ANNUAL REPORT
2017
Baloise Group
Unterkapitel Baloise Group
Annual Report 2017
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 .............................................. 58
Appendix 1: Remuneration Report ....................................... 80
Appendix 2: Remuneration Report Report of the
statutory auditor to the Annual General Meeting
of Bâloise Holding Ltd, Basel ............................................. 108
FINANCIAL REPORT
Consolidated balance sheet ............................................... 112
Consolidated income statement ........................................ 114
Consolidated statement of comprehensive income .......... 115
Consolidated cash flow statement ..................................... 116
Consolidated statement of changes in equity ................... 118
Notes to the consolidated annual financial statements .... 120
Notes to the consolidated balance sheet .......................... 196
Notes to the consolidated income statement .................... 239
Other disclosures ............................................................... 250
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ..... 262
BÂLOISE HOLDING LTD
Income statement of Bâloise Holding Ltd .......................... 270
Balance sheet of Bâloise Holding Ltd ................................ 271
Notes to the financial statements of Bâloise Holding Ltd .. 272
Appropriation of distributable profit as proposed
by the Board of Directors ................................................... 282
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ..... 283
GENERAL INFORMATION
Glossary ............................................................................. 288
Addresses ........................................................................... 292
Information on the Baloise Group ...................................... 293
Financial calendar and contacts ........................................ 294
3
Baloise Group Annual Report 2017
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 share4 (CHF)
Diluted earnings per share4 (CHF)
Equity per share4 (CHF)
Closing price (CHF)
Market capitalisation (CHF million)
Dividend per share5 (CHF)
2016
2017
Change (%)
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
3,229.3
3,512.0
6,741.3
2,519.5
9,260.8
374.7
306.0
81.8
– 78.5
531.9
46,209.0
48,008.5
5,773.7
6,409.2
9.7
91.1
92.2
21.3
3.1
8.9
90.2
92.3
33.4
2.5
4,409.4
4,896.8
322.1
68.5
376.8
125.8
50,000,000
48,800,000
11.53
11.22
123.8
128.30
6,415.0
5.20
11.50
11.48
133.2
151.70
7,403.0
5.60
2.8
– 1.6
0.4
14.6
3.9
– 5.5
35.3
– 11.2
153.2
– 0.4
3.9
11.0
–
–
–
–
–
11.1
17.0
83.6
– 2.4
– 0.3
2.3
7.6
18.2
15.4
7.7
1 Premiums written and policy fees (gross).
2 Of which deferred gains / losses from other operating segments (31 December 2016: CHF – 2.0 million; 31 December 2017: CHF 14.5 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 2017 based on the proposal submitted to the Annual General Meeting.
4
Baloise Group Annual Report 2017
Baloise
At a glance
At a glance
Equity of
CHF 6,409.2 million
Return on equity
(RoE) of
8.9 %
Profit for the period * of
CHF 531.9 million
Profit (attributable to the
shareholders)
CHF 548.0 million
Dividend of
CHF 5.60 per share
(will be proposed to the
Annual General Meeting
on 27 April 2018)
14.6 %
higher business volume
with investment-type premiums
Net investment yield
of insurance assets
2.9 %
Net combined ratio of
92.3 %
New business margin of
33.4 %
* The difference between the profit for the period and the profit attributable to shareholders is primarily due to the fact that only part of the book losses
incurred on the sale of non-strategic entities in Germany was borne by the shareholders.
5
Baloise Group Annual Report 2017
Baloise
Letter to shareholders
Dr Andreas Burckhardt, Chairman of the Board of Directors (on the right), and Gert De Winter, Group CEO (on the left), testing the Baloise Park
augmented reality app, which can be downloaded for free from the Google Play Store and the Apple App Store.
DEAR SHAREHOLDERS
In the autumn of 2016, Baloise formulated the three targets for
its new strategy. By 2021, our aim is to generate CHF 2 billion
of cash for the holding company, attract an additional one
million customers and become one of the most attractive
employers in our industry. At the end of the first year, it is clear
that we have made a very good start. The profit for the period
attributable to shareholders was up by 2.5 per cent to CHF 548.0
million (2016: CHF 534.8 million) and the net combined ratio
held steady at 92.3 per cent (2016: 92.2 per cent), demonstrat-
ing that Baloise has successfully embarked on this strategic
journey. The volume of business grew by 3.9 per cent to
CHF 9,260.8 million. Moreover, Baloise launched numerous
initiatives in 2017 without neglecting its core business, which
is and remains the basis for long-term business success.
The volume of non-life business reached CHF 3,229.3 million,
a year-on-year rise of 2.8 per cent. Switzerland notched up growth
(in Swiss francs) of 0.7 per cent, Belgium 5.5 per cent, Luxem-
bourg 5.0 per cent and Germany 3.6 per cent. The performance
of the life business was also highly encouraging. Underwriting
policy in the traditional life business remained restrictive,
resulting in a 1.6 per cent contraction in the volume of business
to CHF 3,512.0 million. However, business with investment-type
premiums was very successful in 2017 and the volume of pre-
mium income grew by 14.6 per cent to CHF 2,519.5 million.
Baloise can report initial progress on achieving the strategic
targets after just the first year. The holding company has already
received CHF 415 million of the total of CHF 2 billion, we have
signed up 118,000 new customers and we are among the top
25 per cent of the most attractive employers in our sector in
Europe (our ambition: top 10 per cent). Last year, our strategic
activities focused on the launch of digitalisation initiatives and
the expansion of customer care. Building on its strong and
stable core business, Baloise is concentrating on becoming even
more customer-centric. In doing so, it is striving to evolve into
a service provider for insurance, pension and other services
that extend beyond the core insurance business. This transfor-
mation of the business model requires, above all, entrepreneurial
energy, and this was evident throughout the Company in 2017.
6
Baloise Group Annual Report 2017
Baloise
Letter to shareholders
Partnerships with TCS, Bank Cler, BLKB, Möbel Pfister and many
others are also important as they give Baloise significantly more
opportunities to interact with customers in all markets. Finally,
Baloise itself is creating a new digital experience relating to the
construction of Baloise Park with an app that shows what the
new buildings will look like.
Corporate culture is an important element of the digital
transformation, and satisfied employees are central to Baloise’s
new strategy. Employees are playing a core role in implementing
the strategy. In the remuneration system, we have cancelled
the individual performance targets and introduced a new
incentive scheme. The focus is now on team targets that actively
encourage people to work together. This is rooted in our firm
belief that, in future, team achievements rather than exceptional
performance on the part of individuals will determine our success
and lead to the best solutions.
The first year of the new strategy highlights the energy and
speed with which Baloise is tackling the challenges of the digital
transformation. We are doing this with a broad spectrum of
initiatives and capital expenditure on business models that we
think will work, underpinned by our traditionally strong core
business. There are four more years to go before we reach the
objectives of our new strategy. The first signs of success are
already visible and tangible. Not least thanks to its traditionally
strong corporate culture, Baloise has the strength to achieve
its targets and thus successfully implement its plan. For this
reason, the Annual General Meeting will be asked to raise the
dividend by CHF 0.40 to CHF 5.60.
Basel, March 2018
Dr Andreas Burckhardt
Gert De Winter
Chairman of the Board of Directors
Group CEO
When implementing new initiatives, Baloise focuses on five
dimensions: we identify start-ups, develop or help them to
mature, enter into alliances, test out new ideas ourselves or buy
fledging businesses. This broad-based approach gives the
individual initiatives a better chance of success. Working with
an investment and consultancy firm in London, Baloise is
investing up to CHF 50 million in European and US-based start-
ups that offer the potential to drive forward the process of
digitalisation at Baloise. We also benefit from the firm’s expe-
rience with digital financial services and are incorporating it
into our new strategy. In Switzerland, we are involved with
companies that support and develop international fintech start-
ups. This gives Baloise exclusive access to highly promising
fintech start-ups, new technologies and business models that
have the potential to bring about significant changes in the
insurance sector.
«Entrepreneurial energy was evident
throughout Baloise in 2017.»
Baloise also invests in its own start-ups. FRI:DAY, a mobile
insurer, made its debut in early 2017 in Germany. The company
launched the first mileage-based motor vehicle policy and has
already attracted more than 15,000 customers. Another start-up
is Mobly, a platform for services in the Belgian used car market
that complement traditional motor vehicle insurance. The
company began with two products: Mobly Go is a driver assis-
tance system for all vehicle brands in the used car segment,
while Mobly Car Expert enables customers to obtain professional
support when buying a second-hand car.
In its partnerships with various start-ups, Baloise has shown
that it is capable of breaking away from the mindset of a tradi-
tional insurer. The alliances have given rise to new products,
such as watch insurance featuring photo recognition software,
which is offered in Switzerland and Germany. Other examples
include the first cyber-insurance product for retail customers in
Switzerland, the first mortgage app in Switzerland, fully digi-
talised insurance for personal items, which can be taken out
with just a few clicks and offers cover for more than 60 individ-
ual items, and GoodStart, a simple online home contents
insurance product in Luxembourg. Another highlight was the
new YounGo insurance line for customers in Switzerland up to
the age of 30, which has led to a sharp rise in new customers.
7
Baloise Group Annual Report 2017
Baloise
Baloise shares
Baloise shares deliver outstanding performance
In 2017, Baloise shares * recorded their best performance since 2013, rising by 18.2 per cent. The share
price was driven up by a favourable macroeconomic environment and the successful start of the new
Simply Safe strategy. Closing at CHF 151.70, Baloise shares finished markedly higher than the closing
price of CHF 128.30 at the end of the prior year. This meant that they once again comfortably outper-
formed the Swiss Market Index (SMI) and the Swiss Leader Index (SLI) in 2017.
Overall, 2017 was a very successful year for the equity markets.
Since the US elections, the expansionary character of US
President Trump’s fiscal policy agenda has significantly raised
investors’ profit expectations. Positive economic figures along
with a buoyant global economy, which continued to gather pace
over the course of the year, have provided a broad base for the
upturn. The stock markets experienced very low volatility in
2017 and the level of volatility also ended the year below the
historical average.
The main drivers behind the equity market rally were the
booming global economy, growing corporate profits and an
environment of continued expansionary monetary policy.
However, the brightening economic prospects and recovery in
the job markets brought discussions about the normalisation
of monetary policy increasingly to the fore. While there had only
been one rise in the base rate during 2016, the Federal Reserve
carried out three further hikes in 2017, raising the benchmark
interest rate to between 1.25 per cent and 1.5 per cent. Since
2015, US base rates have therefore increased by a total of 125
basis points. The Fed has also announced its intention to reduce
its net monthly asset purchases. Future monetary policy will
depend, among other things, on what happens to the rate of
inflation. At the end of 2017, this remained below the two central
banks’ target of 2 per cent, both in the USA and in the eurozone.
In 2017, the European Central Bank (ECB) once again decided
against a significant change to its monetary policy, but let it be
known that there are currently no economically justified reasons
to intensify expansionary monetary policy measures. It left the
base rate for the supply of central bank money to commercial
banks unchanged at 0.0 per cent, but plans to halve its monthly
net acquisition of assets between January and probably Sep-
tember 2018. The Swiss National Bank decided to leave the
benchmark rate and the target range for three-month Libor
unchanged in 2017, at – 1.25 to – 0.25 per cent. The Swiss franc
has weakened considerably against its main trading partners
8
since the start of the year, which could boost the economic
recovery and might lead to a slight rise in the rate of inflation.
That would aid the Swiss National Bank in meeting its respon-
sibilities. Baloise shares were able to benefit from the afore-
mentioned macroeconomic factors, and from the successful
launch of the Simply Safe strategy, closing the year at a price
of CHF 151.70, 18.2 per cent above the closing price of the prior
year. The STOXX Europe 600 Insurance Index (SXIP) rose by an
equally respectable 16.7 per cent during the same period. Two
of Switzerland’s main share indices also performed well. The
Swiss Market Index and the Swiss Leader Index rose by 14.1 per
cent and 17.0 per cent respectively for the year as a whole.
DIVIDENDS PAID TO SHAREHOLDERS
The Board of Directors of Bâloise Holding Ltd will propose to the
Annual General Meeting on 27 April 2018 that a cash dividend
of CHF 5.60 per share be paid for the 2017 financial year, an
increase of CHF 0.40 compared with the dividend for 2016. This
would represent an attractive dividend yield of 3.7 per cent
relative to the year-end share price.
As announced at the end of 2016, Baloise is planning to
buy back up to 3,000,000 treasury shares over the period from
April 2017 to April 2020. The shares will be bought back for the
purpose of capital reduction, using a second trading line on the
Swiss stock exchange, SIX Swiss Exchange AG. By the end of
2017, the programme had resulted in the purchase of 423,450
treasury shares, returning CHF 63.3 million to shareholders.
* Baloise shares = shares of Bâloise Holding Ltd.
Baloise Group Annual Report 2017
Baloise
Baloise shares
Year (CHF million)
2013
2014
2015
2016
2017
Total
Cash dividends
Share buy-backs
Total
237.5
250.0
250.0
260.0
273.31
1,270.8
–
–
59.1
54.8
63.3
177.2
237.5
250.0
309.1
314.8
336.6
1,448.0
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 27 April 2018.
SHAREHOLDER STRUCTURE
The shares in Bâloise Holding Ltd are widely held and their free
float remains unchanged at 100 per cent. During the 2017
financial year, the following change (notifiable under Art. 120
(1) of the Swiss Financial Market Infrastructure Act) to the Baloise
shareholder base took place: On 29 March 2017, several collec-
tive investments managed by UBS Fund Management (Switzer-
land) AG together rose above the threshold of 3 per cent. Further
information on Baloise’s significant shareholders as at
31 December 2017 can be found in the table 11 on page 279.
STATISTICS ON BALOISE SHARES
Price at year-end (CHF)
High (CHF)
Low (CHF)
Market capitalisation (CHF million)
Basic earnings per share (CHF)
Diluted earnings per share (CHF)
Price / earnings (p / e) ratio 1
Price / book (p / b) ratio 1
Number of shares issued (units)
31.12.2013
31.12.2014
31.12.2015
31.12.2016
31.12.2017
113.60
113.60
80.75
127.80
129.90
101.60
127.60
136.30
109.60
128.30
131.00
103.20
5,680.0
6,390.0
6,380.0
6,415.0
9.65
9.38
11.77
1.10
15.15
14.63
8.44
1.04
10.96
10.65
11.64
1.10
11.53
11.22
11.13
1.04
151.70
159.40
121.35
7,403.0
11.50
11.48
13.19
1.14
50,000,000
50,000,000
50,000,000
50,000,000
48,800,000
Minus the number of treasury shares (units)
3,028,943
3,048,791
3,464,540
2,499,945
1,327,993
Number of shares in circulation (units)
Average number of shares outstanding 2
Dividend per share 3 (CHF)
Dividend payout ratio 3
Dividend yield 3
46,971,057
46,951,209
46,535,460
47,500,055
47,472,007
46,896,926
46,921,282
46,721,219
46,381,359
47,641,577
4.75
49.2
4.2
5.00
33.0
3.9
5.00
45.6
3.9
5.20
45.1
4.1
5.60
48.7
3.7
1 Calculation is based on the profit for the period attributable to shareholders and the equity attributable to shareholders.
2 Relevant for calculation of earnings per share (see page 247 of the Financial Report).
3 2017 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 2012 – 2017
BALN
CHF 0.10
1.241.051
CH0012410517
SIX Swiss Exchange
350
250
150
50
100 % registered shares
2012
2013
2014
2015
2016
2017
1 31 December 2011 = 100
Bâloise Holding registered shares (BALN)
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index (SMI)
9
Baloise Group Annual Report 2017
Baloise
Core markets
Our four core markets
BELGIUM
Business volume (CHF million)
Life: 148.8
Non-life: 999.0
Investment-type premiums: 439.3
Employees: 1,232
Net combined ratio: 91.9 %
Antwerp
Brussels
Hamburg
LUXEMBOURG
Bad Homburg
Luxembourg
Business volume (CHF million)
Life: 79.6
Non-life: 122.3
Investment-type premiums: 1,761.6
Employees: 435
Net combined ratio: 91.5 %
SWITZERLAND
Basel
Solothurn
Business volume (CHF million)
GERMANY
Life: 2,904.3
Non-life: 1,324.6
Investment-type premiums: 111.6
Employees: 3,749
Net combined ratio: 83.5 %
10
Business volume (CHF million)
Life: 379.2
Non-life: 783.0
Investment-type premiums: 207.1
Employees: 1,870
Net combined ratio: 108.3 %
Baloise Group Annual Report 2017
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, tai-
lored 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 indi-
cator that shows how often Baloise is recommended as an
employer.
SHAREHOLDERS
Thanks to sustained improvements in profitability in 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.
11
Baloise Group Annual Report 2017
Baloise
Strategy
Selection of Simply Safe initiatives
Friends 4
Baloise
Voice of
Baloise
Shadow for
a day
The Reflex
Machine
Open X Day
Digital
Leadership
Programe
Story in
Action
Culture
Hackathon
Compensation &
Benefits
Die Baloise
Story
Barcamps
Drivolution
Acquire
MOVU
Trov
Insurdata
onmi:us
Invest
FRI:DAY
Baloise
Scouting
Team
Mobly
Roboadvisor
Monviso
Incubate
Anthemis
F10
2017: + 118,000
Ambition 2021: + 1,000,000
2017: top 25 %
Ambition 2021: top 10 %
2017: CHF 415 mn
Ambition 2021: CHF 2 bn
12
A BRIGHT FUTURE NEEDS A SOLID PAST: Baloise’s new strategic ambitions are based on our excellent track record over the past decade: as well as a forward-looking system of capital management and risk management, we have one of the most profitable non-life portfolios in Europe, a strong position in core markets and cutting-edge IT systems and digital processes. Based on these strengths, Baloise continues to invest in the future. Its current “Simply Safe” initiatives are aimed at achieving the following goals by 2021: ▸Become one of the best employers in the industry ▸Attract 1 million additional customers ▸Generate cash of CHF 2 billion for the benefit of shareholders and for capital investmentCUSTOMERSAmbition: 1 million additional customersPROGRESS MADEEMPLOYEES Ambition: leading employer amongst European financialsSHAREHOLDERSAmbition: CHF 2 billion cash remittance to the holding Baloise Group Annual Report 2017
Baloise
Strategy
Robotics
Chatbot
Single Item
Insurance
Online &
Mobile
Mortgages
Point of Sale
Cooperations
Machine
Learning
Cyberinsurance
Test
Property Fund
GoodDrive
Safe Home
360° Services for
Pension Funds
White Label
Products
youngGo
GoodStart
On Demand
Insurance
oice in the in d u str y
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Optimization &
Extension of the
Core Business
SME Premium
Calculator
Omnichannel
Third Party Asset
Management
SHAREHOL D E R S
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Möbel Pfister
Picsure
Tango
KASKO
TCS
CLER
Partner
Fasoon
Eventbutler
13
Baloise Group Annual Report 2017
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 understand
the needs of our customers and work to find suitable solutions.
14
Baloise Group Annual Report 2017
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.
15
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate Governance
110 Financial Report
268 Bâloise Holding Ltd
286 General information
Review of operating
performance
GROUP ......................................................................... 18
Success during the first year of the new strategic phase .... 18
SWITZERLAND ............................................................ 22
Exceptionally good results ................................................. 22
GERMANY ................................................................... 23
Portfolio restructuring and disposal of
shareholdings lead to losses ............................................. 23
BELGIUM .................................................................... 24
Sharp rise in profitability and strong growth ...................... 24
LUXEMBOURG ............................................................. 25
Significantly higher growth and an excellent profit ............. 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
Unterkapitel Baloise Group Annual Report 2017
Review of operating performance
Group
Success during the first year of the new
strategic phase
Baloise’s profit for 2017 attributable to shareholders was the second highest of the last ten years. This
achievement is proof positive that Baloise is on the right track with its investment in the future and, at
the same time, has strengthened its core business. It has already seen its first operational success in
respect of the strategic targets to be reached by 2021, even though 2017 was just the beginning and saw
numerous initiatives being launched. Core business also fared very well. The non-life business continues
to grow in all markets and profitability remains high. The shift in the life portfolio towards life insurance
products that tie up less capital is having a sustained positive effect. The contribution to EBIT from the
life business rose significantly in 2017.
investment-type premium income continued to grow, rising by
an impressive 14.6 per cent to CHF 2,519.5 million.
The gains on the investment of insurance assets amounted
to CHF 1,621.6 million, which was above the 2016 level of
CHF 1,578.9 million. Recurring current income stood at
CHF 1,300.5 million (2016: CHF 1,379.3 million). The gains on
investments achieved for insurance assets equated to a net
return of 2.9 per cent. 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 2.5 per cent, representing
a decrease on the 3.1 per cent rate of return according to IFRS
in 2016.
BUSINESS VOLUME IN 2017 (GROSS)
BY STRATEGIC BUSINESS UNIT
As a percentage
Switzerland
Germany
Belgium
Luxembourg
46.9
14.8
17.1
21.2
OVERVIEW
In 2017, Baloise’s profit for the period attributable to shareholders
advanced by 2.5 per cent to CHF 548.0 million (2016: CHF 534.8
million). Excluding the non-recurring restructuring effects,
Baloise would have earned a profit attributable to shareholders
of CHF 601.7 million, giving a year-on-year increase of 12.5 per
cent. The volume of business grew by 3.9 per cent to CHF 9,260.8
million. This was driven by business with investment-type
premiums, which climbed by 14.6 per cent to CHF 2,519.5 million,
and by the robust growth of the non-life business in all national
subsidiaries.
The non-life business generated premium income reported
under IFRS of CHF 3,229.3 million, a year-on-year rise of 2.8 per
cent. All business units contributed to this improvement. Profit
before borrowing costs and taxes (EBIT) in the non-life business
was 5.5 per cent lower than in 2016 at CHF 374.7 million. There
were two main reasons for this decrease of around CHF 20 million:
the initial financing for FRI:DAY and a voluntary contribution to
the employee pension fund in Switzerland. The ongoing restruc-
turing of a portfolio in the German liability insurance segment
also had an adverse effect on EBIT. The net combined ratio was
on a par with the prior year at a very healthy 92.3 per cent (2016:
92.2 per cent).
A still restrictive underwriting policy and the sale of the life
portfolio in Germany meant that the volume of traditional life
business contracted by 1.6 per cent to CHF 3,512.0 million.
However, EBIT rose by 35.3 per cent to CHF 306.0 million. This
was due to a slight easing of the interest rate situation, which
significantly reduced the need to strengthen reserves. Another
factor was the ongoing shift in the life portfolio. The volume of
18
Baloise Group Annual Report 2017
Review of operating performance
Group
In operational terms, the EBIT generated by the banking business
was encouraging at CHF 81.8 million. Although this was a fall
of 11.2 per cent compared with 2016, the prior-year figure had
been boosted by a positive non-recurring effect of CHF 11.3
million arising from a change in the pension scheme at Baloise
Bank SoBa.
Baloise’s balance sheet grew even stronger, with consoli-
dated equity rising by 11.0 per cent year on year to reach
CHF 6,409.2 million at the end of 2017.
NET COMBINED RATIO
As a percentage
2017
2016
2015
2014
2013
92.3
92.2
93.3
93.6
94.9
BUSINESS VOLUME
CHF million
Total business volume
Life
Non-life
Investment-type
premiums
2016
2017
+/– %
8,910.8
3,570.9
3,140.7
2,199.2
9,260.8
3,512.0
3,229.3
2,519.5
3.9
– 1.6
2.8
14.6
NON-LIFE DIVISION: GOOD GROWTH AND CONTINUED
HIGH PROFITABILITY
The non-life division saw a further rise in the volume of premiums
(in Swiss francs) of 2.8 per cent. With increases of 0.7 per cent
in Switzerland, 5.5 per cent in Belgium, 3.6 per cent in Germany
and 5.0 per cent in Luxembourg, the total volume came to
CHF 3,229.3 million. In local currency terms too, growth was
consistently above 1.5 per cent in the non-Swiss markets. Whereas
the Swiss business had benefited from a positive effect of
CHF 35.5 million in 2016 owing to pension scheme changes, the
strengthening of the employer contribution reserve in 2017 had
a negative impact on earnings. The initial financing for the mobile
insurer FRI:DAY and the losses arising on a portfolio undergoing
restructuring in the German liability insurance segment also
adversely affected EBIT. Consequently, EBIT in the non-life
business fell by 5.5 per cent to CHF 374.7 million. The level of
large claims incurred declined overall. The net combined ratio
was almost the same as in 2016 at an excellent 92.3 per cent.
LIFE DIVISION: FURTHER STRONG GROWTH IN
INVESTMENT-TYPE PREMIUMS
The life business is evolving as intended. The ongoing shift in
the portfolio was reflected in the 1.6 per cent decline in tradi-
tional life insurance. Investment-type premiums grew at a very
encouraging rate of 14.6 per cent. Total premium income,
including investment-type premiums, amounted to CHF 6,031.5
million (2016: CHF 5,770.1 million). In traditional life insurance,
the business volume increased by 0.9 per cent in Switzerland
(despite a restrictive underwriting policy) and by 3.7 per cent
in Belgium, but contracted by 18.7 per cent in Germany and by
2.7 per cent in Luxembourg. The sharp fall in Germany was due
to the sale of a closed life insurance portfolio to Frankfurter
Leben.
Investment-type premiums increased to CHF 2,519.5 million
(2016: CHF 2,199.2 million). By far the biggest growth driver in
2017 was business in Luxembourg, which was up by 25.2 per
cent. In the other markets, business held steady or contracted.
Business in Luxembourg (including Liechtenstein) accounts for
around 70 per cent of all business with investment-type
premiums. EBIT in the life business again rose year on year,
reaching CHF 306.0 million (2016: CHF 226.1 million). This was
mainly because there was less of a need to strengthen reserves
than in the prior year thanks to the slight bounce-back of
interest rates.
The positive operating income and economic growth resulted
in an increase in the embedded value of the life insurance
business from CHF 4,409.4 million to CHF 4,896.8 million in 2017,
which is equivalent to a return on embedded value of 12.4 per
cent. The new business margin went up in all countries thanks
19
Baloise Group Annual Report 2017
Review of operating performance
Group
to operational measures and further improvements to the
business mix, and stood at 33.4 per cent (2016: 21.3 per cent).
The value of new business also rose, reaching CHF 125.8 million.
BANKING DIVISION: EARNINGS REMAIN STABLE
If the prior-year positive non-recurring effect of CHF 11.3 million
arising from a change in the pension scheme at Baloise Bank
SoBa is excluded, the banking division’s earnings improved
slightly in operational terms. EBIT in the banking business
amounted to CHF 81.8 million (2016: CHF 92.1 million), a year-
on-year fall of 11.2 per cent. As in prior years, the main contrib-
utors to profit were Baloise Asset Management, whose contri-
bution was up slightly at CHF 44.9 million, and Baloise Bank
SoBa, which contributed CHF 30.7 million.
EQUITY REMAINS ROBUST
The balance sheet of Baloise improved once again, with consol-
idated equity rising by 11.0 per cent year on year to reach
CHF 6,409.2 million at the end of 2017. The profit for the period
and other comprehensive income played a big part in this increase,
which was partly offset by dividends paid of CHF 248.7 million.
The Annual General Meeting held on 28 April 2017 voted to cancel
1.2 million shares. This was carried out on 12 July 2017, reducing
the share capital by CHF 120,000 million. Under the announced
programme to buy back more than three million shares, a total
of 423,450 shares had been repurchased by the end of 2017.
This meant CHF 63.3 million was returned to the shareholders.
The increase in equity, the credit rating of “A with a positive
outlook” awarded by Standard & Poor’s and an SST ratio of
significantly above 200 per cent are signs of the strong founda-
tions provided by Baloise’s sustained and robust level of capi-
talisation.
INVESTMENTS: SOLID RESULTS IN A QUIET MARKET
ENVIRONMENT
Broad-based growth and the support from the continued
expansionary monetary policy of many central banks provided
fertile conditions for a good year in the capital markets. Vola-
tility in equity markets was at historically low levels throughout
2017, making it an excellent year for shares. The Swiss Market
Index rose by a healthy 14.1 per cent. Three interest rate hikes
by the US Federal Reserve led to a widening of the interest spread
at the short end compared with Switzerland and the eurozone,
whereas long-term interest rates mainly remained within
a narrow range.
The gains on the investment of insurance assets amounted
to CHF 1,621.6 million, which was above the 2016 level of
CHF 1,578.9 million. The interest rate environment remained
challenging and this was reflected in the lower recurring current
income of CHF 1,300.5 million (2016: CHF 1,379.3 million). Of
the total decrease, CHF 54.8 million was attributable to the
transfer of the closed life insurance portfolio to the Frankfurter
Leben Group. As there was limited appeal in the reinvestment
of maturing bonds denominated in Swiss francs, Baloise avoided
PROPRIETARY INVESTMENTS BY CATEGORY1
INVESTMENT COMPONENTS IN 2017
31.12.2016
31.12.2017
+/– %
CHF million
Investment property
Equities
Alternative financial assets
6,817.5
4,055.3
1,304.1
7,480.3
3,633.6
1,112.6
Fixed-income securities
32,062.1
33,388.2
Mortgage assets
10,690.6
10,596.4
Policy loans and other loans
5,664.1
5,972.1
Derivatives
363.0
362.4
Cash and cash equivalents
1,935.5
2,133.2
Total
62,892.3
64,678.9
9.7
– 10.4
– 14.7
4.1
– 0.9
5.4
– 0.2
10.2
2.8
1 Excluding investments for the account and at the risk of life insurance policyholders and
As a percentage
Fixed-income securities
Mortgage assets
Investment property
Policy loans and other loans
Equities
Cash and cash equivalents
Alternative financial assets
Derivatives
51.6
16.4
11.6
9.2
5.6
3.3
1.7
0.6
third parties.
20
Baloise Group Annual Report 2017
Review of operating performance
Group
ASSETS HELD BY BALOISE
as at 31 December 2016
CHF million
Investments for own account and at own risk
Asset portfolio for the account and at risk
of life insurance policyholders and third parties 1
Total recognised assets
Third party assets
as at 31 December 2017
CHF million
Investments for own account and at own risk
Asset portfolio for the account and at risk
of life insurance policyholders and third parties 1
Total recognised assets
Third party assets
Non-life
Life
Banking
9,166.6
46,006.1
8,120.6
12,001.0
Total for the
Group
62,892.3
12,337.2
9,166.6
58,007.2
8,120.6
75,229.5
7,984.7
Total for the
Group
64,678.9
15,027.4
Non-life
Life
Banking
9,605.9
48,141.2
7,397.8
14,543.8
9,605.9
62,685.0
7,397.8
79,706.3
8,958.6
1 Including CHF 70.5 million (2016: CHF 54.5 million) in other assets (precious metal holdings from investment-linked life insurance policies).
million. 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 2.5 per cent, representing
a decrease on the 3.1 per cent rate of return according to IFRS
in 2016. The banking and asset management segment reported
net inflows of CHF 406.3 million in 2017. The volume of assets
managed for third parties had thus risen to CHF 8,958.6 million
at the end of 2017.
doing so for the most part and instead opted for currency-hedged
euro-denominated bonds and senior secured loans. It continued
to build up its portfolio of investment property and mortgages
with stable income, thereby slightly mitigating the effect of
declining income.
At CHF 467.6 million, the gains recognised in the income
statement were up by CHF 45.1 million compared with the prior
year. Baloise made use of the buoyant equity markets to realise
some of the gains. By contrast, it registered significantly smaller
gains on bonds than in 2016. The remeasurement of available-
for-sale real estate led to extraordinary gains of CHF 39.0 million.
As a result of the good market conditions, gross impairment
losses fell by CHF 87.6 million year on year to CHF 28.0 million.
The currency-related losses of CHF 117.7 million were virtually
equal to the currency hedging costs.
The gains on investments achieved for insurance assets
equated to a net return of 2.9 per cent, which was exactly the
same as in 2016. The slight rise in interest rates in euros and
Swiss francs led to a reduction in unrealised gains of CHF 323.7
21
Baloise Group Annual Report 2017
Review of operating performance
Switzerland
Switzerland
Exceptionally good results
Basel
Solothurn
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
2016
2017
+/– %
4,307.2
2,991.4
1,315.8
81.2
546.6
4,340.6
3,015.9
1,324.6
83.5
618.4
0.8
0.8
0.7
–
13.1
BASLER VERSICHERUNGEN SWITZERLAND
The profit from business in Switzerland was up significantly year
on year and was one of the best results in the history of the
Swiss company. This was thanks, in particular, to a very good
portfolio resulting from disciplined implementation of the target
customer strategy, a healthy profit on claims reserves and fewer
large claims in 2017. Large claims are likely to be higher in 2018
as a result of the weather. There was growth in the non-life and
life businesses in 2017. The overall volume of business rose by
0.8 per cent to CHF 4,340.6 million. The business model com-
bining banking and insurance gained further momentum, with
customer assets generated by the insurance sales force increas-
ing by around CHF 115 million net at Baloise Bank SoBa in 2017.
EBIT advanced by an exceptional 13.1 per cent to CHF 618.4
million.
In the non-life division, premiums were up by 0.7 per cent
to CHF 1,324.6 million. There was also an encouraging rise in
new customers, primarily thanks to the YounGo product line,
the new insurance for personal items and the acquisition and
integration of the Movu platform for home-moving services.
22
Life: 66.9 %
Non-life: 30.5 %
Investment-type premiums: 2.6 %
However, EBIT in the non-life business fell by 4.1 per cent to
CHF 289.3 million. This was mainly due to two countervailing
non-recurring effects. There had been a positive effect of
CHF 35.5 million resulting from pension scheme changes (IAS 19)
in 2016, whereas earnings in 2017 were squeezed by the
strengthening of the employer contribution reserve in the pension
fund for employees. The net combined ratio stood at an out-
standing 83.5 per cent, which was 2.3 percentage points higher
than the exceptionally good prior-year figure.
The life insurance division achieved growth of 0.8 per cent.
In the individual life insurance business, there was a rise in
single premiums because, contrary to 2016, two tranche prod-
ucts were offered in 2017. There was a conscious decision to
take a cautious approach to underwriting new group life busi-
ness, resulting in a low rate of growth. By contrast, the products
of the partially autonomous collective foundation Perspectiva
generated strong growth. EBIT in the life business amounted to
CHF 317.6 million (2016: CHF 221.7 million). Despite larger
allocations to policyholders’ dividends in the group life business,
profit rose sharply thanks to a slight increase in interest rates
and the reduced need for additional funding.
The banking business of Baloise Bank SoBa continues to
perform steadily, which is testament to the success of the unique
business model of banking and insurance in Switzerland. The
number of asset management and investment advice mandates
increased by 59 per cent to more than 1,500. EBIT came to
CHF 30.7 million, which was below the prior-year figure of
CHF 41.7 million. The reduction (in Swiss francs) was due, in
particular, to the non-recurring boost to earnings of CHF 11.3
million in 2016 resulting from pension scheme changes (IAS 19).
BUSINESS VOLUMECHF million (as a percentage of the Group)4,340.6 (46.9 %) Baloise Group Annual Report 2017
Review of operating performance
Germany
Germany
Portfolio restructuring and disposal
of shareholdings lead to losses
Hamburg
Bad Homburg
KEY FIGURES FOR GERMANY
CHF million
Business volume
Of which: life
Of which: non-life
Net combined ratio (per cent)
Loss before borrowing
costs and taxes
2016
2017
+/– %
1,431.2
1,369.3
675.2
755.9
109.7
– 60.9
586.3
783.0
108.3
– 76.0
– 4.3
– 13.2
3.6
–
24.8
BASLER VERSICHERUNGEN IN GERMANY
EBIT in the German business amounted to a loss of CHF 76.0
million, which was below expectations. The non-life business
was weighed down by large claims and a liability insurance
portfolio undergoing restructuring. The overall volume of
business contracted by 4.3 per cent to CHF 1,369.3 million. This
decrease and some of the loss were attributable to strategic
restructuring, such as the sale of Deutscher Ring Bausparkasse.
In operational terms, Germany is achieving profitable growth
– particularly in the non-life business.
The non-life division reported encouraging growth of 3.6
per cent with a volume of business of CHF 783.0 million. Non-life
business with retail customers is growing at a far stronger rate
than the market, especially in the accident, general liability,
motor vehicle and property insurance segments. Industrial
business is declining, above all due to the scheduled exits and
restructuring in these segments. The net combined ratio
improved only slightly, falling to 108.3 per cent (2016: 109.7
per cent). The main reasons for this were the strengthening of
reserves in the aforementioned portfolio and the high number
Life: 27.7 %
Non-life: 57.2 %
Investment-type premiums: 15.1 %
of moderately large claims below the priority limit for reinsur-
ance. Moreover, the volume of large claims incurred was higher
than in 2016.
The volume of business in the life division decreased by
18.7 per cent to CHF 379.2 million. However, this was mainly
because of the sale of the closed life insurance portfolio of
Direktion für Deutschland to the Frankfurter Leben Group, which
was completed on 3 February 2017. The portfolio comprised
around 130,000 life insurance policies. Excluding this effect,
the volume of business would have remained stable owing to
reduced non-recurring income. By contrast, biometric products
and business involving investment-type premiums performed
well. These now account for around 90 per cent of new business.
23
BUSINESS VOLUMECHF million (as a percentage of the Group)1,369.3 (14.8 %) Baloise Group Annual Report 2017
Review of operating performance
Belgium
Belgium
Sharp rise in profitability and strong growth
Antwerp
Brussels
Life: 9.4 %
Non-life: 62.9 %
Investment-type premiums: 27.7 %
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
2016
2017
+/– %
1,561.4
1,587.1
614.4
947.1
93.4
171.7
588.1
999.0
91.9
140.8
1.6
– 4.3
5.5
–
– 18.0
contributed to performance. As a result, the net combined ratio
decreased by 1.5 percentage points to 91.9 per cent.
Against the backdrop of a shrinking Belgian life market, the
volume of business fell by 4.3 per cent to CHF 588.1 million.
Traditional life business generated growth of 3.7 per cent, mainly
thanks to a rise in periodic premiums. Investment-type premiums
were down by 6.7 per cent. While unit-linked products achieved
healthy growth, sales of products with limited guarantee periods
declined.
BALOISE INSURANCE BELGIUM
Last year was very successful for the Belgian market. The volume
of business increased by 1.6 per cent to CHF 1,587.1 million,
which was primarily due to the strong growth of 5.5 per cent in
the non-life business. A reduction in large claims incurred and
a higher profit on claims reserves resulted in improved
profitability. The life business saw growth in both periodic and
single premiums. However, EBIT declined by 18 per cent to
CHF 140.8 million.
Belgian non-life business again registered strong growth,
expanding by 5.5 per cent to CHF 999.0 million (2016: CHF 947.1
million). This shows that Baloise Insurance Belgium was able
to hold its own in a very competitive market. The inward rein-
surance business notched up particularly buoyant growth due
to an agreement entered into with Europe Assistance, an
organisation providing emergency assistance and other services.
As a result of this growth, the Belgian market now accounts for
31 per cent of the Baloise Group’s total non-life premiums.
Business remains highly profitable. Large claims had less of an
adverse impact in 2017, and the profit on claims reserves also
24
BUSINESS VOLUMECHF million (as a percentage of the Group)1,587.1 (17.1 %) Baloise Group Annual Report 2017
Review of operating performance
Luxembourg
Luxembourg
Significantly higher growth and an excellent profit
Luxembourg
Life: 4.1 %
Non-life: 6.2 %
Investment-type premiums: 89.7 %
Once again, the life business was the main driver of growth in
Luxembourg. Investment-type premiums, which are predomi-
nantly sold from Luxembourg and Liechtenstein, increased by
25.2 per cent to CHF 1,761.6 million. Products are largely sold
through banks and brokers, while the main market for products
from Liechtenstein is Italy and they are mainly sold by inhouse
salespeople through contacts in banks and asset management
companies. Traditional life business contracted by 2.7 per cent.
This was in line with the planning, as classic guarantee products
with guarantees above zero are no longer offered in Luxembourg.
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
2016
2017
+/– %
1,605.5
1,489.1
116.4
93.9
23.3
1,963.5
1,841.2
122.3
91.5
27.5
22.3
23.6
5.0
–
18.0
BÂLOISE ASSURANCES LUXEMBOURG
The business unit in Luxembourg significantly increased its
volume of business, which grew by 22.3 per cent to CHF 1,963.5
million. It also reported the best profit in its history. The main
factors were the growth of the life business, where investment-
type premiums were up by 25.2 per cent. The non-life business
saw stronger growth and improved profitability, with premium
income advancing by 5 per cent to CHF 122.3 million. This increase
was primarily driven by motor vehicle insurance and products
for small and medium-sized enterprises. A reduction in high-
volume minor claims led to better profitability. The net combined
ratio decreased by 2.4 percentage points to 91.5 per cent.
25
BUSINESS VOLUMECHF million (as a percentage of the Group)1,963.5 (21.2 %) Baloise Group Annual Report 2017
Review of operating performance
Consolidated income statement
Consolidated income statement
FIVE-YEAR OVERVIEW
CHF million
Income
Premiums earned and policy fees (gross) 1
Reinsurance premiums ceded
Premiums earned and policy fees (net)
Investment income
Realised gains and losses on investments 2
For own account and at own risk
For the account and at risk
of life insurance policyholders and third parties
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)
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
2013
2014
2015
2016
2017
7,212.7
– 167.9
7,044.8
7,168.1
– 163.6
7,004.5
6,832.4
– 148.6
6,683.7
6,680.6
– 168.2
6,512.4
6,726.4
– 183.4
6,542.9
1,765.1
1,701.9
1,521.8
1,476.6
1,392.5
210.7
459.6
119.0
40.5
107.9
775.1
587.4
110.7
8.1
185.2
379.1
7.1
112.6
36.8
136.6
303.1
364.1
110.1
7.1
136.8
427.8
696.5
116.9
5.5
235.0
9,747.5
10,372.8
8,877.9
8,910.2
9,417.1
– 5,439.7
– 5,666.4
– 5,352.4
– 5,664.2
– 5,726.5
– 1,359.4
– 1,469.5
– 1,241.9
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
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 9,089.3
– 9,444.3
– 8,158.6
– 8,226.6
– 8,733.0
Profit before borrowing costs and taxes
658.2
928.6
719.2
683.6
684.1
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).
26
Baloise Group Annual Report 2017
Review of operating performance
Consolidated income statement
FIVE-YEAR OVERVIEW
CHF million
2013
2014
2015
2016
2017
Profit before borrowing costs and taxes
658.2
928.6
719.2
683.6
684.1
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)
ADDITIONAL INFORMATION INSURANCE
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
Net combined ratio
Funding ratio (non-life) (per cent)
– 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
– 34.3
649.8
– 117.9
531.9
548.0
– 16.1
11.50
11.48
2013
2014
2015
2016
2017
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
6,741.3
2,519.5
9,260.8
9,606.8
10,904.2
10,873.2
12,001.0
14,543.8
94.9
179.8
93.6
182.9
93.3
192.4
92.2
188.5
92.3
193.3
27
Financial instruments with characteristics of equity
11,344.4
13,451.2
13,770.8
14,305.6
Financial instruments with characteristics of liabilities
32,327.1
34,461.6
33,248.4
33,766.5
Baloise Group Annual Report 2017
Review of operating performance
Consolidated balance sheet
Consolidated balance sheet
FIVE-YEAR OVERVIEW
as at 31.12.
CHF million
Assets
Property, plant and equipment
Intangible assets
Investments in associates
Investment property
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
Equity before non-controlling interests
Non-controlling interests
Total equity
Liabilities
Derivative financial instruments
Other accounts payable
Deferred tax liabilities
Total liabilities
353.3
1,002.5
138.4
7,480.3
15,874.9
35,360.1
16,568.6
800.4
3,305.1
88.8
3,551.6
2013
2014
2015
(restated)
2016
2017
422.5
1,080.3
222.0
5,685.9
379.2
909.2
227.9
399.1
838.2
162.3
349.3
836.1
160.4
5,962.9
6,251.9
6,817.5
18,329.5
18,165.9
16,656.6
16,354.7
410.7
2,857.7
56.0
613.2
2,153.5
48.3
653.9
3,921.5
39.8
757.3
4,024.3
69.3
2,960.8
2,969.6
2,839.8
3,173.3
75,696.9
79,342.3
78,782.3
80,614.3
84,523.9
2013
2014
2015
(restated)
2016
2017
4,855.9
5,791.3
5,418.9
5,741.3
50.5
39.7
34.7
32.4
6,346.2
63.0
4,906.4
5,831.0
5,453.6
5,773.7
6,409.2
68.2
5,862.3
882.3
176.4
5,789.7
1,065.5
250.8
7,379.5
909.7
299.0
7,070.0
944.9
70,790.5
73,511.4
73,328.7
74,840.6
78,114.7
48,008.5
22,696.5
145.3
6,341.9
922.4
Gross technical reserves
47,435.6
48,738.9
45,776.6
46,209.0
Liabilities arising from banking business and financial contracts
16,542.1
17,740.8
19,012.0
20,317.7
Total equity and liabilities
75,696.9
79,342.3
78,782.3
80,614.3
84,523.9
28
Baloise Group Annual Report 2017
Review of operating performance
Business volume, premiums and combined ratio
Business volume, premiums
and combined ratio
BUSINESS VOLUME
2016
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written1
Investment-type premiums
Total business volume
2017
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written1
Investment-type premiums
Total business volume
1 Premiums written and policy fees (gross).
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
Group
Switzerland
Germany
Belgium
Luxembourg
3,229.3
3,512.0
6,741.3
2,519.5
9,260.8
1,324.6
2,904.3
4,228.9
111.6
4,340.6
783.0
379.2
1,162.2
207.1
1,369.3
999.0
148.8
1,147.8
439.3
1,587.1
122.3
79.6
201.9
1,761.6
1,963.5
29
Baloise Group Annual Report 2017
Review of operating performance
Business volume, premiums and combined ratio
NET COMBINED RATIO
2016
as a percentage of premiums earned
Claims ratio1
Expense ratio
Combined ratio
2017
as a percentage of premiums earned
Claims ratio1
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)
CHF million
Technical reserve for own account1
Premiums written and policy fees for own account
Funding ratio (per cent)
1 Not including capitalised settlement premiums.
30
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
64.0
29.9
93.9
Group
Switzerland
Germany
Belgium
Luxembourg
60.7
31.6
92.3
56.6
26.9
83.5
2016
60.9
30.2
91.1
72.1
36.2
108.3
Gross
2017
59.7
30.5
90.2
57.3
34.6
91.9
2016
60.8
31.4
92.2
61.5
30.0
91.5
Net
2017
60.7
31.6
92.3
2016
2017
5,637.2
2,990.8
188.5
5,924.8
3,065.0
193.3
Baloise Group Annual Report 2017
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
Total technical result of ceded business
For own account
Premiums earned and policy fees
Claims and benefits paid
Change in claims reserve / actuarial reserves1
Change in other technical reserves
Technical expenses
Total technical result for own account
Investment income (gross)
Realised gains and losses on 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)
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 2016: CHF – 2.0 million; 31 December 2017: CHF 14.5 million).
Non-life
2016
2017
2016
Life 3
2017
3,140.7
– 31.0
3,109.7
3,229.3
– 14.9
3,214.4
3,570.9
3,512.0
–
–
3,570.9
3,512.0
– 1,859.7
– 1,881.0
– 3,804.5
– 3,845.5
– 35.3
– 31.5
– 35.7
– 2.5
– 966.1
– 1,003.5
– 547.2
– 55.2
– 353.0
– 87.7
– 409.2
– 302.7
217.2
291.7
– 1,189.2
– 1,133.2
– 149.8
88.0
8.4
0.1
8.7
– 162.6
– 18.4
– 20.8
55.8
11.9
0.2
14.8
7.5
1.1
3.0
1.5
5.0
4.3
3.9
1.3
– 44.6
– 79.9
– 5.2
– 6.4
2,959.9
3,051.8
3,552.4
3,491.1
– 1,771.6
– 1,825.2
– 3,797.0
– 3,840.5
– 26.9
– 31.4
– 23.9
– 2.4
– 957.4
– 988.6
– 546.1
– 52.2
– 351.5
– 83.5
– 405.3
– 301.4
172.6
217.8
47.6
– 22.9
– 18.7
223.8
396.4
–
– 74.9
321.5
211.8
213.2
102.7
– 27.0
– 125.9
163.0
374.7
–
– 100.2
274.5
– 1,194.4
– 1,139.6
1,161.5
616.8
– 85.6
– 272.2
1,420.4
226.1
–
– 34.3
191.8
1,087.3
1,001.4
– 95.4
– 547.8
1,445.6
306.0
– 2.8
– 14.2
289.0
31
Baloise Group Annual Report 2017
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)
32
2016
2017
+/– %
366.2
116.4
330.6
1,036.6
987.8
196.5
74.0
32.7
374.9
130.9
343.2
1,062.3
1,025.9
187.3
78.6
26.3
3,140.7
3,229.3
2.4
12.5
3.8
2.5
3.9
– 4.7
6.2
– 19.6
2.8
2016
2017
+/– %
3,241.6
2,528.4
3,553.7
2,477.8
– 2,199.2
– 2,519.5
3,570.9
3,512.0
9.6
– 2.0
14.6
– 1.6
Baloise Group Annual Report 2017
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
Third party assets
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
2016
2017
86.3
75.9
0.6
11.4
85.6
76.3
0.7
1.4
174.2
164.0
– 57.0
– 14.5
– 71.4
102.8
– 1.2
– 9.4
92.1
– 19.4
72.7
– 60.1
– 14.8
– 75.0
89.0
0.6
– 7.8
81.8
– 15.8
66.0
31.12.2016
31.12.2017
7,984.7
8,958.6
31.12.2016
31.12.2017
–
11.6
–
379.3
6,453.8
291.3
7.0
977.5
–
11.9
–
172.7
6,227.2
186.4
12.6
787.1
8,120.6
7,397.8
33
Baloise Group Annual Report 2017
Review of operating performance
Investment performance
Investment performance
2016 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
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
Change in unrealised gains and losses recognised directly
in equity
119.7
– 8.2
–
–
8.6
120.0
Investment management costs
Operating profit
Average investment portfolio
Performance (per cent)
– 32.5
1,139.7
– 0.5
165.7
– 5.2
300.8
– 15.1
365.2
31,841.4
4,206.4
6,534.7
16,505.7
3.6
3.9
4.6
2.2
– 5.6
– 130.5
3,495.6
– 3.7
– 58.9
1,840.8
62,583.8
2.9
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
2017 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
Average investment portfolio
Performance (per cent)2
Fixed-income
securities
Equities
Investment
property
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives,
cash and cash
equivalents
Total
697.3
375.3
121.8
138.2
263.2
111.1
294.0
25.8
16.3
– 222.6
1,392.5
427.8
– 497.1
184.8
–
–
104.0
– 208.2
– 35.6
539.9
– 9.1
435.6
– 8.1
366.2
– 13.6
306.2
32,725.2
3,844.5
7,148.9
16,461.6
1.6
11.3
5.1
1.9
– 9.4
– 111.7
3,605.4
– 3.1
– 75.8
1,536.3
63,785.6
2.4
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
2 The sale of the closed life insurance portfolio of Direktion für Deutschland resulted in a negative change in unrealised gains and losses recognised directly in equity of CHF 105.4 million.
Adjusted for this effect, performance was 2.6 per cent.
34
Baloise Group Annual Report 2017
Review of operating performance
Investment performance
CURRENT INCOME FROM INSURANCE 1
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Cash and cash equivalents
Total current income
Non-life
Life
37.7
43.8
2.5
100.9
8.1
25.1
– 0.3
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
Non-life
Life
39.6
40.9
2.7
99.6
7.0
23.7
– 0.3
222.3
80.3
15.1
591.1
71.3
108.2
– 1.0
2017
Total
261.9
121.3
17.8
690.7
78.3
131.8
– 1.3
217.8
1,161.5
1,379.3
213.2
1,087.3
1,300.5
REALISED GAINS AND LOSSES IN 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
Total capital gains and losses
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
Total
2016
Total
59.1
23.0
20.2
355.4
0.3
30.4
Non-life
Life
33.2
45.6
9.3
47.4
–
1.0
77.9
92.6
63.9
327.1
2.0
35.0
– 130.1
– 181.6
259.2
306.8
– 33.8
102.7
– 259.2
339.3
48.3
10.7
17.5
283.9
0.4
28.5
10.9
12.3
2.7
71.4
– 0.1
1.9
– 51.4
47.6
Non-life
Life
2016
Total
Non-life
Life
917.4
1,251.3
280.2
5,875.3
2,791.0
1,023.9
6,792.7
4,042.3
1,304.1
952.4
1,076.4
312.5
6,502.5
2,543.9
800.0
4,852.9
26,829.2
31,682.0
5,247.3
27,967.3
33,214.7
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
442.4
1,084.6
28.5
461.7
3,926.8
5,384.5
317.8
698.3
4,369.2
6,469.1
346.4
1,160.0
9,166.6
46,006.1
55,172.7
9,605.9
48,141.2
57,747.2
2017
Total
111.1
138.2
73.2
374.5
2.0
35.9
– 293.0
442.0
2017
Total
7,454.9
3,620.3
1,112.6
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
35
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate Governance
110 Financial Report
268 Bâloise Holding Ltd
286 General information
Sustainable business
management
RESPONSIBILITY ......................................................... 38
HUMAN RESOURCES .................................................... 42
Anchoring the culture of growth ........................................ 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
Unterkapitel Baloise Group Annual Report 2017
Sustainable business management
Responsibility
Responsibility
TAKING RESPONSIBILITY
Responsible and socially engaged corporate behaviour is not
only a core part of the Baloise strategy but, ultimately, also a
critical factor in the economic success of the locations in which
companies operate – not least because it helps 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 Federal Council, for example, makes the
case for responsible companies being a vital factor in the success
of the Swiss economy and sets out the government’s intention
to help shape the framework for CSR: www.seco.admin.ch.
In June 2017, it published a position paper and action plan
on companies’ responsibility in respect of society and the
environment.
Prevention work
in Switzerland
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 themselves
to put into practice and should not be prescribed by law. With
its new strategy and new focus on customers, Baloise is empha-
sising 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 respon-
sibility long before the term was popularised. Sustainability is
at the heart of everything that Baloise does. Every day, through
its insurance and pension solutions, it helps companies, econ-
omies and communities to function properly, which in turn boosts
economic and social stability in the countries where it operates.
The Company has a history going back more than 150 years,
and, since the day it was founded, has always been there when
its customers needed it most. People put their trust in Baloise
to look after their future and in return expect stability, security
38
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 must be able to offer
the sort of long-term security that 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.
CSR-PROJECTS AT BALOISE
Education
▸ More than 200 career entrants each year
▸
Creation of new workplaces
Cooperation with the Emilie Leus Foundation
in Belgium regarding «Don’t Drink and Drive»
▸
▸
▸
▸
Sponsoring
Know-how-transfer
Awareness raising
Lobbying for legislative adjustments
Prevetion work in Switzerland
Youth and addiction
▸
Presentations at schools
▸
Baloise Group Annual Report 2017
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 and has recently introduced a system of “pulse checks”
to help monitor whether it is on the right track in terms of
achieving this objective. Every three months, randomly selected
employees are asked to score Baloise in terms of attractiveness.
Baloise has worked hard over the years to develop and promote
an employee-friendly corporate culture, building on the stable
foundations put in place long ago. The concept of social partner-
ship has a long tradition at Baloise Insurance in Switzerland. In
2015, the Company’s employee commission (MAKO) celebrated
its 40th anniversary. The Baloise MAKO was established long
before 1993, when the Swiss federal government passed a
co-determination act that made it law for employees to have a
say in the workplace and to be given information on particular
matters. To this day, the rights of the MAKO go well beyond the
provisions of that legislation. Baloise has always fostered an
employee-oriented corporate culture across its organisation. It
gives its staff scope to contribute to the success of the Company
and to develop both personally and professionally, placing
particular emphasis on training and development. In doing so,
Baloise secures not only its own long-term viability but also the
future employability of its staff in an increasingly competitive
economic environment. By giving young people their first
experience in the world of work – as trainees, interns and
temporary student employees – 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.
▸
Chapter “Sustainable business management /
Human Resources”
RESPONSIBILITY TO THE CUSTOMER
Customer focus is central to Baloise’s strategy. Baloise wants
to be more than just an insurer and 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 simply feel safe. One way to meet this
requirement is to provide services 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 strength-
ens the insurance collective through its strategy of seeking out
customers who are cautious and careful and to whom safety
and security are as important as they are to Baloise. But it is
not just about providing security by covering a particular risk,
it is also about giving customers everyday peace of mind. Baloise
wants to use the means at its disposal to help make customers’
broader environment safer.
Social
responsibility
as a tradition
It is also about Baloise getting involved in society through its
corporate citizenship and sponsorship activities. Examples
include the Baloise Session music festival and the Art Basel art
fair, two cultural events that raise the profile of Basel around
the world and enrich sociocultural life. The collaboration with
the Emilie Leus Foundation in Belgium illustrates how employees
are thinking beyond the traditional parameters of insurance.
The foundation was established to combat drink driving across
Belgium as part of a broad-ranging campaign. And for a number
of years now, Baloise has been carrying out work in Switzerland
to help prevent addiction among young people. Baloise employ-
ees visit schools several times a year to talk about this subject.
www.fondsemilieleus.be
www.cktgmbh.ch/themen/sucht/modul.php
39
Baloise Group Annual Report 2017
Sustainable business management
Responsibility
RESPONSIBILITY 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 pol-
icies, 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.
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 2017, the rating agency raised
its assessment to “A with a positive outlook”. The Company’s
risk management is rated as “strong”.
www.baloise.com/de/home/investoren/rating.html
Chapter “Sustainable business management /
▸
Risk management”
RESPONSIBILITY 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 over a number of years. The Company’s
focus on energy efficiency, particularly in its IT infrastructure
and buildings, plays a key part in this. Employees are encouraged
to use public transport wherever possible and separate their
waste for recycling. 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 sustainability 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 “environ-
mental platform”, a business initiative of the Basel region. This
platform facilitates the sharing of knowledge among businesses
and supports climate protection and sustainable development
through specific projects. Baloise is committed to environmental
protection 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
Baloise Group Annual Report 2017
Sustainable business management
Responsibility
RESPONSIBILITY IN SOCIETY
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’ Asso-
ciation. The declaration requires companies to offer flexible
working conditions and working time models that enable
employees to participate in the milizsystem. Baloise not only
encourages its employees to engage in voluntary activities by
holding annual inhouse events but it also meets its own respon-
sibility to society as a commercial organisation. Countless
employees also get politically involved at local, cantonal and
federal level. Karin Keller-Sutter, a member of the Baloise Board
of Directors, was even appointed as President of the Council of
States (upper chamber of the Swiss parliament) for 2018, which
illustrates the commitment of Baloise to the milizsystem. The
Company also 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. It also offers vocational training opportunities to more
than 200 young people a year in the form of apprenticeships,
management traineeships and work placements.
Baloise sponsors the arts and has funded the Baloise Art
Prize for 18 years. Every year, this prestigious 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 Hamburger Bahnhof museum in
Berlin and the Musée d’Art Moderne (MUDAM) 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 supporting numerous institutions and events. Some
of the Baloise activities and initiatives that enrich socio-
cultural life are listed here:
WEBLINKS TO THE CSR ACTIVITIES OF THE
BALOISE GROUP’S BUSINESS UNITS
▸
Baloise Group and Switzerland
https://www.baloise.com/en/home/about-us/
responsibility.html
▸
▸
▸
Belgium
www.baloise.be/nl/over-baloise-insurance/
voorstelling/sponsoring.html
Germany
www.basler.de/ueber-uns/unternehmen/
basler-versicherungen-stellen-sich-vor/
engagement.html
Luxembourg
www.baloise.lu/fr/assurance-baloise-luxembourg/
Qui-sommes-nous/engagements-sponsoring.html
41
Baloise Group Annual Report 2017
Sustainable business management
Human resources
Anchoring the culture of growth
From raising awareness to establishing
a sustainable process
The defining feature of 2016 for Baloise was the introduction of the new Simply Safe strategy, which
is based on the conviction that hard-working employees will cultivate strong customer relationships
that in turn will help the Company to achieve its financial targets. In 2017, all efforts were focused on
implementing the “employee focus” part of the strategy. Through both top-down (management) and
bottom-up initiatives (e. g. viral change), improvements were made to existing instruments in order to
support the change and drive it forward. All HR measures are united by a single ambition: for Baloise
to become a leading employer in its industry by 2021.
KEY FIGURES
▸
▸
▸
▸
▸
▸
7,286 (2016: 7,270) employees (FTEs in 2017: 6,655).
43.5 per cent of all employees are women (2016: 43.9
per cent).
The Baloise Group employs 245 (2016: 230) apprentices,
trainees and interns.
64.0 per cent of staff members working in our main
market of Switzerland participated in our Share
Participation Plan in 2017 (2016: 65.5 per cent).
Baloise employees work at the Company for an average
of 13.0 years.
Staff turnover as at 31 December 2017 amounted
to 5.2 per cent (end of 2016: 5.4 per cent).
CHANGING THE ORGANISATION. PAST,
PRESENT AND FUTURE.
Baloise is pursuing a growth strategy that is based both on its
strong core business and on its unique corporate culture. So in
2016, HR invested in establishing a culture of growth across the
Group. In 2017, in order to drive forward this cultural shift,
Baloise pursued initiatives in areas such as executive develop-
ment, viral change, performance management and creating a
culture of dialogue.
LEADING BY EXAMPLE TO ESTABLISH A
CULTURE OF GROWTH
Encouraging people to show drive and initiative, to help shape
the process of change, to try new things out and to strive for
improvement at all levels presents challenges for the managers.
They will need to learn how to relinquish control, deal with
uncertainty and delegate more, and yet still provide meaning
and guidance.
Last year, to help the managers facilitate this change, a
series of groupwide workshops were held for senior management
focusing on topics such as leading by example, experimentation
and digitalisation. A programme for experts in their field was
also added to the established Baloise Campus management
development programme. The focus here was on the challenge
of leading without having formal authority to do so.
VIRAL CHANGE AND PERSONAL INITIATIVE:
DRIVING CHANGE FROM THE BOTTOM UP
In 2017, in addition to the top-down change, Leandro Herrero’s
concept of viral change was deployed. To prepare for this, a
groupwide survey was carried out at the end of 2016 to identify
highly engaged and well-connected employees – the “sparks”
– who were then invited to help with the change. These 300
employees now act as beacons for the new corporate culture
and provide authentic examples of the eight behaviours
enshrined in the Baloise Code. They are proactive in launching
initiatives and projects that accelerate the change in the corpo-
rate culture. The sparks’ mindset is catching on; more and more
employees are joining in and adding to the viral effect through
their behaviour.
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Human resources
DIALOGUE AS THE BASIS FOR OUR SUCCESS
A BROADER SCOPE FOR CONTINUOUS IMPROVEMENT
Our three hierarchy-transcending dialogue formats play a key
role in the Baloise culture.
1.
In the individual development dialogue, an employee and
their manager will meet face to face to talk specifically
about the employee’s skillset. The focus is on continuous
learning and on helping employees to make the most of
the freedom they are given in their work. In addition, the
particular skills that are needed to achieve the envisioned
growth are encouraged. The meetings are structured
around a talent assessment questionnaire that covers the
skills relevant to growth. A simplified version of this
questionnaire was made available in digital form in 2017
in order to streamline the process and eliminate any
remaining hurdles.
2. The aim of the managerial feedback session is to continu-
ally improve and expand the capabilities of our managers.
All employees are given the opportunity to fill out a ques-
tion on the twelve growth-relevant management compe-
tencies of the Baloise Leadership Compass. The results
are then discussed with their line managers. In 2017, this
process was carried out simultaneously across all coun-
tries and at all management levels for the first time.
3. The employee engagement survey is conducted every two
years at departmental level in order to identify areas that
have potential for improvement and raise them for dis-
cussion. In addition, quarterly “pulse checks” were intro-
duced in October 2017, in which 30 per cent of employees
are polled in order to gauge the extent to which the work-
force as a whole would recommend the Company as an
employer. These surveys provide a good indication of
whether Baloise is on the right path to becoming a lead-
ing employer in its industry.
Baloise Code
▸
▸
▸
▸
▸
Keep promises: walk the talk.
Ask questions: learn new things all the time.
Speak up: every voice matters.
Share insights: collaborate beyond your role.
Understand the impact of your work: look for
constant improvements.
Appreciate colleagues: build personal
connections.
Bring in customer needs: take their
perspective.
▸
▸
▸ Meet others with a smile!
The Baloise Code was developed on the basis of
the Company’s core strategies and in line with
Baloise’s behavioural values “Put yourself in the
other’s shoes!”, “Act authentically and earn trust!”
and “Develop and engage – yourself and others!”
The eight behaviours are designed to accelerate
the change in culture, which is essential if the
strategic objectives are to be achieved.
BASELINE MEASUREMENT: TOP 30 %. TOP 10 %
IS THE TARGET.
In December 2016, the employee engagement survey was carried
out across the Group for the first time. The questionnaire was
designed to measure levels of engagement and enablement
among employees. Particular emphasis was given to the afore-
mentioned question as to whether they would recommend
Baloise as an employer. The results arrived in February 2017.
Around 4,800 of Baloise’s 7,300 employees took part in the
survey. The proportion who either agreed or agreed strongly
with the statements put to them was 76 per cent for engagement
and 74 per cent for enablement. An impressive 78 per cent of
employees indicated that they either would or definitely would
recommend Baloise as an employer. This result puts Baloise in
the top 30 per cent of all European financial institutions – a good
start. The target is to be in the top 10 per cent by 2021. The
results of the first “pulse check” in October 2017 showed that we
are already making good progress. The proportion of employees
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Baloise Group Annual Report 2017
Sustainable business management
Human resources
who would recommend Baloise now stands at 85 per cent,
putting the Company in the top 25 per cent in its industry.
The areas with potential for improvement identified by the
employee survey mainly related to the familiar topics of achieving
career goals, addressing behaviour that is out of step with our
values, and having sufficient resources to be able to work
effectively. The results of the survey were analysed at divisional
level and the managers worked with their teams to come up with
specific measures for improvement.
ENCOURAGING INTERACTION. ACHIEVING MORE.
OPTIMISATION OF THE PERFORMANCE AND TALENT
DEVELOPMENT PROCESS
Development is a continuous process, not an annual event.
Things are changing all the time – including the environment in
which Baloise’s employees work. Which is why, going forward,
Baloise will be putting even more emphasis on developing its
staff. In 2017, the performance and talent development process
was revised and simplified in order to achieve this. The follow-
ing two components are at the heart of the process:
▸
Regular one-to-one meetings between managers and
employees ensure continuous learning and provide
clarity about common objectives. They are the central
element in an ongoing dialogue focused on performance
and development targets.
In the established annual process of talent development
for high-potential employees, Baloise identifies talented
young employees and key individuals, finds potential
successors and agrees development activities.
▸
44
The new performance management process will come into play
from 2018. The way that it deals with performance and develop-
ment has been simplified and now better matches the fast pace
of real-life business. It rests on the belief that if different
departments and parts of the Group interact well together then
this will lead to an improvement in performance. Going forward,
the focus is being put on agile agreements, overarching team
objectives and continuous dialogue between managers and
employees. We have made a conscious decision not to weight
the targets and not to have a year-end appraisal in which for-
mulas are used to evaluate the degree of target fulfilment.
Instead, variable remuneration will be based on the manager’s
overall assessment of the employee’s performance.
THE RIGHT WORKING MODEL FOR ALL
Flexible. Mobile. Family-friendly. The only way that Baloise will
be able to stand out from the competition is through its
employees. This strategy is being further reinforced by the new
focus communicated in 2016, in which Baloise is committed to
offering every employee suitable working conditions in addition
to encouraging their development, engaging in honest dialogue
with them and giving them the opportunity to help shape the
company. This is reflected in its flexible working models, which
include options to work part-time and from home, its company
crèche and its wide-ranging corporate health management
service.
Change of perspective
Shadow for a day is the shorter version of the two
“change of perspective” options. Under this
scheme, an employee is given the chance to shadow
a colleague for one day, ask them questions and
take on board invaluable learnings for their own
work. Under the temporary job change initiative,
employees perform a new role for a defined period
of time or work on groupwide projects, before
returning to their original function. These tempo-
rary vacancies arise when employees go on
parental leave, for example, or when additional
resources are needed for a particular project.
Baloise Group Annual Report 2017
Sustainable business management
Human resources
Baloise is now also offering employees the chance to look beyond
their own horizon for a set period of time. The “temporary job
change” and “shadow for a day” initiatives, both of which were
suggested by a “spark”, give employees insights into different
departments and divisions – with their secondments lasting for
several months or one day.
BALOISE IN THE LABOUR MARKET.
AUTHENTIC. RELEVANT. PERSONAL.
The Baloise Group wants to become an employer of choice in
its industry. The way it presents itself on the labour market has
a direct impact on whether it will achieve this goal – all the more
so because competition for the best brains will only get tougher
because of demographic change. It is becoming particularly
difficult to recruit IT workers, insurance specialists and appren-
tices for commercial vocations, for example.
Baloise engages with potential candidates in various dif-
ferent ways, including through its careers blog, through its
profiles on social media and at university fairs. To attract the
right talent, it uses employee profiles, tips on how to apply, and
personal interaction to convey an authentic picture of the
Company.
In 2017, new application processes were tested that featured
components designed to engage the emotions and create an
even more personal experience. These promising tests will be
expanded to cover a broader section of the population this year.
Activities in 2017 –
spreading the word about Baloise as an employer
▸
▸
▸
▸
▸
▸
▸
▸
▸
10 graduate fairs
15 workshops
5 WhatsApp taster days
95 blog articles
10 podcasts
17 application tip videos
171 Facebook posts
185 LinkedIn posts
155 Xing posts
Candidate experience – personal and authentic
As well as engaging their minds, the test targeted
candidates’ hearts. A number of components were
tested that would make the application process a
more personal experience. These included target-
ing people directly, using videos to convey an
authentic image of the team, responding quickly
and meeting in neutral surroundings.
Baloise also puts a great deal of emphasis on the attractiveness
of its training opportunities. Around 245 young people currently
work for Baloise as apprentices, interns and temporary student
workers. The Company’s established 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 25 years, can today be found in a
wide range of roles within the Company. In 2017, trainees were
recruited in Belgium and Luxembourg for the first time.
SHARED GOALS. LOCAL CONFIGURATIONS.
The activities of the country-specific HR units are aligned with
the wider objectives of the group but are also dictated by regional
circumstances and the local legal system.
In Switzerland, for example, the focus was on changing the
culture to one that is agile and that employees can actively help
to shape. This was reflected in initiatives such as the “Baloise
wants to know” workshop, which was commissioned by the Swiss
HR unit and initiated by the employee commission. The workshop
gave staff a platform for making suggestions for how Baloise
could do more to become an employer of choice. The results are
now in and the first action steps are currently being reviewed.
The various sparks initiatives also helped employees to grow
more confident – it is now easier for them to speak up and
pursue ideas. Agility, meanwhile, played a key role in manage-
ment. People rotated jobs both at Executive Committee level
and below this, which provided fresh impetus. The sales force
in the field is also becoming more agile – today, customers are
choosing to interact with Baloise in the way that makes most
sense for them. In 2017, we developed a new remuneration model
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Baloise Group Annual Report 2017
Sustainable business management
Human resources
for sales that takes account of these changes. The transition in
January 2018 was communicated transparently and at an early
stage, with HR closely involved. The fast pace of digital trans-
formation also presents challenges – particularly for older
employees. Baloise is therefore coming up with options for them
such as the “career arc”, which incorporates part-time working
or coaching roles. This is also the subject of a research project
that Baloise is working on together with the University of
St. Gallen and the FHNW, a vocational university in north-west
Switzerland.
In Germany too, the focus was very much on driving forward
the change in culture. Employees and managers were actively
integrated into the change process through a series of initiatives.
In “future workshops”, employees are identifying key topics for
the areas in which they work. New internal communication
formats such as blog posts are providing transparency about
the change in culture. The “change of perspective” formats,
meanwhile, are giving employees the opportunity to see for
themselves the type of work that people do in different and
related parts of the company and the challenges that they face.
Furthermore, it was possible to make improvements in areas
that were assessed critically in the employee survey by working
on them at different levels. A new occupational pension scheme
was also successfully introduced in 2017.
In Belgium, the focus was on driving innovation and enabling
employees. Last year, an initiative was successfully launched
in which employees were urged to contribute innovative ideas.
One of their promising ideas is now at the development stage.
In addition, employees were released from their usual duties
so that they could temporarily help out in innovation projects
in order to advance their development. A decision was also made
to stop recording working hours from 2018. This decision was
based on the evaluation of a pilot scheme carried out in 2017
and marks a major step away from an approach based on
attendance and towards one based on results. An action plan
to promote diversity was also agreed. The first measures under
this plan, such as part-time working for managers, are being
introduced in 2018.
Luxembourg is supporting the change in culture by intro-
ducing “sneak preview” training courses with the aim of
arousing employees’ interest in continuous professional
development. In addition, the number of training options for
employees was increased and they were given more time to
dedicate to them. Last year, to promote a spirit of innovation,
the post of Chief Innovation Officer was created and an innova-
tion lab was launched. Various improvement measures were
also launched on the basis of the results of the employee
engagement survey.
BALOISE’S 7,286 EMPLOYEES IN 2017 BY COUNTRY
Switzerland
Germany
Belgium
Luxembourg
Per cent
Employees
51.5
25.7
16.9
6.0
3,749
1,870
1,232
435
Friendly Work Space
Baloise has been re-certified
as a Friendly Work Space for
the second time. With an
impressive score of 4.3 (out of
a possible 5), it is the leading
company in the financial ser-
vices / insurance sector.
46
Baloise Group Annual Report 2017
Sustainable business management
Human resources
FAIR PAY. BASED ON PERFORMANCE AND TARGETS.
Baloise’s employees should be rewarded for their performance,
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 compet-
itive base salaries and a range of variable remuneration com-
ponents as well as attractive employee incentives and loyalty
bonuses.
EMPLOYEE STORIES AND THE LATEST FROM THE WORLD OF
INSURANCE. BALOISE GROUP HUMAN RESOURCES ON THE
INTERNET
Baloise maintains a presence on various media in order to reach
potential employees and to convey an authentic picture of the
Company. The following platforms are used to present career
stories, the corporate culture, employees and the latest news
and events at Baloise.
Remuneration is determined by the following criteria:
Competitiveness in the marketplace
Individual performance and the Company’s success
Fairness and transparency
Sustainability
▸
▸
▸
▸
Careers website:
www.baloise.com/careers
Careers blog:
www.baloisejobs.com
Variable remuneration is based on both the success of the
Company as a whole and individual performance. Employees
regularly hold meetings with their managers to make sure they
are on track to achieve the targets that have been agreed upon.
To help secure long-term success, part of employees’
remuneration is paid in the form of restricted shares, with the
senior management team receiving a comparatively high pro-
portion of their pay in the form of shares. This form of remuner-
ation strengthens loyalty to Baloise and gives employees the
opportunity to share in the Company’s success.
Facebook:
www.facebook.com/baloisegroup
YouTube:
www.youtube.com/baloisegroup
Xing:
www.xing.com/companies/baloisegroup
LinkedIn:
The packages also feature attractive fringe benefits that
www.linkedin.com/company/baloisegroup
Twitter:
www.twitter.com/baloise_jobs
are awarded regardless of function and seniority.
From 2018, Baloise will be going in a new direction when it
comes to performance management. In 2017, to support this,
the system for short-term variable remuneration was revised
and simplified. The system in which performance-related
remuneration was based solely on individual performance was
abolished. Now, variable remuneration is being systematically
aligned to the attainment of overarching Company targets by
means of the performance pool. Although the payment of variable
remuneration will continue to be based on an evaluation of
individual performance, more emphasis is being put on collab-
oration, including across departments, divisions and countries,
and on the individual’s contribution to the team’s success. This
development will be supported by the aforementioned focus on
team targets and will play a direct role in achieving the three
strategic objectives of “employee focus”, “customer growth”
and “cash upstream”.
47
Baloise Group Annual Report 2017
Sustainable business management
The environment
Environmental mission statement
In 1995, Baloise became one of the first insurers to sign the insurance industry declaration on
sustainable development formulated by the United Nations Environment Programme (UNEP). It drew
up its own environmental guidelines in 1999 in order to give concrete form to this general commitment.
From the outset, it was deemed important to embed sustainability throughout the Company and in
all day-to-day business activities.
What are Baloise’s sustainability principles? Which issues take greatest priority? And what are the key
principles? The sustainability guidelines adopted in 1999 provide a framework for action and form the
basis of all environmental and social activities at Baloise.
PRINCIPLE
As a signatory to the UNEP declaration, Baloise strives for
sustainable 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 initiatives for achieving them. They are kept regularly
informed about the implementation of the environmental mission
statement 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
problems. 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.
ENVIRONMENTAL FOOTPRINT
Baloise continually reduces its direct impact on the environment
by planning, building and operating its office buildings in a
resource-saving and energy-efficient manner. It observes the
same principles in the procurement and use of office equipment
and materials. In doing so, it pays particular attention to its
published energy mission statement and its environmental audit.
PRODUCTS AND SERVICES
Baloise strives to take environmental aspects into account when
developing its products and services and fixing premiums and
levels of coverage. Its underwriting policy takes account of its
customers’ environmental management practices (e. g. ISO
14001) on the basis of identifiable operational and product-
related 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,
environmentally 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.
ORGANISATION
The Corporate Executive Committee bears ultimate responsibility
in environmental matters. Each Group company has a coordi-
nation 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 2017
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 prag-
matic 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
Ever since the Kyoto conference in Japan put the issue of climate
change firmly in the public spotlight in 1997, Baloise has been
publishing key figures on energy and resource consumption,
documenting sustainability measures in its annual report, and
calculating its absolute and relative CO2 emissions in accordance
with the directives issued by the Association for Environmental
Management and Sustainability in Financial Institutions (VfU).
The successor to the Kyoto Protocol, the Paris Agreement in
2015, has spurred us on in our ambition, and future measures
will be based on the Paris objectives. Both absolute and relative
CO2 emissions have been reduced massively at Baloise since
the year 2000. Over a 16-year period, Baloise has 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, while
emissions per employee fell by 32.5 per cent over the same
period, from four tonnes to 2.7 tonnes. Our objective is to reduce
this further still. In 2017, the figure increased by 9 per cent due
to new measuring methods, as any personal mileage driven in
the 165 leasing vehicles of our German employees is now
included in the calculations. In light of our overall efforts, this
slight increase in 2017 does not change Baloise’s general target.
For example, the changes made in the staff canteen alone led
to a 5 per cent reduction in C0₂ emissions per main meal in 2017.
This was achieved by reducing the amount of meat consumed,
in particular. The staff canteen at our HQ in Basel also avoids
goods transported by air, where possible, and mainly uses
seasonal vegetables.
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
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CO2 emissions, Group
CO2 emissions, Switzerland
CO2 emissions, Switzerland
CO2 emissions, Group
49
Baloise Group Annual Report 2017
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
2015 absolute
2016 absolute
2017 absolute 1
Relative Unit
5,196
139,080
13
19,866,588
8,821,860
48,237 m3
439 t
68.7 million
A4 sheets
961 t
+/– %
– 2.7
– 0.4
0
4.9
– 5.3
1.4
– 11.2
5,290
137,151
15
18,236,089
10,380,219
47,128 m3
465 t
5,148
136,601
15
headcount
ERA m2
number of buildings
19,137,677
3,717 kWh / employee
9,830,542
47,768 m3
72 kWh / m2
37 l / employee / day
413 t
80 kg / employee
5.0 % recycled
73.0 % chlorine-free-bleached
22.0 % chlorine-bleached
76.0 million
A4 sheets
72.4 million
A4 sheets
14,062 A4 sheets / employee
– 4.6
811 t
1009 t
196 kg / employee
39.0 % paper / cardboard
7.0 % other materials
6.0 % special waste
49.0 % misc. waste / refuse
24.4
21.8
19.1 million km
18.4 million km
22.5 million km
4,361 km / employee
21.8
23.0 % km by air
52.7 % km by road
24.3 % km by public transport
CO2 emissions
14,738 t
14,257 t
15,579 t
3,026 kg / employee
9.3
1 The increase in the amount of refuse is mainly due to the destruction of an archive and the disposal of old IT hardware in Germany.
50
Baloise Group Annual Report 2017
Sustainable business management
The environment
These reductions were primarily 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. The Baloise Park project (www.baloisepark.ch)
at our HQ in Basel is being constructed in strict accordance with
SNBS guidelines (Standard for Sustainable Construction in
Switzerland). We also continually assess the energy efficiency
of our buildings, and when implementing measures, we aim to
be pragmatic and achieve the broadest possible benefits. In
2017, the partial renovation of a roof area was used to build a
300 square meter roof terrace. In the future, even more energy
will be saved and added value was created for the employees.
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 headquar-
ters 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 assessors, who use
eco-friendly electric bikes to get to local incidents. We have
maintained this service at a consistent level since introducing it.
MEASURES UNDERTAKEN BY BALOISE IN BELGIUM
TO REDUCE TRAFFIC PROBLEMS
In Belgium, Baloise carried out a transport review in conjunction
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. Eight charging stations for electric vehicles
were also installed in 2017. Furthermore, to support the trend
towards commuting to work by bicycle, particularly in urban
centres, we are now incentivising employees who cycle to work
with EUR 0.22 per kilometer.
The employee vehicle fleet is gradually being moved over
to low-CO2 vehicles. As at the end of 2017, the average vehicle
in the fleet produced 115.0g / km (2016: 117.5 g / km).
www.baloise.com/responsibility
ENERGY EFFICIENCY AT BALOISE
The total energy and resource consumption revealed by the
environmental 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.
Per-employee consumption of heating has been reduced by 20
per cent and of electricity by 30 per cent over the last ten years.
With the objectives of the Paris Agreement in mind, a wide range
of energy-saving measures have been analysed and could be
implemented over the coming years.
BALOISE IS BUILDING SUSTAINABLE OFFICES
THAT WILL APPEAL TO EMPLOYEES AS WELL AS
A STATE-OF-THE-ART HOTEL.
In a project scheduled for completion in 2020, Baloise is erecting
three new buildings 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 comfortably exceed the
legal requirements in terms of energy efficiency. An efficient
energy centre will provide power for all three buildings, which
will be heated by 100 % renewable district heating.
51
Baloise Group Annual Report 2017
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 2017.
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.
▸
▸
▸
▸
52
BUSINESS RISKS
Actuarial Risks Life
▸
▸
Parameter Risks
Catastrophe Risks
Actuarial Risks Non-Life
▸
▸
▸
▸
Premiums
Claims
Catastrophe Risks
Reserving
Reinsurance
▸
▸
▸
Premiums / Pricing
Reinsurance Default
Active Reinsurance
INVESTMENT RISKS
Market Risks
Interest Rates
▸
Equities
▸
Currencies
▸
▸
Real Estate
▸ Market Liquidity
Derivatives
▸
Alternative Investments
▸
Credit Risks
Baloise Group Annual Report 2017
Sustainable business management
Risk management
FINANCIAL STRUCTURE RISKS
BUSINESS ENVIRONMENT RISKS
Asset-Liability Risks
▸
▸
Interest Rate Change Risk
(Re-)Financing, Liquidity
Risk Concentration
▸
▸
Accumulation Risks
Cluster Risks
Balance Sheet Structure and
Capital Requirements
▸
▸
Solvency
Other Regulatory Requirements
OPERATIONAL RISKS
IT Risks
▸
▸
▸
▸
IT Governance
IT Architecture
IT Operations
Cyber Security
HR Risks
▸
▸
▸
Skills / Capacities
Availability of Knowledge
Incentive System
Legal Risks
▸
▸
▸
Contracts
Liability and Litigations
Tax
Compliance
Business Processes
▸
▸
▸
Process Risks
Project Risks
In- / Outsourcing
Risk Analysis and Risk Reporting
▸
▸
Risk Analysis and Risk Assessment
Risk Reporting
Change in Standards
Competition Risks
External Events
Investors
LEADERSHIP AND INFORMATION RISKS
Organizational Structure
Corporate Culture
Business Strategy
▸
▸
Business Portfolio
Risk Steering
Merger & Acquisitions
External Communication
▸
▸
External Reporting
Reputation Management
Financial Statements, Forecast, Planning
Project Portfolio
Internal Misinformation
Business risk
Investment risk
Financial-structure risk
Business-environment risk
Operational risk
Leadership and information risk.
THE RISK MAP
The risk map distinguishes between the following categories
of risk to which Baloise is exposed:
▸
▸
▸
▸
▸
▸
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).
53
Baloise Group Annual Report 2017
Sustainable business management
Risk management
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 system (ICS) and the compliance function are further
major planks of this strategy.
The most senior decision-making body in Baloise’s risk
organisation 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.
Overall responsibility lies with the Baloise Group’s Chief Finan-
cial 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 (required capital) – irrespective of any financial
accounting treatment – to ensure that the Company remains
solvent even in adverse circumstances and can meet its obliga-
tions to policyholders at all times. This target capital figure is
constantly compared with the capital currently available (the
risk-bearing 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 cor-
porate 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
supplement 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 twelve months.
This combination of a holistic risk model with analysis of
specific risks ensures that Baloise maintains an adequate
overview of the prevailing risk situation at all times.
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 evaluated,
managed and reported. A number of risk limits act as early-warn-
ing indicators to mitigate the risks taken.
The business units are responsible for local implementation of
the standards and requirements specified by the Baloise Group.
The Baloise Group uses a system of limits in order to mitigate
its risks holistically at an aggregate level. This system tracks
54
Baloise Group Annual Report 2017
Sustainable business management
Risk management
▸
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 suitable
measures can be developed. The results of the ORSA are also
reported to the regulatory authority. In addition, risk managers’
assessment of the risk situation is factored into the remunera-
tion paid to executives. The three criteria used to determine the
performance pool payments awarded to individual managers
are personal performance, leadership and conduct.
STRATEGIC RISK MANAGEMENT
The internal risk model, which uses standard methods to
quantify 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 target 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.
OUR PROFESSIONAL RISK MANAGEMENT DEMONSTRATED
ITS PROVEN STRENGTHS IN 2017
Baloise’s risk strategy principles are designed for the long term,
as shown by the Company’s excellent risk positioning in 2017.
Proof positive of this situation was again the Baloise Group’s
positive Standard & Poor’s rating of “A” with a stable outlook
and the confirmation of the significance of the enterprise risk
management as “high”.
Underwriting approaches that have been tried and tested
for many years were maintained in 2017:
▸
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 7.0 per cent at 31 December
▸
2017, 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. Baloise’s real-estate
portfolio has proved very helpful in this respect. Baloise
also invests in safe long-term bonds denominated
in either Swiss francs or euros and supplements this
strategy by using derivative financial instruments
such as swaptions.
Baloise’s underwriting business has proved to be highly
consistent, with the Baloise Group’s net combined ratio
of 92.3 per cent demonstrating its excellent capabilities
in underwriting and managing non-life risk.
▸
Risk management at Baloise will continue to evolve over the
coming years, reaffirming its standing as a company with an
outstanding risk strategy and risk positioning.
Further information on risk management can be found in
the 2017 Financial Report (section 5. Management of insurance
risk and financial risk, pages 146 to 189).
55
Baloise Group Annual Report 2017
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 commitment also extends to providing
recognition and support for contemporary artists.
each receive CHF 30,000 in prize money. After the announcement
at the Art Basel media conference, both the winners and the
galleries receive considerable attention at this globally signif-
icant event.
The 2017 Baloise Art Prize was awarded to Martha Atienza
and Sam Pulitzer. Atienza received it for her film “Our Island”,
which shows a traditional procession in her native Philippines.
The artist staged the parade under water, not least in order to
draw attention to the growing climatic threat her home country
is facing from global ocean warming.
Sam Pulitzer’s prize was awarded for his precise, masterful,
multi-layered presentation of a group of his drawings. His work
addresses the question of the function and significance of the
numerous images, logos and labels which are appearing on a
daily basis, and which organise or distort our communication
and interpersonal relationships.
Due to its prestige, the Baloise Art Prize has also become
a springboard for artists to embark on successful careers. The
prize money enables the young recipients to continue their work.
At the same time, the acquisition of their artworks, which are
then donated to well-known museums, offers an ideal platform
to present their talent. This combination of prize money, acqui-
sition, donation and exhibition within one art prize is unique,
and continues to make the Baloise Art Prize much sought-after
and highly acclaimed.
TAKING RESPONSIBILITY – AN IMPORTANT ASPECT OF
CORPORATE CULTURE
Baloise Group has a long-standing tradition of promoting talent.
For many years, its management trainee programme has given
graduates from a wide range of degree courses access to careers
with substance. The same idea of sponsorship is also paramount
in the company’s commitment to art.
This has been established over a long period of collecting
art. Corporate collecting is an important aspect of our culture
at Baloise. Its primary objective is not to achieve monetary gain,
but to integrate spiritual and creative values into our corporate
culture. The foundations for this engagement were laid at a time
when it was by no means typical for companies to collect art.
Baloise believes that the privilege of owning art comes with an
obligation to make it accessible to the wider public. Its commit-
ment to sponsoring modern art – through acquisitions for its
own collection and in the form of the Baloise Art Prize – also
represents part of this approach. It is Baloise’s way of support-
ing the development of young and emerging artistic talent.
Since it first began collecting in the immediate post-war
period, the company’s art works have always been accessible
both to employees and visitors. The collection is on display in
foyers, corridors, meeting rooms and offices, as well as in
reception rooms that are open to the public. Baloise is of the
opinion that works of art ought to be seen, to enrich lives, inspire
reflection and also to provoke discussion.
BALOISE ART PRIZE
For almost 20 years, the Baloise Group has been awarding the
annual Baloise Art Prize at Art Basel, an international art fair.
The challenging task of selecting 20 pieces for the Statements
sector from a flood of applications, which are then presented
to a global audience at the fair, falls to the Art Basel committee.
On behalf of Baloise, a panel of judges consisting of international
experts then selects two winners from this shortlist of 20, who
56
Baloise Group Annual Report 2017
Sustainable business management
Commitment to art
ART AT THE BALOISE PARK COMPLEX
Many of the past winners of the Baloise Art Prize are now among
the stars of the international art scene; including Karsten
Födinger, who received it in 2012. His work visualises forces in
the most basic sense: statics and movement, the diagonal and
the horizontal, mass and emptiness. Getting an artist whose
work resides somewhere between architecture and sculpture
to design a “cornerstone” for Baloise Park seemed an obvious
choice. For his contribution, Karsten Födinger got directly
involved early on in the construction process of the high-rise
building. His “cornerstone” was not going to be a hidden object,
but would rather constitute an integral element of the architec-
ture. Like a classic Atlas sculpture, the structure of the building
will rest directly atop the copper column. Copper, normally used
for water pipes and electric cabling, introduces a utility supply
element, and allows the column to be interpreted as a kind of
trunk rooting the building in the ground.
The column is also a time capsule, but rather than filling it
with objects, the guests at the building’s cornerstone ceremony
in June 2017 worked together to “decorate” it by each signing
it with a personal dedication. The cornerstone column will remain
exposed and on display as a contemporary artefact in the
basement of the building. The artist has also reinterpreted the
concept of the cornerstone for the two remaining buildings of
the Baloise Park complex. At an event in the summer of 2017,
employees had the opportunity to engrave their wishes for the
new Group headquarters on seven metres of copper cladding
which is going to be attached to one of the building’s outside
supports.
ART FORUM
The new Group headquarters at Baloise Park will also provide
space to display the Baloise collection. The publicly accessible
Art Forum on the ground floor is going to present two exhibitions
a year on different themes. New acquisitions for the collection
are made by the Baloise art commission, which comprises six
art-loving employees from various parts of the company and
one external advisor. They will be focusing on acquiring works
on paper by contemporary artists. The decisive factor for inclu-
sion in the collection is the persuasive quality of the work and
its emotional and intellectual connection to the hopes and fears
of our time.
This acquisition policy also allows the art commission to
include the winners of the Baloise Art Prize in the collection,
and thus to help shape the way in which it promotes art.
The website www.baloise.com/art presents the themed
exhibitions at the Baloise Art Forum,
giving some initial insights into the
collection. In this digital age,
Baloise is not going to limit itself to
putting on exhibitions, but rather
aims to make its collection available
to an even broader audience. An
online platform that is currently
being developed will soon give
access to the entire collection.
www.baloise.com/art
www.baloiseartprize.com
In the corridors of the head office in Basel: on the left works by Teresa Hubbard and Alexander Birchler,
on the right works by John Pilson.
57
Unterkapitel Corporate
Governance
CORPORATE GOVERNANCE 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, shareholdings and loans ..................... 76
6. Shareholder participation rights ................................. 76
7. Changes of control and poison-pill measures ............. 77
8. External auditors ....................................................... 77
9. Information policy ...................................................... 78
Appendix 1: Remuneration Report ..................................... 80
Appendix 2: Report of the external auditors .................... 108
4 Baloise
16 Review of operating performance
36 Sustainable Business Management
58 Corporate Governance
110 Financial Report
268 Bâloise Holding Ltd
286 General information
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Unterkapitel
Baloise Group Annual Report 2017
Corporate Governance
Corporate Governance Report
Transparent Corporate Governance
Baloise is a company that adds value, and, as such, we attach 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
standards that emphasises the integrity of the Company and its
employees. Baloise is convinced that high-quality corporate
governance has a positive impact on its long-term performance.
The Company therefore rapidly and transparently implemented
the requirements under the Swiss Ordinance Against Excessive
Remuneration in Listed Companies Limited by Shares (ERCO).
This chapter reflects the structure of the SIX Corporate
Governance Guidelines as amended on 13 December 2016 in
order to enhance transparency and, consequently, improve
comparability with previous years and other companies. It
includes the requirements of economiesuisse’s Swiss Code of
Best Practice for Corporate Governance and, in particular,
Appendix 1 to the latter, which contains recommendations on
the remuneration paid to the Board of Directors and the Executive
Committee. In item 5 of its Corporate Governance Report, Baloise
publishes the principles of its remuneration system. The Remu-
neration Report is replicated in the appendix to the Corporate
Governance Report from page 80 onwards.
Sustainable business management has long played an
important role at Baloise and is described in a dedicated section
of the Annual Report from page 36 onwards.
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 listed
on the Swiss Exchange (SIX). The Baloise Group had a market
capitalisation of CHF 7,403 million as at 31 December 2017.
Information on Baloise shares can be found from page 8
▸
onwards.
Significant subsidiaries, joint ventures and associates as
at 31 December 2017 can be found from page 258
onwards in the notes to the consolidated annual financial
statements, which form part of the Financial Report.
▸
60
▸
▸
Segment reporting by region and operating segment can
be found from page 191 onwards in the notes to the con-
solidated annual financial statements within the Finan-
cial Report section.
The Baloise Group’s operational management structure is
presented on page 74 onwards.
Shareholder base
As a public company with a broad shareholder base, Bâloise
Holding is a member of the SMI Mid (SMIM) Index and the Swiss
Leader Index (SLI).
Shareholder structure
A total of 19,962 shareholders were registered in Bâloise
Holding’s share register as at 31 December 2017. The number
of registered shareholders had decreased by 5.8 per cent
compared with the previous year. The “Significant shareholders”
section on page 279 provides information on the structure of
the Company’s shareholder base as at 31 December 2017.
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.
Treasury shares
Bâloise held 728,645 treasury shares (1.49 per cent of the issued
share capital) as at 31 December 2017.
Cross-shareholdings
There are no cross-shareholdings based on either capital
ownership or voting rights.
Baloise Group Annual Report 2017
Corporate Governance
Corporate Governance Report
2. CAPITAL STRUCTURE
Dividend policy
Bâloise Holding pursues a policy of paying consistent, earn-
ings-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 1,448.0
million from cash dividends and share buy-backs over the last
five years. In recent years, Baloise has therefore had a combined
annual payout rate of between 30 to 50 per cent of the profit for
the period attributable to shareholders.
Year (CHF million)
2013
2014
2015
2016
2017
Total
Cash dividends
Share buy-backs
Total
237.5
250.0
250.0
260.0
273.31
1,270.8
–
–
59.1
54.8
63.3
177.2
237.5
250.0
309.1
314.8
336.6
1,448.0
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 27 April 2018.
Bâloise Holding’s equity
The table below shows the changes in equity during the last
three reporting years.
CHANGES IN BÂLOISE HOLDING’S EQUIT Y
(BEFORE APPROPRIATION OF PROFIT)
CHF million
Share capital
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
Treasury shares
Equity attributable
to Bâloise Holding
31.12.20151
31.12.2016
31.12.2017
5.0
11.7
3.5
387.6
435.4
5.0
11.7
2.3
573.9
289.6
– 194.8
648.4
– 156.6
725.9
4.9
11.7
6.1
472.4
367.9
– 71.8
791.2
1 Restated in accordance with the new financial reporting legislation.
Since the capital reduction decided on 28 April 2017, the share
capital of Bâloise Holding has totalled CHF 4.88 million and is
divided into 48,800,000 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
28 April 2017 has authorised the Board of Directors until
28 April 2019 to increase the Company’s share capital by up to
CHF 500,000 by issuing up to 5,000,000 fully paid-up registered
shares with a par value of CHF 0.10 each (see article 3 [4] of the
Articles of Association).
www.baloise.com/rules-regulations
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Conditional capital
The 2004 Annual General Meeting created conditional capital.
This capital enables the Company’s share capital to be increased
by up to 5,530,715 registered shares with a par value of CHF 0.10
each (see article 3 [2] of the Articles of Association). This con-
stitutes 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
Credit rating
On 1 September 2017, credit rating agency Standard & Poor’s
raised Baloise Insurance Ltd’s rating of “A“ with a stable outlook
to “A” with a positive outlook. Standard & Poor’s awarded this
rating in recognition of Baloise’s very strong capitalisation, its
excellent operational profitability and its solid competitive
position in its profitable core markets. The agency also rated
the firm’s risk management as strong. On 30 June 2017 and on
1 September 2017, Standard & Poor’s issued additional ratings
for the Swiss unit Basler Life Ltd (“A” with a positive outlook),
the Belgian subsidiary Baloise Belgium NV (“A” with a positive
outlook), the German subsidiary Basler Sachversicherungs-AG
(“A–” with a positive outlook) and Bâloise Holding Ltd (“BBB +”
with a positive outlook).
www.baloise.com/s&prating
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 6,409.2
million on 31 December 2017. Details of changes in consolidated
equity in 2016 and 2017 can be found in the consolidated
statement of changes in equity on pages 118 and 119 in the
Financial Report section. All pertinent details relating to 2015 can
be found in the consolidated statement of changes in equity on
page 116 in the Financial Report section of the 2016 Annual Report.
Bonds outstanding
Bâloise Holding and Basler Leben AG (with Bâloise Holding
acting as guarantor) have issued bonds publicly. As at the end
of 2017, a total of eight public bonds were outstanding. Details
of outstanding bonds can be found on pages 237 and 277 and
on the internet.
www.baloise.com/bonds
3. BOARD OF DIRECTORS
Election and term of appointment
The Board of Directors consisted of ten members at the end of
2017. 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.
Members of the Board of Directors
All members of the Board of Directors – including the Chairman
– 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 Andreas Beerli, Dr Georges-
Antoine de Boccard, Dr Andreas Burckhardt, Christoph B. Gloor,
Karin Keller-Sutter, Werner Kummer, Hugo Lasat, Thomas Pleines
and Prof. Dr Marie-Noëlle Venture - Zen-Ruffinen were re-elected
as members of the Board of Directors for a one-year term until
the end of the next ordinary Annual General Meeting. Dr Michael
Becker stepped down from the Board of Directors at the 2017
Annual General Meeting. Dr Thomas von Planta was newly elected
to the Board of Directors.
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With the exception of Werner Kummer, who is not available for
re-election, all members of the Board of Directors are standing
for re-election. Werner Kummer (70) joined the Board of Directors
in 2000. He has been on the Audit and Risk Committee (formerly
the Audit Committee) since 2002, becoming its chairman in 2004.
Werner Kummer is also a member of the Chairman’s Committee
and Vice-Chairman of the Board of Directors.
The Board of Directors of Bâloise Holding has decided to
propose Prof. Dr Hans-Jörg Schmidt-Trenz for election at the
Annual General Meeting on 27 April 2018. Prof. Dr Hans-Jörg
Schmidt-Trenz (58, from Germany) is a professor of economics
at the University of Hamburg and Saarland University in Germany.
He is President of the HSBA Hamburg School of Business
Administration and was Chief Executive Officer of the Hamburg
Chamber of Commerce from 1996 to 2017. He will be an inde-
pendent non-executive director.
Further information on the members of the Board of Direc-
tors can be found on the internet.
www.baloise.com/board-of-directors
Statutory rules concerning the number of permitted activities
The 2015 Annual General Meeting approved the addition of a
new 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
Directors 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 delegated
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.
MEMBERS
Dr Andreas Burckhardt, Chairman (since 2011), Basel
Werner Kummer, Vice-Chairman (since 2014), Küsnacht
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)
Dr Thomas von Planta, Zurich
Thomas Pleines, Munich (D)
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen,
Crans-Montana
C: Chair, DC: Deputy Chair, M: Member
Chairman’s
Committee
Audit and Risk
Committee
Remuneration
Committee
Investment
Committee
Nationality
Born in
Appointed in
C
DC
M
M
C
DC
M
M
C
M
DC
M
CH
CH
CH
CH
CH
CH
B
CH
D
CH
1951
1947
1951
1951
1966
1963
1964
1961
1955
1975
M
DC
C
M
1999
2000
2011
2011
2014
2013
2016
2017
2012
2016
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BOARD AT TENDANCE IN 2017: 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
Dr Thomas von Planta
Thomas Pleines
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen
x = present, 0 = absent, n. a. = not applicable.
08.02.2017
17.03.2017
28.04.2017
29.06.2017
24.08.2017
07.09.2017
08.12.2017
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.
n. a.
n. a.
x
x
x
x
x
x
x
x
x
x
x
0
x
x
n. a.
n. a.
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
x
x
x
x
x
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 Directors
and submit the necessary proposals for their particular areas
of responsibility. The Investment Committee and the Remuner-
ation Committee have their own decision-making powers.
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. Article 7 ERCO requires the
members of the Remuneration Committee to be elected by the
Annual General Meeting. The Chairman and Vice-Chairman of
the Board of Directors are ex officio members of the Chairman’s
Committee. The Chairman of the Board of Directors is not allowed
to sit on the Audit and Risk Committee. The committees’ basic
functions and responsibilities are specified in the Organisational
Regulations. Additional specific regulations applicable to
individual committees 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 Directors.
The Chairman’s Committee regularly discusses succession
planning for the Board of Directors. It focuses on the skills,
experience and specialisations of the members of the Board of
Directors and the requirements of the insurance group. Potential
candidates are internally identified or advisers are brought in
to find them. They are then proposed to the Board of Directors
for nomination.
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
allocation strategy for all strategic business units and devise
the relevant 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 Corpo-
rate Executive Committee has to be approved by the Annual
General Meeting. The Remuneration Committee approves the
target agreements and performance assessments that are
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applied to the Corporate Executive Committee members in order
to determine their variable remuneration. It also sanctions the
remuneration policies applicable to the Corporate Executive
Committee members and ensures that they are being correctly
implemented. It approves the variable remuneration granted to
individual members of the Corporate Executive Committee; this
remuneration has to be within the maximum amount approved
by the Annual General Meeting. Furthermore, it specifies the
total amount available in the performance pool.
The Audit and Risk Committee supports the Board of
Directors in its non-delegable overarching supervisory and
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 separate
and consolidated annual financial statements. It receives reg-
ular 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 seven
occasions in 2017. The table on page 64 shows Board of Direc-
tors members’ attendance at these meetings. All members of
the relevant committee in each case attended every one of the
additional 16 committee meetings. This means that the Board
of Directors achieved an overall meeting attendance rate of 99.3
per cent. The Board of Directors held a seminar for the purpose
of training its members on the topic of value management.
Meetings of the Board of Directors and its committees usually
last half a working day each.
The Chairman’s Committee convened six times in 2017,
which included one two-day strategy meeting. The Investment
Committee met on three occasions. The Audit and Risk Commit-
tee held four meetings, and the Remuneration Committee
convened three times.
Meetings of the Board of Directors are regularly attended
by members of the Corporate Executive Committee. Meetings
of the Chairman’s Committee are usually attended by the Group
CEO and the Chief Financial Officer. Those present at Audit and
Risk Committee meetings are the Chief Financial Officer, 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 meetings are the Group CEO, the Head of the Corpo-
rate Centre and the Head of Group Human Resources. Meetings
of the Investment Committee are usually attended by the Group
CEO, the Chief Investment Officer and the Heads of Investment
Strategy and Investment Control, Baloise Asset Management
and Real Estate. The Secretary to the Board of Directors attends
the meetings of the full Board of Directors and those of its
committees.
Self-evaluation
Every two years, a comprehensive self-evaluation is carried out
in the full Board of Directors, in the Investment Committee and
in the Audit and Risk Committee. 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
between the Board of Directors and the Corporate Executive
Committee 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 146.
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 Treuhandgesell-
schaft 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
governing bodies of national and regional business organisations. From
1981 to 2011 he performed various political functions in the Basel civic
municipality and in the canton of Basel-Stadt, and from 1997 to 2011
he served on the Great Council of the Canton of Basel-Stadt (as Chairman
in 2006 and 2007). Until 2017, he sat on the Board of Directors of Carl
Spaeter AG. Dr Andreas Burckhardt is Chairman of the Board of Governors
of the Swiss Tropical and Public Health Institute, Basel. He is also a
member of the Executive Committee of economiesuisse and sits on the
Executive Board of the Employers’ Federation for Basel. Dr Andreas
Burckhardt performs a non-executive function as Chairman of Baloise’s
Board of Directors.
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 Holding GmbH. He was CEO of Forbo Holding AG from 1998
to 2004 and from 2005 to 2017 he served as Chairman of the Board of
Directors at Gebrüder Meier AG, Regensdorf. Werner Kummer is a freelance
management consultant with clients in Switzerland and abroad and sits
on the supervisory bodies of unlisted companies. He is an independent
non-executive director.
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Andreas Beerli (1951, Switzerland, Dr iur.)
has been a member 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 Andreas
Beerli is an independent non-executive director.
Georges-Antoine de Boccard (1951, Switzerland, Dr med.)
has been a member of the Board of Directors since 2011. He studied
medicine at the University of Geneva. He has been running his own
urological surgery practice in Geneva since 1987. 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 Patri-
moniale Personnal isée SA. He sits on the Board of Directors at the Swiss
International Prostate Center SA and Trillium SA. From 2005 to 2006 he
was Chairman of the Swiss Association of Urology. He is a member of
the Swiss Association of Urology, the European Association of Urology
and other professional bodies and associations. Dr Georges-Antoine de
Boccard is an independent non-executive director.
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Christoph B. Gloor (1966, Switzerland, university degree in business
economics)
has been a member of the Board of Directors since 2014. He has also
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 member of the Board of Managing Directors of the Basel
Banking Association since 2016. Christoph B. Gloor is an independent
non-executive director.
Karin Keller-Sutter (1963, Switzerland, university degree in translation
and conference interpreting, postgraduate qualification in education)
has been a member of the Board of Directors since 2013. In 1996 she
was elected to St. Gallen’s cantonal parliament and became Chairwoman
of the FDP (the Swiss Liberal Party) for the canton of St. Gallen before
being elected to St. Gallen’s cantonal governing council in 2000. She
was in charge of the security and justice 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 and was appointed as
Chairwoman in 2017. Karin Keller-Sutter 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 Chairwoman of the Swiss Retail Federation and a member of the
executive committee of the Swiss Employers’ Federation. Karin Keller-
Sutter is an independent non-executive director.
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Hugo Lasat (1964, Belgium, Master in Economic Sciences, Master in
Finance)
has been a member of the Board of Directors since 2016. He has been
CEO of Brussels-based Degroof Petercam Asset Management (formerly
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 Manage-
ment). He is a guest professor at KU Leuven (Brussels Campus) and VIVES
University College, member of the Board of Directors of the Belgian Asset
Management Association (BEAMA) and a member of the Financial
Commission of the Financial Committee of the Belgian Red Cross. Hugo
Lasat is an independent non-executive director.
Thomas von Planta (1961, Switzerland, Dr iur., lawyer)
has been a member of the Board of Directors since 2017. He is the founder
and managing director of CorFinAd AG, a company specialising in con-
sultancy for M&A transactions and capital market finance. He has sat
on the Board of Directors of Bellevue Group AG since 2007 as well as
Bank am Bellevue AG and Bellevue Asset Management AG since 2012,
and has been Chairman of the Board 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. Dr Thomas von
Planta is an independent non-executive director.
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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.
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. Thomas Pleines is an independent non-executive director.
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 University of Fribourg. She is a lawyer and honorary professor
at the School of Economics and Management at the University of Geneva,
where she mainly lectures on corporate law. Professor Marie-Noëlle
Venturi - Zen-Ruffinen was a partner in the Geneva law firm Tavernier
Tschanz until 2012, and since that time has been of counsel for the firm.
She is president of the Swiss Board Institute foundation and sits on the
Board of Management of the Swiss Institute of Directors. Professor
Marie-Noëlle Venturi - Zen-Ruffinen is an independent non-executive
director.
Secretary to the Board of Directors:
Dr Philipp Jermann,
Buus (BL)
Head of Group Internal Audit:
Rolf-Christian Andersen,
Meilen (ZH)
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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 transformation 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.
Matthias Henny (1971, Switzerland, Dr phil.)
completed his undergraduate and postgraduate studies in physics at
the University of Basel. From 1998 to 2003, he was employed at
McKinsey & Co., before switching to what was then the Winterthur Group,
where he was Head of Financial Engineering in Asset Management until
2007. Subsequently, he was a member of the management team at AXA
Winterthur, first as CIO (until 2010), then as CFO. In 2012 Dr Matthias
Henny joined the Baloise Group. As CEO of Baloise Asset Management AG
he was responsible for the administration of approximately CHF 50 billion
in assets. Dr Matthias Henny became a member of the Corporate Executive
Committee on 1 May 2017. He manages the Corporate Division Asset
Management with its units Investment Strategy and Investment Con-
trolling, Sales and Marketing, Portfolio Management, Operations, Real
Estate, Corporate Development and Compliance.
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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 financial 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, Vice President of the Swiss Insurance Association
(SVV) and a member of the Executive Board of the Association of Basel
Insurance Companies.
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 Thomas
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.
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Carsten Stolz (1968, Germany / Switzerland, Ph.D.)
studied business economics at Fribourg University where he also gained
a doctorate specialising in financial management. After that he spent
four years as an advisor for the Financial Services practice unit at Price-
waterhouseCoopers in Zurich and Geneva, before joining the Baloise
Group as Head of Financial Relations. From 2009 to 2011, Dr Carsten
Stolz was the Baloise Group’s Head of Financial Accounting & Corporate
Finance. Between 2011 and 2017 he was Head of Finance and Risk, and
thus a member of the Executive Committee, at Baloise Insurance, Switzer-
land. Dr Carsten Stolz became a member of the Corporate Executive
Committee on 1 May 2017. He manages the Corporate Division Finance
with its departments Group Accounting & Controlling, Financial Plan-
ning & Analysis, Corporate Communications & Investor Relations, Group
Risk Management and Corporate IT as well as the actuary responsible
for Swiss business at Baloise and the Head of Regulatory Affairs.
Further information on the members of the Corporate Executive
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 2017)
GROUP CEO
Gert De Winter *
HEAD GROUP CEO OFFICE
Ruken Baysal
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
Carsten Stolz *
Matthias Henny *
Thomas Sieber *
Michael Müller *
Jürg Schiltknecht
Henk Janssen
Romain Braas
Group Accounting & Controlling
Pierre Girard
Asset Strategy
& Investment Controlling
Group Strategy
& Digital Transformation
Marc Dünki
Adrian Honegger
Product Management
Commercial Clients
Patric Olivier Zbinden
Group Risk Management
Stefan Nölker
Corporate Communications
& Investor Relations
Marc Kaiser
Corporate IT
Olaf Romer
Sales & Marketing
Robert Antonietti
Portfolio Management
Stephan Kamps
Operations
Bernd Maier
Appointed Actuary Switzerland
Real Estate / CEO BIM
Thomas Müller
Dieter Kräuchi
Regulatory Affairs
Fabian Berger
Corporate Development
& Compliance
Fabian Kaderli
Group Human
Resources
Stephan Ragg
Group Legal & Tax
Andreas Burki
Group Compliance
Peter Kalberer
Run-off
Bruno Rappo
Group Procurement
Manfred Schneider
Product Management
Private Customer s
& Focused Financial Services
Wolfgang Prasser
Sales &Marketing
Bernard Dietrich
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Clemens Markstein
Finance & Risk
Urs Bienz
Claims
Mathias Zingg
74
* Member of the Corporate Executive Committee.
Life & Tied Agents
Maximilien Beck
Finance / Asset
Management
Julia Wiens
Alexander Tourneau
(from 1.1.2018:
Christoph Willi)
IT / Operations
Ralf Stankat
Non-Life
Non-Life Corporate Clients
Operations & IT
Daniel Frank
Life & Finance
Alain Nicolai
Sales & Marketing
Laurent Heiles
REGIONAL MANAGER
Peter Zutter
Risk, Compliance
& Corporate Legal
Patrick Van De Sype
Non-Life Private Clients
Joris Smeulders
& Transport
Erik Vanpoucke
Life
Wim Kinnet
ICT & General Services
Gerdy De Clercq
Finance
Gert Vernaillen
Human Resources
Marc L’Ortye
Baloise Group Annual Report 2017
Corporate Governance
Corporate Governance Report
GROUP CEO
Gert De Winter *
HEAD GROUP CEO OFFICE
Ruken Baysal
REGIONAL MANAGER
Peter Zutter
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
Carsten Stolz *
Matthias Henny *
Thomas Sieber *
Michael Müller *
Jürg Schiltknecht
Henk Janssen
Romain Braas
Group Accounting & Controlling
Asset Strategy
Group Strategy
& Investment Controlling
& Digital Transformation
Marc Dünki
Adrian Honegger
Pierre Girard
Group Risk Management
Stefan Nölker
Corporate Communications
& Investor Relations
Portfolio Management
Product Management
Commercial Clients
Patric Olivier Zbinden
Product Management
Private Customer s
& Focused Financial Services
Sales & Marketing
Robert Antonietti
Stephan Kamps
Operations
Bernd Maier
Marc Kaiser
Corporate IT
Olaf Romer
Appointed Actuary Switzerland
Real Estate / CEO BIM
Thomas Müller
Dieter Kräuchi
Regulatory Affairs
Corporate Development
Fabian Berger
& Compliance
Fabian Kaderli
Group Human
Resources
Stephan Ragg
Group Legal & Tax
Andreas Burki
Group Compliance
Peter Kalberer
Run-off
Bruno Rappo
Group Procurement
Manfred Schneider
Wolfgang Prasser
Sales &Marketing
Bernard Dietrich
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Clemens Markstein
Finance & Risk
Urs Bienz
Claims
Mathias Zingg
Life & Tied Agents
Maximilien Beck
Finance / Asset
Management
Julia Wiens
Non-Life
Alexander Tourneau
(from 1.1.2018:
Christoph Willi)
IT / Operations
Ralf Stankat
Risk, Compliance
& Corporate Legal
Patrick Van De Sype
Non-Life Private Clients
Joris Smeulders
Non-Life Corporate Clients
& Transport
Erik Vanpoucke
Operations & IT
Daniel Frank
Life & Finance
Alain Nicolai
Sales & Marketing
Laurent Heiles
Life
Wim Kinnet
ICT & General Services
Gerdy De Clercq
Finance
Gert Vernaillen
Human Resources
Marc L’Ortye
75
Baloise Group Annual Report 2017
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Corporate Governance Report
5. REMUNERATION, SHAREHOLDINGS AND LOANS
The remuneration report in Appendix 1 to the Corporate Gover-
nance Report (page 80 onwards) describes the remuneration
policies adopted and the remuneration systems in place and it
contains in particular the remuneration paid and the loans
granted to members of the Board of Directors and the Corporate
Executive Committee 2017 as well as the investments they hold.
The content and scope of these disclosures are determined by
articles 13 to 17 of the Ordinance Against Excessive Remuner-
ation in Listed Companies Limited by Shares (ERCO), article 663c
(3) of the Swiss Code of Obligations (OR), the corporate govern-
ance information guidelines published by the SIX Swiss Exchange
and the Swiss Code of Best Practice for Corporate Governance.
The report of the statutory auditors on the audit of the
remuneration report can be found in Appendix 2 to the Corporate
Governance Report (page 108 onwards).
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 shareholder
structure and to protect minority shareholders, no shareholder
is registered as holding more than 2 per cent of voting rights,
regardless of the size of their shareholding. The Board of Direc-
tors 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 share-
holder 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 number
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
financial 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 share-
holder 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 share-
holders who represent at least 10 per cent of the share capital.
Requesting agenda items
Article 699 (3) OR states that one or more shareholders who
together represent shares of at least CHF 100,000 can request
items to be put on the agenda for debate. Such requests must
be submitted in writing to the Board of Directors at least six
weeks before the ordinary Annual General Meeting is held,
giving details of the motions to be put to the AGM (article 14 of
the Articles of Association).
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Baloise Group Annual Report 2017
Corporate Governance
Corporate Governance Report
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 article 5 and article 17 of the Articles of Association.
www.baloise.com/rules-regulations
www.baloise.com/calendar
7. CHANGES OF CONTROL AND POISON-PILL MEASURES
Shareholders or groups of shareholders acting together by
agreement 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 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.
EXTERNAL AUDITORS’ FEES
CHF
(including outlays and VAT)
Audit fees
Consulting fees
Total
2016
2017
4,706,926
5,637,503
223,944
519,930
4,930,870
6,157,433
Audit fees paid to EY include fees for engagements with a direct
or indirect connection to a particular audit engagement and fees
for audit-related activities (namely, the MCEV Review, ISAE 3401
reports and statutory and regulatory special audits).
In 2017, CHF 213,527 of the additional fees for consultancy
services were attributable to tax consultancy and legal advice
and CHF 306,403 to operational advice. The services were
rendered in accordance with the relevant provisions on inde-
pendence set forth in the Swiss Code of Obligations, the Swiss
Audit Supervision Act and FINMA-Circular 2013 / 3 on “auditing”
(as at 18 November 2016) published by the Swiss Financial
Market Supervisory Authority (FINMA).
At its four meetings, primarily at meetings about the annual
and half-year financial statements, the Audit and Risk Committee
receives detailed explanations and documents about the
external auditors’ main findings from the auditors’ representa-
tives.
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.
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Baloise Group Annual Report 2017
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Information about Baloise shares
Information about Baloise shares begins on page 8.
www.baloise.com/baloise-share
INFORMATION POLICY
9.
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 information
generally and easily accessible.
Information events
Baloise provides detailed information about its business
activities as follows:
▸
Details about its financial performance, targets, strate-
gies 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
avail-able 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.
▸
▸
▸
▸
▸
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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
79
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
Appendix 1: Remuneration Report
1. OVERVIEW OF REMUNERATION
REMUNERATION IN RELATION TO BUSINESS PERFORMANCE
REMUNERATION GUIDELINE
PERFORMANCE POOL
Basic salary
▸
▸
Aim for a position around the market median
Reflection of the responsibilities of the role and the
individual’s long-term performance
Total performance pool 2 for
Corporate Executive Committee (CHF million)
Performance pool factor 2
(%)
2016
2.4
2017
2.3
107 %
120 %
Short-term variable remuneration
▸
Influencing factors: the Company’s economic value
added and the individual’s performance
Designed to incentivise staff to achieve outstanding
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
employees and its respect for them
▸
Profit vs performance pool factor2
750
625
500
375
250
125
0
150 %
125 %
100 %
75 %
50 %
25 %
0 %
2013
2014
2015
2016
2017
Profit (CHF million)
As a percentage of the expected value
Total shareholder return (TSR) vs performance pool factor 2
APPROVED REMUNERATION VS. AMOUNT PAID OUT
Approved
2016
Paid out
Approved
2017
Paid out
3.4
3.4
3.3
3.3
4.6
4.9 1
4.5
5.0 1
4.8
4.0
4.7
3.7
CHF million
Fixed remuneration of
Board of Directors
Fixed remuneration of
Corporate Executive
Committee
Variable remuneration of
Corporate Executive
Committee
75.0 %
62.5 %
50.0 %
37.5 %
25.0 %
12.5 %
0
150 %
125 %
100 %
75 %
50 %
25 %
0 %
1 Due to the changes to the Corporate Executive Committee, the sum paid exceeded the
total amount originally requested, which is 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.
2013
2014
2015
2016
2017
TSR (%) (left axis)
As a percentage of the expected value (right axis)
80
Baloise Group Annual Report 2017
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Remuneration Report
REMUNERATION OF THE CORPORATE EXECUTIVE COMMITTEE
Gert
De Winter
Dr. Martin
Strobel 1
Michael
Müller
Dr. Thomas
Sieber
Carsten
Stolz 2
Matthias
Henny 2
German
Egloff 3
Martin
Wenk 3
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
53 %
52 %
100 %
55 %
52 %
55 %
55 %
60 %
31 %
9 %
28 %
12 %
60 %
57 %
84 %
54 %
85 %
29 %
29 %
18 %
19 %
28 %
33 %
28 %
28 %
26 %
16 %
30 %
15 %
17 %
15 %
17 %
17 %
17 %
16 %
CHF 2.152 million
CHF 2.192 million
CHF 0.452 million
CHF 1.481 million
CHF 1.679 million
CHF 1.478 million
CHF 1.479 million
CHF 0.779 million
CHF 0.786 million
CHF 1.600 million
CHF 0.923 million
CHF 1.682 million
CHF 0.997 million
Fixed (comprising basic salary, 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)
1 Until 30 April 2016
2 Since 1 Mai 2017
3 Until 30 October 2017
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
allocation of PSUs to each individual Corporate
Executive Committee member
Conversion
▸
Performance criterion: profit for shareholders relative
to the peer group (STOXX Europe 600 Insurance) after
three years
PSUs are a performance instrument, enabling clear
differentiation using a performance multiplier of between
0.5 and 1.5
Vesting period
Peer group
Upper quar tile
Median
Lower quar tile
Performance multiplier
1.5
1.0
0.5
n
o
i
s
r
e
v
n
o
c
U
S
P
▸
p
u
o
r
g
r
e
e
P
2017 plan (ended)
Plan term 1 March 2014 – 28 February 2017
01.03.2014
28.02.2017
100 %
100 %
15 %
6 %
Profit for shareholders 1 March 2014 – 28 February 2017
01.03.2014
28.02.2017
100 %
100 %
15 %
13 %
Overview of ended and current plans
(as at 31 December 2017)
2011 to 2017 plans
1 Jan 2011 – 31 Dec 2013
– 29 %
25 %
1 Mar 2012 – 28 Feb 2015
74 %
37 %
1 Mar 2013 – 29 Feb 2016
1 Mar 2014 – 28 Feb 2017
50 %
75 %
15 %
6 %
1 Mar 2015 – 28 Feb 2018
25 %
55 %
1 Mar 2016 – 28 Feb 2019
17 %
6 %
1 Mar 2017 – 28 Feb 2020
8 %
37 %
100 %
120 %
100 %
128 %
– 47 %
– 4 %
111 %
125 %
Share value at start
of PSU programme
Dividend payments
Change in share value
during programme term
Change in share value
(measured as at
31 Dec 2017)
Performance multiplier
Performance multiplier
(measured as at
31 Dec 2017)
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Baloise Group Annual Report 2017
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Remuneration Report
2. 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
Company’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 structure
of remuneration to be paid in the Baloise Group, espe-
cially the remuneration to be paid to the Chairman and
members of the Board of Directors and to the members
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).
▸
▸
▸
▸
82
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 med
Georges-Antoine de Boccard and Prof. Dr Marie-Noëlle Venturi -
Zen-Ruffinen were elected to the Remuneration Committee by
the Annual General Meeting on 28 April 2017. The Remuneration
Committee maintains a regular 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 attended 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 remuneration. The Chairman of the Remuneration
Committee reports to the Board of Directors at its next meeting
on the committee’s activities.
3. REMUNERATION POLICIES
Principles
The Company’s success is largely dependent on the skills,
capabilities and performance of its workforce. It is therefore
essential to recruit, develop and retain suitably qualified, highly
capable and highly motivated professionals and executives.
The level of remuneration offered by Baloise is in line with the
going market rate and is 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
parameters 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
summarised as follows:
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
▸
▸
▸
▸
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 remu-
neration packages in excess of the going market rate
to reward outstanding performance by the Company and
individuals;
Remuneration that reflects the performance of the
company as a whole and individual performance;
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 Guideline
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 remuner-
ation system that meets all the requirements of the Swiss
Financial Market Supervisory Authority and, in particular,
ensures that variable remuneration accurately reflects the value
added by the Company.
4. REMUNERATION SYSTEM
Objectives
The objectives of the remuneration system are to further increase
the emphasis on performance at Baloise and to strengthen
employees’ and executives’ loyalty and commitment to the
organisation. 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 perfor-
mance-driven organisation, Baloise clearly and transparently
aligns individual employees’ targets with the Company’s targets,
which are derived from its strategic priorities. The individual
contributions to the achievement of targets correlate with the
amount of the individually specified variable remuneration. The
total remuneration package – which comprises basic salary and
variable remuneration – offers a sophisticated way of linking
individuals’ performance to Baloise’s success and recognising
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
remuneration 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 prospective entitle-
ments; 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 profitability 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 compensation) increase accordingly.
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
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Performance management system
Baloise introduced the current performance management system
for short-term variable remuneration in 2011. In order to encour-
age employees to focus relentlessly on performance and results
while also taking the overall success of the Company into con-
sideration, this system comprises two distinct tools: perfor-
mance-related remuneration and the performance pool. Per-
formance-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 individual
performance is factored into the allocation of payments from
the performance pool.
Simple and in step with our strategy. From 2018, Baloise will be going in a new direction when it comes to
performance management.
The performance management system for short-term variable remuneration, originally introduced in 2011, was revised
during the year under review and a simplified version was put in place for 1 January 2018. The short-term variable remu-
neration is closely linked to achievement of the Company’s goals and is calculated solely on the basis of the performance
pool – the individual performance-related pay element has been scrapped. Baloise has thereby returned to having
a single standardised system for the variable remuneration of the Corporate Executive Committee (for whom this simplified
system was introduced in 2014), the most senior level of management across the entire Group, the majority of management
team members in Switzerland and the equivalent functions in other countries.
This adjustment to the performance management system also underpins the implementation of Baloise’s “Simply Safe”
strategy, as it puts the focus on achieving the three strategic pillars: “cash upstream”, “customer growth” and “employees”.
This remuneration report for the current reporting year is based on the 2011 performance management system that
was in force until 31 December 2017 and under which the short-term variable remuneration was paid out for the last time
in spring 2018.
Market comparisons
Baloise regularly compares the salaries paid to its senior
executives with those paid in the wider market. The Corporate
Key Position Benchmark survey conducted by Willis Towers
Watson (for the whole Baloise Group) and Kienbaum (for Lux-
embourg) uses function-specific peer groups. Each function
being compared is assigned to one of three distinct peer groups.
Assignment is based on which companies Baloise is competing
against for the skill sets and qualifications needed for each
function (i. e. recruitment market) and which alternative employ-
ers – in theory, at least – meet a certain function profile (i. e.
competitors).
The first peer group replicates Baloise’s core market and com-
prises 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 management
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.
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Baloise regularly compares the salaries paid in its insurance-
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 require-
ments. The comparison mainly covers insurance-specific func-
tions up to middle management level. It also examines insurance-
related, managerial and specialist functions performed by senior
executives. Functions not covered by the Kienbaum comparison
are regularly reviewed using the Willis Towers Watson Financial
Services Compensation Survey. The findings of these bench-
marking surveys are fed into the Company’s regular review of its
salary structures and presented to the Remuneration Committee.
Baloise also regularly conducts market comparisons of its
local functions in the countries outside Switzerland.
5. COMPONENTS OF REMUNERATION
Baloise views its compensation packages in the round and
therefore factors in not only the basic salary plus short- and
long-term variable remuneration but also other benefits such
as pension contributions, additional benefits and staff devel-
opment.
Basic salary
The basic salary constitutes the level of remuneration that is
commensurate with the functions and responsibilities of the
position concerned as well as the employee skills and expertise
required in order to achieve the relevant business targets and
objectives. When determining the level of its basic salaries,
Baloise aims to position itself around the market median,
although the way in which this is done will vary depending
on local operating and market requirements. This remuneration
is paid by bank transfer. In order to ensure fairness and comp-
liance 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 qualifica-
tions should be paid the same amount. The Company’s clearly
defined and market-based salary structures (e. g. grade-based
salary bands) 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 the Company’s profitability and economic
value added and an employee’s individual performance. The
consequent link between the Company’s profits and individual
performance is designed to incentivise staff to achieve outstand-
ing results. Measurement of the short-term variable remunera-
tion paid to employees who perform control functions (risk
management, compliance, Group Internal Audit) is structured
in such a way that it is not determined directly by the profitability
of the unit being monitored or by the profitability of individual
products or transactions.
The remuneration paid to the insurance sales force is, by
its very nature, strongly performance-related in line with the
system of commissions commonly used in the insurance indus-
try as a whole. However, these commissions constitute selling
expenses rather than being regarded as variable remuneration
in the strict sense of the term. Consequently, they are not dis-
cussed in this remuneration report.
Short-term variable remuneration is paid together with the
salary for March of the following year. Baloise attaches consid-
erable 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 propor-
tion 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 propor-
tion of their compensation is paid in the form of deferred
remuneration. This system also raises employees’ risk awareness
and encourages them to maintain sustainable business practices.
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Two plans are available to individuals who wish to subscribe for
shares: the Share Subscription Plan and the Share Participation
Plan (see “7. 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
The performance-related remuneration paid out for the last time
in 2017 (see infobox on the performance management system
on page 84) 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 following year – assess
the extent to which these targets and objectives have been
achieved. The target achievement scale ranges from 0 per cent
(not achieved) to a maximum of 150 per cent (significantly over-
achieved). When setting these 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 remuner-
ation depends on the employee’s basic salary and varies
according to his or her seniority in the management hierarchy
and the importance of his or her function. Those entitled to
receive performance-related remuneration are the most senior
management level in the Baloise Group (except for the members
of the Corporate Executive Committee), the majority of senior
managers in Switzerland and the corresponding functions
abroad.
The members of the Corporate Executive Committee do not
receive any performance-related remuneration. Instead, their
individual performance is recognised in such a way that the
contribution made by each and every member of the Corporate
Executive Committee to the achievement of the Company’s
targets and objectives is factored into decisions affecting the
measurement of the performance pool.
86
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:
▸
Strategy implementation
Indicators are the three strategic goals set by Baloise
for the period 2017 to 2021, comprising a cash inflow
of CHF 2 billion into Bâloise Holding, one million new
customers, and a rating as one of the best employers
in the sector.
Business performance
The key metric for this criterion is the profit for the
period, with the combined ratio, the interest margin and
the business mix in the life insurance business as
sub-criteria.
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 including dividends
paid compared with the 33 European insurance companies
represented in the STOXX Europe 600 Insurance Index
(the composition of this index is shown in the table on
page 89).
▸
▸
▸
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 requirements
that cannot be precisely measured 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.
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
Performance pool payments are awarded to individuals at the
discretion of the line manager concerned. The amount of these
payments is mainly determined by a holistic assessment con-
sisting 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 indi-
vidual 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
behavioural attributes are factored into the performance pool
payments awarded to individuals.
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 major-
ity of senior managers in Switzerland and the corresponding
functions abroad. However, there is no entitlement to receive
payments from the performance pool.
This chosen system is centred on senior managers’ overall
assessment and the validation of individuals’ performance pool
payments at round-table 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.
For the 2017 financial year the Remuneration Committee
decided, on the basis of a positive overall assessment, on a
factor of 120 per cent of the normally expected value of perfor-
mance pool payments. The same factor was agreed for the
members of the Corporate Executive Committee and the Group.
This decision was motivated by the following considerations:
Main indicator
Key question
Sub-criteria
Appraisal
Rating
Strategy implementation
How successfully were the strategic targets implemented?
Cash Upstream
Customer growth
Employees
The implementation of the new “Simply Safe” strategy has begun successfully. The acquisition of MovU
in Switzerland and the launch of FRI:DAY in Germany are examples of the Baloise Group’s ambitious and
innovative plans. The launch of younGo products in Switzerland and the measures taken in Luxembourg
and Belgium resulted in a slight overall increase in customers, within the range of expectations for 2017.
In Switzerland, the negative trend in customer growth was halted. The excellent earnings in Switzerland
and the growing contributions from Belgium and Luxembourg meant the Company also met its targets
for cash upstream. Baloise measures its attractiveness as an employer with regular staff surveys, in
particular asking staff whether they would recommend Baloise as a good employer (Employee Engagement
Survey carried out every two years and supplemented with quarterly Pulse Checks). In the latest survey,
85 per cent of employees said they would recommend Baloise as an employer – an excellent figure that
is around 15 percentage points higher than the standard among European financial services providers.
Neutral / Positive
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Main indicator
Key question
Sub-criteria
Appraisal
Rating
Business performance
What is the operating profit?
Profit for the period (incl. combined ratio and interest margin in life insurance, as well as the business
mix in life insurance)
Overall, Baloise achieved profit for the period that was above budget, although Germany was significantly
below expectations. Switzerland performed well above expectations; with the planned combined ratio
being undercut and the interest margin in the life insurance business further increased to 1.4 per cent.
Luxembourg built on its good position in the life insurance business. Belgium’s results remained strong.
Positive
Main indicator
Key question
Sub-criteria
Appraisal
Rating
Risks taken
How should the operating performance be assessed from a risk perspective?
Solvency I
SST
Economic Profit
S&P rating
Internal perspective
Compliance
Despite challenging conditions in the markets (low interest rates) and in connection with regulatory
requirements, risks were managed carefully according to internal experts. The sound SST ratio and the
positive S&P rating confirm Baloise’s healthy risk position. Thanks partly to a prudent compliance function,
there were no serious breaches of laws or internal regulations. From a risk management perspective,
risks were lower than in recent years.
Positive
Main indicator
Key question
Sub-criteria
Appraisal
Rating
Capital markets perspective
How did Baloise perform relative to other companies on the stock market?
Total shareholder return
The total shareholder return for 2017 is 23 per cent, clearly outperforming the market. In its peer group
of companies on the STOXX Europe 600 Insurance Index, Baloise is just below the upper quartile.
Positive
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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. It consciously does not carry out
any weighting of the four main indicators so as to avoid giving
either too much or too little weight to either the qualitative or
quantitative criteria.
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
2017
Performance pool
(as a percentage of
the normal
expected value)
Consolidated profit
for the period
(CHF million)
70 %
100 %
120 %
137 %
100 %
107 %
120 %
61.3
485.2
455.4
711.9
511.1
533.9
531.9
Long-term variable remuneration: performance share units
In addition, Baloise grants performance share units (PSUs) to
the most senior managers as a form of long-term variable
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.
At the beginning of each vesting period the participating
employees are granted rights in the form of PSUs, which entitle
them to receive a certain number of shares free of charge after
the vesting period has elapsed. The Remuneration Committee
specifies the grant date and applies its own discretion in decid-
ing which of the most senior management team members are
eligible to participate. 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 participating employees 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 33 leading European
insurance companies contained in the STOXX Europe 600
Insurance Index.
One PSU generally confers the right to receive one share.
This is the case if Baloise shares perform in line with the median
of their peer group. In this case the performance multiplier would
be 1.0. 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 above the upper quartile of companies in the peer group. The
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2017)
ADMIRAL GRP
CNP ASSURANCES
OLD MUTUAL
SWISS REINSURANCE COMPANY
DIRECT LINE INSURANCE GROUP
PHOENIX GROUP HDG.
TRYG
GJENSIDIGE FORSIKRING
POSTE ITALIANE
ZURICH INSURANCE GROUP
AEGON
AGEAS
ALLIANZ
ASR NEDERLAND NV
HANNOVER RUECK
HELVETIA HLDG
ASSICURAZIONI GENERALI
HISCOX
AVIVA
AXA
BALOISE
BEAZLEY
LEGAL & GENERAL GRP
MAPFRE
MUENCHENER RUECK
NN GROUP
Source: http://www.stoxx.com/index-details?symbol=SXIP
PRUDENTIAL
RSA INSURANCE GRP
SAMPO
SCOR
ST. JAMES’S PLACE CAPITAL
STOREBRAND
SWISS LIFE HLDG
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multiplier is 0.5 if the performance of Baloise shares is below
the bottom quartile of companies in the peer group. If the per-
formance of Baloise shares is between the top and bottom
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 2017 they receive their shares on 1 March 2020. 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 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
PERFORMANCE SHARE UNIT
(PSU) PLAN
allocated to an individual or to a group of participants if there
are specific reasons for doing so. Such specific reasons include,
for example, serious breaches of internal or external regulations,
the taking of inappropriate risks that are within an individual’s
control, and the type of conduct or behaviour that would increase
the risks to Baloise.
The shares needed to convert the PSUs are purchased in
the market as and when required.
Measurement of the PSUs at their issue date is based on
a Monte Carlo simulation, which calculates a present value for
the payout expected at the end of the vesting period. This
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.
▸
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
2017
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
01.03.2017
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
130.70
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
01.03.2020
1.182
1.24
0.64
0.58
0.77
1.21
1.50
1.05
1.444
1.054
1.344
86.05
91.00
64.40
78.50
113.60
124.00
126.00
130.70
151.704
151.704
151.704
101.71
112.84
41.22
45.53
87.47
150.04
189.00
137.24
218.304
159.904
203.604
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
124 %
21 %
76 %4
27 %4
56 %4
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 2017.
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Adjustments to the calculation of the performance
multiplier from 1 March 2018
The Baloise Board of Directors has decided to amend the
performance multiplier used to determine the number of
shares per prospective entitlement with effect from 2018.
The total shareholder return (TSR) will now be used
instead of the share price to compare the performance
of Baloise against that of the peer group (STOXX Europe
600 Insurance). The current lower limit of 0.5 will also
be removed, so that if the Baloise TSR is below the
bottom quartile of the peer group, the performance
multiplier will be 0 and consequently no prospective
entitlements will be converted into shares. This change
is partly offset by the increase in the maximum possible
performance multiplier to 2.0 in the event that the Baloise
TSR grows more strongly over the vesting period than
the TSRs of all the peer companies. The performance
multiplier now increases on a linear basis from the
bottom quartile from 0.5 to 2.0. This change anchors the
performance-related pay principle even more firmly
within the long-term variable remuneration structure.
Fringe benefits
Fringe benefits are generally defined as components of the total
remuneration package that are not dependent on either an
individual’s function or performance or the Company’s perfor-
mance. By providing voluntary benefits in the form of retirement
pensions, subsidies, concessions, and staff training and pro-
fessional development, Baloise demonstrates the close partner-
ship 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.
6. 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
concluded 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 Directors
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 – irrespec-
tive of their amount – must be approved by the Remuneration
Committee. Inducement payments and severance packages for
the most senior managers must be approved by the Remuner-
ation Committee if they exceed CHF 100,000. Each individual
case is assessed on a discretionary basis.
7. 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.
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The parameters used to determine the subscription price are
decided each year by the Remuneration Committee. The sub-
scription 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.
The parameters used to determine the subscription price are
decided each year by the Remuneration Committee. The sub-
scription 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 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.
Applicable closing
quotation
Subscription
price
from
CHF
CHF
Applicable closing
quotation
Subscription
price
from
CHF
CHF
Share Subscription Plan for 2018
10.01.2018
156.20
140.58
Share Participation Plan for 2018
10.01.2018
156.20
140.80
(applies to variable
remuneration awarded for
the 2017 reporting period)
(applies to variable
remuneration awarded for
the 2017 reporting period)
Share Subscription Plan for 2017
10.01.2017
129.30
116.37
Share Participation Plan for 2017
10.01.2017
129.30
114.49
(applies to the variable remunera-
tion granted for 2016 and to the
shares subscribed by the Chairman
and members of the Board of
Directors in 2017)
(applies to the variable remunera-
tion granted for 2016 and to the
shares subscribed by the Chairman
of the Board of Directors in 2017)
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 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 during a three-year
closed period.
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, pro-
gramme 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 remain-
ing shares to do with as they wish.
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EMPLOYEE INCENTIVE PLAN
Number of shares subscribed
Restricted until
Subscription price per share (CHF)
Value of shares subscribed (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
Subscribed shares per participant (average)
8. 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 – 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 2017 the subscription price
amounted to CHF 77.00 (2016: CHF 56.40) and a total of 176,252
shares were subscribed (2016: 183,678). 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. It supplements these shareholdings by pur-
chasing 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).
2016
2017
183,678
176,252
31.08.2019
31.08.2020
56.40
10.4
21.5
3,098
2,029
90.5
77.00
13.6
26.9
3,146
2,007
87.8
9. PENSION SCHEMES
Baloise provides a range of pension solutions, which vary from
country to country in line with local circumstances. In Switzer-
land it offers different pension schemes for its insurance and
banking employees.
The Company provides its employees in Switzerland with
an attractive occupational pension solution (Pillar 2) that meets
the following objectives:
▸
It covers its insured employees’ needs in the event of old
age, death or disability and mitigates the resultant finan-
cial consequences by offering an occupational pension
scheme based on the principle of social partnership.
It enables its retirees to maintain the standard of living to
which they are accustomed by providing them with a
sufficiently high level of income replacement (combination
of Pillar 1 and Pillar 2 benefits) to compensate for their
loss of earnings.
The employer makes a disproportionately high contribu-
tion to the funding of its occupational pension scheme.
Its pension solutions are future-proof, robust, predicta-
ble 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
contributions 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.
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Remuneration Report
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.
10. 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
11. REMUNERATION PAID TO THE MEMBERS
OF THE BOARD OF DIRECTORS
Please refer to the tables on pages 98 and 99.
The Chairman of the Board of Directors chairs the meetings
of both the Board of Directors and the Chairman’s Committee.
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 Corpo-
rate 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 Corpo-
rate Executive Committee and whenever matters of strategic or
long-term importance are being discussed.
94
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 remuner-
ation in the form of shares, although he is free to choose each
year how many shares he receives under the Share Subscription
Plan and how many under the Share Participation Plan. 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.
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
12. REMUNERATION PAID TO THE MEMBERS
OF THE CORPORATE EXECUTIVE COMMITTEE
Please refer to the tables on pages 100 to 103.
The short-term variable remuneration paid to the members
of the Corporate Executive Committee is allocated from the
performance pool. The individual performance and individual
contribution of each member in achieving the Company’s
objectives is factored into the measurement 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).
The structure of remuneration paid to the Corporate Exec-
utive Committee is laid down in the Remuneration Policy. The
actual level of remuneration paid is determined in accordance
with the table below.
The members of the Corporate Executive Committee must
receive at least 50 per cent of their short-term variable remu-
neration in the form of shares in order to ensure that their own
interests are more strongly aligned with those of shareholders.
This mandatory purchase of shares coupled with the shares
allocated under the PSU programme ensures that, compared
with the market as a whole, a significant proportion of their
compensation is paid in the form of deferred remuneration.
The Corporate Executive Committee members’ remuneration is
disclosed on pages 100 to 103 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 2017 was slightly lower overall than in the pre-
vious year (sum total of basic salary plus variable remuneration
down by 3.6 per cent). The change can be explained as follows:
Because of a change to the composition of the Corporate
▸
Executive Committee, fixed remuneration was paid both
to the two outgoing members and to the two new members
for an overlapping period of six months. This meant
a slight increase in the total basic salaries, even though
there had also been a similar overlap in 2016 with the
change in the Group CEO, and the fixed salaries of the
new members of the Corporate Executive Committee are
lower than those of their predecessors.
The slight increase in the total basic salaries was offset
through lower variable remuneration. Although the higher
performance pool factor meant the total of the expected
value for short-term variable remuneration was higher
(performance pool factor of 120 per cent in comparison
to 107 per cent in the prior year), significantly fewer per-
formance share units were allocated. No further PSUs
were allocated to the resigning members of the Corporate
Executive Committee, and the allocation received by
the new members on 1 March was based on the terms
and conditions of their employment prior to joining
the Corporate Executive Committee.
▸
T YPE OF REMUNERATION
DECIDED BY
Fixed remuneration
Annual General Meeting
Variable remuneration
– cap
Annual General Meeting
– individual payment
Remuneration Committee
(in compliance with the cap set by the Annual General Meeting)
APPLICABLE PERIOD
Upcoming year
Current year
95
13. LOANS AND CREDIT FACILITIES
Please refer to the table on page 104.
14. SHARES AND OPTIONS HELD
Please refer to the tables on pages 105 and 106.
15. AMOUNTS OF TOTAL REMUNERATION AND VARIABLE
REMUNERATION
Please refer to the table on page 107.
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 107 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 2017 even
if individual components are not paid until a later date.
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
The Annual General Meeting held on 29 April 2016 approved
a maximum amount of CHF 4,522 million for the fixed remuner-
ation (including pension contributions) payable to the Corporate
Executive Committee for 2017. CHF 5,046 million was paid out.
The difference of CHF 0,524 million (including pension contri-
butions) is due to the overlap resulting from the changes to the
Corporate Executive Committee. The resigning members of the
Corporate Executive Committee were paid in accordance with
the terms of their contracts up to the end of October 2017 and
the new members of the Corporate Executive Committee were
paid the fixed remuneration from the start of May 2017. The
fixed salaries of the two new members of the Corporate Executive
Committee are lower than those of the two resigning members.
The amount exceeding the total amount originally requested,
is covered by article 30 of the Articles of Association of Bâloise
Holding (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
Executive Committee remuneration approved by the Annual
General Meeting will be increased. The increase applies for each
newly appointed member in the amount of the average of the
sum approved for the current members of the Corporate Exec-
utive Committee.”).
The Annual General Meeting held on 28 April 2017 also
approved a maximum amount of CHF 4,671 million for the
variable remuneration (including pension contributions) payable
for 2017. A total of CHF 3,645 million was paid out, which meant
that only around four-fifths of the maximum amount available
was utilised.
The individual allocation of the performance pool to the
members of the Corporate Executive Committee is based on
their individual contribution towards the attainment of the
targets for the Group’s profit for the period and on the attainment
of the individual targets (which focus on the implementation of
the agreed strategy, on projects and innovation, and on the
conduct of the members of the Corporate Executive Committee).
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This page has been left empty on purpose.
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Remuneration Report
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
1,320,000
100,076
1,420,076
311,906
2,890
Chairman of the Board of Directors
0
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)
Remuneration Committee
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
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 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). 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 BOARD OF DIRECTORS
2017
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
1,320,000
Chairman of the Board of Directors
0
Werner Kummer
125,000
295,000
Vice-Chairman of the Board of Directors
Chairman’s Committee
Chair of the Audit and Risk Committee
Dr Michael Becker (until 28 April 2017)
Audit and Risk Committee
Dr Andreas Beerli
Chairman’s Committee
Audit and Risk Committee
62,500
125,000
Dr Georges-Antoine de Boccard
125,000
Investment Committee
Remuneration Committee
Christoph B. Gloor
Investment Committee
Audit and Risk Committee
Karin Keller-Sutter
Remuneration Committee
Hugo Lasat
Investment Committee
125,000
125,000
125,000
Dr Thomas von Planta (since 28 April 2017)
83,333
Investment Committee
Thomas Pleines
Chair of the Remuneration Committee
Chairman’s Committee
125,000
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen
125,000
Remuneration Committee
50,000
50,000
70,000
25,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
33,333
70,000
50,000
50,000
0
0
0
0
0
1,320,000
311,929
2,703
295,000
73,662
633
87,500
43,639
225,000
56,207
375
483
225,000
56,207
483
87,500
225,000
225,000
225,000
5,966
230,966
56,207
483
175,000
5,966
180,966
43,639
175,000
5,966
180,966
43,639
116,667
5,619
122,286
0
375
375
0
245,000
5,966
250,966
61,211
526
175,000
5,966
180,966
43,639
375
Total for the Board of Directors
2,465,833
798,333
3,264,167
35,449
3,299,616
789,977
6,811
Explanatory notes to the table
Prior to 2012, newly elected members of the Board of Directors only received six months’ pay in the first calendar year; the first two months following election to the Board of Directors (May
and June) were not remunerated. When members resigned from the Board of Directors, they received six months’ pay instead of four months’, thereby making up for the missing two months.
Since 2012, newly elected members of the Board of Directors receive a fee for the full eight months of their first calendar year and in the year of their resignation they are paid for just four
months.
Mr Becker was elected before this change and therefore on the payment date in March 2017 received an additional two months’ remuneration on top of the four months’ remuneration
he was due for 2017 (half each in shares and cash).
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 116.37, in line with the Share Subscription Plan). The Chairman of the Board of Directors received 1,340 shares in connection with the Share Subscription Plan
(CHF 155,936, with a closed period of five years instead of the usual three years) and 1,363 shares under the Share Participation Plan (CHF 155,993).
Pension contributions The information disclosed for 2017 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). 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
basic salary Non-cash benefits
contributions
remuneration
Pension
Total
Total basic salary
remuneration as
Variable
percentage of
plus variable
remuneration
2016
Gert De Winter
Group CEO
Dr Martin Strobel (until 30 April 2016)
383,333
0
0
0
Departing Group CEO
Michael Müller
Head of Corporate Division Switzerland
632,500
125,245
2,511
292,205
0
0
0
0
0
0
CHF
CHF
Number of shares
CHF
Number of shares
CHF
Number of PSU
CHF
Number of shares
CHF
CHF
950,000
313,616
2,693
313,384
Granted in 2016
2,929
380,038
2,693
1,007,038
1,957,038
106 %
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
CHF
CHF
194,871
2,151,908
CHF
0
0
German Egloff
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
Head of Corporate Division Finance
Dr Thomas Sieber
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
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 2016 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 loan-financed 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.
100
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
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 PSU
CHF
Number of shares
CHF
CHF
950,000
313,616
2,693
313,384
2,929
380,038
2,693
1,007,038
1,957,038
106 %
Dr Martin Strobel (until 30 April 2016)
383,333
0
0
0
0
0
0
0
383,333
0 %
CHF
0
0
CHF
CHF
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
German Egloff
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
Dr Thomas Sieber
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
2016
Gert De Winter
Group CEO
Departing Group CEO
Michael Müller
Head of Corporate Division Switzerland
Head of Corporate Division Finance
Head of Corporate Division Corporate Centre
Head of Corporate Division Asset Management
0
0
0
0
0
0
0
0
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 and the pension fund (up to the pensionable or insurable threshold in
each case).
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 2016 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 loan-financed shares), which are measured at market value less dividend rights discounted over
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
three years. Subscription price = CHF 114.49.
the payout expected at the end of the vesting period.
101
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Corporate Governance
Remuneration Report
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 (PSUs)
Total variable remuneration
Variable remuneration
Variable
Total basic salary
remuneration as
plus variable
remuneration
percentage of
basic salary
Non-cash
benefits
Pension
Total remunera-
contributions
tion
2017
Gert De Winter
Group CEO
Michael Müller
Head of Corporate Division Switzerland
CHF
CHF
Number of shares
CHF
Number of shares
950,000
313,507
2,230
313,493
700,000
163,904
2,718
382,096
0
0
CHF
0
0
Granted in 2017
Number of PSUs
CHF
Number of shares
CHF
CHF
3,003
420,120
2,230
1,047,120
1,997,120
110 %
CHF
0
CHF
CHF
194,871
2,191,990
1,809
253,079
2,718
799,079
1,499,079
114 %
5,121
174,338
1,678,538
Dr Thomas Sieber
621,000
164,038
874
122,867
873
122,955
1,776
248,462
1,747
658,322
1,279,322
106 %
5,121
194,871
1,479,314
Head of Corporate Division Corporate Centre
Dr Carsten Stolz (since 1 May 2017)
333,334
120,085
853
119,915
0
0
66,686
853
306,686
640,019
92 %
5,121
133,700
778,841
Head of Corporate Division Finance
Dr Matthias Henny (since 1 May 2017)
333,334
136
938
131,864
625
88,000
93,360
1,563
313,360
646,694
94 %
5,121
134,446
786,261
Head of Corporate Division Asset Management
German Egloff (until 30 October 2017)
575,000
151,800
Departing Head of Corporate Division Finance
Martin Wenk (until 30 October 2017)
575,000
151,800
Departing Head of Corporate Division Asset
Management
0
0
0
0
0
0
0
0
0
0
0
0
151,800
726,800
26 %
5,121
191,300
923,221
151,800
726,800
26 %
64,621
205,836
997,257
477
667
0
0
Total for the Corporate Executive Committee
4,087,667
1,065,270
7,613
1,070,236
1,498
210,955
7,732
1,081,707
9,111
3,428,167
7,515,834
84 %
90,226
1,229,361
8,835,422
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 2017 even if individual components are not
paid until a later date. Amounts are gross, before deduction of social security contributions etc.
The basic salary of Matthias Henny and Carsten Stolz is recognised pro rata from 1 May 2017. German Egloff and Martin Wenk received their usual monthly salary until the end of their notice
period on 31 October 2017; payments from the performance pool were made for the time served as members of the Corporate Executive Committee until 30 April 2017.
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. German Egloff received CHF 30,013 and Martin Wenk received CHF 21,897 in remuneration payments for November and
December 2017, for roles performed after the end of their notice period.
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 140.58.
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 140.80.
Performance share units (PSUs) These have been disclosed at their value of CHF 139.90 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. The PSUs allocated to Matthias Henny and Carsten Stolz on 1 March 2017 based on the terms and conditions of their employment prior
to joining the Corporate Executive Committee and have been recognised pro rata from 1 May 2017 for eight months.
102
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Corporate Governance
Remuneration Report
(fixed)
Cash payment
Share Subscription Plan
Share Participation Plan
Performance share units (PSUs)
Total variable remuneration
Granted in 2017
CHF
CHF
Number of shares
CHF
Number of shares
CHF
Number of PSUs
CHF
Number of shares
CHF
CHF
950,000
313,507
2,230
313,493
3,003
420,120
2,230
1,047,120
1,997,120
110 %
CHF
0
CHF
CHF
194,871
2,191,990
700,000
163,904
2,718
382,096
1,809
253,079
2,718
799,079
1,499,079
114 %
5,121
174,338
1,678,538
Variable remuneration
Total basic salary
plus variable
remuneration
Variable
remuneration as
percentage of
basic salary
Non-cash
benefits
Pension
contributions
Total remunera-
tion
Dr Thomas Sieber
621,000
164,038
874
122,867
873
122,955
1,776
248,462
1,747
658,322
1,279,322
106 %
5,121
194,871
1,479,314
477
667
0
0
66,686
853
306,686
640,019
92 %
5,121
133,700
778,841
93,360
1,563
313,360
646,694
94 %
5,121
134,446
786,261
0
0
0
0
151,800
726,800
26 %
5,121
191,300
923,221
151,800
726,800
26 %
64,621
205,836
997,257
Total for the Corporate Executive Committee
4,087,667
1,065,270
7,613
1,070,236
1,498
210,955
7,732
1,081,707
9,111
3,428,167
7,515,834
84 %
90,226
1,229,361
8,835,422
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). In 2017, Martin Wenk received a loyalty bonus in cash for his service anniversary. Michael Müller, Thomas
Sieber and Carsten Stolz opted for additional annual leave for their service anniversaries instead of a loyalty bonus in cash.
Pension benefits These comprise the estimated employer contributions to the state-run social security schemes and the pension fund (up to the pensionable or insurable threshold in each
case).
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
2017
Gert De Winter
Group CEO
Michael Müller
Head of Corporate Division Switzerland
Head of Corporate Division Corporate Centre
Head of Corporate Division Finance
0
0
0
0
0
0
0
0
0
0
Dr Carsten Stolz (since 1 May 2017)
333,334
120,085
853
119,915
Dr Matthias Henny (since 1 May 2017)
333,334
136
938
131,864
625
88,000
Head of Corporate Division Asset Management
German Egloff (until 30 October 2017)
575,000
151,800
Departing Head of Corporate Division Finance
Martin Wenk (until 30 October 2017)
575,000
151,800
0
0
0
0
Departing Head of Corporate Division Asset
Management
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 2017 even if individual components are not
paid until a later date. Amounts are gross, before deduction of social security contributions etc.
The basic salary of Matthias Henny and Carsten Stolz is recognised pro rata from 1 May 2017. German Egloff and Martin Wenk received their usual monthly salary until the end of their notice
period on 31 October 2017; payments from the performance pool were made for the time served as members of the Corporate Executive Committee until 30 April 2017.
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. German Egloff received CHF 30,013 and Martin Wenk received CHF 21,897 in remuneration payments for November and
December 2017, for roles performed after the end of their notice period.
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 140.58.
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 140.80.
Performance share units (PSUs) These have been disclosed at their value of CHF 139.90 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. The PSUs allocated to Matthias Henny and Carsten Stolz on 1 March 2017 based on the terms and conditions of their employment prior
to joining the Corporate Executive Committee and have been recognised pro rata from 1 May 2017 for eight months.
103
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Corporate Governance
Remuneration Report
LOANS AND CREDIT FACILITIES GRANTED TO MEMBERS OF THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMIT TEE (AS AT 31 DECEMBER)
Mortgages
Loans pertaining to the
Share Participation Plan
Other loans
2016
2017
2016
2017
2016
2017
2016
Total
2017
CHF
Dr Andreas Burckhardt
Chairman
Werner Kummer
Vice-Chairman
Dr Michael Becker
(until 28 April 2017)
Member
Dr Andreas Beerli
Member
Dr Georges-Antoine
de Boccard
Member
Christoph B. Gloor
Member
Karin Keller-Sutter
Member
Hugo Lasat
Member
Dr Thomas von Planta
(since 28 April 2017)
Member
Thomas Pleines
Member
Dr Eveline Saupper
(until 29 April 2016)
Member
Prof. Dr Marie-Noëlle
Venturi - Zen-Ruffinen
Member
Total for the Board
of Directors
Corporate Executive
Committee member with the
highest outstanding loan
Dr Thomas Sieber
Head of Corporate Division
Corporate Centre
Other members of the
Corporate Executive
Committee
Total for the Corporate
Executive Committee
0
0
0
0
0
0
0
0
–
0
0
0
0
0
0
0
0
0
0
0
0
0
0
–
0
0
2,623,656
2,623,673
0
0
0
0
0
0
0
–
0
0
0
0
0
0
0
0
0
0
0
0
–
0
2,623,656
2,623,673
1,000,000
660,000
1,887,700
1,690,895
1,600,000
2,200,000
574,474
3,145,165
2,600,000
2,860,000
2,462,174
4,836,060
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
0
0
0
2,623,656
2,623,673
0
0
0
0
0
0
0
–
0
0
0
0
0
0
0
0
0
0
0
0
–
0
2,623,656
2,623,673
2,887,700
2,350,895
2,174,474
5,345,165
0
5,062,174
7,696,060
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 “7. Share Subscription Plan and Share Participation Plan”). Interest
is charged on loans at a market rate (2017: 1 per cent), and they have a term of three years.
Other loans There are no policy loans.
104
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
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
2016
2017
2016
2017
2016
2017
2016
2017
Quantity
Dr Andreas Burckhardt
Chairman
Werner Kummer
Vice-Chairman
Dr Michael Becker (until 28
April 2017)
Member
Dr Andreas Beerli
Member
Dr Georges-Antoine de
Boccard
Member
Christoph B. Gloor
Member
Karin Keller-Sutter
Member
Hugo Lasat
Member
Dr Thomas von Planta
(since 28 April 2017)
Member
Thomas Pleines
Member
Dr Eveline Saupper (until
29 April 2017)
Member
Prof. Dr Marie-Noëlle
Venturi - Zen-Ruffinen
Member
Total for the Board
of Directors
Percentage of issued share
capital
13,983
19,543
38,611
36,367
52,594
55,910
0.105 %
0.115 %
5,192
5,787
2,911
2,949
8,103
8,736
0.016 %
0.018 %
2,961
4,508
2,551
1,379
5,512
5,887
0.011 %
0.012 %
1,261
1,808
2,551
2,487
3,812
4,295
0.008 %
0.009 %
1,261
1,686
2,429
2,487
3,690
4,173
0.007 %
0.009 %
7,312
7,312
1,781
2,264
9,093
9,576
0.018 %
0.020 %
0
0
–
425
2,206
2,156
2,206
2,581
0.004 %
0.005 %
0
1,000
1,375
1,000
1,375
0.002 %
0.003 %
111
–
1,000
–
1,111
–
0.002 %
594
1,141
2,551
2,530
3,145
3,671
0.006 %
0.008 %
5,270
0
–
0
37,834
42,321
1,688
–
6,958
–
0.014 %
–
1,000
59,279
1,375
56,369
1,000
97,113
1,375
98,690
0.002 %
0.194 %
0.003 %
0.202 %
0.076 %
0.087 %
0.119 %
0.116 %
0.194 %
0.202 %
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 restriction 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.
105
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
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)
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
Quantity
Gert De Winter
Group CEO
Dr Martin Strobel (until 30 April 2016)
Departing Group CEO
Michael Müller
13,527
16,246
3,013
4,578
16,540
20,824
0.033 % 0.043 %
5,852
7,340
100
–
11,517
–
11,617
– 0.023 %
–
7,833
–
Head of Corporate Division Switzerland
16,209
16,816
8,248
7,585
24,457
24,401
0.049 % 0.050 %
6,259
5,847
Dr Thomas Sieber
Head of Corporate Division
Corporate Centre
Dr Carsten Stolz (since 1 May 2017)
Head of Corporate Division Finance
Dr Matthias Henny (since 1 May 2017)
Head of Corporate Division
Asset Management
German Egloff (until 30 October 2017)
Departing Head of Corporate Division
Finance
Martin Wenk (until 30 October 2017)
Departing Head of Corporate Division
Asset Management
Total for the members
of the Corporate Executive Committee
7,100
6,100
24,819
21,435
31,919
27,535
0.064 % 0.056 %
6,145
5,741
–
–
1,500
9,264
–
–
1,870
22,928
–
–
3,370
– 0.007 %
32,192
– 0.066 %
–
–
2,351
3,236
12,054
966
13,293
18,349
25,347
19,315
0.051 % 0.040 %
6,829
4,406
9,533
3,685
8,467
8,915
18,000
12,600
0.036 % 0.026 %
6,829
4,406
58,523
54,577
69,357
85,660 127,880 140,237
0.256 % 0.287 % 39,747
33,327
Percentage of issued share capital
0.117 % 0.112 % 0.139 % 0.176 % 0.256 % 0.287 %
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 2015, 1 March 2016 and 1 March 2017).
106
Baloise Group Annual Report 2017
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Remuneration Report
TOTAL AND VARIABLE REMUNERATION IN THE BALOISE GROUP
2016
In cash
In shares
Prospective
entitlements
Total
In cash
In shares
Prospective
entitlements
2017
Total
Total remuneration
CHF million
Total variable
remuneration (total pool)
CHF million
Number of beneficiaries
Of which commission paid
to insurance sales force
705.3
5.7
5.3
716.3
735.7
5.6
4.7
746.0
153.4
5,176
5.7
176
5.3
69
164.4
155.3
5,237
5.6
138
4.7
65
165.6
CHF million
101.1
0.0
0.0
101.1
105.5
0.0
0.0
105.5
Of which other forms of
variable remuneration
CHF million
52.3
5.7
5.3
63.2
47.3
5.6
4.7
57.6
Total outstanding
deferred remuneration
CHF million
Debits / credits for
remuneration for previous
reporting periods
recognised in profit or loss
0.0
87.1
15.0
102.2
0.0
103.5
14.6
118.1
CHF million
– 0.1
0.0
0.0
– 0.1
– 0.2
0.0
0.0
– 0.2
Total inducement
payments made
CHF million
Number of beneficiaries
Total severance
payments made
CHF million
Number of beneficiaries
0.1
9
9.6
80
0.0
0
0.0
0
0.0
0
0.0
0
0.1
9.6
0.2
5
2.3
52
0.0
0
0.0
0
0.0
0
0.0
0
0.2
2.3
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.
107
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basel
Phone
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Basel, 21 March 2018
Report of the statutory auditor on the remuneration report
We have audited the remuneration report of Bâloise Holding Ltd (pages 80 - 106) for the year
ended 31 December 2017.
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 Against Excessive
Remuneration in Listed Companies Limited by Shares (ERCO).
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 ERCO.
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 ERCO.
The procedures selected depend on the auditor’s judgement, 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.
108108
Baloise Group Annual Report 2017
Corporate Governance
Remuneration Report
Opinion
In our opinion, the remuneration report for the year ended 31 December 2017 of Bâloise
Holding Ltd complies with Swiss law and articles 14–16 of ERCO.
Ernst & Young Ltd
Stefan Marc Schmid
Licensed audit expert
(Auditor in charge)
Christian Fleig
Licensed audit expert
109109
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
58 corporate Governance
110 Financial Report
268 Bâloise Holding ltd
286 General information
Financial Report
consolidated balance sheet ............................................. 112
consolidated income statement ....................................... 114
consolidated statement of comprehensive income .......... 115
consolidated cash flow statement ................................... 116
consolidated statement of changes in equity ................... 118
NOTES TO THE CONSOLIDATED
ANNUAL FINANCIAL STATEMENTS .............................. 120
1. Basis of preparation ................................................. 120
2. application of new financial reporting standards ...... 120
3. consolidation principles and accounting policies ..... 123
4. Key accounting judgements,
estimates and assumptions ...................................... 143
5. Management of insurance risk and financial risk ...... 146
6. Basis of consolidation .............................................. 190
7. information on operating segments
(segment reporting) ................................................. 192
NOTES TO THE CONSOLIDATED BALANCE SHEET ........ 196
8. property, plant and equipment ................................. 196
9. intangible assets ..................................................... 198
10. investments in associates ........................................ 201
11. investment property ................................................ 203
12. Financial assets ....................................................... 203
13. Mortgages and loans ............................................... 208
14. Derivative financial instruments .............................. 209
15. Receivables .............................................................. 211
16. Reinsurance assets ................................................... 211
17. Receivables from reinsurers ..................................... 212
18. employee benefits ................................................... 213
19. Deferred income taxes ............................................. 222
20. other assets ............................................................ 224
21. non-current assets and disposal groups
classified as held for sale ......................................... 225
22. Share capital ........................................................... 226
23. technical reserves (gross) ....................................... 227
24. liabilities arising from banking business
and financial contracts ............................................. 236
25. Financial liabilities ................................................... 237
26. provisions ................................................................ 238
27. insurance liabilities ................................................. 238
NOTES TO THE CONSOLIDATED
INCOME STATEMENT ................................................. 239
28. premiums earned and policy fees ............................. 239
29. income from investments for
own account and at own risk ..................................... 239
30. Realised gains and losses on investments ............... 240
31. income from services rendered ................................ 243
32. other operating income ........................................... 243
33. classification of expenses ....................................... 244
34. personnel expenses ................................................. 244
35. Gains or losses on financial contracts ....................... 245
36. income taxes ........................................................... 246
37. earnings per share ................................................... 247
38. other comprehensive income ................................... 248
OTHER DISCLOSURES ................................................ 250
39. acquisition and disposal of companies .................... 250
40. Related party transactions ........................................ 252
41. Remuneration paid to the Board of Directors
and the corporate executive committee .................... 252
42. contingent and future liabilities ............................... 253
43. operating leases ...................................................... 256
44. claim payments received from
non-Group insurers ................................................... 257
45. Significant subsidiaries, joint ventures
and associates ......................................................... 258
46. changes to shareholdings ........................................ 260
47. consolidated structured entities .............................. 260
48. Joint arrangements .................................................. 260
49. events after the balance sheet date .......................... 260
REPORT OF THE STATUTORY AUDITOR
TO THE ANNUAL GENERAL MEETING OF
BÂLOISE HOLDING LTD, BASEL ................................... 262
t
R
o
p
e
R
l
a
i
c
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a
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i
F
Unterkapitel
Baloise Group annual Report 2017
Financial Report
consolidated balance sheet
Consolidated balance sheet
cHF million
Assets
property, plant and equipment
intangible assets
investments in associates
investment property
Financial instruments with characteristics of equity
available for sale
Recognised at fair value through profit or loss
Financial instruments with characteristics of liabilities
Held to maturity
available for sale
Recognised at fair value through profit or loss
Mortgages and loans
carried at cost
Recognised at fair value through profit or loss
Derivative financial instruments
Receivables from financial contracts
carried at cost
Reinsurance assets
Receivables from reinsurers
insurance receivables
Receivables from employee benefits
other receivables
Receivables from investments
Deferred tax assets
current income tax assets
other assets
carried at cost
Recognised at fair value through profit or loss
cash and cash equivalents
non-current assets and disposal groups classified as held for sale
Total assets
112
Note
31.12.2016
31.12.2017
8
9
10
11
12
12
13
14
15
16
17
18
15
15
19
20
21
349.3
836.1
160.4
6,817.5
353.3
1,002.5
138.4
7,480.3
4,357.1
9,948.5
4,402.9
11,472.0
8,224.6
8,488.9
23,806.7
24,870.1
1,735.2
2,001.1
15,457.7
15,791.7
897.0
757.3
4.2
415.2
47.5
383.5
0.8
463.1
451.6
69.3
54.1
776.8
800.4
3.0
468.3
38.2
444.1
3.3
403.1
440.9
88.8
43.6
187.6
54.5
3,173.3
1,962.0
349.1
70.5
3,551.6
1,041.1
80,614.3
84,523.9
Baloise Group annual Report 2017
Financial Report
consolidated balance sheet
cHF million
Equity and liabilities
Equity
Share capital
capital reserves
treasury shares
Unrealised gains and losses (net)
Retained earnings
Equity before non-controlling interests
non-controlling interests
Total equity
Liabilities
technical reserves (gross)
liabilities arising from banking business and financial contracts
With discretionary participation features
Measured at amortised cost
Recognised at fair value through profit or loss
Financial liabilities
provisions
Derivative financial instruments
insurance liabilities
liabilities arising from employee benefits
other accounts payable
Deferred tax liabilities
current income tax liabilities
other liabilities
Note
31.12.2016
31.12.2017
22
23
24
25
26
14
27
18
19
5.0
317.3
– 248.1
– 318.4
5,985.5
5,741.3
32.4
4.9
346.2
– 152.3
– 4.3
6,151.7
6,346.2
63.0
5,773.7
6,409.2
46,209.0
48,008.5
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
2,814.2
7,628.8
12,253.6
1,742.9
49.0
145.3
1,706.3
1,394.4
593.1
922.4
81.5
131.1
643.6
liabilities included in non-current assets and disposal groups classified as held for sale
21
1,908.3
Total liabilities
Total equity and liabilities
74,840.6
78,114.7
80,614.3
84,523.9
113
Baloise Group annual Report 2017
Financial Report
consolidated income statement
Consolidated income statement
cHF million
Income
premiums earned and policy fees (gross)
Reinsurance premiums ceded
premiums earned and policy fees (net)
investment income
Realised gains and losses on investments
For own account and at own risk
For the account and at risk of life insurance policyholders and third parties
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)
114
Note
2016
2017
28
28
28
29
30
30
31
32
23
23
23
33
33
33
35
33
25
36
37
6,680.6
– 168.2
6,512.4
6,726.4
– 183.4
6,542.9
1,476.6
1,392.5
303.1
364.1
110.1
7.1
136.8
427.8
696.5
116.9
5.5
235.0
8,910.2
9,417.1
– 5,664.2
– 5,726.5
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 8,226.6
– 8,733.0
683.6
684.1
– 38.0
645.6
– 34.3
649.8
– 111.7
533.9
– 117.9
531.9
534.8
– 0.9
548.0
– 16.1
11.53
11.22
11.50
11.48
Baloise Group annual Report 2017
Financial Report
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
other items not to be reclassified to the income statement
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
2016
2017
533.9
531.9
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
– 0.7
1.3
72.4
9.9
– 21.4
61.6
– 182.5
7.5
78.1
– 2.5
197.0
119.3
38.1
255.1
– 103.0
316.6
430.9
848.5
433.0
– 2.0
863.4
– 14.9
115
Baloise Group annual Report 2017
Financial Report
consolidated cash flow statement
Consolidated cash flow statement
Note
2016
2017
cHF million
Cash flow from operating activities
profit before taxes
Adjustments for
Depreciation, amortisation and impairment of property, plant and equipment and of intangible assets
8 / 9
645.6
649.8
63.1
– 0.3
– 7.1
82.7
– 6.4
– 5.5
– 652.0
– 1,087.2
9.6
7.9
9
– 20.0
589.4
– 9.2
– 81.7
405.2
– 17.9
1,426.4
1,872.4
36.9
– 72.8
– 349.2
27.8
72.0
102.0
11
11
– 453.7
49.5
– 567.2
157.7
– 2,670.4
– 3,562.6
2,398.0
3,739.0
– 4,669.3
– 6,538.7
4,500.7
5,969.7
– 3,074.5
– 2,972.1
3,326.6
– 341.0
103.5
38.0
– 154.1
713.7
2,768.5
– 453.4
62.4
34.3
– 90.1
568.6
25
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
amortised cost valuation of financial instruments
Change in assets and liabilities from operating acitivities
Deferred acquisition costs
technical reserves
Reinsurers’ share of technical reserves
Receivables and liabilities arising from banking business and financial contracts
Receivables from investments
Receivables and liabilities arising from insurance business and from reinsurers
change in other assets and other liabilities from operating acitivities
Change in operating assets and liabilities
purchase of investment property
Sale of investment property
purchase of financial assets of an equity nature
Sale of financial assets of an equity nature
purchase of financial assets of a debt nature
Sale of financial assets of a debt nature
addition of mortgages and loans
Disposal of mortgages and loans
addition of derivative financial instruments
Disposal of derivative financial instruments
Borrowing costs
taxes paid
Cash flow from operating activities
116
Baloise Group annual Report 2017
Financial Report
consolidated cash flow statement
cHF million
Cash flow from investing activities
purchase of property, plant and equipment
Sale of property, plant and equipment
purchase of intangible assets
Sale of intangible assets
acquisition of companies, net of cash and cash equivalents
Disposal of companies, net of cash and cash equivalents
purchase of investments in associates
Sale of investments in associates
Dividends from associates
Cash flow from investing activities
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
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
2016
2017
8
9
39
39
25
25
25
– 16.4
0.6
– 26.6
0.1
– 20.3
–
–
–
6.2
– 56.3
–
– 163.2
– 33.4
– 106.9
228.3
– 0.3
– 232.0
– 307.5
– 21.7
8.4
– 27.6
0.1
– 250.4
37.7
–
–
5.5
– 247.9
496.5
– 225.0
– 30.9
– 101.9
91.9
– 0.3
– 248.5
– 18.2
350.0
302.5
2,839.8
350.0
–
– 16.6
3,173.3
3,173.3
302.5
– 48.7
124.5
3,551.6
1,935.5
2,133.2
–
1,237.8
3,173.3
105.3
857.3
141.4
– 57.4
0.1
1,418.3
3,551.6
77.1
749.7
98.4
– 40.5
117
Baloise Group annual Report 2017
Financial Report
consolidated statement of changes in equity
Consolidated statement of changes in equity
Note
Share
capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
Equity
before non-
controlling
interests
Non-
controlling
interests
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
Total
equity
5,453.6
533.9
– 103.0
430.9
34.7
– 0.9
– 1.1
– 2.0
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
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
118
Baloise Group annual Report 2017
Financial Report
consolidated statement of changes in equity
2017
cHF million
Balance as at 1 January 2017
profit for the period
other comprehensive income
Comprehensive income
Other changes in equity
Dividend
capital increase / repayment
purchase of treasury shares
Sale of treasury shares
cancellation of (treasury) shares
increase / decrease in non-controlling
interests due to change in the scope
of consolidation
increase / decrease in non-controlling
interests due to change in the percentage
of shareholding
Note
Share
capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
Equity
before non-
controlling
interests
Non-
controlling
interests
Total
equity
5.0
317.3
– 248.1
– 318.4
5,985.5
5,741.3
32.4
5,773.7
–
–
–
–
–
–
–
– 0.1
–
–
–
–
–
–
–
– 1.3
30.3
–
–
–
–
–
–
–
–
– 100.6
61.7
134.8
–
–
38
22
39
6
–
548.0
314.1
314.1
1.3
549.3
548.0
315.4
863.4
– 16.1
1.3
– 14.9
531.9
316.6
848.5
–
–
–
–
–
–
–
– 248.5
– 248.5
– 0.3
– 248.7
–
–
–
–
– 101.9
91.9
– 134.7
–
–
–
–
–
–
–
–
–
45.7
–
– 101.9
91.9
–
45.7
–
–
Balance as at 31 December 2017
4.9
346.2
– 152.3
– 4.3
6,151.7
6,346.2
63.0
6,409.2
119
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Notes to the consolidated annual financial statements
Basis of presentation
1. BASIS OF PREPARATION
the Baloise Group is a european direct insurer comprising 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 several fund management companies in luxembourg.
the Baloise Group’s consolidated annual financial statements 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 measurement 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 21 March 2018 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.
1.1 Presentation changes
Minor changes to the presentation of the consolidated income statement were made in the reporting period. the breakdown of
realised gains and losses on investments into “own account” and “third party”, which was previously shown in note 30, is now
presented directly in the income statement (2016: cHF 667.2 million). By presenting the information in this way, Baloise is taking
the different bearers of the risk into consideration and enabling users of the financial statements to see this information directly
in the income statement. this adjustment does not otherwise impact on income or other line items.
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.
120
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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 2017 consolidated annual financial statements:
Standard /
Inter-
pretation
iFRS 9
iFRS 15
iFRS 16
iFRS 17
Content
Financial instruments
Revenue from contracts with customers
leases
insurance contracts
Applicable
to annual periods
beginning
on or after
1.1.2018
1.1.2018
1.1.2019
1.1.2021
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 recognition (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” (amend-
ments to iFRS 4). the amendments address concerns arising from implementing the new financial instruments Standard iFRS 9
before implementing the Standard iFRS 17 insurance contracts.
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 exemption 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 from being applied.
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.
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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. application 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 modified retrospective method is being used for first-time adoption, which means the cumulative effects will be recognised
once directly in equity. 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.
application of the standard will lead to a slight increase in the size of the balance sheet because the usage rights have to be
recognised as assets while, on the other side, the lease liabilities are reported as liabilities. there will also be changes to the
presentation of the income statement and cash flow statement because borrowing costs and depreciation, amortisation and
impairment will be affected. We do not anticipate a material effect on the profit for the period.
IFRS 17 Insurance Contracts
iFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts that are
within the scope of this standard. the objective of iFRS 17 is to ensure that reporting entities provide relevant information that
faithfully represents their insurance contracts. this information provides a basis for users of financial statements to assess the
effect that insurance contracts have on an entity’s financial position, financial performance and cash flows.
iFRS 17 was published in May 2017 and is required to be applied for annual periods beginning on or after 1 January 2021.
Rather than changing the business model of insurers, iFRS 17 affects their reporting. the most important changes relate to the
methodology for measuring contracts and policies. Until now, they have been measured primarily in accordance with past
developments and on the basis of data that was available at the start of the contracts. analysis will now have a stronger focus on
the future, with assessments based on potential cash flows. life insurance contracts, which may have a term of several decades,
will be particularly affected.
the Baloise Group has initiated a groupwide project to fully examine the effects of implementing iFRS 17. it is too early to
comment on the potential impact on the consolidated financial statements.
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3. CONSOLIDATION PRINCIPLES AND ACCOUNTING POLICIES
3.1 Method of consolidation
3.1.1 Subsidiaries
the consolidated annual financial statements comprise the financial statements of Bâloise Holding ltd and its subsidiaries,
including any structured entities. a subsidiary is consolidated if the Baloise Group controls it either directly or indirectly. as a
rule, this is the case if the Baloise Group has exposure or rights to variable profit components as a result of its involvement with
the investee and, because of legal positions, has the ability to influence the investee’s business activities that are critical to
its financial success and, therefore, to affect the amount of the variable profit components.
companies acquired during the reporting period are included in the consolidated annual financial statements from the date
on which control is effectively assumed, while all companies 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 concerned are
measured at fair value as at the date of first-time consolidation. non-controlling interests arising from business combinations are
measured either at their fair value or according to their share of the acquiree’s identifiable net assets. the Baloise Group decides
which measurement method to apply to each individual business combination.
the acquisition cost corresponds to the fair value of the consideration paid to the previous owners on the date of the acquisition.
if investments in the form of financial instruments or associates were already held before control was acquired, these investments
are remeasured and any difference is recognised in profit or loss. any contingent consideration recognised as part of the consideration
paid for the acquiree is measured at fair value on the transaction date. any subsequent changes in the fair value of a contingent
consideration are recognised in the income statement. if the acquisition cost exceeds the fair value of assets and liabilities plus
non-controlling interests, the difference is recognised as goodwill. conversely, if the identified net assets exceed the acquisition
cost then the difference is recognised directly through profit or loss as other operating income. all intercompany transactions and
the resultant gains and losses are eliminated.
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 subsidiaries
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.
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Joint arrangements
3.1.3
Joint arrangements are contractual agreements over which two or more parties have joint control. a joint arrangement is classified
as either a joint operation or a joint venture. in a joint operation, the involved parties have direct rights and obligations in respect
of the assets and liabilities and the income and expenses. By contrast, the parties involved in a joint venture do not have a direct
entitlement to the assets and liabilities and, instead, have rights in respect of the net assets of the joint venture owing to their
position as investors.
Joint ventures are accounted for using the equity method, i. e. the Baloise Group initially recognises the joint ventures at cost
(fair value at the date of acquisition) and thereafter recognises 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.
3.1.4 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 management of the entity concerned. changes in the fair value of associates are
generally recognised in profit or loss and take account of any dividend flows. if the Baloise Group’s share of the losses exceeds
the value of the associate, no further losses are recognised. Goodwill paid for associates is included in the carrying amount of
the investment.
Functional currency and reporting currency
3.2 Currency translation
3.2.1
each subsidiary prepares its annual financial statements in its functional currency, which is the currency of its primary economic
environment. the consolidated Financial Report is presented in millions of Swiss francs (cHF), which is the Baloise Group’s
reporting currency.
3.2.2 Translation of transaction currency into functional currency at Group companies
income and expenses denominated in foreign currency are translated either at the exchange rate prevailing on the transaction
date or at the average exchange rate. Monetary and non-monetary balance sheet items measured at fair value and arising from
foreign currency transactions conducted by Group companies are translated at the closing rate. non-monetary items measured
at historical cost are translated at the historical rate. any resultant exchange differences are recognised in profit or loss. this does
not include exchange differences that form part of cash flow hedges and are recognised directly in hedging reserves or are used
as hedges of a net investment in a foreign operation.
exchange differences arising on non-monetary financial instruments recognised at fair value through profit or loss are reported
as realised gains or losses on these instruments. exchange differences on available-for-sale non-monetary financial instruments
are recognised in other comprehensive income. exchange differences arising on available-for-sale monetary financial instruments
are recognised in profit or loss.
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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
consolidated 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
31.12.16
31.12.17
Ø 2016
Ø 2017
1.07
1.02
1.17
0.97
1.09
0.99
1.11
0.98
3.3 Property, plant and equipment
items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment
losses. the acquisition cost of property, plant and equipment includes all directly attributable costs. Subsequent acquisition
costs are only capitalised if future economic benefits associated with the property, plant and equipment will flow to the entity
concerned and these costs can be measured reliably. all other repairs and maintenance costs are expensed as incurred.
land is not depreciated. other items of property, plant and equipment are depreciated on a straight-line basis over the
owner-occupied buildings: 25 to 50 years
office furniture, equipment, fixtures and fittings: 5 to 10 years
following estimated useful lives:
▸
▸
▸ Machinery, furniture and vehicles: 4 to 10 years
▸
computer hardware: 3 to 5 years
at each balance sheet date the Baloise Group tests all items of property, plant and equipment for impairment and reviews the
suitability of their useful lives.
an impairment loss is immediately recognised on items of property, plant and equipment if their recoverable amount is lower
than their carrying amount.
Gains or losses on the sale of property, plant and equipment are immediately taken to the income statement as either other
operating income or other operating expenses.
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Leases
The Baloise Group as a lessee
3.4
3.4.1
Finance leases: leases on real estate, office furniture, equipment, fixtures, fittings and other tangible assets are classified and
treated as finance leases if they transfer to the Baloise Group substantially all the risks and rewards incidental to ownership. the
fair value of the leased property or, if lower, the present value of the lease payments is recognised as an asset at the inception of
the lease. all lease payments are apportioned between the finance charge and the reduction of the outstanding liability. the
finance charge is allocated so as to produce a constant periodic rate of interest on the remaining balance of the liability; this is
reported on the Baloise Group’s balance sheet as liabilities arising from banking business and financial contracts. assets held
under finance leases are fully depreciated over the shorter of the lease term and their useful life.
operating leases: all other leases are classified as operating leases. lease payments under operating leases are expensed
in the income statement on a straight-line basis over the term of the lease.
3.4.2 The Baloise Group as a lessor
investment real estate let on operating leases is reported as investment property on the consolidated balance sheet.
Intangible assets
3.5
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 non-controlling interests in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity
interest in the acquiree. Goodwill is reported as an intangible asset. Goodwill is tested for impairment in the second half of each
year. an impairment test may also be conducted in the first half of the year if there are objective indications that goodwill may be
permanently impaired. When a new investment is acquired, the date for conducting future impairment tests is fixed and these
tests are subsequently carried out at the same time each year. When entities are sold, their share of goodwill is recognised in their
profit or loss. Goodwill is allocated to cash-generating units (cGUs) for the purposes of impairment testing.
3.5.2 Present value of future profits (PVFP) on insurance contracts acquired
the present value of future profits on insurance contracts acquired arises from the purchase of life insurance companies or life
insurance portfolios. it is initially measured in accordance with actuarial principles and is amortised on a straight-line basis. it is
regularly tested for impairment as part of a liability adequacy test (see section 3.19.2 for further details).
3.5.3 Deferred acquisition costs (DACs)
costs directly incurred by the conclusion of insurance contracts or financial contracts with discretionary participation features
(DpFs) – such as commissions – are capitalised and amortised over the term of these contracts or, if shorter, over the premium
payment period. Deferred acquisition costs are tested for impairment at each balance sheet date (see section 3.19.3 for further
details).
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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 developed),
internally developed assets (such as software) and assets identified during the acquisition of entities (such as brands and customer
relationships). these assets are recognised at cost and are amortised on a straight-line basis over their useful lives. intangible
assets with indefinite useful lives are not amortised and are carried at cost less accumulated impairment losses.
all financing for intangible assets is generally obtained from the Baloise Group’s own financial resources. if funding from
external sources is required, interest accrued during the assets’ development is capitalised as incurred.
Investment property
3.6
investment property comprises land and / or buildings held to earn rental income or for capital appreciation (or both). if mixed-use
properties cannot be broken down into owner-occupied property and property used by third parties, the entire property is clas-
sified according to the purpose for which most of its floor space is used. if, owing to a change of use, an investment property held
by the Baloise Group becomes the latter’s owner-occupied property, it is reclassified as property, plant and equipment. any such
reclassification is based on the property’s fair value at the reclassification date. By contrast, if one of the Baloise Group’s own-
er-occupied properties becomes an investment property owing to reclassification, then, on the date this change of use takes
effect, the difference between the property’s carrying amount and its fair value is recognised in profit or loss in the event of an
impairment; or, if the property’s fair value exceeds its carrying amount, then the difference is recognised directly in equity as an
unrealised gain. if an investment property that was reclassified in a previous period is sold, the amount 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 risk-adjusted basis. the measurement is carried
out internally each year by experts using market-based assumptions that have been verified by respected consultancies. in
addition, the properties are assessed by external valuation specialists at regular intervals; roughly 10 per cent of the fair value
of the real estate portfolio is subject to such assessments each year. changes in fair value are taken to income as realised
accounting gains or losses in the period in which they occur.
Financial assets
3.7
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 Financial
Report covers financial assets, mortgages and loans, derivative financial instruments, cash, cash equivalents and investment
property.
the asset classes covered by the term financial instruments with characteristics of equity are equities, share certificates,
units held in equity, bond and real estate funds; and alternative financial assets such as private equity investments and hedge
funds. Financial instruments with characteristics of equity are generally more frequently exposed to price volatility than financial
instruments with characteristics of liabilities.
the term financial instruments with characteristics of liabilities covers securities such as bonds and other fixed-income
securities. they are usually interest-bearing and are issued for a fixed or determinable amount.
the Baloise Group classifies its financial instruments with characteristics of equity and its financial instruments with char-
acteristics of liabilities as either “recognised at fair value through profit or loss”, “held to maturity” or “available for sale”. the
classification of the financial instruments concerned is determined by the purpose for which they have been acquired.
Mortgages and loans are generally carried at cost. in pursuing its strategy of using natural hedges, however, the Baloise
Group applies the fair value option to designate parts of its portfolio as “recognised at fair value through profit or loss”. appro-
priately designated derivative financial instruments are used to hedge these parts of the portfolio.
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Financial assets recognised at fair value through profit or loss
3.7.1
this category consists of two sub-categories: held-for-trading financial assets (trading portfolio) and financial assets that are
designated to this category. Financial instruments are classified in this category if they have principally been acquired with the
intention of selling them in the short term, or if they form part of a portfolio for which there have recently been indications that a
gain could be realised in the short term, or if they have been designated to this category. Derivative financial instruments are
classified as “held for trading” (trading portfolio) with the exception of derivatives that have been designated for hedge account-
ing purposes. also designated to this category are structured products, i. e. equity instruments and debt instruments which, in
addition to the host contract, contain embedded derivatives that are not bifurcated and measured separately. Financial assets
held under investment-linked life insurance contracts are also designated as “recognised at fair value through profit or loss”.
3.7.2 Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial instruments involving fixed or determinable payments. However,
they do not include mortgages, loans (section 3.8) or receivables (section 3.9) that the Baloise Group can – and intends to – hold
until maturity.
3.7.3 Available-for-sale financial assets
available-for-sale financial assets are non-derivative financial instruments that have been classified as “available for sale” or have
not been designated to any of the above-mentioned categories and are not classified as mortgages, loans or receivables.
alternative financial assets – such as private equity investments 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 corresponding liabilities. in its stock lending operations the Baloise Group only
engages in securities lending. the borrowed financial instruments continue to be recognised as financial assets. the securities
provided as cover for repos, reverse repos and securities lending transactions are measured daily at their current fair value.
available-for-sale financial assets and financial assets recognised at fair value through profit or loss are measured at fair
value. Held-to-maturity financial assets are measured at amortised cost using the effective interest method. Realised and unrealised
gains and losses on financial assets recognised at fair value through profit or loss are taken to income. Unrealised gains and losses
on available-for-sale financial assets are recognised directly in equity. if available-for-sale financial assets are sold or impaired,
the cumulative amount recognised directly in equity is recognised in the income statement as a realised gain or loss on financial
assets. changes in the fair value of financial assets’ risks that are covered by fair value hedges are recognised in the income
statement for the duration of these hedges irrespective of the financial assets’ classification.
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the fair value of listed financial assets is based on prices in active markets as at the balance sheet date. if no such prices are
available, fair value is estimated using generally accepted methods (such as the present-value method), independent assessments
based on comparisons with the market prices of similar instruments or the prevailing market situation.
Derivative financial instruments are measured using models or on the basis of publicly quoted prices.
if no publicly quoted prices are available for private equity investments, they are measured on the basis of their net asset
value using non-public information from independent external providers. these providers use various methods for their estimates
(e. g. analysis of discounted cash flows and reference to similar, fairly recent arm’s-length transactions between knowledgeable,
willing parties).
if the fair value of hedge funds cannot be determined on the basis of publicly quoted prices, then prices quoted by independent
external parties are used for measurement purposes.
if such estimates do not enable financial assets to be reliably measured, the assets are recognised at cost (less allowance)
and disclosed accordingly.
3.8 Mortgages and loans
Mortgages and loans (including policy loans) are financial instruments involving fixed or determinable payments that are not
traded in an active market. Mortgages and loans classified as “carried at cost” are measured at amortised cost using the effective
interest method. they are regularly tested for impairment.
Mortgages and loans held as part of fair value hedges (natural hedges) are designated as “at fair value through profit or loss”.
present-value models are used to measure these portfolios.
3.9 Receivables
other receivables are recognised at amortised cost less any impairment losses recognised for non-performing receivables.
amortised cost is usually the same as the nominal amount of the receivables.
3.10 Permanent impairment
3.10.1 Financial assets measured under the amortised-cost method (mortgages, loans, receivables and
held-to-maturity financial assets)
the Baloise Group determines at each balance sheet date whether there is any objective evidence that a financial asset or a group
of financial assets may be permanently impaired. a financial asset or a group of financial assets is only impaired if, as a result of
one or more events, there is objective evidence of impairment that has an impact on the expected future cash flows from the
financial asset that can be reliably estimated. objective evidence of a financial asset’s impairment includes observable data on
the following cases:
▸
▸
▸
▸
Serious financial difficulties on the part of the borrower
Breaches of contract, such as a borrower in default or arrears with the payment of principal and / or interest
Greater probability that the borrower will file for 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
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analysts’ reports from banks and evaluations by credit rating agencies are also used to assess the need for impairment losses.
if there is objective evidence that loans and receivables or held-to-maturity financial assets may be permanently impaired,
the impairment loss represents the difference between the asset’s carrying amount and the present value of future cash flows,
which are discounted using the financial asset’s relevant effective 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 impairment loss is reversed.
the mortgage portfolio is regularly tested for impairment. if there is objective evidence that the full amount owed under the
original contractual terms and conditions or the relevant proceeds of a receivable cannot be recovered, an impairment loss is
recognised. loan exposures are individually evaluated based on the nature of the borrower concerned, its financial position, its
credit history, the existence of any guarantors and, where appropriate, the realisable value of any collateral security.
3.10.2 Financial assets measured at fair value
the Baloise Group determines at each balance sheet date whether there is any objective evidence that available-for-sale financial
assets may be permanently impaired. this category includes financial instruments with characteristics of equity. an impairment
loss must be recognised on financial instruments with characteristics of equity whose fair value at the balance sheet date is more
than 50 per cent below their acquisition cost or whose fair value is consistently below their acquisition cost throughout the
twelve-month period preceding the balance sheet date. the need for an impairment loss is examined and, where necessary, such
a loss is recognised on securities whose fair value at the balance sheet date is between 20 per cent and 50 per cent below their
acquisition cost.
if an impairment loss is recognised, the cumulative net loss recognised directly in equity is taken to the income statement.
impairment losses on available-for-sale financial instruments with characteristics of equity that have been recognised in profit
or loss cannot be reversed and taken to income. any further reduction in the fair value of financial instruments with characteristics
of equity on which impairment losses were recognised in previous periods must be charged directly to the income statement.
an impairment loss is recognised on available-for-sale financial instruments with characteristics of liabilities if their fair value
is significantly impaired by default risk.
if the fair value of an available-for-sale financial instrument with characteristics of liabilities rises in a subsequent reporting
period and this increase can be objectively attributed to an event that has occurred since an impairment loss was recognised in
profit or loss, the impairment loss is reversed and taken to income.
3.10.3 Impairment losses on non-financial assets
Goodwill and any assets with indefinite useful lives are tested for impairment at the same time each year or whenever there is
objective evidence of impairment. Goodwill is allocated to cash-generating units (cGUs) for the purposes of impairment testing.
insurance companies that sell both life and non-life products (so-called composite insurers) test goodwill for impairment 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 long-term 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 mark-ups 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.
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impairment losses recognised in previous reporting periods on assets with finite useful lives are reversed if the estimates used
to determine the recoverable amount have changed since the most recent impairment loss was recognised. this increase constitutes
a reversal of impairment losses. impairment losses recognised in previous reporting periods on goodwill are not reversed. impairment
losses recognised in previous reporting periods on assets with indefinite useful lives are reversed and taken to income; however,
the amount to which they are reversed must be no more than the amount recognised prior to the impairment losses less depreciation
or amortisation.
3.11 Derivative financial instruments
Derivative financial instruments include swaps, futures, forward contracts and options whose value is primarily derived from the
underlying interest rates, exchange rates, commodity prices or share prices. the acquisition cost of derivatives is usually either
very low or non-existent. these instruments are carried at fair value on the balance sheet. at the time they are purchased they are
classified as either fair value hedges, cash flow hedges, hedges of a net investment in a foreign operation or trading instruments.
Derivative financial instruments that do not qualify as hedges under iFRS criteria despite performing a hedging function as part
of the Baloise Group’s risk management procedures 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 contract.
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 instrument, the embedded derivative is bifurcated from the host contract and is
separately recognised, measured and disclosed. if the derivative and the host contract are not bifurcated, the structured product
is designated as a host contract that is recognised at fair value through profit or loss.
3.11.2 Fair value hedges
When the effective portion of hedges is being accounted for, changes in the fair value of derivative financial instruments classified
as fair value hedges – plus the hedged portion of the fair value of the asset or liability concerned – are reported in the income
statement. the ineffective portion of hedges is recognised separately in profit or loss.
3.11.3 Cash flow hedges
When the effective portion of hedges is being accounted for, changes in the fair value of derivative financial instruments classified
as cash flow hedges are recognised directly in equity. the amounts reported in equity as “unrealised gains and losses (net)” are
taken to the income statement at a later date in line with the hedged cash flows. the ineffective portion of hedges is recognised
in profit or loss.
if a hedging instrument is sold, terminated or exercised or it no longer qualifies as a hedge, the cumulative gains and losses
continue to be recognised directly in equity until the forecasted transaction materialises. if the forecasted transaction is no longer
expected to materialise, the cumulative gains and losses recognised in equity are taken to income.
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3.11.4 Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation are treated as cash flow hedges. When the effective portion of hedges is being
accounted for, gains or losses on hedging instruments are recognised directly in equity. the ineffective portion of hedges is
recognised in profit or loss.
if the foreign operation – or part thereof – is sold, the gain or loss recognised directly in equity is taken to the income statement.
3.11.5 Derivative financial instruments that do not qualify as hedges
changes in the fair value of derivative financial instruments that do not qualify as hedges are recognised in the income 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.
3.13 Non-current assets and disposal groups classified as held for sale
non-current assets (or disposal groups) held for sale that meet the criteria stipulated in iFRS 5 “non-current assets Held for Sale
and Discontinued operations” are shown separately on the balance sheet. those assets described in the standard are measured
at the lower of their carrying amount and fair value less costs to sell. any resultant impairment losses are taken to income. any
depreciation or amortisation is discontinued from the reclassification date.
Details of discontinued operations – where available – are disclosed in the notes to the Financial Report.
3.14 Other assets
3.14.1 Other assets carried at cost
Development projects earmarked for subsequent sale (such as apartments in blocks of apartments owned by different people)
are recognised at the lower of investment cost and recoverable value pursuant to iaS 2 inventories. the revenue is recognised
under other income at the time of the transfer of title (transfer of benefits and risk).
3.14.2 Other assets recognised at fair value through profit or loss
precious metals are recognised at fair value through profit or loss if they are traded in a price-efficient and liquid market.
3.15 Cash and cash equivalents
cash and cash equivalents essentially consist of cash, demand deposits and cash equivalents. cash equivalents are predominantly
short-term liquid investments with residual terms of no more than three months.
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3.16 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.
3.16.1 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 preferential voting rights.
3.16.2 Capital reserves
capital reserves include the paid-up 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.
3.16.3 Treasury shares
treasury shares held either by Bâloise Holding ltd or by subsidiaries are shown in the consolidated financial statements at their
acquisition cost (including transaction costs) as a deduction from equity. their carrying amount is not constantly restated to reflect
their fair value. if the shares are resold, the difference between their acquisition cost and their sale price is recognised as a change
in the capital reserves. only Bâloise Holding ltd shares are classified as treasury shares.
3.16.4 Unrealised gains and losses (net)
this item includes changes in the fair value of available-for-sale financial instruments, the net effect of cash flow hedges, the net
effect of hedges of a net investment in a foreign operation, exchange differences and gains on the reclassification of the Baloise
Group’s owner-occupied property as investment property.
Deductions from these unrealised gains and losses include the pertinent deferred taxes and, in the case of life insurance
companies, also the funds that will be used in future to amortise acquisition costs and to finance policyholders’ dividends (shadow
accounting).
any non-controlling interests are also deducted from these items.
3.16.5 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.
3.16.6 Non-controlling interests
non-controlling interests constitute the proportion of Group companies’ equity attributable to third parties outside the Baloise
Group on the basis of their respective shareholdings.
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3.17 Insurance contracts
an insurance contract is defined as a contract under which one party (the insurer) accepts a significant insurance risk from another
party (the policyholder) to pay compensation, should a specified contingent future event (the insured event) adversely affect the
policyholder. an insurance risk is any directly insured or reinsured risk that is not a financial risk.
the significance of insurance risk is assessed according to the amount of additional benefits to be paid by the insurer if the
insured event occurs.
contracts that pose no significant insurance risk are financial contracts. Such financial contracts may include a 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 re-determined. the deposit account balance is then remeasured as if this new effective interest
rate had applied from the outset, and the change in the value of the deposit account is recognised as interest income or interest
expense. otherwise, the insurance cover financed from the deposit account is amortised over the expected term of the
deposit account.
the Baloise Group considers an insurance risk to be significant if, during the term of the contract and under a plausible scenario,
the payment triggered by the occurrence of the insured event is 5 per cent higher than the contractual benefits payable if the
insured event does not occur.
a discretionary participation feature (DpF) exists if the policyholder is contractually or legally entitled to receive benefits over
and above the benefits guaranteed and if
▸
▸
the benefits received are likely to account for a significant proportion of the total benefits payable under the contract,
the timing or amount of the benefits payable is contractually at the discretion of the insurer, and the benefits received are
contractually contingent on the performance of either a specified portfolio of contracts or a specified type of contract, on
the realised and / or unrealised capital gains on a specified portfolio of investments held by the insurer, or on the profit or
loss reported by the insurer.
captive insurance policies are derecognised from the annual financial statements. this also applies to contracts involving proprietary
pension plans, provided that the employees covered by these plans work for the Baloise Group.
in addition, iFRS 4 makes exceptions for the treatment of embedded derivatives that form part of insurance contracts or
financial contracts with discretionary participation features. if such embedded derivatives themselves qualify as insurance
contracts, they do not have to be either separately measured or disclosed. in the case of the Baloise Group this affects, among
other things, certain guarantees provided for annuity conversion rates and further special exceptions such as specific guaranteed
cash surrender values for traditional policies.
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3.18 Non-life insurance contracts
all standardised non-life products contain sufficient insurance risk to be classified as insurance contracts under iFRS 4. the
non-life business conducted by the Baloise Group is broken down into seven main segments:
▸
accident
all standard product lines typical of each relevant market are available in the accident insurance business. the Belgian
market and Switzerland in particular also offer specific government-regulated occupational accident products that differ
from the other products usually available.
Health
the Baloise Group writes health insurance business in Switzerland and Belgium only. the benefits paid by the products
in this segment cover the usual cost of treatment and also include a daily sickness allowance; they are available to
individuals as well as small and medium-sized businesses in the form of so-called group insurance.
General liability
in addition to conventional personal liability insurance the Baloise Group also sells third-party indemnity policies
for certain professions. in Switzerland and Germany it offers policies – especially combined products – for small and
medium-sized enterprises and for industrial partners that include features such as product liability.
▸
▸
▸ Motor
the two standardised products common in the market – comprehensive and third-party liability insurance – are sold in
this segment. in some countries there are also products that have been specially designed for collaborations with motoring
organisations and individual automotive companies.
Fire and other property insurance
in addition to conventional home contents insurance this segment offers an extensive range of property policies that
include fire insurance, buildings insurance and water damage insurance in all the varieties commonly available.
▸
▸ Marine
Marine insurance is mainly sold in Switzerland and Germany. these products may include a third-party liability component
in addition to the usual cargo insurance.
▸ Miscellaneous
this category generally comprises small segments such as credit protection insurance and legal expenses insurance.
provided that financial guarantees qualify as insurance contracts, they are treated as credit protection insurance policies.
3.18.1 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 contributions 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.
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3.18.2 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 realistically
as possible, the Baloise Group uses the claims history of recent years, generally accepted mathematical-statistical methods and all
the information available to it at the time – especially knowledge about the expertise of those entrusted with the handling of claims.
the total claims reserve consists of three components. Reserves calculated using actuarial methods form the basis of the total
claims reserve. the second component comprises reserves for those complex special cases and events that do not lend themselves
to purely statistical evaluation. these are generally rare claims that are fairly atypical of the sector concerned – usually sizeable
claims whose costs have to be estimated by experts on a case-by-case basis. neither of these components is subject to discount-
ing. the third component consists of reserves for annuities that are discounted using basic actuarial principles such as mortality
and the technical interest rate and are largely derived from claims in the motor, liability and accident insurance businesses.
actuarial methods are used to calculate by far the largest proportion of claims reserves. to this end, the Baloise Group selects
actuarial forecasting methods that are appropriate for each sector, insurance product and existing claims history. additional
market data and assumptions obtained from insurance rates are used if the claims history available on a customer is inadequate.
the Baloise Group mainly applies the chain-ladder method, which is the most widely used, tried-and-tested procedure. this method
involves estimating the number and amounts of claims incurred over time and the proportion of claims that are reported to the
insurer either with a time lag or after the balance sheet date. the proportion of these so-called incurred-but-not-reported (iBnR)
claims is exceptionally important, especially in operating segments involving third-party liability insurance. these estimates
naturally factor in emerging claims trends as well as recoveries. the mean ratio of costs incurred to claims actually paid is
essentially used to calculate reserves for claims handling costs.
the forecasting methods used cannot eliminate all the uncertainties inherent in making predictions about future developments
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, consequently, to adjust the level of reserves and modify the forecasting method
where necessary. this analysis is based on the so-called “run-off triangles” presented in aggregated form in section 5.4.5. the
relevant calculations for typical property policies such as storm and tempest insurance or home contents insurance are usually
based on the payments made over the past ten years. larger amounts of data and, consequently, claims triangles that go further
back in time and are based on both payments and expenses (payments plus reserves) are, of course, used for insurance segments
with longer run-off periods, such as third-party liability. to supplement the Baloise Group’s various internal control mechanisms,
its reserves – and the methods used to calculate them – are regularly reviewed by external specialists. Mention should be made
here of the liability adequacy test described in detail in section 3.18.4. the Baloise Group takes great care to ensure that it complies
with the pertinent financial reporting standard by performing the regularly required profitability analysis and examining whether,
at the balance sheet date, it can actually meet all the liabilities that it has taken on as an insurer. it immediately offsets any
shortfall in its reserves that it identifies.
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3.18.3 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.
3.18.4 Liability adequacy test
a liability adequacy test (lat) is carried out at each balance sheet date to ascertain whether – taking all known developments
and trends into consideration – the Baloise Group’s existing reserves are adequate.
to this end, all existing reserves – both claims reserves (including reserves for claims handling costs) and annuity reserves
in the non-life segment – are first analysed and, if a shortfall is identified, the relevant reserves are then strengthened accordingly.
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 automatically extended at the end of the year on the same terms and conditions. taking
account of all the latest data and trends, Baloise conducts a profitability analysis of its insurance business during the reporting
year in order to check whether an adequate level of premiums has been charged and, implicitly, whether these liabilities are
therefore covered. this amounts to an analysis of unearned premium reserves and an impairment test of deferred acquisition
costs at the same time. if a loss is expected to be incurred (also applies to other loss-making insurance contracts in existence at
the balance sheet date), the deferred acquisition costs are initially reduced by the respective amount. if the total amount of deferred
acquisition costs is insufficient or if the resultant liability cannot be covered in full, a separate provision for impending losses
equivalent to the residual amount is recognised under other technical reserves.
3.19 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).
the following life insurance products offered by the Baloise Group contain sufficient insurance risk to be classified as insurance
contracts under iFRS 4:
▸
▸
▸
▸
▸
▸
endowment policies (both conventional and unit-linked life insurance)
Swiss group life business (BVG)
term insurance
immediate annuities
Deferred annuities with annuity conversion rates that are guaranteed at the time the policy is purchased
all policy riders such as premium waiver, accidental death and disability.
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the accounting policies applied by the Baloise Group are described below.
3.19.1 General accounting policies
the accounting policies applied to traditional life insurance vary according to the type of profit participation agreed. premiums
are recognised as income and benefits are recognised as expense at the time they fall due. the amount of reserves set aside in
each case is determined by actuarial principles or by the net premium principle, which ensures that the level of reserves generated
from premiums remains consistent over time. the actuarial assumptions used to calculate reserves at the time that contracts are
signed either constitute best estimates with explicit safety margins for specific business lines or they are determined in accordance
with local loss reserving practice and thus also factor in safety margins. the assumptions used are locked in throughout the term
of the contract unless a liability adequacy test reveals that the resultant reserves need to be strengthened after the deferred
acquisition costs (Dacs) and the present value of future profits (pVFp) on acquired insurance contracts have been deducted.
Unearned premium reserves, reserves for final dividend payments and certain unearned revenue reserves (URRs) are also recognised
as components of the actuarial reserve.
a liability adequacy test is performed on all life insurance business at each balance sheet date. this involves calculating
a reserve at the measurement date that factors in all future cash flows (such as insurance benefits, surpluses and contract-related
administrative expenses) based on the best estimates available for the assumptions used at the time. if the minimum reserve
calculated in this way for individual business lines exceeds the reserve available at the time, any existing deferred acquisition
cost or present value of future profits is reduced and, if this is not enough, the reserve is immediately increased to the minimum
level and this increase is recognised in profit or loss.
3.19.2 Present value of future profits (PVFP) on insurance contracts acquired
the present value of future profits on insurance contracts acquired constitutes an identifiable intangible asset that arises from
the purchase of a life insurance company or life insurance portfolio. it is initially measured in accordance with actuarial principles
and is amortised on a straight-line basis. it is regularly tested for impairment as part of a liability adequacy test.
3.19.3 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.
3.19.4 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 acquisition costs.
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3.19.5 Policyholders’ dividends
a large proportion of life insurance contracts confer on policyholders 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 (chapter 23). the relevant interest expense is reported as interest
expenses on insurance liabilities. Surpluses that have been used to finance an increase in insurance benefits are recognised in
actuarial reserves. all investment income derived from unit-linked life insurance contracts is credited to the policyholder.
iFRS 4 introduces the concept of a discretionary participation feature (DpF), which is of relevance not only for the classification
of contracts but also for the disclosure of surplus reserves according to policyholders’ share of the unrealised gains and losses
recognised directly in equity under iFRS and their share of the increases and decreases recognised in profit or loss in the consolidated
financial statements compared with the financial statements prepared in accordance with local accounting standards. 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 subsidiaries
are allocated pro rata to the DpF components of the life insurance company concerned. the DpF component calculated 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 stipulated, the Baloise Group defines a discretionary participation feature
as the currently available reserve for premium refunds after allowing for final policyholders’ dividends. Unless a minimum quota
has been stipulated, all other measurement differences between the local and iFRS financial statements are recognised directly
in equity.
the applicable minimum quotas prescribed by law, contract or Baloise’s articles of association vary from country to country.
life insurance companies operating in Germany and in some areas of Swiss group life business are required by law to distribute
a minimum proportion of their profits to policyholders in the form of dividends.
policyholders in Germany must receive a share of the profits generated. any losses incurred are borne by shareholders.
policyholders are entitled to 90 per cent of investment income (minus the technical interest rate), 75 per cent of the net profit on
risk exposures and 50 per cent of other surpluses. the articles of association of Basler lebensversicherungs-aG, Germany,
additionally 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 liabilities and 90 per cent for changes in assets.
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3.20 Reinsurance
Reinsurance contracts are insurance contracts between insurance companies and / or reinsurance companies. there must be
a transfer of risk for a transaction to be recognised as reinsurance; otherwise the transaction is treated as a financial contract.
inward reinsurance is recognised in the same period as the initial risk. the relevant technical reserves are reported as gross
unearned premium reserves or gross claims reserves for non-life insurance and as gross actuarial reserves for life insurance. in
non-life insurance they are estimated as realistically as possible based on empirical values and the latest information available,
while in life insurance they are recognised as a reserve to cover the original transaction. outward reinsurance is the business
ceded to insurance companies outside the Baloise Group and includes transactions ceded from direct life and non-life business
and from inward insurance.
assets arising from outward reinsurance are calculated over the same periods and on the same basis as the original trans-
action 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.
3.21 Liabilities arising from banking business and financial contracts
3.21.1 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 3.19.
3.21.2 Measured at amortised cost
liabilities measured at amortised cost include savings deposits, medium-term bonds, mortgage-backed bonds, other liabilities
and financial guarantees that do not qualify as insurance contracts. they are initially measured at their acquisition cost (fair value).
the difference between acquisition cost and redemption value is recognised in profit or loss over the term of the liability as
“gains or losses on financial contracts” under the amortised-cost method and the effective interest method.
3.21.3 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.
3.22 Financial liabilities
the financial liabilities reported under this line item comprise the bonds issued in the capital markets. Financial liabilities are
initially measured at their acquisition cost (fair value). acquisition cost includes transaction costs.
the difference between acquisition cost and redemption value is recognised in profit or loss over the term of the liability as
borrowing costs under the amortised-cost method and the effective interest method.
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3.23 Employee benefits
the benefits that the Baloise Group grants to its employees comprise all forms of remuneration that is paid in return for work
performed or in special circumstances.
the benefits available include short-term benefits (such as wages and salaries), long-term benefits (such as long-service
bonuses), termination benefits (such as severance pay and social compensation plan benefits) and post-employment benefits.
the benefits described below may be especially significant owing to their scale and scope.
3.23.1 Post-employment benefits
the main post-employment benefits provided are retirement pensions, employer contributions to mortgage payments and certain
insurance benefits. although these benefits are paid after employees have ceased to work for the Baloise Group, they are funded
while the staff members concerned are still actively employed. all the pension benefits currently provided by the Baloise Group
are defined benefit plans. the projected unit credit method is used to calculate the pertinent pension liabilities.
assets corresponding to these liabilities are only recognised if they are ceded to an entity other than the employer (such as
a foundation). Such assets are measured at fair value. changes to assumptions, discrepancies between the planned and actual
returns on plan assets, and differences between the benefit entitlements effectively received and those calculated using actuarial
assumptions give rise to actuarial gains and losses that must be recognised directly in other comprehensive income.
the Baloise Group’s pension plan agreements are tailored to local conditions in terms of enrolment and the range of
benefits offered.
3.23.2 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 participation
plan and performance Share Units (pSUs) are measured and disclosed in compliance with iFRS 2 Share-based 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.
3.24 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.
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3.25 Taxes
provisions for deferred income taxes are recognised under the liability method, which means that they are based either on the
current tax rate or on the rate expected in future. Deferred income taxes reflect the tax-related impact of temporary differences
between the assets and liabilities reported in the iFRS financial statements and those reported for tax purposes. When deferred
income taxes are calculated, tax loss carryforwards are only recognised to the extent that sufficient taxable profit is likely to be
earned in future.
Deferred tax assets and liabilities are offset against each other and shown as a net figure in cases where the criteria for such
offsetting have been met. this is usually the case if the tax jurisdiction, the taxable entity and the type of taxation are identical.
3.26 Revenue recognition
Revenue and income are recognised at the fair value of the consideration received or receivable. intercompany transactions and
the resultant gains and losses are eliminated. Recognition of revenue and income is described below.
3.26.1 Income from services rendered
income from services rendered is recognised in the period in which the service is provided.
3.26.2 Interest income
interest income from financial instruments that are not recognised 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.
3.26.3 Dividend income
Dividend income from financial assets is recognised as soon as a legal entitlement to receive payment arises.
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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
constant review and are based on empirical values and other factors – including expectations about future events – that are
deemed to be appropriate on the date that the balance sheet is prepared.
Fair value of various balance sheet line items
4.1
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 comparisons 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 non-public information from independent external providers. these
providers use various methods for their estimates (e. g. analysis of discounted cash flows and reference to similar, fairly recent
arm’s-length transactions between knowledgeable, willing parties). if such estimates do not enable financial assets to be
reliably measured, the assets are recognised at cost and disclosed accordingly. publicly quoted prices are used to determine
the fair value of hedge funds. if no such prices are available, prices quoted by independent third parties are used to determine
fair value.
▸ Mortgages and loans (recognised at fair value through profit or loss)
Mortgages and loans are designated as “at fair value through profit or loss” as part of the Baloise Group’s strategy of using
natural hedges. Yield curves are used to measure these portfolios.
the following financial liabilities are measured at fair value:
▸
liabilities arising from banking business and financial contracts (recognised at fair value through profit or loss)
liabilities arising from investment-linked life insurance contracts involving little or no transfer of risk are measured at fair
value based on the capitalised investments underlying these liabilities.
Derivative financial instruments
Models or quoted market prices are used to determine the fair value of derivative financial instruments.
▸
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Financial instruments with characteristics of liabilities (held to maturity)
4.2
the Baloise Group applies the provisions of iaS 39 when classifying non-derivative financial instruments with fixed or
determinable payments as “held to maturity”. to this end, it assesses its intention and ability to hold these financial instruments
to maturity.
if – contrary to its original intention – these financial instruments are not held to maturity (with the exception of specific
circumstances such as the disposal of minor investments), the Baloise Group must reclassify all held-to-maturity financial instru-
ments 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”.
Impairment
4.3
the Baloise Group determines at each balance sheet date whether there is any objective evidence that financial assets may be
permanently impaired.
▸
Financial instruments with characteristics of equity (available for sale)
an impairment loss must be recognised on available-for-sale financial instruments with characteristics of equity whose fair
value at the balance sheet date is more than 50 per cent below their acquisition cost or whose fair value is consistently below
their acquisition cost throughout the twelve-month period preceding the balance sheet date. the Baloise Group examines
whether it needs to recognise impairment losses on securities whose fair value at the balance sheet date is between 20 per
cent and 50 per cent below their acquisition cost. Such assessments of the need to recognise impairment losses consider
various factors such as the volatility of the securities concerned, credit ratings, analysts’ reports, economic conditions and
sectoral prospects.
Financial instruments with characteristics of liabilities (available for sale or held to maturity)
objective evidence of a financial asset’s impairment includes observable data on the following cases:
– Serious financial difficulties on the part of the borrower
– Breaches of contract, such as a borrower in default or arrears with the payment of principal and / or interest
– Greater probability that the borrower will file for bankruptcy or undergo some other form of restructuring
– observable data that indicates a measurable reduction in the expected future cash flows from a group of financial
▸
assets since their initial recognition
– analysts’ reports from banks and evaluations by credit rating agencies are also used to assess the need for impairment
losses
▸ Mortgages and loans (carried at cost)
the mortgage portfolio is regularly tested for impairment. the methods and assumptions used in these tests are also regularly
reviewed in order to minimise any discrepancies between the actual and expected probabilities of default.
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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.
Estimate uncertainties specific to insurance
4.5
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 recognised if such an outflow of resources is probable and can be reliably
estimated.
Employee benefits
4.7
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 assumptions 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. this does not apply to impairment tests for start-ups,
for which a multiples-based market approach is used.
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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). consequently, 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 permitted by local regulations is one option that could be taken if the risk
situation were to change. However, the allocation of surpluses between policyholders and the company is not only subject to local
law, it is also governed by market expectations.
the main risk categories to which the Banking division of the Baloise Group is exposed are credit risk, interest rate risk and
liquidity risk. these risks are identified and managed locally by the banks. the loan portfolio is reviewed and analysed on an
ongoing basis. a range of tools is used for this purpose, including standardised credit regulations and procedures, 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.
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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 simulations
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, incorporating new
business scenarios and patterns of behaviour observed in the past.
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
organisation and responsibilities
entities. its Group-wide Risk Management Standards focus on the following areas:
▸
▸ 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 identified.
Risk owners are allocated according to a hierarchy of responsibility. the Group’s overall risk owner is the chief executive officer
of the Baloise Group. alongside the risk owners, defined risk controllers are responsible for systematic risk control and risk
reporting. When selecting risk controllers, particular care is taken to ensure that their role is independent of the risk they control.
Risk control within the Baloise Group focuses on investment risk, business risk (actuarial and banking risks), risks to the Group’s
financial structure and 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
▸
▸
▸
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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 management 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 technical development
of suitable risk management processes and tools. every month, it tracks developments in the financial markets and their impact
on the risk portfolio and the individual risk capacity of all the business units and the Group as a whole. the relevant risk owners
and risk controllers verify the figures that have been computed and incorporate them into their management decisions.
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 control application.
Life and non-life underwriting strategies
5.2
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 author-
isation 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 Germany and Belgium. the only
other comparable underwriting limits in the Group are for marine and liability insurance. tools for setting the basic premium and
for risk-based management of the total portfolio are also used to manage industrial insurance risk.
For its exposure to natural hazards the Baloise Group has purchased reinsurance cover for the whole Group amounting to
cHF 250 million and cover for earthquakes amounting to cHF 350 million.
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this page has been left empty on purpose.
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RISK MAP
Business Risks
Investment Risks
Financial Structure Risks
Business Environment Risks
Operational Risks
Leadership and Information Risks
actuarial Risks life
▸ parameter Risks
▸ catastrophe Risks
actuarial Risks non-life
▸ premiums
▸ claims
Market Risks
▸ interest rates
▸ equities
▸ currencies
▸ Real estate
▸ Market liquidity
▸ Derivatives
▸ catastrophe Risks
▸ alternative investments
▸ Reserving
Reinsurance
▸ premiums / pricing
▸ Reinsurance Default
▸ active Reinsurance
credit Risks
asset-liability Risks
▸ interest Rate change Risk
▸ (Re)Financing, liquidity
Risk concentration
▸ accumulation Risks
▸ cluster Risks
Balance Sheet Structure and
capital Requirements
▸ Solvency
▸ other Regulatory Requirements
150
change in Standards
it Risks
organizational Structure
competition Risks
external events
investors
▸ it Governance
▸ it architecture
▸ it operations
▸ cyber Security
HR Risks
▸ Skills / capacities
▸ incentive System
legal Risks
▸ contracts
▸ liability and litigations
corporate culture
Business Strategy
▸ Business portfolio
▸ Risk Steering
external communication
▸ external Reporting
▸ Reputation Management
▸ availability of Knowledge
Merger and acquisitions
▸ tax
Financial Statements, Forecast, planning
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
RISK MAP
actuarial Risks life
▸ parameter Risks
▸ catastrophe Risks
actuarial Risks non-life
▸ premiums
▸ claims
▸ Reserving
Reinsurance
▸ premiums / pricing
▸ Reinsurance Default
▸ active Reinsurance
▸ catastrophe Risks
▸ alternative investments
Market Risks
▸ interest rates
▸ equities
▸ currencies
▸ Real estate
▸ Market liquidity
▸ Derivatives
credit Risks
asset-liability Risks
▸ interest Rate change Risk
▸ (Re)Financing, liquidity
Risk concentration
▸ accumulation Risks
▸ cluster Risks
Balance Sheet Structure and
capital Requirements
▸ Solvency
▸ other Regulatory Requirements
Baloise Group annual Report 2017
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notes to the consolidated annual financial statements
Business Risks
Investment Risks
Financial Structure Risks
Business Environment Risks
Operational Risks
Leadership and Information Risks
change in Standards
it Risks
organizational Structure
competition Risks
external events
investors
▸ it Governance
▸ it architecture
▸ it operations
▸ cyber Security
HR Risks
▸ Skills / capacities
corporate culture
Business Strategy
▸ Business portfolio
▸ Risk Steering
▸ availability of Knowledge
Merger and acquisitions
▸ incentive System
legal Risks
▸ contracts
▸ liability and litigations
external communication
▸ external Reporting
▸ Reputation Management
▸ tax
Financial Statements, Forecast, planning
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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Life and non-life reinsurance strategies
5.3
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 property 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 difficulties.
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 insurance as to non-life insurance, although reinsurance is a less important
instrument for ceding risk in life insurance business.
5.4 Non-Life
5.4.1 Actuarial risk
the Baloise Group primarily underwrites insurance risk for private individuals and small and medium-sized enterprises in selected
countries in mainland europe. Business with industrial clients is also conducted in Switzerland and Germany. Underwriting risk
is limited by monitoring and adjusting rates and maintaining underwriting policies and limits appropriate to the size of each
portfolio and the country in which it is located.
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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 homogeneous 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 2017, the Baloise Group’s total reserves calculated using actuarial methods or recognised separately for
special claims (including large claims but not run-off or actuarial reserves for annuities) amounted to cHF 4,600.2 million (2016:
cHF 4,324.4 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 349.3 million (2016: cHF 316.2 million) in claims payments (after taxes) before reinsurance.
the reserves in its run-off business mainly arose from liabilities that the Baloise Group had incurred in the london market
since the early 1990s, largely third-party liability claims relating to asbestos and environmental damage.
Because of the long settlement period, there is a high degree of uncertainty associated with the calculation of these claims
reserves. Both the timing at which cases of this type are 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 6.0 million after taxes
and before reinsurance (2016: cHF 6.5 million) for this reserve.
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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
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total
Year in which the claims occurred
641.7
690.7
723.1
777.9
732.2
768.5
733.6
707.8
704.8
729.5
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
631.4
628.6
623.6
622.6
606.8
597.8
594.3
580.7
576.8
576.8
670.6
657.4
641.0
634.4
638.6
632.8
617.2
615.0
–
685.4
675.1
666.9
659.6
653.0
650.4
641.8
–
–
736.5
731.0
729.1
722.7
717.3
701.6
–
–
–
751.1
736.9
726.3
717.0
710.5
–
–
–
–
768.2
764.1
764.7
756.3
–
–
–
–
–
715.7
701.2
695.9
–
–
–
–
–
–
667.8
657.6
–
–
–
–
–
–
–
689.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
615.0
641.8
701.6
710.5
756.3
695.9
657.6
689.5
729.5
6,774.5
–
–
–
–
–
–
–
–
–
–
claims paid
– 523.7
– 565.6
– 582.6
– 624.0
– 636.1
– 672.3
– 603.2
– 565.9
– 552.1
– 370.6 – 5,696.1
Gross claims reserves
53.1
49.4
59.2
77.6
74.4
84.0
92.7
91.7
137.4
358.9
1,078.4
410.2
775.6
– 36.7
2,227.5
Gross claims reserves
prior to 2008
(including large claims
and assumed business)
Gross provision
for annuities
(non-life, including iBnR)
Reinsurers’ share
Net claims reserves
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For greater clarity, the following analysis of claims trends is shown in euros.
ESTIMATED CUMULATIVE CLAIMS INCURRED IN GERMANY
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total
Year in which the claims occurred
298.2
288.0
302.5
290.8
297.4
382.9
319.3
319.0
332.6
363.6
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
296.2
299.7
300.3
301.2
300.6
301.4
301.2
301.3
300.8
300.8
286.4
289.0
294.6
294.8
295.1
297.1
296.2
296.7
–
299.7
305.6
305.8
306.0
307.9
305.2
304.9
–
–
297.6
300.9
306.6
309.8
311.7
311.3
–
–
–
298.4
302.5
304.3
302.6
303.2
–
–
–
–
384.7
385.9
397.6
396.6
–
–
–
–
–
330.5
334.7
338.4
–
–
–
–
–
–
322.3
321.2
–
–
–
–
–
–
–
333.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
296.7
304.9
311.3
303.2
396.6
338.4
321.2
333.0
363.6
3,269.7
–
–
–
–
–
–
–
–
–
–
claims paid
– 297.0
– 290.5
– 297.3
– 298.7
– 293.0
– 366.4
– 294.8
– 272.0
– 247.7
– 147.2 – 2,804.6
Gross claims reserves
3.8
6.2
7.6
12.6
10.2
30.2
43.6
49.2
85.3
216.4
Gross claims reserves
prior to 2008
(including large claims
and assumed business)
Gross provision
for annuities
(non-life, including iBnR)
Reinsurers’ share
Net claims reserves
465.1
389.8
154.8
– 299.5
710.2
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ESTIMATED CUMULATIVE CLAIMS INCURRED IN BELGIUM
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total
Year in which the claims occurred
205.7
228.0
235.1
308.7
1412.4
2403.6
483.7
459.9
470.3
446.8
eUR million
at the end of the year
in which the claims
occurred
one year later
two years later
three years later
Four years later
Five years later
Six years later
Seven years later
eight years later
nine years later
estimated claims
incurred
215.2
212.3
216.5
1223.0
2222.5
226.7
223.8
219.8
218.9
218.9
478.9
476.0
480.7
494.3
488.7
483.4
402.5
398.0
396.7
394.4
2426.5
421.9
412.9
410.7
416.9
1395.1
2392.2
387.9
392.5
388.6
387.1
287.1
1308.0
2304.0
308.1
306.0
306.0
306.6
248.5
252.2
1264.5
2254.0
250.7
252.5
248.5
245.8
–
–
–
–
–
–
–
–
–
–
245.8
306.6
387.1
416.9
394.4
483.4
480.7
478.9
446.8
3,859.5
claims paid
– 186.9
– 217.0
– 262.1
– 326.9
– 358.8
– 341.0
– 414.2
– 362.0
– 351.9
– 205.3 – 3,026.1
Gross claims reserves
32.0
28.8
44.5
60.2
58.1
53.4
69.2
118.7
127.0
241.5
Gross claims reserves
prior to 2008
(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.
833.4
323.5
155.4
– 299.6
1,012.7
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ESTIMATED CUMULATIVE CLAIMS INCURRED IN LUXEMBOURG
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total
Year in which the claims occurred
15.0
17.5
125.0
123.6
24.0
23.6
236.8
343.8
49.8
49.6
340.8
57.1
57.7
237.8
341.2
57.7
58.2
60.4
57.9
60.0
24.5
236.5
339.9
57.3
57.8
22.7
22.6
235.3
339.7
57.4
57.9
122.0
21.8
21.7
237.0
341.9
59.9
60.7
16.9
121.5
21.3
21.1
236.2
342.0
60.3
60.9
–
–
–
–
–
–
–
–
–
–
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
14.9
15.1
120.8
21.1
20.9
237.9
343.4
61.8
62.7
62.7
60.9
60.7
57.9
57.8
58.2
57.7
60.0
60.4
49.6
585.9
– 62.3
– 60.5
– 60.0
– 57.1
– 56.8
– 56.9
– 55.9
– 56.8
– 54.9
– 30.9
– 552.1
Gross claims reserves
0.4
0.4
0.7
0.8
1.0
1.3
1.8
3.2
5.5
18.7
Gross claims reserves
prior to 2008 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including iBnR)
Reinsurers’ share
Net claims reserves
33.8
49.8
–
– 18.7
64.9
1 the increase in the total estimated claims incurred is primarily due to the addition of Bâloise assurances luxembourg S.a.
2 the increase in the total estimated claims incurred is primarily due to the addition of p & V assurances.
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 85.7 years (2016: 55.7 years).
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Life
5.5
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
31.12.2016
cHF million
Switzerland
individual life
Switzerland
group life
Germany
Belgium
Luxembourg
technical reserves without guaranteed returns
technical reserves with 0 % guaranteed returns
668.5
621.8
2,183.3
686.3
3,362.5
82.1
112.9
91.3
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 %
248.3
23.3
452.6
2.6 %
31.12.2017
technical reserves without guaranteed returns
technical reserves with 0 % guaranteed returns
technical reserves with guaranteed positive returns
average technical interest rate of guaranteed positive returns
Switzerland
individual life
Switzerland
group life
763.2
579.8
2,330.2
632.5
6,817.6
15,709.3
2.5 %
1.3 %
Germany
3,854.8
106.7
6,741.9
3.1 %
Belgium
Luxembourg
129.0
103.8
3,092.7
3.3 %
276.3
25.4
526.3
2.5 %
the guaranteed technical interest rate is one of the risks inherent in traditional life insurance and group life business.
if interest rates rise, there is the risk that more policies will be cancelled, and the payment of surrender values could cause
liquidity problems. this risk can be reduced by imposing surrender charges. in the past, no significant correlation has been
observed between rises in interest rates and the number of major policies cancelled.
When interest rates fall, there is the risk that investment income may no longer be sufficient to fund the technical interest rate.
this risk can be mitigated by means of asset and liability management (alM) and, in some cases, by adjusting policyholders’ dividends.
Unit-linked life insurance generally involves endowment life insurance or a deferred annuity in which the policyholder has
more flexibility regarding the investment process. During the deferment period, unit-linked annuities behave in a similar way to
endowment life insurance, but during the payout period the policy converts into a traditional annuity.
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 policy-
holder’s investment profile. the policyholder usually bears the entire investment risk and may benefit from a positive return.
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neither the cash surrender value nor the maturity value of unit-linked life insurance is guaranteed, but the maturity value is partly
secured by the choice of fund. the funds are typically those with the type of investment strategy (e. g. the proportion of equities
falls if share prices fall) that guarantees the maturity value for a specific policy term. this type of business is offered in Switzerland
and Germany. the guaranteed maturity value of these specific life insurance policies may differ somewhat from the fund value
because of the way the policies are structured. this risk has been factored into actuarial calculations.
in Switzerland, there is a closed sub-portfolio with a guaranteed interest rate. the guarantee was issued as part of the statutory
pension scheme (pillar 3a). on the endowment date, the policyholder receives the value of the fund units or the net investment
premium plus accrued interest at the technical interest rate (3.25 per cent), whichever is the greater. the funds approved for these
policies have a low equity ratio and are therefore not exposed to high volatility. a corresponding actuarial reserve has been
recognised for the guarantee.
Some closed-end funds in Belgium and Switzerland also offer a guaranteed maturity value. the funds are managed and the
guarantees are provided by banks outside the Baloise Group. in Switzerland there is also a closed-end Baloise fund with a guaranteed
maturity value which is hedged via investments in bonds issued by banks outside the Group.
the Baloise Group has a number of variable annuities products including unit-linked and, in some cases, guaranteed whole-life
annuities in its units in Switzerland and in luxembourg / liechtenstein. Financial hedges are provided using external reinsurance.
as at 31.12.
cHF million
actuarial reserves
from unit-linked
life insurance contracts
Switzerland
Germany
Belgium
Luxembourg
2016
2017
2016
2017
2016
2017
2016
2017
639.1
687.9
1,847.5
2,145.3
17.4
22.4
223.3
252.5
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.
our group life business in Switzerland and Belgium focuses on the provision of occupational pensions which, like individual life
insurance, covers the risks of death, disability and survival. the distinctive feature of group life business is the influence of
political decisions. in Switzerland, the government sets the minimum rate of interest to be paid on savings, and the conversion
rate at which accumulated capital is converted into an annuity to provide a pension. However, these regulations only apply to the
minimum portion of accumulated capital that is required to provide initial finance for an annuity. For the remaining portion,
actuarially appropriate annuity conversion rates are used but any change to the minimum interest rate would also affect the
existing statutory portfolio, not just new business, which would normally be the case for individual life business. the technical
interest rate for Belgian group life business – unlike individual life business – is also set by the government. However, it is the
companies – and not their insurers – that are obliged to guarantee this technical interest rate. Baloise insurance in Belgium offers
group life insurance policies with interest rates that are lower than the rate stipulated by the government.
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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
31.12.2016
Actuarial reserves
31.12.2017
CHF
million
Share (%)
CHF
million
Share (%)
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
11,212.2
9,989.9
1,784.5
11,341.6
34,328.1
1,695.2
1,412.9
3,108.1
30.0
26.7
4.8
30.3
91.7
4.5
3.8
8.3
36,280.5
100.0
37,436.2
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.
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.
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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 reinsurance 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 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 33 million (2016: cHF 42 million). the effect on equity in Switzerland was minor..
10 per cent fall in mortality
Similar to the aforementioned scenario of an increase in mortality, the effects of a reduction in mortality were marginal for
the life insurance companies in Germany, Belgium and luxembourg and for Baloise life (liechtenstein) aG. this was true of
the impact on both the income statement and on equity. a reduction in mortality in the Swiss life insurance business – with
policyholders’ dividends adjusted accordingly – had a negative impact of approximately cHF 76 million (2016: cHF 75 million)
on the income statement. the effect on equity is minor.
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 to an attribution of unearned revenue reserve. this adverse impact was exacerbated
by impairment losses on interest rate derivatives. the overall impact was substantially mitigated by the prevailing legal
requirements governing the distribution of surpluses. on balance there was a marginal effect from the German units’ profitability
in the reporting year (2016: cHF 2 million). the negative impact on equity amounted to approximately cHF 5 million (2016:
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 12 million on profitability (2016:
cHF 7 million). the negative effect on unrealised gains amounted to cHF 119 million (2016: cHF 94 million). in luxembourg,
this scenario produced a marginal positive impact on the income statement and an adverse effect of roughly cHF 16 million
(2016: cHF 14 million) on the unrealised gains and losses recognised in equity. the resultant impact on the profitability and
equity of Baloise life (liechtenstein) aG was negligible. in Switzerland, this scenario resulted in a reversal of Dac write-downs,
a reduction in technical reserves, and the offsetting effect of interest rate hedges. this improved profitability overall by roughly
cHF 10 million (2016: cHF 4 million). the adverse impact on equity amounted to approximately cHF 186 million (2016:
cHF 196 million).
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▸
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 partially
compensated for by the increase in the fair value of interest rate derivatives. the overall impact was mitigated by the prevail-
ing legal requirements governing the distribution of surpluses. on balance there was a negative effect from the German units’
profitability in the reporting year of approximately cHF 3 million (2016: approximately cHF 5 million). the positive impact on
their equity amounted to approximately cHF 5 million (2016: cHF 5 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 24 million on the income statement
(2016: cHF 21 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 135 million (2016: cHF 109 million). in
luxembourg, this scenario produced a marginal negative impact on the income statement (2016: marginal negative impact)
and a positive effect of roughly cHF 14 million (2016: cHF 15 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 10 million on the income statement (2016: cHF 19 mil-
lion). the positive impact on equity amounted to approximately cHF 185 million (2016: cHF 195 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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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.
Interest rate risk
5.6.1
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 incorporates the asset managers’ expectations
regarding the capital markets and customers’ expectations regarding life insurance.
the Baloise Group’s chief investment officer (cio) reviews the strategic asset allocation undertaken by all business units
twice a year.
the banks also use an appropriate asset and liability management system to monitor and manage interest rate risk. interest
rate risk is incurred only in proportion to business volume and business activities. interest rate risk is measured using software
based on gap, duration and interest rate sensitivity methods. the asset and liability mismatch at Baloise Bank SoBa is also actively
managed by the use of appropriate interest rate derivatives, generally fair value hedges.
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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 36 million (31 December 2016:
cHF 51 million). including the impact on profit for the period, equity (after shadow accounting, deferred gains / losses and deferred
taxes) would have risen by cHF 211 million (31 December 2016: cHF 181 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 21 million (31 December 2016 cHF 19 million). including the impact on profit for
the period, equity (after shadow accounting, deferred gains / losses and deferred taxes) would have fallen by cHF 238 million
(31 December 2016: cHF 220 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 diver-
sification 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 2016: + / – cHF 1.4 million) in the profit for the period; a positive (+)
change of cHF 0.01 would have generated a currency gain and a negative (–) change of cHF 0.01 would have generated a currency loss.
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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 imple-
mentation of hedging strategies to forward contracts makes it easier to demonstrate 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
2016
2017
2016
2017
0.8
14.3
27.5
2.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.8
14.3
27.5
2.3
cHF million
amount recognised directly in equity
Hedge ineffectiveness reclassified to the income statement
2016
2017
– 14.8
–
72.7
–
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 recognition 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 2017 the Group’s Swiss companies did hold a net position in euros equivalent to cHF 837.1 million
(2016: 765.2 million) and a net position in US dollars equivalent to cHF 243.1 million (2016: cHF 8.3 million). the remaining foreign
exchange positions, both assets and liabilities, were negligible.
During the year, the overall aggregated hedge ratio for the net foreign exchange exposure in US dollars ranged from 90 per
cent to 100 per cent and in euros ranged from 95 per cent to 100 per cent.
the foreign entities in the Baloise Group had not a significant foreign currency exposure.
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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.
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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
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
31.12.2016
3,671.8
2,590.6
1,970.0
1,649.0
1,531.9
996.1
937.0
827.4
31.12.2017
3,448.8
2,806.0
1,998.3
1,574.9
1,538.0
1,011.0
936.3
774.9
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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
31.12.2016
31.12.2017
18,351.8
18,822.3
6,425.5
7,269.6
15.2
7,844.4
6,711.3
10.2
10,852.6
10,746.9
131.8
4,349.5
139.6
4,638.1
838.1
25.7
–
325.1
363.0
4.2
415.2
47.5
383.5
489.7
451.6
939.7
26.8
–
228.1
362.4
3.0
468.3
38.2
444.1
432.9
440.9
1,935.5
2,133.2
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 560.5 million (2016: cHF 672.8 million).
168
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
the management and control of credit risk arising from mortgage business are set out in instructions and written procedures in
which mandatory lending regulations are specified. these lending regulations lay down strict procedures for the immediate
identification, accurate assessment, proper authorisation and continuous monitoring of credit risk. Standard credit documentation
is used to record and review loan applications, which are all logged and managed centrally. the relevant credit documentation
reflects or incorporates all evaluation criteria and policies.
Because a running total of mortgage transactions is kept, it is possible to monitor compliance with credit policy, and corrective
action can be taken if necessary. all mortgages are also managed by periodically auditing exposure, including records of overdue
interest. procedures and audit intervals are set out in a separate directive. Senior management regularly receive detailed risk
reports on the composition of the mortgage portfolio and risk trends.
policies, directives and authorisation levels set out the terms and conditions for granting mortgages, which consist of the
amount, the credit quality of the counterparty, collateral and the term of the transaction as well as the specialist qualifications of
the mortgage expert.
there are special instructions for valuing collateral and calculating loan-to-value ratios. the purpose of these provisions is
to ensure that a standard procedure is used to determine the applicable value of collateral when assessing mortgages. the
calculation of fair value and the loan-to-value ratio of real estate is of key importance, particularly with regard to mortgage
business. one of the objectives of the active management of mortgages is the early identification of potential downside risk.
the mortgage portfolio comprises loans to individuals and to legal entities. the type and degree of risk that may be incurred,
together with collateralisation and quality requirements, are set out in directives and authorisation levels. to mitigate risk, the
portfolio is as geographically diverse as possible.
169
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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
Total
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
14.5
–
–
4.4
91.2
–
–
–
0.0
135.8
128.2
914.0
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
–
2,320.4
131.4
–
–
29.6
30.2
–
188.8
14.3
7.9
19.2
106.2
266.3
–
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
14,651.2
14,789.2
15,688.1
4,122.7
2,927.2
52,178.4
170
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED
promissory notes and registered bonds
2,048.3
2,290.1
as at 31.12.2017
cHF million
Financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
other
Mortgages and loans
Mortgages
policy loans
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
Total
AAA
AA
A
Lower than BBB
or no rating
BBB
Total
6,626.2
207.9
4,449.8
0.2
98.2
–
9,324.2
998.4
566.9
10.0
1,411.6
3,308.5
1,045.5
–
1,117.8
1,880.2
347.9
–
878.7
8,530.1
830.5
–
4.1
–
–
4.7
88.6
–
–
–
0.0
66.9
127.5
776.7
77.0
–
–
25.2
11.3
–
88.3
6.6
6.1
17.3
104.3
382.2
–
47.5
12.2
–
–
125.7
185.9
–
322.8
17.5
7.4
97.0
43.4
625.3
–
78.9
29.8
–
–
25.4
14.5
–
0.0
–
0.2
16.3
29.5
25.5
342.5
18,822.3
1,449.4
301.1
–
129.4
139.6
173.3
816.6
26.8
–
34.8
62.1
3.0
53.1
14.1
282.6
203.0
118.9
323.5
7,844.4
6,711.3
10.2
10,466.8
139.6
4,638.1
939.7
26.8
–
215.7
362.4
3.0
464.2
38.2
296.4
400.5
423.6
2,133.2
14,499.0
14,786.4
15,780.5
4,396.7
4,473.7
53,936.2
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 1.9 million (2016: cHF 1.8 million) and cash and cash equivalents of 0.1 million
(2016: 0.1 million) from collateral received were used.
171
Gross amount
Impairment
Carrying amount
Gross amount
Impairment Carrying amount
2016
2017
–
2.7
0.7
–
147.0
–
2.1
–
–
–
–
– 2.7
– 0.7
–
– 24.3
–
– 2.1
–
–
–
28.5
– 15.3
13.2
–
–
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
–
–
–
–
–
2.9
0.8
–
–
– 2.9
– 0.8
–
–
–
–
–
122.7
135.1
– 20.4
114.7
–
–
–
–
–
–
–
–
0.0
–
24.8
–
–
0.1
134.5
3.3
18.7
320.3
–
–
–
0.0
–
–
–
–
–
–
– 12.4
12.4
–
–
– 0.1
– 35.7
– 0.7
– 1.5
– 74.5
–
–
0.0
98.8
2.6
17.2
245.8
Baloise Group annual Report 2017
Financial Report
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
other loans
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
insurance receivables
other receivables
Receivables from investments
Total
172
Baloise Group annual Report 2017
Financial Report
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
173
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS OVERDUE BUT NOT IMPAIRED
as at 31.12.2017
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16.9
0.0
–
16.9
11.5
–
0.0
11.5
–
–
–
–
14.8
–
–
–
–
–
–
–
–
–
13.9
0.0
–
28.7
–
–
–
–
–
–
–
–
–
–
–
–
4.1
–
6.6
–
–
10.7
–
–
–
–
14.8
–
–
–
–
–
–
–
4.1
–
48.9
0.0
0.0
67.8
Liquidity risk
5.8
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.
174
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
liquidity management must take account of the maturity structure of liabilities as follows:
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31.12.2016
’ 1 year2
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
2,208.8
6,295.5
3,406.0
255.9
40.2
237.4
971.1
489.9
contingent liabilities and capital commitments
1,427.8
1.1
289.9
–
232.4
24.1
24.6
593.4
23.7
172.8
1.2
596.3
6,148.2
590.9
0.0
9.4
–
3.8
260.2
106.3
819.2
445.2
540.9
15.7
27.6
0.6
20.5
12.4
2,317.4
8,000.9
9,999.4
1,620.1
80.0
299.0
1,565.2
537.9
1,873.1
Total
15,332.6
1,362.1
7,610.0
1,988.5
26,293.1
2,317.4
8,000.9
9,999.4
1,470.4
80.0
299.0
1,565.2
537.9
–
–
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31.12.2017
’ 1 year2
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
2,706.7
6,262.3
3,895.9
38.3
28.6
101.5
1,073.9
627.0
923.5
1.0
106.0
42.4
547.7
9.3
4.3
631.7
32.2
729.1
1.5
540.9
7,839.2
444.1
2.0
21.0
0.1
4.1
88.9
105.0
719.6
476.1
914.0
9.1
18.5
0.6
20.3
6.4
2,814.2
7,628.8
2,814.2
7,628.8
12,253.6
12,253.6
1,944.1
1,742.9
49.0
145.3
1,706.3
683.6
1,747.9
Total
15,657.9
2,103.8
8,941.7
2,269.5
28,972.8
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.
49.0
145.3
1,706.3
724.2
–
–
175
Baloise Group annual Report 2017
Financial Report
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 committees analyse maturity schedules
and the income generated by assets or required for liabilities.
as part of tactical and strategic investment planning, care is taken when allocating the assets held by the individual life and
non-life insurance units in the Baloise Group to ensure that sufficient liquidity is available to carry out investment activity and for
the operational settlement of all business processes. the level of liquidity required is determined on the basis of the maturity
structure of investments versus the payout schedule for insurance-related liabilities. the average historical pattern of incoming
and outgoing cash management payments over the previous five years is also taken into account. investment planning explicitly
includes exceptionally large incoming or outgoing payments that are known in advance. Maintenance of liquidity levels and access
to further liquidity via the repo market ensure sufficiently high reserves for payments needed at short notice, such as large claim
settlements, until such as time as the reinsurer assumes the costs. cash pooling among the Baloise Group’s Swiss companies
also ensures that excess liquidity in one unit can be used to offset a temporary liquidity squeeze at another unit via an intra-Group
interest-bearing overdraft facility.
if these precautions fail to meet the need for liquidity, the Baloise Group holds financial assets that can be sold at short notice
without significant price losses. they include all equities (excluding long-term equity investments). Because the Group holds
a substantial portfolio of government and quasi-government bonds, it is possible to sell relatively large holdings of available-for-sale
bonds even in crisis situations. Mortgages and loans are generally held to maturity; early redemption is not considered at present.
in terms of alternative financial assets, 64 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.
Equity price risk
5.9
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:
Impact on profit for the period
Impact on equity
(including profit for the period)
2016
2017
2016
2017
57.4
– 77.6
9.4
– 20.2
264.9
– 267.3
234.0
– 236.7
cHF million
Market price plus 10 %
Market price minus 10 %
176
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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 3.19.5.).
the table above takes account of this profit-sharing scheme.
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, measurement 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 measured 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, 3.21 and 4.1.
177
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Details of the methods used to measure level 2 and level 3 assets and liabilities
the table below gives an overview of the measurement methods that the Baloise Group uses to determine the fair value of balance
sheet line items classified as level 2 or level 3. the table shows the individual measurement methods, the key input factors used
for measurement purposes and – where practicable – the range within which these input factors vary.
Balance sheet line item
Measurement method
Key input factors used for
measurement purposes
Range of input factors
Level 2
Financial instruments
with characteristics of equity
available for sale
at fair value through profit or loss
Financial instruments with characteristics of liabilities
internal
measurement methods
price of underlying instrument,
liquidity discount, balance sheet
and income statement figures
net asset value
net asset value
n. a.
n. a.
available for sale
present-value model
at fair value through profit or loss
present-value model
net asset value
Yield curve,
swap rates, default risk
interest rate, credit spread,
market price
n. a.
Mortgages and loans
carried at cost
at fair value through profit or loss
Derivative financial instruments
liabilities arising from banking business
and financial contracts
at fair value through profit or loss
Level 3
present-value model
interest rate, credit spread
present-value model
Black-Scholes
option pricing model
liBoR, swap rates
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
Financial instruments with characteristics of equity
net asset value
n. a.
Financial instruments with characteristics of liabilities
present-value model
interest rate, credit spread
–
–
–
–
–
–
–
–
–
–
n. a.
–
n. a.
Derivative financial instruments
investment property
net asset value
DcF method
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.
178
n. a.
Discount rate1
2.8 % – 5.6 %3
Rental income2 268 – 288 cHF million3
Vacancy costs1
9 – 14 cHF million3
Running costs1
22 – 25 cHF million3
Maintenance costs1
26 – 29 cHF million3
capital expenditure2
50 – 70 cHF million3
inflation rate2
0 % – 2 %3
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Determining the fair value of assets and liabilities classified as level 3
the Baloise Group organises its operating activities into strategic business units, which are generally combined under a single
management team for each region. the financial and management information needed for all relevant executive decisions is held by
these strategic business units. this organisational structure is also used to delegate authority and responsibility for proper imple-
mentation 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 investments 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.
179
Baloise Group annual Report 2017
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notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
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
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
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
30.8
30.8
25.4
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
337.6
6,817.5
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
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
8,103.0
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.
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FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
31.12.2017
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
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
other receivables
carried at cost
Receivables from investments
carried at cost
investment property
Total
carrying amount
Total fair value
Level 1
Level 2
Level 3
4,402.9
4,402.9
343.3
343.3
2,695.1
343.3
8,488.9
10,018.7
24,870.1
24,870.1
29.2
29.2
10,018.7
23,501.3
29.2
15,791.7
16,730.1
776.8
362.4
776.8
362.4
3.0
3.0
403.1
403.5
–
–
23.3
–
–
440.9
440.9
7,480.3
7,480.3
321.7
–
501.3
1,206.5
–
–
1,368.8
–
–
–
–
–
10,237.2
6,492.9
776.8
339.1
–
–
20.4
–
–
–
3.0
403.5
98.7
7,480.3
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
7,628.8
7,738.9
518.5
145.3
518.5
145.3
–
–
7.1
1,742.9
1,852.9
1,852.9
7,667.8
71.1
518.5
138.2
–
–
–
–
in 2017, Baloise used a revised methodology for classifying the hierarchy levels. the changes mainly relate to mortgages carried
at cost, the majority of which can be allocated to level 2 on the basis of observable discount factors (interest rates).
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notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES
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
Derivative financial instruments
9,510.4
9,510.4
9,510.4
–
–
–
–
–
–
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.
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notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES
31.12.2017
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
11,128.7
11,128.7
10,908.6
–
220.1
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
1,971.9
1,971.9
1,804.2
95.2
72.6
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
other assets
–
438.0
–
438.0
–
194.5
–
243.5
Recognised at fair value through profit or loss
70.5
70.5
70.5
–
Liabilities measured on a recurring basis
liabilities arising from banking business and financial contracts
Recognised at fair value through profit or loss
11,735.1
11,735.1
11,639.9
Derivative financial instruments
–
–
–
95.2
–
–
–
–
–
–
183
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notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS FOR OWN ACCOUNT AND AT OWN RISK AND CLASSIFIED AS LEVEL 3
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 classified as held for sale
changes in fair value recognised in profit or loss1
changes in fair value not recognised in profit or loss2
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
943.1
122.3
–
–
– 105.7
–
–
–
–
–
– 6.8
18.7
– 7.5
964.0
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.
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notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS FOR OWN ACCOUNT AND AT OWN RISK AND CLASSIFIED AS LEVEL 3
2017
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 classified as held for sale
changes in fair value recognised in profit or loss1
changes in fair value not recognised in profit or loss2
exchange differences
Balance as at 31 December
Financial
instruments with
characteristics
of equity
Available
for sale
964.0
279.0
0.0
–
Total
Investment
property
Recognised at
fair value
through
profit or loss
6,817.5
7,781.5
567.2
384.5
–
846.2
384.5
–
– 103.5
– 157.7
– 261.2
–
–
–
–
–
– 10.4
30.0
47.4
–
–
–
–
–
–
–
–
– 336.8
111.1
–
94.6
– 336.8
100.7
30.0
141.9
1,206.5
7,480.3
8,686.8
Changes in fair value of financial instruments held at the balance sheet date and recognised
in profit or loss
– 10.4
99.5
89.1
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.
2 changes in fair value not recognised in profit or loss arise from unrealised gains and losses on investments.
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notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES AND CLASSIFIED AS LEVEL 3
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 loss1
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.
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notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES AND CLASSIFIED AS LEVEL 3
2017
cHF million
Assets and liabilities measured on a recurring basis
Balance as at 1 January
additions
additions arising from change in the scope of consolidation
additions arising from change in the percentage of shareholding
Financial
instruments with
characteristics of
equity
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
44.7
100.3
–
–
42.2
19.6
–
–
Disposals
– 0.8
– 30.4
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 loss1
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
–
–
83.5
– 20.4
1.2
11.6
220.1
0.8
–
–
41.3
– 4.4
– 0.8
5.1
72.6
– 0.3
1 changes in fair value recognised in profit or loss arise from realised gains and losses on investments, impairment losses or the reversal of impairment losses.
0.8
–
–
–
–
–
–
–
– 0.8
–
0.0
–
–
Total
87.7
119.9
–
–
– 31.2
–
–
124.7
– 25.5
0.4
16.7
292.7
0.5
187
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notes to the consolidated annual financial statements
Reclassification of assets and liabilities from level 1 to level 2 and vice versa
assets and liabilities measured at fair value are generally reclassified from level 1 to level 2 if there is no longer deemed to be an
active market in these instruments owing to their low daily trading volumes or lack of liquidity or if the instruments concerned
have been de-listed. Financial instruments are reclassified from level 2 to level 1 for the exact opposite reasons.
no significant amounts of assets or liabilities measured at fair value were reclassified from level 1 to level 2 or vice versa
during the reporting period or in 2016.
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.
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 2,117 million (2016: cHF 2,142 million) was met in 2016 and 2017. the cover ratio for the capital adequacy requirement in
available funds was 406 per cent at 31 December 2017 (31 December 2016: 351 per cent). the capital currently available consists
of iFRS equity, the eligible hybrid capital, unallocated policyholders’ dividends and the final policyholders’ dividend reserve.
liabilities are also recognised as capital in accordance with the corresponding options for solvency coverage at individual company
level. 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 Requirements Regulation (cRR).
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notes to the consolidated annual financial statements
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 (target capital) for the SSt using an inhouse model which takes into account
the Baloise Group’s business model. all activities and processes for developing and structuring the inhouse model are gathered
together in the Baloise internal Solvency System (BiSS) and coordinated and managed by Group Risk Management.
Risk-bearing capital is calculated on the basis of a consolidated balance sheet measured using market values. the difference
between the assets and liabilities measured at market value gives the risk-bearing capital after any capital deductions and
including any eligible supplementary capital. as a result, all capital items that can be deployed to cover losses in the event of
adverse business developments are taken into consideration.
Risk-bearing capital is compared with target 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 extreme scenarios are also evaluated, and their potential impact on
risk-bearing capacity is analysed. the SSt ratio (ratio of risk-bearing capital to target capital, after deduction of the market value
margin in both cases) is calculated for the strategic business units and the Group. the Group’s target capital is not determined
by simply adding together individual risk positions; it also takes into account diversification 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.
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notes to the consolidated annual financial statements
6. BASIS OF CONSOLIDATION
6.1 2016 financial year
6.1.1 Acquisitions
in the second half of 2016, four affiliated real-estate companies were acquired in Belgium (postsite aalst). according 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.
6.1.2 Disposals
no companies were sold during the year under review.
6.1.3 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.
6.2 2017 financial year
6.2.1 Acquisitions and foundations
on 11 January 2017, a controlling interest in Drivolution nV was acquired in Belgium.
in Germany, a start-up named FRi:DaY was founded as a mobile insurer in Berlin. FRi:DaY was entered in the commercial
register on 15 February 2017 as a German branch of Basler Versicherungen luxemburg a.G. in luxembourg, this start-up was
entered in the trade and company register under the name “FRiDaY tech” on 19 December 2017. FRi:DaY’s business is to be transferred
to this company during 2018 and the digital insurance business is to be relaunched and expanded as a separate legal entity.
on 28 February 2017, anthemis Baloise Strategic Ventures llp was founded in london as part of a fintech investment partner-
ship with the UK-based anthemis Group.
approximately a 71 per cent shareholding in the listed company pax anlage aG was purchased in Basel, Switzerland, on
31 March 2017. this stake was increased to 84.1 per cent in the second quarter of 2017 as a result of a public purchase order
followed by additional share purchases. Further purchases were made in the second half of 2017, and the percentage of share-
holding according to the share register was 84.9 per cent as at 31 December 2017. pax Wohnbauten aG, a wholly owned subsidiary
of pax anlage aG, was included in the purchase. it was renamed Baloise Wohnbauten aG on 3 July 2017.
in Switzerland, 82.6 per cent of the shares in Movu aG, which operates an online platform for home-moving services, were
acquired on 13 July 2017. a call option exists on the remaining shares, which Baloise can exercise up to the end of 2021. there is
a strong intention to exercise this option, which is why the company has been fully consolidated.
in Belgium, a company named MoBlY was founded on 6 october 2017 that operates an online platform for services relating
to second-hand cars.
on 22 november 2017, the real-estate company Vac De Meander was acquired in Belgium. it contains just one property, the
newly built Herman teirlinck office block in Brussels, which is occupied by the Flemish civil service on a long-term lease. according
to the criteria defined in iFRS 3 Business combinations, this purchase constitutes the acquisition of assets.
the two luxembourg companies Baloise alternative investments partner S.à r.l. and Baloise private equity partner S.à r.l.
were founded at the start of December 2017. this was done to aid the planned transfer of parts of the investment business to
luxembourg that are currently still conducted by firms in Jersey.
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notes to the consolidated annual financial statements
6.2.2 Disposals
the two German companies assekuranz Herrmann GmbH and Wilhelm Herrmann assekuranz Makler GmbH were sold to the artus
Group in January 2017.
the German branch of Baloise life ltd in Bad Homburg was sold to the Frankfurter leben Group on 3 February 2017.
6.2.3 Other changes in the group of consolidated companies
no companies were merged or liquidated in the year under review.
INFORMATION ON OPERATING SEGMENTS (SEGMENT REPORTING)
7.
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 lebensversicherungs-aG
in the czech Republic and Slovakia. the “luxembourg” segment also includes the Baloise life liechtenstein unit.
the “Group business” segment comprises the units engaged in intercompany reinsurance and financing, as well as corporate
it and the holding companies.
the revenue generated by the Baloise Group is broken down into the non-life, life, Banking (including asset management)
and other activities operating segments. the non-life segment offers accident and health insurance as well as products relating
to liability, motor, property and marine insurance. these products are tailored to the specific needs of our customers – primarily
retail clients – and the core competences of the relevant companies in the Baloise Group. the life segment provides individuals
and companies with a wide range of endowment policies, term insurance, investment-linked products and private placement life
insurance. the Banking segment essentially comprises Baloise Bank SoBa, which acts as a universal bank in Switzerland, and
Deutscher Ring Bausparkasse, which operates in Germany mainly as a conventional building society.
the “other activities” operating segment includes equity investment companies, real estate firms and financing companies.
the accounting policies applied to the presentation of the operating segments (segment reporting) are those used throughout
the rest of the Financial Report. no intersegment relationships recognised either on the balance sheet or in the income statement
– with the exception of income from long-term equity investments – are offset against each other.
191
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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)
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
4,188.1
– 81.5
4,106.6
4,231.7
– 83.7
4,148.0
1,219.3
– 85.2
1,134.1
1,164.2
– 92.2
1,072.0
1,078.8
– 88.0
990.8
1,133.5
– 98.0
1,035.6
198.4
– 17.1
181.2
202.4
– 18.9
183.6
6,684.5
– 271.8
6,412.8
6,731.9
– 292.8
6,439.1
– 103.6
– 109.4
103.5
0.0
109.4
0.0
6,680.6
– 168.2
6,512.4
6,726.4
– 183.4
6,542.9
investment income
878.2
867.4
336.4
260.9
239.5
241.9
18.9
20.1
1,473.1
1,390.3
5.3
4.3
– 1.8
– 2.0
1,476.6
1,392.5
Realised gains and losses on investments
For own account and at own risk
For the account and at the risk
of life insurance policyholders and third parties
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
108.6
12.4
37.2
0.0
106.8
5,249.8
– 29.9
0.0
155.3
43.1
40.8
0.0
179.2
5,433.9
– 29.5
0.0
100.5
114.7
31.8
7.1
27.5
208.3
102.7
28.7
5.5
42.1
95.0
10.0
1.6
0.0
16.5
42.5
18.3
2.9
–
16.5
1,752.1
1,720.2
1,353.5
1,357.6
39.0
7.1
39.9
5.5
34.2
0.0
35.7
–
– 3,651.7
– 3,829.7
– 1,209.2
– 1,041.0
– 351.8
– 148.4
27.1
– 65.6
38.7
– 55.7
– 416.7
– 428.2
– 43.8
– 2.3
– 19.8
– 51.4
– 0.7
– 18.3
– 178.6
– 321.8
– 181.6
103.2
– 188.2
– 193.3
– 24.2
– 28.3
– 23.8
– 67.6
– 281.5
85.0
– 159.8
– 180.3
– 30.2
– 21.3
– 26.6
– 140.5
– 688.6
– 126.3
74.8
– 229.2
– 108.3
– 11.6
– 0.2
– 59.2
– 33.1
– 722.8
– 68.9
51.4
– 247.0
– 107.2
– 13.5
– 0.1
– 66.2
– 42.6
– 4,703.2
– 4,815.5
– 1,813.0
– 1,796.2
– 1,181.7
– 1,216.8
– 436.3
– 718.6
– 8,134.2
– 8,547.1
– 8,226.6
– 8,733.0
Profit / loss before borrowing costs and taxes
546.6
618.4
– 60.9
– 76.0
171.7
140.8
23.3
27.5
680.7
710.6
2.9
– 26.6
683.6
684.1
Borrowing costs
Profit / loss before taxes
income taxes
Profit / loss for the period (segment result)
–
546.6
– 99.2
447.4
– 2.8
615.5
– 94.7
520.8
–
–
– 60.9
– 76.0
12.4
– 48.5
10.5
– 65.5
–
171.7
– 46.3
125.5
–
140.8
– 12.4
128.5
Segment assets as at 31.12.
45,081.9
46,200.1
15,104.9
14,433.3
9,521.0
10,828.4
10,413.8
12,652.5
80,121.6
84,114.4
1,466.1
1,620.1
– 973.4
– 1,210.6
80,614.3
84,523.9
192
8,814.9
9,257.8
8,910.2
9,417.1
157.5
160.4
– 133.8
– 135.0
– 236.8
– 238.8
– 55.1
– 190.8
190.8
– 53.0
– 190.0
190.0
– 114.2
– 5,660.6
– 5,707.6
– 5,664.2
– 5,726.5
99.6
0.0
99.6
– 3.4
6.5
20.5
286.1
–
–
112.5
– 208.2
– 0.3
– 0.5
– 0.1
– 8.3
–
– 10.2
– 168.1
– 283.2
– 38.0
– 35.1
20.3
– 14.8
103.9
0.0
103.9
23.4
34.3
23.2
349.4
–
–
– 80.3
– 14.0
– 0.4
– 0.4
– 0.3
– 8.4
–
– 37.6
– 234.4
– 375.9
– 31.4
– 58.0
– 18.9
– 76.9
–
–
–
–
–
–
–
–
–
– 116.1
221.8
– 105.7
1.1
– 1.1
29.0
0.2
5.8
155.8
190.8
61.5
39.4
– 100.9
0.9
– 0.9
28.0
0.2
4.0
157.8
190.0
–
–
–
–
–
–
–
–
–
303.1
364.1
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
2.5
220.5
15.8
–
20.6
459.5
2.6
–
– 111.1
– 23.1
9.2
– 20.6
– 44.4
– 1.4
0.1
– 235.6
– 9.3
–
23.3
1.0
24.3
– 1.7
498.0
19.1
–
27.0
746.0
2.8
–
– 61.6
6.9
– 20.1
– 48.9
– 1.6
0.0
– 468.8
– 10.3
–
27.5
– 2.4
25.1
306.5
357.6
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
–
680.7
– 132.0
548.7
404.4
662.2
91.5
5.5
264.8
48.8
5.5
– 560.5
182.0
– 482.6
– 764.6
– 96.7
– 22.1
– 579.8
– 515.2
– 2.8
707.8
– 98.9
608.8
Total
2017
427.8
696.5
116.9
5.5
235.0
–
5.5
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 34.3
649.8
– 117.9
531.9
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Total
2017
4,188.1
– 81.5
4,106.6
4,231.7
– 83.7
4,148.0
1,219.3
– 85.2
1,134.1
1,164.2
– 92.2
1,072.0
1,078.8
– 88.0
990.8
1,133.5
– 98.0
1,035.6
198.4
– 17.1
181.2
202.4
– 18.9
183.6
6,684.5
– 271.8
6,412.8
6,731.9
– 292.8
6,439.1
99.6
0.0
99.6
103.9
0.0
103.9
– 103.6
– 109.4
103.5
0.0
109.4
0.0
6,680.6
– 168.2
6,512.4
6,726.4
– 183.4
6,542.9
investment income
878.2
867.4
336.4
260.9
239.5
241.9
18.9
20.1
1,473.1
1,390.3
5.3
4.3
– 1.8
– 2.0
1,476.6
1,392.5
2.5
220.5
15.8
–
20.6
459.5
2.6
–
– 111.1
– 23.1
9.2
– 20.6
– 44.4
– 1.4
0.1
– 235.6
– 9.3
– 1.7
498.0
19.1
–
27.0
746.0
2.8
–
306.5
357.6
86.4
7.1
171.4
404.4
662.2
91.5
5.5
264.8
8,814.9
9,257.8
– 3.4
6.5
157.5
–
20.5
286.1
–
23.2
349.4
46.0
7.1
48.8
5.5
– 236.8
– 238.8
–
–
23.4
34.3
–
–
–
–
160.4
– 133.8
– 135.0
– 114.2
– 5,660.6
– 5,707.6
– 61.6
6.9
– 20.1
– 48.9
– 1.6
0.0
– 468.8
– 10.3
– 682.8
214.2
– 503.5
– 762.7
– 81.0
– 30.7
– 338.5
– 288.7
– 560.5
182.0
– 482.6
– 764.6
– 96.7
– 22.1
– 579.8
– 515.2
112.5
– 208.2
– 0.3
– 0.5
– 0.1
– 8.3
–
– 10.2
– 168.1
– 283.2
– 80.3
– 14.0
– 0.4
– 0.4
– 0.3
– 8.4
–
– 37.6
– 234.4
– 375.9
303.1
364.1
110.1
7.1
136.8
427.8
696.5
116.9
5.5
235.0
8,910.2
9,417.1
–
7.1
–
5.5
– 5,664.2
– 5,726.5
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 8,226.6
– 8,733.0
683.6
684.1
– 38.0
645.6
– 111.7
533.9
– 34.3
649.8
– 117.9
531.9
–
– 55.1
– 190.8
190.8
–
– 116.1
221.8
– 105.7
1.1
– 1.1
29.0
0.2
5.8
155.8
190.8
–
–
–
–
–
–
– 53.0
– 190.0
190.0
–
61.5
39.4
– 100.9
0.9
– 0.9
28.0
0.2
4.0
157.8
190.0
–
–
–
–
–
– 4,703.2
– 4,815.5
– 1,813.0
– 1,796.2
– 1,181.7
– 1,216.8
– 436.3
– 718.6
– 8,134.2
– 8,547.1
Profit / loss before borrowing costs and taxes
546.6
618.4
– 60.9
– 76.0
171.7
140.8
23.3
27.5
680.7
710.6
2.9
– 26.6
–
23.3
1.0
24.3
–
27.5
– 2.4
25.1
–
680.7
– 132.0
548.7
– 2.8
707.8
– 98.9
608.8
– 38.0
– 35.1
20.3
– 14.8
– 31.4
– 58.0
– 18.9
– 76.9
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)
Realised gains and losses on investments
For own account and at own risk
For the account and at the risk
of life insurance policyholders and third parties
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)
operating and administrative expenses
– 416.7
– 428.2
– 3,651.7
– 3,829.7
– 1,209.2
– 1,041.0
– 351.8
– 148.4
108.6
12.4
37.2
0.0
106.8
5,249.8
– 29.9
0.0
27.1
– 65.6
– 43.8
– 2.3
– 19.8
–
546.6
– 99.2
447.4
155.3
43.1
40.8
0.0
179.2
5,433.9
– 29.5
0.0
38.7
– 55.7
– 51.4
– 0.7
– 18.3
– 2.8
615.5
– 94.7
520.8
– 178.6
– 321.8
1,752.1
1,720.2
1,353.5
1,357.6
100.5
114.7
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
208.3
102.7
28.7
5.5
42.1
39.9
5.5
– 281.5
85.0
– 159.8
– 180.3
– 30.2
– 21.3
– 26.6
– 140.5
–
–
– 60.9
– 76.0
12.4
– 48.5
10.5
– 65.5
95.0
10.0
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
42.5
18.3
2.9
–
16.5
35.7
–
– 722.8
– 68.9
51.4
– 247.0
– 107.2
– 13.5
– 0.1
– 66.2
– 42.6
–
140.8
– 12.4
128.5
Segment assets as at 31.12.
45,081.9
46,200.1
15,104.9
14,433.3
9,521.0
10,828.4
10,413.8
12,652.5
80,121.6
84,114.4
1,466.1
1,620.1
– 973.4
– 1,210.6
80,614.3
84,523.9
193
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
7.2 Segment reporting by operating segment
cHF million
Income
premiums earned and policy fees (gross)
Reinsurance premiums ceded
premiums earned and policy fees (net)
investment income
Realised gains and losses on investments
For own account and at own risk
For the account and at the risk
of life insurance policyholders and third parties
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
2016
3,109.7
– 149.8
2,959.9
Non-Life
2017
3,214.4
– 162.6
3,051.8
2016
3,570.9
– 18.4
3,552.4
Life
2017
3,512.0
– 20.8
3,491.1
217.8
213.2
1,161.5
1,087.3
118.7
113.1
– 23.4
– 23.5
1,476.6
1,392.5
47.6
–
19.6
0.0
80.7
3,325.7
– 49.7
0.0
102.7
–
23.5
0.0
57.3
3,448.5
– 52.9
0.0
259.2
357.6
17.0
3.0
87.3
5,437.9
– 42.7
3.0
339.3
662.2
21.8
1.7
218.9
5,822.2
– 45.3
1.7
– 1,859.7
– 1,881.0
– 66.7
96.5
– 440.0
– 488.5
– 22.9
– 0.2
– 0.5
– 38.1
67.7
– 468.4
– 490.6
– 27.0
– 0.2
– 0.8
– 147.3
– 2,929.3
– 235.5
– 3,073.7
– 3,804.5
– 602.4
– 3,845.5
– 496.9
11.7
– 63.0
– 275.4
– 85.6
– 30.3
– 303.9
– 58.4
13.1
– 13.7
– 275.3
– 95.4
– 21.8
– 560.9
– 219.7
– 5,211.8
– 5,516.2
Profit / loss before borrowing costs and taxes
396.4
374.7
226.1
306.0
– 31.0
– 78.5
683.6
684.1
Borrowing costs
Profit / loss before taxes
income taxes
Profit / loss for the period (segment result)
–
396.4
– 74.9
321.5
–
374.7
– 100.2
274.5
–
226.1
– 34.3
191.8
– 2.8
303.2
– 14.2
289.0
194
2016
2016
2017
2016
2017
2016
Other activities
Eliminated
Banking
2017
– 15.8
–
137.4
–
4.4
239.2
– 65.4
–
–
–
–
–
–
–
–
–
–
– 31.0
– 100.3
– 157.4
81.8
–
81.8
– 15.8
66.0
– 3.4
131.2
16.6
263.0
– 66.3
–
–
–
–
–
–
–
–
–
–
–
–
– 46.5
– 99.5
– 170.9
92.1
–
92.1
– 19.4
72.7
–
–
–
2.1
– 0.3
6.5
165.2
4.2
11.1
188.7
– 146.4
4.2
–
–
–
–
–
–
– 16.4
– 200.6
– 219.7
– 38.0
– 68.9
16.9
– 52.1
–
–
–
2.4
1.6
34.3
159.9
3.8
15.9
218.0
– 147.1
3.8
–
–
–
–
–
–
– 45.4
– 248.0
– 296.5
– 31.4
– 109.9
12.3
– 97.6
– 222.9
– 225.8
– 58.9
– 305.2
305.2
– 61.4
– 310.7
310.7
8,910.2
9,417.1
– 5,664.2
– 5,726.5
Total
2017
6,726.4
– 183.4
6,542.9
427.8
696.5
116.9
5.5
235.0
–
5.5
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 34.3
649.8
– 117.9
531.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,680.6
– 168.2
6,512.4
303.1
364.1
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 24.9
– 26.0
– 2.6
– 3.1
75.8
74.4
24.6
204.8
305.2
24.6
211.8
310.7
– 8,226.6
– 8,733.0
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
7.2 Segment reporting by operating segment
cHF million
Income
premiums earned and policy fees (gross)
Reinsurance premiums ceded
premiums earned and policy fees (net)
investment income
Realised gains and losses on investments
For own account and at own risk
For the account and at the risk
of life insurance policyholders and third parties
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
2016
2016
Non-Life
2017
3,214.4
– 162.6
3,051.8
102.7
–
23.5
0.0
57.3
3,448.5
– 52.9
0.0
– 38.1
67.7
– 468.4
– 490.6
– 27.0
– 0.2
– 0.8
–
374.7
– 100.2
274.5
3,109.7
– 149.8
2,959.9
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
Life
2017
3,512.0
– 20.8
3,491.1
339.3
662.2
21.8
1.7
218.9
5,822.2
– 45.3
1.7
13.1
– 13.7
– 275.3
– 95.4
– 21.8
– 560.9
– 219.7
– 2.8
303.2
– 14.2
289.0
3,570.9
– 18.4
3,552.4
259.2
357.6
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
– 1,859.7
– 1,881.0
– 3,804.5
– 602.4
– 3,845.5
– 496.9
Profit / loss before borrowing costs and taxes
396.4
374.7
226.1
306.0
– 147.3
– 2,929.3
– 235.5
– 3,073.7
– 5,211.8
– 5,516.2
2016
–
–
–
Banking
2017
–
–
–
217.8
213.2
1,161.5
1,087.3
118.7
113.1
– 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
– 15.8
–
137.4
–
4.4
239.2
– 65.4
–
–
–
–
–
–
– 26.0
–
– 31.0
– 100.3
– 157.4
81.8
–
81.8
– 15.8
66.0
–
–
–
2.1
– 0.3
6.5
165.2
4.2
11.1
188.7
– 146.4
4.2
–
–
–
–
–
– 2.6
–
– 16.4
– 200.6
– 219.7
–
–
–
2.4
1.6
34.3
159.9
3.8
15.9
218.0
– 147.1
3.8
–
–
–
–
–
– 3.1
–
– 45.4
– 248.0
– 296.5
– 31.0
– 78.5
– 38.0
– 68.9
16.9
– 52.1
– 31.4
– 109.9
12.3
– 97.6
Other activities
Eliminated
2016
2017
2016
2017
2016
Total
2017
6,726.4
– 183.4
6,542.9
–
–
–
–
–
–
6,680.6
– 168.2
6,512.4
– 23.4
– 23.5
1,476.6
1,392.5
–
–
– 222.9
–
– 58.9
– 305.2
305.2
–
–
–
–
–
–
75.8
–
24.6
204.8
305.2
–
–
–
–
–
–
–
– 225.8
–
– 61.4
– 310.7
310.7
–
–
–
–
–
–
74.4
–
24.6
211.8
310.7
–
–
–
–
–
303.1
364.1
110.1
7.1
136.8
427.8
696.5
116.9
5.5
235.0
8,910.2
9,417.1
–
7.1
–
5.5
– 5,664.2
– 5,726.5
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 8,226.6
– 8,733.0
683.6
684.1
– 38.0
645.6
– 111.7
533.9
– 34.3
649.8
– 117.9
531.9
195
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Notes to the consolidated balance sheet
8. 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
Reclassification
Reclassification to non-current assets
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
Depreciation and impairment form part of other operating expenses.
Land
Buildings
65.1
0.0
245.7
0.9
–
–
–
–
–
–
– 0.4
– 31.4
–
–
– 0.1
–
– 0.3
64.4
66.6
– 2.2
64.4
–
–
– 8.4
– 1.1
–
– 1.7
204.1
474.6
– 270.6
204.1
–
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
– 56.0
37.7
–
–
–
– 0.2
23.8
58.4
– 34.6
23.8
–
–
–
0.0
19.4
80.1
– 60.7
19.4
–
399.1
16.4
0.0
– 0.3
–
– 31.8
–
– 30.7
– 1.1
–
– 2.2
349.3
773.3
– 424.0
349.3
–
196
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
2017
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
Reclassification to non-current assets
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
Depreciation and impairment form part of other operating expenses.
Land
Buildings
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Total
64.4
0.0
–
– 1.6
–
–
–
–
–
–
1.8
64.5
66.9
– 2.4
64.5
–
204.1
1.3
–
–
–
–
–
37.7
3.5
–
–
–
0.0
0.0
23.8
6.0
0.3
– 0.4
– 0.2
0.0
0.0
19.4
10.9
0.0
0.0
0.0
0.0
– 0.3
349.3
21.7
0.3
– 2.0
– 0.2
0.0
– 0.3
– 8.3
– 7.2
– 6.2
– 10.5
– 32.3
–
–
13.0
210.1
491.4
– 281.3
210.1
–
–
–
0.4
34.3
95.9
– 61.6
34.3
–
–
–
1.4
24.5
64.0
– 39.4
24.5
–
–
–
0.3
19.8
51.3
– 31.5
19.8
–
–
–
16.9
353.3
769.6
– 416.3
353.3
–
197
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
9.
INTANGIBLE ASSETS
2016
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
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
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
67.1
7.9
480.9
149.9
–
–
–
–
77.1
253.3
–
–
–
–
132.3
–
26.4
–
– 0.1
–
–
–
0.1
–
0.2
–
–
–
–
–
Total
838.2
–
26.6
330.3
– 0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 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
–
–
– 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
165.5
464.9
150.1
48.0
7.6
836.1
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
198
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
2017
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
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 2017
Switzerland
Germany
Belgium
luxembourg
Group business
Total for geographic regions
Goodwill
66.3
23.0
–
–
–
–
–
–
–
–
– 19.6
–
–
–
11.5
81.1
246.3
– 165.1
81.1
21.8
17.0
17.6
24.8
–
81.1
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
Present value
of gains on
insurance
contracts
acquired
Deferred
acquisition
cost
(life)
Deferred
acquisition
cost
(non-life)
Other
intangible
assets
Internally
developed
intangible
assets
7.0
485.6
149.9
–
–
–
–
89.1
266.4
127.2
5.1
27.6
–
– 0.1
– 1.1
0.0
– 0.4
0.2
–
–
–
–
–
–
–
–
–
–
–
Total
836.1
28.1
27.6
355.5
– 0.1
– 1.1
0.0
– 0.4
–
–
–
–
– 12.4
2.0
–
–
–
10.4
41.1
615.8
–
–
– 259.0
– 29.9
– 0.1
– 302.3
–
–
–
– 4.4
–
8.8
161.7
–
–
–
–
–
–
–
8.6
137.0
367.5
– 230.5
–
–
–
–
–
–
0.1
10.0
– 9.9
2.0
– 19.6
–
– 4.4
10.4
70.6
1,002.5
–
–
615.8
161.7
137.0
0.1
1,002.5
89.7
507.4
9.3
9.4
–
55.7
40.0
61.4
4.5
0.1
29.7
0.6
81.0
16.8
8.9
6.7
615.8
161.7
137.0
–
–
–
–
–
–
–
– 0.8
–
–
–
–
–
0.6
6.7
–
–
6.7
–
6.7
–
–
–
–
–
–
–
0.1
0.1
196.9
571.6
169.3
55.6
9.1
1,002.5
199
Baloise Group annual Report 2017
Financial Report
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).
Movu aG
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 (%)
2016
–
13.1
13.6
6.8
15.4
14.9
2017
21.8
–
14.8
7.4
16.8
16.2
2016
–
9.6
6.8
7.0
7.0
7.0
2017
n. a.
–
7.2
7.0
7.0
7.0
2016
–
1.0
1.0
2.5
2.5
2.6
2017
n. a.
–
1.0
2.5
2.5
2.6
the impairment test in 2017 resulted in a write-off being recognised at Zeus Vermittlungsgesellschaft due to a lack of future cash
flows owing to the disappearance of fee and commission income. this impairment loss affects the “other activities” operating segment.
Goodwill in respect of Movu aG was recognised for the first time when it was acquired. Using an income approach, taking
account of a discount rate and growth rate, would not be a useful way of measuring this start-up. it was therefore tested for
impairment using a multiples-based method.
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 2017 or in 2016, to the carrying amount of an entity being significantly higher than its recoverable value.
200
Baloise Group annual Report 2017
Financial Report
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
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
30.9.2016
30.9.2017
24.7
151.8
176.5
26.9
175.5
202.4
30.9.2016
30.9.2017
91.6
1.0
83.8
176.5
99.5
1.1
101.8
202.4
1. – 9.2016
1. – 9.2017
183.8
173.1
10.7
0.0
– 0.2
10.5
188.6
179.9
8.7
0.0
– 0.5
8.3
3.2
3.8
32.6 %
32.6 %
65.7
71.5
79.9
101.7
201
Baloise Group annual Report 2017
Financial Report
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.
2016
cHF million
Total
2017
cHF million
Total
Carrying amount
Baloise’s share of
profit or loss for
the period from
continuing
operations
profit or loss for
the period from
disposal groups
held for sale
other
comprehensive
income
comprehensive
income
94.7
4.1
0.0
0.0
4.0
Carrying amount
Baloise’s share of
profit or loss for
the period from
continuing
operations
profit or loss for
the period from
disposal groups
held for sale
other
comprehensive
income
comprehensive
income
66.9
1.7
2.0
4.7
8.4
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 2017 or 31 December 2016.
as at 31 December 2017, the Baloise Group held more than 20 per cent of the capital of further companies but does not have
any influence over these companies’ management. as a result, they are not reported as associates.
202
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
11. INVESTMENT PROPERTY
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 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
2016
2017
6,251.9
6,817.5
453.7
73.9
– 49.5
–
31.8
–
67.7
– 12.0
567.2
384.5
– 157.7
–
–
– 336.8
111.1
94.6
6,817.5
7,480.3
83.2
0.6
86.7
0.1
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 resulted from the acquisition of Baloise Wohnbauten aG and
Vac De Meander nV. Reclassification to non-current assets and disposal groups classified as held for sale relates to the properties
for the launch of the real-estate fund for institutional investors.
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 loss1
Financial assets as reported on the balance sheet
31.12.2016
31.12.2017
4,357.1
1,002.3
4,402.9
343.3
8,224.6
8,488.9
23,806.7
24,870.1
30.8
29.2
37,421.6
38,134.4
10,650.6
48,072.2
13,100.6
51,235.0
1 of which financial assets totalling cHF 184.3 million (2016: cHF 99.5 million) involved insurance policies that had not been fully reviewed by the balance sheet date.
203
Baloise Group annual Report 2017
Financial Report
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
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
–
–
–
–
–
–
8,224.6
8,488.9
23,765.6
24,852.3
–
–
–
–
–
–
8,224.6
8,488.9
23,806.7
24,870.1
29.2
32,062.1
33,388.2
2,471.8
1,885.3
4,357.1
2,695.1
1,707.8
4,402.9
11.8
29.3
–
17.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
310.7
691.5
1,002.3
0.1
25.3
5.5
–
30.8
343.3
0.0
343.3
0.1
29.1
–
–
2,782.6
2,576.9
5,359.4
3,038.4
1,707.8
4,746.2
31,990.3
33,341.3
37.1
34.8
–
46.9
–
–
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.
204
Baloise Group annual Report 2017
Financial Report
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
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
–
–
–
–
–
–
–
–
–
–
–
–
2,471.8
1,885.3
4,357.1
2,695.1
1,707.8
4,402.9
8,224.6
8,488.9
23,765.6
24,852.3
11.8
29.3
–
17.8
–
–
8,224.6
8,488.9
23,806.7
24,870.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
310.7
691.5
1,002.3
0.1
25.3
5.5
–
30.8
343.3
0.0
343.3
0.1
29.1
–
–
2,782.6
2,576.9
5,359.4
3,038.4
1,707.8
4,746.2
31,990.3
33,341.3
37.1
34.8
–
46.9
–
–
29.2
32,062.1
33,388.2
205
Baloise Group annual Report 2017
Financial Report
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
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Total
Trading portfolio
Designated
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,208.0
7,514.2
14.6
986.9
15.0
8.0
956.6
10.0
Financial assets of a debt nature
8,224.6
8,488.9
23,806.7
24,870.1
29.2
32,062.1
33,388.2
Total
8,224.6
8,488.9
28,163.9
29,273.0
1,033.1
372.5
37,421.6
38,134.4
Secured financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
other
Total
10.7
–
922.2
–
933.0
11.7
–
901.9
–
913.6
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or a government
bond has been securitised as collateral.
4,357.1
4,402.9
1,002.3
343.3
5,359.4
4,746.2
17.2
18,351.8
18,822.3
2,466.5
2,627.5
33.7
155.6
58.1
339.2
627.7
676.4
69.8
24.7
57.9
510.4
719.4
393.1
11,126.9
6,410.9
6,268.8
0.2
11,290.8
7,836.4
5,742.7
0.2
239.0
6.5
4,025.7
0.2
4,271.4
247.2
1,375.7
3,684.4
0.2
5,307.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33.9
933.7
34.6
0.0
16.9
13.9
30.8
–
–
–
–
–
–
–
–
–
–
19.3
258.2
65.8
0.0
12.0
–
–
–
–
–
–
–
–
–
2,466.5
67.6
1,089.3
92.7
339.2
627.7
676.4
6,425.5
7,269.6
15.2
249.8
6.5
4,947.9
0.2
5,204.4
2,627.5
89.1
283.0
123.7
510.4
719.4
393.1
7,844.4
6,711.3
10.2
258.9
1,375.7
4,586.4
0.2
6,221.2
206
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Total
Trading portfolio
Designated
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2,466.5
2,627.5
33.7
155.6
58.1
339.2
627.7
676.4
69.8
24.7
57.9
510.4
719.4
393.1
4,357.1
4,402.9
11,126.9
6,410.9
6,268.8
0.2
11,290.8
7,836.4
5,742.7
0.2
Financial assets of a debt nature
8,224.6
8,488.9
23,806.7
24,870.1
8,224.6
8,488.9
28,163.9
29,273.0
239.0
6.5
4,025.7
0.2
4,271.4
247.2
1,375.7
3,684.4
0.2
5,307.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33.9
933.7
34.6
0.0
–
–
–
19.3
258.2
65.8
0.0
–
–
2,466.5
67.6
1,089.3
92.7
339.2
627.7
676.4
2,627.5
89.1
283.0
123.7
510.4
719.4
393.1
1,002.3
343.3
5,359.4
4,746.2
16.9
–
13.9
–
30.8
17.2
–
12.0
–
29.2
18,351.8
18,822.3
6,425.5
7,269.6
15.2
7,844.4
6,711.3
10.2
32,062.1
33,388.2
1,033.1
372.5
37,421.6
38,134.4
–
–
–
–
–
–
–
–
–
–
249.8
6.5
4,947.9
0.2
5,204.4
258.9
1,375.7
4,586.4
0.2
6,221.2
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
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
other
Total
other
Total
Secured financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,208.0
7,514.2
14.6
986.9
15.0
8.0
956.6
10.0
10.7
11.7
922.2
901.9
933.0
913.6
as at 31.12.
cHF million
public corporations
industrial enterprises
Financial institutions
other
Total
Carrying amount
Fair value
2016
2017
2016
2017
7,208.0
7,514.2
8,774.3
8,950.0
14.6
986.9
15.0
8.0
956.6
10.0
15.5
8.4
1,098.3
1,049.4
16.0
10.9
8,224.6
8,488.9
9,904.1
10,018.7
207
Baloise Group annual Report 2017
Financial Report
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
2016
2017
2016
2017
2016
2017
2016
2017
9,818.1
131.5
4,351.6
838.1
25.7
–
9,840.2
139.4
4,638.1
939.7
26.8
–
– 24.3
–
– 2.1
–
–
–
– 20.4
–
–
–
0.0
–
9,793.8
131.5
4,349.5
838.1
25.7
–
9,819.8
10,265.8
10,237.2
139.4
4,638.1
144.1
4,893.5
150.0
5,076.4
939.7
26.8
–
839.5
26.2
–
940.9
27.3
–
334.4
240.5
15,499.4
15,824.6
– 15.3
– 41.7
– 12.4
– 32.9
319.1
228.1
325.5
298.4
15,457.7
15,791.7
16,494.6
16,730.1
896.8
0.3
897.0
776.6
0.2
776.8
–
–
–
–
–
–
896.8
0.3
897.0
776.6
0.2
776.8
896.8
0.3
897.0
776.6
0.2
776.8
Mortgages and loans
16,396.4
16,601.4
– 41.7
– 32.9
16,354.7
16,568.6
17,391.7
17,506.9
208
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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 classified as held for sale
currency translation
Balance as at 31 December
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
2016
2017
– 44.9
11.4
2.1
– 10.5
–
–
–
0.2
– 41.7
– 41.7
7.9
1.4
– 1.5
–
–
2.2
– 1.2
– 32.9
Fair value assets
Fair value liabilities
2016
2017
2016
2017
363.0
394.4
362.4
438.0
299.0
–
145.3
–
Derivative financial instruments as reported on the balance sheet
757.3
800.4
299.0
145.3
209
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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
2016
2017
2016
2017
2016
2017
–
–
1,313.0
1,094.9
607.3
0.9
–
–
208.5
1.6
–
–
–
72.8
90.9
–
50.2
27.8
113.4
165.7
–
–
–
–
–
79.7
14.9
30.7
–
–
–
60.9
–
20.0
–
–
1,921.1
1,305.1
277.0
243.7
125.3
80.9
–
2,431.0
703.8
–
–
2,127.4
777.6
–
3,134.8
2,905.0
8,591.6
9,022.4
–
–
652.4
1,242.3
–
–
–
–
–
39.2
11.4
–
50.7
34.2
–
1.0
–
–
–
38.7
12.3
–
51.0
57.2
–
10.5
–
–
–
11.1
14.8
–
25.9
146.1
–
1.7
–
–
–
2.6
6.9
–
9.5
43.5
–
11.4
–
–
9,244.1
10,264.6
35.3
67.7
147.8
54.9
14,300.0
14,474.7
363.0
362.4
299.0
145.3
–
–
–
–
1,086.2
1,751.7
–
–
0.8
–
–
–
–
14.3
27.5
–
–
2.3
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.
210
Baloise Group annual Report 2017
Financial Report
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
Gross amount
Impairment
Carrying amount
Fair value
2016
2017
2016
2017
2016
2017
2016
2017
4.2
3.0
464.9
453.3
403.8
442.3
922.4
849.1
–
– 1.8
– 1.6
– 3.4
–
4.2
3.0
4.2
3.0
– 0.7
– 1.5
463.1
451.6
403.1
440.9
464.2
451.6
403.5
440.9
– 2.2
919.0
846.9
920.0
847.3
IMPAIRMENT OF RECEIVABLES
cHF million
Balance as at 1 January
Usage not recognised in profit or loss
Unused provisions reversed through profit or loss
increases and additional provisions recognised in profit or loss
Disposal arising from change in scope of consolidation
Reclassification to non-current assets classified as held for sale
currency translation
Balance as at 31 December
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 classified as held for sale
exchange differences
Reinsurers’ share of technical reserves as at 31 December
2016
2017
– 4.2
0.2
1.4
– 0.8
–
–
0.0
– 3.4
– 3.4
0.2
1.1
– 1.1
–
1.2
– 0.1
– 2.2
2016
2017
410.8
0.2
– 94.5
103.6
–
–
–
– 4.9
415.2
415.2
1.7
– 60.8
76.9
–
–
–
35.2
468.3
211
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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 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 classified as held for sale
currency translation
Impairment of receivables from reinsurers as at 31 December
2016
2017
7.8
1.2
– 0.2
–
–
– 0.1
8.7
44.6
99.5
8.7
1.4
0.3
–
–
0.9
11.3
38.9
105.5
– 104.9
– 118.8
–
–
– 0.3
38.9
– 0.1
–
0.1
– 0.1
–
–
0.0
– 0.1
–
–
1.4
27.0
– 0.1
–
0.0
0.0
–
–
–
– 0.1
Receivables from reinsurers as at 31 December
47.5
38.2
212
Baloise Group annual Report 2017
Financial Report
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
Short-term employee benefits
post-employment benefits – defined contribution plans
post-employment benefits – defined benefit plans
other long-term employee benefits
termination benefits
Total
Receivables from
employee benefits
Liabilities arising from
employee benefits
2016
2017
2016
2017
0.8
3.3
–
–
–
–
–
–
–
–
107.7
–
115.0
–
1,316.9
1,242.7
29.1
10.2
28.5
8.2
0.8
3.3
1,463.9
1,394.4
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.
213
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
18.2.1 Fair value of plan assets
cHF million
Balance as at 1 January
interest rate effect
Return on plan assets
employees’ savings and purchases
exchange differences
employer contribution
employee contribution
Benefits paid
cash flow between Baloise Group and plan assets
(excl. benefits paid to employees and employer contribution)
additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets 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 classified as held for sale
Gains and losses on plan settlements
Balance as at 31 December
214
2016
2017
2,373.2
2,374.8
15.0
10.7
29.2
– 0.2
57.9
30.7
15.2
110.3
37.9
1.1
79.9
30.9
– 141.6
– 111.7
–
–
–
–
–
–
–
–
2,374.8
2,538.4
2016
2017
– 2,821.2
– 2,848.5
– 92.7
– 17.9
– 29.2
– 52.6
– 19.1
– 5.3
0.2
47.7
141.6
–
–
–
– 87.6
– 17.9
– 37.9
– 53.6
19.7
12.6
– 1.7
– 25.9
111.7
–
–
–
– 2,848.5
– 2,929.0
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
18.2.3 Unfunded liabilities under defined benefit plans
cHF million
Balance as at 1 January
current service cost
interest rate effect
employees’ savings and purchases
actuarial gains / losses on defined benefit obligations arising from
changes in financial assumptions
changes in demographic assumptions
experience adjustments
exchange differences
Unrecognised past service cost
Benefits paid
additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets 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
2016
2017
– 752.5
– 843.2
– 14.0
– 15.4
–
– 88.2
– 1.9
– 1.3
10.1
– 14.0
30.7
–
3.2
–
– 17.0
– 11.5
–
14.6
– 3.0
– 3.6
– 68.1
–
33.8
0.6
45.4
–
– 843.2
– 852.1
31.12.2016
31.12.2017
2,374.8
2,538.4
– 2,848.5
– 2,929.0
– 843.2
– 852.1
–
–
– 1,316.9
– 1,242.7
215
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
18.2.5 Asset Allocation
cHF million
cash and cash equivalents
Real estate
equities and investment funds
publicly listed
not publicly listed
Fixed-interest assets
publicly listed
not publicly listed
Mortgages and loans
Derivatives
publicly listed
not publicly listed
other
Fair value of plan assets
of which: Bâloise Holding ltd shares (fair value) and convertible bonds (fair value)
of which: real estate leased to the Baloise Group
the investment funds are mainly fixed-income funds.
18.2.6 Expenses for defined benefit plans recognised in the income statement
cHF million
current service cost
net interest cost
Unrecognised past service cost
Gains and losses on plan settlements
expected return on reimbursement rights
Regular employee contribution
Total expenses for defined benefit plans recognised in the income statement
216
31.12.2016
31.12.2017
52.8
456.1
62.3
481.5
1,313.6
142.4
1,359.0
179.7
114.0
–
315.2
–
– 6.3
– 12.9
100.2
–
338.7
–
– 8.1
25.2
2,374.8
2,538.4
28.8
–
35.6
–
2016
2017
– 106.6
– 104.6
– 18.4
33.7
–
–
31.4
– 59.9
– 14.2
– 25.9
–
–
31.7
– 113.0
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
18.2.7 Actuarial assumptions
per cent
Discount rate
expected wage and salary increases
expected increase in pension benefits
Weighted annuity option take-up rate
Years
average life expectancy of a 65-year-old woman
average life expectancy of a 65-year-old man
2016
2017
0.8
1.4
0.3
81.0
24.2
21.6
0.7
1.4
0.3
77.0
24.3
21.7
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 assumptions 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
31.12.2016
31.12.2017
3,691.7
3,781.1
– 268.2
– 277.0
303.8
36.3
– 34.4
205.4
– 36.3
– 93.5
102.8
14.5
300.8
30.5
– 40.2
202.2
– 41.7
– 99.9
97.3
13.3
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.
217
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
18.2.9 Funding of plan benefits
the plan assets of the Swiss plans are funded jointly by the employer and employee. the amount of individual contributions
depends largely on an employee’s remuneration and age. Statutory regulations require employers to contribute a minimum of
50 per cent of the total contributions for part of the insured benefits.
18.2.10 Estimated employer contribution
the employer’s contribution for the following year can only be predicted with a limited degree of certainty. the Baloise Group
expects to pay employer contributions of approximately cHF 68.5 million for the 2018 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 10.0 years; the average present value
factor for current benefit entitlements under pension commitments is 17.6 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 2017 totalled
cHF 28.5 million (2016: cHF 29.1 million). there were no disposals of plan assets for long-term employee benefits. Benefits paid
out amounted to cHF 3.6 million (2016: cHF 4.7 million).
218
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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 2017, a sum of cHF 24.4 million (2016: cHF 21.8 million) was recognised as an expense in profit or
loss in connection with the following share-based payment plans.
the textual explanations of the individual compensation programs are contained in chapters 5, 7 and 8 of the compensation
Report. the most important quantitative information is listed in tabular form below.
18.4.1 Employee Incentive Plan
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)
18.4.2 Share Subscription Plan
SHARE SUBSCRIPTION PLAN (SSP)
number of shares subscribed
Restricted until1
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
2016
2017
183,678
176,252
31.08.2019
31.08.2020
56.40
10.4
21.5
3,098
2,029
90.5
77.00
13.6
26.9
3,146
2,007
87.8
2016
35,475
2017
34,738
28.02.2019
29.02.2020
109.26
116.37
3.9
4.5
929
110
14 %
4.0
4.5
917
116
15 %
1 the closed period during which shares are allocated to the chairman of the Board of Directors is five years instead of three. this means that the shares are restricted until
28 February 2021 and 28 February 2022 respectively.
219
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
18.4.3 Share Participation Plan
SHARE PARTICIPATION PLAN (SPP)
number of shares subscribed1
Restricted until
Subscription price per share2 (cHF)
Value of shares subscribed2 (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.
2016
104,075
2017
95,009
28.02.2019
29.02.2020
106.59
114.49
11.1
13.1
909
104
6 %
10.9
12.4
889
96
6 %
18.4.4 Performance share units
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
2017
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
01.03.2017
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
130.70
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
01.03.2020
1.182
1.24
0.64
0.58
0.77
1.21
1.50
1.05
1.444
1.054
1.344
86.05
91.00
64.40
78.50
113.60
124.00
126.00
130.70
151.704
151.704
151.704
101.71
112.84
41.22
45.53
87.47
150.04
189.00
137.24
218.304
159.904
203.604
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
124 %
21 %
76 %4
27 %4
56 %4
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 2017.
220
Baloise Group annual Report 2017
Financial Report
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 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
of which: expired (departures in 2017)
number of active pSUs as at 31 December 2017
Value of allocated pSUs on issue date (cHF million)
pSU expense incurred by the Baloise Group for 2015 (cHF million)
pSU expense incurred by the Baloise Group for 2016 (cHF million)
pSU expense incurred by the Baloise Group for 2017 (cHF million)
Plan 2015
Plan 2016
Plan 2017
62
69
65
42,162
40,748
33,698
0
42,162
– 2,429
39,733
– 139
39,594
5.1
1.4
1.5
1.6
–
–
– 604
40,144
– 413
39,731
5.3
1.3
1.9
–
–
–
–
– 263
33,435
4.7
1.1
221
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
19. DEFERRED INCOME TAXES
19.1 Deferred tax assets and liabilities
DEFERRED TA X ASSETS
2016
cHF million
Financial assets
other investments
other comprehensive income
tax credits and losses carried forward1
insurance receivables
technical reserves
insurance liabilities
liabilities arising from banking business
and financial contracts
liabilities arising from employee benefits
other
Total
2017
cHF million
Financial assets
other investments
other comprehensive income
tax credits and losses carried forward
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
Reclassifica-
tion
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
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifica-
tion
in accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
31.5
16.5
145.6
74.3
5.9
458.7
773.5
133.0
67.5
46.3
– 1.6
11.2
–
17.0
– 1.8
– 6.5
– 136.4
– 8.0
– 13.2
– 7.6
–
–
– 32.2
–
–
–
–
–
–
–
1,752.8
– 147.0
– 32.2
–
–
–
–
–
–
–
–
–
–
–
– 0.1
– 4.0
– 4.5
0.0
–
–
–
–
–
0.0
– 8.7
2.6
0.2
3.4
2.3
0.1
28.1
61.3
7.7
4.9
0.9
32.4
23.9
112.3
93.7
4.3
480.2
698.4
132.7
59.2
39.7
111.7
1,676.7
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.
222
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
DEFERRED TA X LIABILITIES
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
2017
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
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
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation
IFRS 5
Exchange
differences
Balance
as at
31 December
3.5
3.3
201.0
39.6
361.7
117.8
95.1
322.0
1.7
– 0.1
1.3
10.9
9.9
2.8
– 38.8
– 20.5
–
– 0.5
1,410.4
– 122.4
72.4
– 5.9
–
–
–
–
–
–
–
– 61.8
–
–
–
2,628.4
– 163.2
– 61.8
–
0.9
–
–
2.4
–
–
–
–
–
4.0
7.3
–
–
–
–
– 23.0
–
– 4.0
– 4.5
–
–
– 0.4
– 31.9
0.3
0.4
15.6
0.6
5.0
0.6
4.8
16.3
0.1
87.3
0.4
3.8
5.9
227.4
50.2
348.9
79.6
75.4
271.9
1.3
1,375.3
70.6
131.5
2,510.3
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.
223
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
the Baloise Group had recognised deferred tax assets on tax loss carryforwards totalling cHF 272.6 million as at 31 December 2017
(2016: cHF 195.1 million). of this total, cHF 0.5 million will expire after one year, 0.0 million after two to four years and cHF 272.1 mil-
lion 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 2017 (2017: cHF 134.7 million), which it can
use until the end of 2025.
no deferred tax assets had been recognised on tax loss carryforwards amounting to cHF 261.7 million as at 31 December 2017
(2016: cHF 213.5 million) because the relevant offsetting criteria had not been met. of this total, cHF 19.8 million will expire after
one year, a further cHF 2.4 million will expire after two to four years and cHF 239.5 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
20. OTHER ASSETS
cHF million
liabilities to brokers and agents
tax credits indirect taxes (withholding tax etc.)
prepaid insurance benefits
Development properties
other assets
impairments
Sub-total
Sub-total
31.12.2016
31.12.2017
1,752.8
1,676.7
– 2,628.4
– 2,510.3
– 875.6
69.3
– 944.9
– 833.6
88.8
– 922.4
31.12.2016
31.12.2017
54.2
49.8
57.7
–
25.9
–
187.6
54.5
54.5
84.2
37.2
56.3
144.7
32.0
– 5.3
349.1
70.5
70.5
242.1
419.6
numerous development projects in Switzerland were taken on as part of the acquisition of Baloise Wohnbauten aG. Most of them
are new properties in blocks of apartments owned by different people and will be sold upon completion.
224
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
21. NON-CURRENT ASSETS AND DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
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
2016
2017
2016
2017
–
13.2
–
1,911.1
–
27.7
9.9
0.3
0.4
336.8
653.5
41.3
8.3
0.5
1,962.0
1,041.1
1,888.5
–
14.5
5.4
1,908.3
–
540.5
79.4
23.7
643.6
– 7.6
– 19.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
the disposal group reported for the 2016 financial year comprised the assets and related liabilities of the portfolio of life insurance
policies held by the German branch of Baloise life ltd (Basler leben DfD [Direktion für Deutschland]).
the sale of this portfolio to the Frankfurter leben Group was approved by the German Federal Financial Supervisory authority
(BaFin) on 5 January 2017. the transfer was completed on 3 February 2017. the financial implications are provided in the “acquisition
and disposal of companies” section in chapter 39.
in the year under review, the following events took place that satisfy the criteria for iFRS 5:
on 14 December 2017, it was publicly announced that Basler lebensversicherungs-aG, based in Hamburg, and Basler Sachver-
sicherungs-aG, based in Bad Homburg, in collaboration with SiGnal iDUna Krankenversicherung a.G., Dortmund, was selling its
long-term equity investment in Deutscher Ring Bausparkasse aG to the BaWaG p.S.K. in Vienna. the reclassification of assets and
liabilities affects the Banking segment in Germany.
an agreement was signed on 18 December 2017, under which Basler Beteiligungsholding GmbH is selling its long-term equity
investment in RolanD Rechtsschutz Beteiligung GmbH. this reclassification affects the other activities operating segment.
in 2018, it is planned to launch a real-estate fund in Switzerland for institutional investors. to this end, investment properties
held by Baloise life ltd and Basler Versicherung aG will be transferred to this new real-estate portfolio. this affects the life and
non-life segments in Switzerland.
225
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
22. SHARE CAPITAL
2016
Balance as at 1 January
purchase / sale of treasury shares
capital increases
Share buy-back and cancellation
Balance as at 31 December
2017
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)
3,464,540
46,535,460
50,000,000
– 964,595
964,595
–
–
–
–
–
–
–
2,499,945
47,500,055
50,000,000
5.0
–
–
–
5.0
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
2,499,945
47,500,055
50,000,000
28,048
– 28,048
–
– 1,200,000
–
–
–
–
– 1,200,000
1,327,993
47,472,007
48,800,000
5.0
–
–
– 0.1
4.9
the share capital of Bâloise Holding ltd totals cHF 4.88 million and is divided into 48,800,000 registered, fully paid-up registered
shares with a par value of cHF 0.10 each (2016: 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 reduction of share capital from cHF 5.0 million to cHF 4.88 million by cancelling 1,200,000 registered treasury shares,
each with a nominal value of cHF 0.10, which was approved by the shareholders of Bâloise Holding ltd at the annual General
Meeting on 28 april 2017, was carried out following expiry of the statutory time limit set for creditors to register their claims
(article 734 oR). the related changes to the commercial register of the Basel city canton were published in the Swiss official
Gazette of commerce (SoGc no. 133 of 12 July 2017).
as at the balance sheet date (31 December 2017), a cumulative total of 423,450 shares in Bâloise Holding ltd had been
repurchased for a total amount of cHF 63.3 million under the share buy-back programme that had been announced on 4 april 2017.
the buy-back programme is planned for a maximum of three years.
the annual General Meeting held on 28 april 2017 voted to pay a gross dividend of cHF 5.20 per share forthe 2016 financial
year. this amounted to a total dividend distribution of cHF 260.0 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 248.5 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. the share buy-back programme was concluded ahead of
schedule on 29 July 2016.
226
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23. TECHNICAL RESERVES (GROSS)
cHF million
Unearned premium reserves (gross)
claims reserve (gross)
other technical reserves
Technical reserves (non-life)
actuarial reserves (gross)
policyholders’ dividends credited and provisions for future policyholders’ dividends (gross)
31.12.2016
31.12.2017
589.0
5,307.8
89.6
649.1
5,595.0
74.7
5,986.4
6,318.8
36,813.2
38,008.1
3,409.4
3,681.5
40,222.5
41,689.7
46,209.0
48,008.5
Technical reserves (life)
Technical reserves (gross)
23.1 Technical reserves (non-life)
cHF million
Unearned premium reserves
claims reserve
provision for claims handling costs
Claims reserve
Other technical reserves
Gross
Reinsurance
assets
Net
Gross
Reinsurance
assets
31.12.2016
589.0
4,787.3
520.5
1.8
590.8
–
–
–
–
649.1
5,082.5
512.5
0.1
–
–
Net
31.12.2017
649.3
–
–
5,307.8
– 393.2
4,914.7
5,595.0
– 438.3
5,156.7
89.6
–
89.6
74.7
–
74.7
Total technical reserves (non-life)
5,986.4
– 391.4
5,595.1
6,318.8
– 438.2
5,880.7
227
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.1.1 Maturity structure of technical reserves
cHF million
Unearned premium reserves
Up to 1 year
More than 1 year
no determinable residual term
Total unearned premium reserves
Claims reserve
Up to 1 year
More than 1 year
no determinable residual term
Total claims reserve
Gross
Reinsurance
assets
Net
Gross
Reinsurance
assets
31.12.2016
555.8
8.2
25.0
589.0
1.7
0.1
–
1.8
557.4
8.4
25.0
590.8
613.3
8.8
27.0
649.1
0.1
0.1
– 0.1
0.1
838.9
3,236.8
1,232.1
5,307.8
– 45.6
– 80.6
– 267.0
– 393.2
793.3
3,156.3
965.1
4,914.7
879.0
3,508.7
1,207.2
5,595.0
– 50.4
– 99.1
– 288.8
– 438.3
Net
31.12.2017
613.3
9.0
27.0
649.3
828.6
3,409.6
918.4
5,156.7
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
Gross
Reinsurance
assets
Gross
Reinsurance
assets
Net
2016
562.7
2.0
564.8
589.0
1.8
3,140.7
– 150.0
2,990.8
3,229.3
– 164.3
Net
2017
590.8
3,065.0
less: premiums earned during the reporting period
– 3,109.7
149.8
– 2,959.9
– 3,214.4
162.6
– 3,051.8
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
classified as held for sale
exchange differences
Balance as at 31 December
–
–
–
– 4.7
589.0
–
–
–
0.0
1.8
–
–
–
–
–
–
– 4.8
590.8
45.2
649.1
–
–
–
0.1
0.1
–
–
–
45.2
649.3
apart from the actual unearned premium reserves, this item includes health insurance reserves for old age and deferred unearned
premiums.
228
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.1.3 Other technical reserves
cHF million
Balance as at 1 January
less: expenditures during the reporting period
additional provisions recognised and unused provisions
reversed through profit or loss
additions arising from acquisition of policy portfolios
and insurance companies
Disposals arising from sale of policy portfolios
and insurance companies
Reclassification to non-current assets
classified as held for sale
exchange differences
Balance as at 31 December
Gross
Reinsurance
assets
77.6
– 19.2
31.5
–
–
–
– 0.2
89.6
– 0.1
0.1
– 0.1
–
–
–
–
–
Net
2016
77.5
– 19.1
31.4
–
–
–
Gross
Reinsurance
assets
89.6
– 19.1
2.5
–
0.2
– 0.2
–
–
–
–
–
–
–
–
– 0.2
89.6
1.7
74.7
Net
2017
89.6
– 18.9
2.4
–
–
–
1.7
74.7
229
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.1.4 Claims reserve (including claims handling costs)
cHF million
Balance as at 1 January (gross)
Reinsurers’ share
Balance as at 1 January (net)
Claims incurred (including claims handling costs)
For the reporting period
For previous years
Total
Payments for claims and claims handling costs
For the reporting period
For previous years
Total
Other changes
additions / disposals arising from changes in scope of consolidation
Reclassification to non-current assets classified as held for sale
exchange differences
Total
Balance as at 31 December (net)
Reinsurers’ share
Balance as at 31 December (gross)
2016
2017
5,306.7
– 389.6
4,917.1
5,307.8
– 393.2
4,914.7
1,884.2
– 85.7
1,936.3
– 87.3
1,798.5
1,849.0
– 884.7
– 886.7
– 913.3
– 911.9
– 1,771.4
– 1,825.2
–
–
– 29.5
– 29.5
–
–
218.1
218.1
4,914.7
5,156.7
393.2
438.3
5,307.8
5,595.0
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 74.2 million at the end of 2017 (2016: cHF 81.3 million). the
decrease was attributable to commutations of reserves and currency effects.
230
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.2 Technical reserves (life)
cHF million
actuarial reserves from non-unit-linked life insurance contracts1
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.
31.12.2016
31.12.2017
33,553.2
34,328.1
2,727.3
3,108.1
185.1
347.6
181.3
390.7
36,813.2
38,008.1
3,409.4
3,681.5
40,222.5
41,689.7
231
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.2.1 Maturity structure of technical reserves
cHF million
Actuarial reserves from non-unit-linked life insurance contracts
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
no determinable residual term
Business from Swiss occupational pension plans1
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
31.12.2016
31.12.2017
1,193.8
3,139.7
3,186.7
5,931.1
8,812.4
1,256.3
3,123.1
3,314.7
6,062.6
9,229.9
11,289.4
11,341.6
33,553.2
34,328.1
99.0
296.1
372.9
365.3
1,593.9
2,727.3
55.1
269.4
215.6
311.7
181.2
84.8
341.1
365.8
416.7
1,899.7
3,108.1
86.6
252.4
214.4
296.7
182.9
1,033.1
1,032.9
93.3
2,283.0
2,376.3
88.9
2,559.7
2,648.6
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.
232
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.2.2 Actuarial reserves from non-unit-linked life insurance contracts
cHF million
Balance as at 1 January
change in actuarial reserves
additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets classified as held for sale
exchange differences
Balance as at 31 December
2016
2017
33,159.2
33,553.2
508.0
– 55.3
–
–
–
–
–
–
– 114.1
830.2
33,553.2
34,328.1
the actuarial reserves include unearned premium reserves and claims reserves.
the actuarial reserves for DpF business as at 31 December 2017 amounted to cHF 34,046.7 million (31 December 2016: cHF 33,271.7 million), while for non-DpF business they
totalled cHF 281.4 million (31 December 2016: cHF 281.5 million).
the actuarial reserves for assumed business (inward reinsurance) as at 31 December 2017 came to cHF 10.5 million (31 December 2016: cHF 8.5 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 classified as held for sale
exchange differences
Balance as at 31 December
2016
2017
2,622.7
233.0
– 177.8
– 5.1
80.2
–
–
–
2,727.3
255.4
– 236.9
– 5.8
175.6
–
–
–
– 25.8
192.7
2,727.3
3,108.1
233
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.2.4 Reserve for final policyholders’ dividends
cHF million
Balance as at 1 January
adjustment arising from unrealised gains and losses as at 1 January (shadow accounting)
interest on and change in liability
Final policyholders’ dividends paid
additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets 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
2016
2017
201.5
– 8.0
8.6
– 22.5
–
–
–
7.0
– 1.5
185.1
185.1
– 7.0
6.2
– 20.8
–
–
–
6.8
11.0
181.3
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 classified as held for sale
exchange differences
Balance as at 31 December
2016
2017
348.5
20.8
– 16.7
– 0.8
–
–
–
347.6
19.2
– 8.0
0.1
–
–
–
– 4.2
347.6
31.7
390.7
234
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
23.2.6 Policyholders’ dividends credited and reserves for future policyholders’ dividends
cHF million
Policyholders’ dividends credited as at 1 January
Dividends credited to policyholders during the reporting period
policyholders’ dividends paid
additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
exchange differences
Balance as at 31 December
Provisions for future policyholders’ dividends as at 1 January
adjustment arising from unrealised gains and losses as at 1 January
additions
Withdrawals
change in measurement differences between iFRS and national accounting standards recognised in profit or loss
adjustment arising from unrealised gains and losses as at 31 December (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 classified as held for sale
exchange differences
Balance as at 31 December
2016
2017
1,111.0
1,033.1
45.0
45.4
– 114.2
– 108.6
–
–
–
–
–
–
– 8.8
63.1
1,033.1
1,032.9
2,386.6
– 722.2
57.0
– 92.9
– 14.3
771.4
–
–
–
2,376.3
– 771.4
115.3
– 103.8
290.0
663.0
–
–
–
– 9.4
79.3
2,376.3
2,648.6
Policyholders’ dividends credited and provisions for future policyholders’ dividends as at 31 December
3,409.4
3,681.5
235
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
24. LIABILITIES ARISING FROM BANKING BUSINESS AND FINANCIAL CONTRACTS
as at 31.12.
cHF million
With discretionary participation features (DPFs)
Financial contracts with discretionary participation features (DpFs)1
Sub-total
Measured at amortised cost
liabilities to banks
Repurchase agreements
liabilities arising from time deposits
loans
Mortgages
Savings and customer deposits
Medium-term bonds
Mortgage-backed bonds
Bonds
liability for future financial lease payments (present value)
other financial contracts
Sub-total
Recognised at fair value through profit or loss (designated)
other financial contracts
Sub-total
Carrying amount
Fair value
2016
2017
2016
2017
2,317.4
2,317.4
2,814.2
2,814.2
–
–
–
–
263.9
600.0
6.1
–
–
5,682.3
137.1
1,267.3
–
0.0
44.3
225.1
820.0
–
8.9
36.8
5,107.8
104.2
1,300.6
–
0.0
25.4
263.8
600.0
6.1
–
–
5,737.0
141.8
1,360.3
–
0.0
44.3
225.0
820.0
–
8.9
36.8
5,144.1
107.3
1,371.4
–
0.0
25.4
8,000.9
7,628.8
8,153.3
7,738.9
9,999.4
9,999.4
12,253.6
12,253.6
9,999.4
9,999.4
12,253.6
12,253.6
Total liabilities arising from banking business and financial contracts
20,317.7
22,696.5
–
–
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.
236
Baloise Group annual Report 2017
Financial Report
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
Borrowing costs paid
accrued borrowing costs
Interest costs (sub-total)
Balance as at 31 December
2016
2017
1,707.8
–
–
–
– 242.4
38.0
– 33.4
0.4
5.0
1,470.4
496.5
–
496.5
– 225.0
34.3
– 30.9
– 2.2
1.1
1,470.4
1,742.9
on 19 September 2017, Baloise life ltd issued two cancellable subordinated bonds with a total nominal value of cHF 500 million.
these bonds are guaranteed by Bâloise Holding ltd. the bond of cHF 200 million, which matures on 19 June 2048, cannot be
redeemed before 19 June 2028 (iSin cH0379611004). Until this date, the coupon is 2.2 per cent per year. thereafter, the coupon
will be determined for five-year successive periods on the basis of the five-year cHF mid-swap rate plus the initial margin of 194.6
basis points per year. the bond of cHF 300 million is perpetual and cannot be redeemed before 19 June 2023 (iSin cH0379610998).
Until this date, the coupon is 1.75 per cent per year. thereafter, the coupon will be determined for five-year successive periods on
the basis of the five-year cHF mid-swap rate plus the initial margin of 194.4 basis points per year. the issuer can subsequently
repay the bonds annually on the interest payment date, provided it has given prior notice and obtained the approval of FinMa.
the bond of cHF 225.0 million (1.0 per cent, 2012 – 2017, iSin cH0188295536) was redeemed in full on 12 october 2017.
TERMS & CONDITIONS GOVERNING SENIOR DEBT OUTSTANDING (SENIOR BONDS BÂLOISE HOLDING LTD AND BALOISE LIFE LTD)
issuer
Face value
(cHF million)
interest rate
Bâloise
Holding ltd
Bâloise
Holding ltd
Bâloise
Holding ltd
Bâloise
Holding ltd
Bâloise
Holding ltd
Bâloise
Holding ltd
300
250
175
150
225
150
Baloise
life ltd
300
Baloise
life ltd
200
2.875 %
3.000 %
2.250 %
2.000 %
1.750 %
1.125 %
1.750 %
2.200 %
Redemption value
Year of issue
100 %
2010
100 %
2011
100 %
2012
100 %
2012
100 %
2013
100 %
2014
100 %
2017
100 %
2017
Repayment date
14.10.2020
07.07.2021
01.03.2019
12.10.2022
26.04.2023
19.12.2024
perpetual
19.06.2048
iSin
cH0117683794
cH0131804616
cH0148295014
cH0194695083
cH0200044821
cH0261399064
cH0379610998
cH0379611004
237
Baloise Group annual Report 2017
Financial Report
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
classified as held for sale
increases and additional provisions recognised
in profit or loss
Unused provisions reversed through profit or loss
Usage not recognised in profit or loss
Unwinding of discount
exchange differences
Balance as at 31 December
Total
2017
80.0
0.6
–
Restructuring
Other
Total
Restructuring
Other
2016
18.4
76.4
94.8
11.3
–
–
–
–
–
–
–
–
–
–
–
–
68.7
0.6
–
– 25.6
– 25.6
4.8
14.8
19.6
0.2
15.7
15.9
– 1.1
– 10.7
–
– 0.1
11.3
– 11.0
– 11.1
–
– 0.4
68.7
– 12.1
– 21.8
–
– 0.5
80.0
– 0.8
– 5.6
–
0.7
5.8
– 15.2
– 2.5
–
1.6
43.2
– 16.0
– 8.1
–
2.2
49.0
the balance shown for other provisions includes the usual amounts for legal advice and litigation risks. other provisions 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
238
31.12.2016
31.12.2017
1,255.0
1,350.3
126.2
167.4
16.6
147.9
186.7
21.3
1,565.2
1,706.3
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
Notes to the consolidated income statement
28. PREMIUMS EARNED AND POLICY FEES
cHF million
Gross premiums written and policy fees
change in unearned premium reserves
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Reinsurers’ share of change in unearned premium reserves
Non-Life
Life
3,140.7
– 31.0
3,109.7
– 150.0
0.2
3,570.9
–
3,570.9
– 18.4
–
Total
2016
6,711.6
– 31.0
6,680.6
– 168.4
0.2
Non-Life
Life
3,229.3
– 14.9
3,214.4
– 164.3
1.7
3,512.0
–
3,512.0
– 20.8
–
Total
2017
6,741.3
– 14.9
6,726.4
– 185.1
1.7
Total premiums earned and policy fees (net)
2,959.9
3,552.4
6,512.4
3,051.8
3,491.1
6,542.9
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
Total investment income for own account and at own risk
2016
2017
246.3
263.2
128.1
39.4
214.1
479.6
2.8
352.2
14.6
– 0.6
126.5
13.1
214.5
480.9
1.9
280.9
13.1
– 1.6
1,476.6
1,392.5
income from investment property consists mainly of rental income. income from financial instruments with characteristics 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 2.8 million had been recognised on impaired investments at the balance sheet date (2016: cHF 3.1 million).
239
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
30. REALISED GAINS AND LOSSES ON INVESTMENTS
30.1 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 maturity1
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 maturity1
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
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
–
–
–
–
–
–
–
–
– 108.2
–
– 0.3
–
–
–
–
–
–
–
–
– 108.2
– 0.3
–
–
–
6.7
42.5
49.2
–
–
–
– 22.7
– 4.6
– 27.3
–
–
– 10.5
–
–
2.1
– 8.4
Total
166.1
0.3
589.0
533.4
42.5
–
–
–
474.1
–
474.1
1,331.3
–
–
–
– 643.4
–
– 643.4
–
–
–
–
–
–
–
– 106.4
– 19.5
– 103.5
– 677.2
– 4.6
– 911.3
–
– 108.5
– 10.5
–
–
2.1
– 116.9
Total realised gains and losses on investments
59.7
43.2
356.0
13.5
– 169.3
303.1
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.
240
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
30.2 Realised gains and losses on investments for own account and at own risk
2017
cHF million
Realised gains on sales and book profits
investment property
Held to maturity1
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
Investment
property
Financial
assets of an
equity nature
Financial
assets of
a debt nature
Mortgages
and loans
Derivative
financial
instruments
244.9
–
–
–
–
244.9
– 133.8
–
–
–
–
–
–
284.6
25.0
–
309.7
–
–
– 47.6
– 23.3
–
–
141.2
467.8
2.6
–
611.6
–
– 0.5
– 234.6
– 1.1
–
– 133.8
– 70.9
– 236.3
–
–
–
–
–
–
–
–
– 27.3
–
–
–
–
– 27.3
–
–
–
–
–
–
–
–
–
–
0.0
38.6
38.6
–
–
–
– 12.6
– 0.1
– 12.7
–
–
– 1.5
–
–
1.4
– 0.1
Total
244.9
141.2
752.4
485.5
38.6
–
–
–
457.9
–
457.9
1,662.6
–
–
–
– 753.7
–
– 133.8
– 0.5
– 282.2
– 790.8
– 0.1
– 753.7
– 1,207.4
–
–
–
–
–
–
–
–
– 27.3
– 1.5
–
–
1.4
– 27.5
Total realised gains and losses on investments
111.1
211.4
375.3
25.8
– 295.8
427.8
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.
241
Baloise Group annual Report 2017
Financial Report
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
employee loans
Reverse repurchase agreements
other loans
Sub-total
2016
2017
– 90.7
– 14.4
–
– 3.2
–
– 1.1
– 3.6
– 9.6
– 108.2
–
–
– 0.3
–
– 0.3
– 1.7
–
– 5.4
–
–
–
– 3.4
– 10.5
–
–
–
– 0.1
– 10.3
– 2.5
– 27.3
–
–
–
–
–
– 1.5
–
–
–
0.0
–
0.0
– 1.5
Total impairment losses on financial assets recognised in profit or loss
– 119.0
– 28.8
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 98.0 million was reported for 2017 (2016: gain of cHF 45.5 million).
a gross currency gain of cHF 116.6 million was recognised directly in equity for the reporting year (2016: loss of cHF 2.2 million).
allowing for hedges of a net investment in a foreign operation (hedge accounting), a net gain of cHF 194.8 million was recognised
for 2017 (2016: net loss of cHF 17.5 million).
242
Baloise Group annual Report 2017
Financial Report
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
Badwill 1
currency gains on assets and liabilities
Reversal of impairment losses recognised on receivables
external income from owner-occupied property
income from development properties
other income
Other operating income
2016
2017
40.6
19.5
41.9
8.0
45.4
15.3
48.1
8.1
110.1
116.9
2016
2017
12.3
1.2
0.4
–
5.5
6.3
6.8
–
104.2
136.8
19.9
0.8
6.6
10.3
9.5
5.5
6.9
101.2
74.4
235.0
1 opposite negative effect on earnings of cHF – 8.8 million as a result of applying the deferred gains / losses for policyholders’ dividends (note 39).
the negative goodwill in the reporting year was due to the purchase of pax anlage aG and pax Wohnbauten aG and arose from
the remeasurement of development projects taking account of the current situation in the real-estate market.
in 2017, the development projects gave rise to income for the first time; the corresponding expenses are recognised in other
operating expenses (note 33).
243
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
33. CLASSIFICATION OF EXPENSES
cHF million
personnel expenses (excluding loss adjustment expenses)
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 classified as held for sale
expenses from development properties
other1
Total
1 this includes changes in deferred acquisition costs recognised in profit or loss, as shown in table 9.
2016
2017
– 753.7
– 801.4
– 35.0
– 31.9
– 31.3
– 63.6
– 43.1
– 2.8
– 42.0
– 32.3
– 50.4
– 73.4
– 42.7
– 41.1
– 526.7
– 544.2
– 13.9
– 6.3
–
–
– 119.8
– 13.1
– 6.5
–
– 106.5
– 163.3
– 1,628.0
– 1,916.9
in 2017, the expense arising on development projects resulting from the acquisition of pax anlage aG and pax Wohnbauten aG
(renamed Baloise Wohnbauten aG) was recognised for the first time. the corresponding income for this expense is recognised
in other operating income (note 32).
34. PERSONNEL EXPENSES
total personnel expenses for 2017 came to cHF 916.3 million (2016: cHF 868.1 million).
244
Baloise Group annual Report 2017
Financial Report
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
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
2016
2017
– 52.7
– 52.7
0.0
– 6.7
– 16.3
4.7
– 15.7
– 13.7
– 47.7
– 49.7
– 49.7
– 0.1
– 9.4
– 12.1
6.8
– 19.8
– 11.1
– 45.7
– 242.5
– 242.5
– 518.1
– 518.1
– 342.9
– 613.4
–
–
–
–
–
–
245
Baloise Group annual Report 2017
Financial Report
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
2016
2017
– 107.2
– 4.5
– 111.7
– 134.1
16.2
– 117.9
36.2 Expected and current income taxes
the expected average tax rate for the Baloise Group was 25.6 per cent in 2016 and 18.8 per cent in 2017. these rates correspond
to the weighted average tax rates in those countries where the Baloise Group operates.
2016
2017
645.6
25.63 %
– 165.5
649.8
18.81 %
– 122.2
9.4
– 6.7
– 0.4
– 18.0
18.1
31.0
9.0
– 5.0
6.7
9.5
16.7
– 9.8
– 0.6
31.0
– 10.3
–
– 1.1
– 7.9
– 17.9
4.2
– 111.7
– 117.9
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
246
Baloise Group annual Report 2017
Financial Report
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 bond1
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)
2016
534.8
2017
548.0
46,381,359
47,641,577
11.53
11.50
2016
534.8
6.0
540.8
2017
548.0
–
548.0
46,381,359
47,641,577
1,756,722
–
75,748
97,459
–
–
48,213,829
47,739,036
11.22
11.48
1 pro-rata recognition in 2016 of the convertible bond, which matured on 17 november 2016 (in accordance with iaS 33).
the dilution of earnings was attributable to the performance Share Units (pSU) share-based payment plan and in they year 2016
the convertible bond issued by Bâloise Holding ltd.
247
Baloise Group annual Report 2017
Financial Report
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
other items not to be reclassified to the income statement
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
2016
2017
7.9
–
– 153.7
40.5
27.2
– 78.1
– 0.7
1.3
72.4
9.9
– 21.4
61.6
437.9
– 311.2
126.6
369.4
– 551.9
– 182.5
– 0.4
–
– 0.4
– 14.8
– 0.6
– 15.3
0.0
– 1.1
– 1.1
– 117.3
– 2.5
– 14.8
– 24.9
7.5
–
7.5
72.7
5.4
78.1
0.2
– 2.6
– 2.5
197.0
119.3
38.1
255.1
Total other comprehensive income
– 103.0
316.6
248
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
38.2 Income taxes on other comprehensive income
cHF million
Other comprehensive income before deferred income taxes
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
Deferred income taxes on 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
2016
2017
– 115.4
299.9
–
41.1
– 13.4
– 0.6
–
27.2
– 18.4
0.0
3.1
0.3
– 2.6
2.9
–
– 14.8
0.1
– 26.1
1.0
3.6
–
– 21.4
120.8
– 1.5
– 15.4
0.8
– 50.1
– 16.5
– 0.1
38.1
Other comprehensive income after deferred income taxes
– 103.0
316.6
249
Baloise Group annual Report 2017
Financial Report
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 income1
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
2016
2017
2016
2017
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
386.8
10.5
1.1
99.3
–
– 192.7
– 47.8
257.2
262.6
7.3
–
–
–
–
269.9
– 257.2
–
12.7
– 262.6
99.3
– 163.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,911.5
24.5
37.2
0.1
– 1,888.5
– 40.5
–
44.5
37.7
–
–
– 7.8
–
–
29.9
– 44.5
– 7.1
– 21.7
37.7
–
37.7
in 2017, 84.9 per cent of the shares in the listed company pax anlage aG, Basel, were purchased. pax anlage aG’s wholly owned
subsidiary pax Wohnbauten aG (since 3 July 2017 Baloise Wohnbauten aG) has a real-estate portfolio comprising investment
properties and development projects. the intention is for the development projects to be sold at a later date. they have therefore
been recognised on the balance sheet under other assets. Most of the properties are located in German- speaking Switzerland.
this transaction represents a further expansion of Baloise’s real-estate portfolio and takes Baloise’s total investment of
insurance assets in a secure and attractive asset class to up to cHF 288 million.
the acquisition resulted in negative goodwill of cHF 10.3 million, which was recognised under other operating income. this
negative goodwill arose from the remeasurement of development projects, taking account of the current situation in the real- estate
market. in the acquiring Group company, there was an opposite negative effect on earnings of cHF 8.8 million as a result of
applying the deferred gains / losses for policyholders’ dividends.
250
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
the purchase price for Movu aG in Switzerland was cHF 25.6 million. of this amount, cHF 18.3 million was paid in cash and
cHF 7.3 million was paid in other forms of consideration. Goodwill of cHF 21.8 million was recognised in connection with the
acquisition. the goodwill essentially comprises expected future income. the goodwill is not tax-deductible and is allocated to
the non-life segment in Switzerland.
the purchase price for Drivolution nV in Belgium was cHF 2.0 million and was paid in cash. Goodwill of cHF 1.2 million was
recognised in connection with the acquisition. it is allocated to the non-life segment in Belgium.
the disposals included the German companies assekuranz Herrmann GmbH and Wilhelm Herrmann assekuranz Makler GmbH
as well as the portfolio of life insurance policies of Baloise life ltd. the loss on the disposal of the two Herrmann insurance
companies totalled cHF 5.9 million. the sale of the portfolio of life insurance policies of Baloise life ltd. resulted in a loss of
cHF 15.8 million. these losses were recognised under other operating expenses.
the acquisitions and disposals had no material effect for the year profit 2017.
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 acquisition of assets. that is why the outflows
and inflows of cash and cash equivalents vary from the presentation in thecash flow statement. Further explanations are provided
in note 6 (changes to the group of consolidated companies).
251
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
40. RELATED PARTY 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 Remuneration Report as part of corporate governance (page 80 to 107).
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
2016
2017
2016
2017
2016
2017
31.12.2016
31.12.2017
31.12.2016
31.12.2017
cHF million
associates
Key management personnel
0.1
0.1
–
0.1
2.9
0.0
1.7
0.1
– 27.7
– 12.2
– 28.2
– 12.1
–
7.7
–
10.3
– 6.4
–
– 3.9
–
EXECUTIVE MANAGEMENT REMUNERATION
cHF million
Short-term employee benefits
post-employment benefits
payments under share-based payment plans
Total
2016
2017
– 7.4
– 1.2
– 3.6
– 7.7
– 1.3
– 3.2
– 12.2
– 12.1
19,037 shares worth cHF 2.5 million were repurchased from members of the corporate executive committee in 2017 (2016:
cHF 4.2 million) under the Share participation plan (section 18.4.3).
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 80 to 107 in the part of 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
252
Baloise Group annual Report 2017
Financial Report
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 2017.
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
31.12.2016
31.12.2017
54.2
618.6
672.8
–
–
–
51.5
509.0
560.5
–
–
–
253
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
CREDIT RATINGS OF GUARANTEES AND COLLATERAL
31.12.2016
cHF million
Guarantees
collateral
31.12.2017
cHF million
Guarantees
collateral
AAA
–
–
AAA
–
–
AA
–
–
AA
–
–
A
30.3
–
A
30.3
–
Lower than BBB
or no rating
BBB
–
0.2
23.9
618.4
Lower than BBB
or no rating
BBB
0.0
0.2
21.2
508.7
Total
54.2
618.6
Total
51.5
509.0
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
254
31.12.2016
31.12.2017
514.1
3,358.2
1,971.9
649.5
3,983.0
2,024.0
–
–
–
–
–
–
5,844.2
6,656.5
31.12.2016
31.12.2017
61.2
59.1
4,770.4
4,883.4
–
–
4,831.6
4,942.5
–
–
–
–
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
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.
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
31.12.2016
31.12.2017
326.5
873.8
–
–
451.8
735.7
–
–
1,200.3
1,187.5
–
–
–
–
31.12.2016
cHF million
capital commitments
31.12.2017
cHF million
capital commitments
AAA
318.8
AAA
199.2
AA
0.4
AA
–
A
Lower than BBB
or no rating
BBB
Total
92.2
18.6
770.3
1,200.3
A
61.5
Lower than BBB
or no rating
BBB
Total
–
926.9
1,187.5
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.
255
Baloise Group annual Report 2017
Financial Report
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.
2016
2017
– 2.1
– 1.4
–
– 3.5
– 3.4
–
– 3.4
–
–
– 2.2
– 1.6
–
– 3.8
– 3.3
–
– 3.3
–
–
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. 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
256
2016
2017
28.1
49.0
24.0
101.1
37.6
0.2
37.7
49.3
119.5
200.7
369.6
50.5
0.1
50.5
Baloise Group annual Report 2017
Financial Report
44. CLAIM PAYMENTS RECEIVED FROM NON-GROUP INSURERS
the companies in the Baloise Group received claim payments totalling cHF 0.1 million in 2017 (2016: cHF 0.1 million) from non-Group
insurers in connection with insurance contracts under which the Baloise Group companies are themselves policyholders. Most of
these claim payments were made for damage to buildings in Switzerland where, depending on the building’s location, mandatory
insurance cover is provided by government agencies.
257
Unterkapitel Baloise Group annual Report 2017
Financial Report
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
segment1
Method of
consoli-
dation3
Currency
Share
capital
(million)
Total
assets
(million)
Gross
premiums /
policy fees
(million)
Holding
non-life
life
Holding
other
Banking
other
o
nl
l
l
l
B
o
B
Holding
Holding
100.00
100.00
100.00
100.00
84.88
84.88
84.88
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
32.57
60.00
100.00
100.00
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
e
F
F
–
–
–
–
–
–
–
cHF
cHF
cHF
cHF
cHF
cHF
cHF
cHF
4.9
2,131.5
–
75.0
5,442.9
1,333.4
50.0 33,063.6
2,904.3
18.0
1.0
179.2
366.4
50.0
7,526.0
0.2
1.5
56.3
31.8
cHF
1.5
21.7
eUR
94.7
369.0
eUR
22.0
9,634.7
337.6
eUR
15.1
1,783.1
646.7
eUR
12.8
566.1
eUR
eUR
eUR
eUR
eUR
12.8
234.0
1.5
–
0.1
0.5
7.7
–
35.6
13.3
–
–
–
–
–
–
31.12.2017
Switzerland
Bâloise Holding ltd, Basel
Baloise insurance ltd, Basel
Baloise life ltd, Basel
pax anlage aG, Basel
Baloise Wohnbauten aG, 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 Beteiligung GmbH, cologne
ZeUS Vermittlungsgesellschaft mbH, Hamburg
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.
258
Unterkapitel Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
31.12.2017
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
segment1
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
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.
Method of
consoli-
dation3
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
8,987.4
972.0
eUR
eUR
2.7
17.1
188.9
24.5
cHF
250.0
1,215.3
64.1
–
–
eUR
15.8
342.9
110.0
eUR
32.7
7,686.0
70.7
eUR
0.1
14.4
eUR
224.3
274.7
–
–
cHF
7.5
3,241.1
1.1
eUR
10.9
0.8
USD
0.0
415.5
cHF
1.3
149.1
USD
0.0
599.3
–
–
–
–
259
Baloise Group annual Report 2017
Financial Report
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 2017, 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 2017 and in 2016.
49. EVENTS AFTER THE BALANCE SHEET DATE
By the time that these consolidated annual financial statements had been completed on 21 March 2018, we had not become aware
of any further events that would have a material impact on the consolidated annual financial statements as a whole.
260
Baloise Group annual Report 2017
Financial Report
notes to the consolidated annual financial statements
this page has been left empty on purpose.
261
Baloise Group annual Report 2017
Financial Report
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basel
Phone:
Fax:
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Basel, 21 March 2018
Report of the statutory auditor on the consolidated financial statements
Opinion
We have audited the consolidated financial statements (pages 112 - 260) of Bâloise Holding
Ltd and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as at
31 December 2017, the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated cash flow statement, the consolidated statement of
changes in equity for the year then ended, and the notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion the consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2017, 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 section Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements 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 judgement, were of most
significance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the consolidated 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 section Auditor’s responsibilities for the
audit of the consolidated financial statements of our report. Accordingly, our audit included
procedures designed to respond to our assessment of the risks of material misstatement of
the consolidated 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 consolidated financial statements.
262
Baloise Group annual Report 2017
Financial Report
Report of the statutory auditor
Claims reserves - non-life
Area of focus Claims reserves non-life include Management’s estimate of notified but
not yet paid claims, reserves for incurred but not reported losses and
the provision for claims handling costs.
Inappropriate valuation of the claims reserves non-life could result in a
misstatement to the financial statements of the Group and its overall
financial position. The valuation of claims reserves non-life involves a
significant amount of Management’s judgement. The selection of
methodology, underlying assumptions and input parameters may
significantly affect the annual result and the Group’s equity position.
Management discloses the valuation principles used in the recognition
of the claims reserves in note 5.4 “Non-Life” and note 5.4.2
“Assumptions”. The impact of various scenarios is described in note
5.4.4 “Sensitivity analysis”. We also refer to notes 3.18 and 23.1 on
pages 135 to 137 and 227 to 230 of the Group’s financial statements.
As part of the audit of the significant portfolios, we involved our non-life
insurance actuarial specialists to independently assess the
methodology and the underlying assumptions used by Management.
Our assessment of the claims reserves included an independent
valuation and a comparison to the Group’s financial statements.
We further assessed the operating effectiveness of selected key
controls over the input parameters and the mathematical correctness of
the actuarial calculations. In addition, we evaluated the required
disclosures in the notes to the financial statements.
Our audit
response
Technical reserves - life
Area of focus Life insurance technical reserves consist of the actuarial reserves and
the 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 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
judgement. The selection of methodology, underlying assumptions and
input parameters may significantly affect the annual result and the
Group’s equity position.
Management discloses the valuation principles used in the recognition
of 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”. We also refer to notes 3.19 and 23.2 on pages 137 to 139
and 231 to 235 of the Group’s financial statements.
263
Baloise Group annual Report 2017
Financial Report
Report of the statutory auditor
264
Our audit
response
As part of the audit, we involved our life insurance actuarial specialists.
On a sample basis, the actuaries assessed the methodology and
underlying assumptions used by Management as well as the
implementation of the technical reserves based on tariff assumptions.
In addition, we assessed the technical reserves by reviewing
Management’s Liability Adequacy Tests (LAT). We further tested the
operating effectiveness of selected key controls over the input
parameters and the mathematical correctness of the actuarial
calculations. In addition, we evaluated the required disclosures in the
notes to the financial statements.
Valuation of investments without publically available market values
Area of focus Certain investments (such as derivatives and investment properties) are
valued using generally recognised methods without reference to any
observable market data. Due to the complexity of those models and the
significant judgement exercised by Management in determining the
parameters of the models, any deficiencies or inaccurate input data
could lead to a material misstatement within the Group’s financial
statements.
Management discloses the inherent risks related to the valuation of
investments without publically available market prices in note 4 “Key
accounting judgements, estimates and assumptions” and the valuation
principles in note 5.10 “Fair value measurement”. We also refer to notes
3.7 and 12 on pages 127 to 129 and 203 to 207 of the Group’s financial
statements.
Our audit
response
We assessed and tested the design and the operating effectiveness of
key controls related to the valuation of investment properties, including
the controls over the review of the models and the model parameters.
We engaged real estate valuation specialists to independently assess
the valuation of selected investment property positions.
For a sample of equity instruments and derivative financial instruments
without publically available market prices, we identified the market data
input used by the Group and tested it against independent data. For
complex products, we engaged our internal valuation specialists to
perform an independent calculation. In addition, we evaluated the
required disclosure in the notes to the financial statements.
Baloise Group annual Report 2017
Financial Report
Report of the statutory auditor
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
consolidated financial statements, the stand-alone financial statements and our auditor’s
reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in
the annual report and we do not express any form of assurance thereon.
In connection with our audit of the consolidated financial statements, 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 consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
the work performed, we conclude that there is a material misstatement of the other
information, we are required to report it. We have nothing to report in this regard.
Responsibility of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial
statements that give a true and fair view in accordance with IFRS and the provisions of Swiss
law. 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.
In preparing the consolidated financial statements, 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 consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements 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 aggregate, they could reasonably be expected to influence the economic decisions of
users of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial
statements is located on the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-
report-for-public-companies. The description forms part of our auditor’s report.
265
Baloise Group annual Report 2017
Financial Report
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
consolidated financial statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Ernst & Young Ltd
Stefan Marc Schmid
Licensed audit expert
(Auditor in charge)
Christian Fleig
Licensed audit expert
266
Baloise Group annual Report 2017
Financial Report
Report of the statutory auditor
this page has been left empty on purpose.
267
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
58 corporate Governance
110 Financial Report
268 Bâloise Holding Ltd
286 General information
Bâloise Holding Ltd
income statement of Bâloise Holding ltd ........................ 270
Balance sheet of Bâloise Holding ltd .............................. 271
notes to the financial statements of Bâloise Holding ltd . 272
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
D
t
l
G
n
i
D
l
o
H
e
S
i
o
l
â
B
Unterkapitel
Baloise Group annual Report 2017
Bâloise Holding ltd
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
interest expenses
other expenses
Total expenses
Tax expense
Profit for the period
Note
2016
2017
2
3
4
256.3
102.0
12.4
370.7
– 40.7
– 33.0
– 2.5
– 76.2
406.8
33.8
6.9
447.5
– 46.6
– 30.5
– 2.8
– 79.9
– 5.3
– 0.3
289.2
367.3
270
Baloise Group annual Report 2017
Bâloise Holding ltd
Balance sheet of Bâloise Holding ltd
Balance sheet of Bâloise Holding Ltd
cHF million
Assets
cash and cash equivalents
Receivables from Group companies
Receivables from third parties
Current assets
Financial assets
loans to Group companies
long-term equity investments
Non-current assets
Total assets
Equity and liabilities
current liabilities
liabilities to Group companies
liabilities to third parties
current interest-bearing liabilities to third parties
Deferred income
non-current liabilities
long-term interest-bearing liabilities to Group companies
long-term interest-bearing liabilities to third parties
provisions
Liabilities
Share capital
Statutory retained earnings
General reserve
Reserve for treasury shares
Voluntary retained earnings
Free reserves
Distributable profit:
– profit carried forward
– profit for the period
treasury shares
Equity
Total equity and liabilities
Note
31.12.2016
31.12.2017
5
6
7
76.5
207.5
5.0
289.0
96.1
359.9
2.8
458.8
102.0
1,849.5
1,951.5
102.0
1,860.8
1,962.8
2,240.5
2,421.6
8.5
0.0
225.0
22.9
–
8
1,250.0
8.2
3.4
1.6
–
27.7
340.0
1,250.0
7.7
1,514.6
1,630.4
5.0
11.7
2.3
4.9
11.7
6.1
573.9
472.4
0.4
289.2
– 156.6
725.9
9
10
0.6
367.3
– 71.8
791.2
2,240.5
2,421.6
271
Baloise Group annual Report 2017
Bâloise Holding ltd
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). 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 iden-
tifiable risks in accordance with the prudence principle.
Long-term equity investments
long-term equity investments are recognised individually at cost less any impairment losses.
272
Notes to the financial statements of Bâloise Holding Ltd
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
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 to third parties and interest-bearing liabilities to Group companies 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.
273
Baloise Group annual Report 2017
Bâloise Holding ltd
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
Realized income treasury shares
other income from interest and securities
Total income from interest and securities
3. 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.
4.
INTEREST EXPENSES
cHF million
interest on bonds
other interest expenses
Total interest expenses
274
2016
2017
13.1
3.7
85.2
0.0
102.0
6.7
3.7
23.4
–
33.8
2016
2017
– 27.6
– 13.1
– 40.7
– 33.5
– 13.1
– 46.6
2016
2017
– 33.0
– 0.0
– 33.0
– 30.5
–
– 30.5
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
NOTES TO THE BALANCE SHEET
5. RECEIVABLES FROM GROUP COMPANIES
cHF million
Dividends
other receivables
Total receivables from Group companies
31.12.2016
31.12.2017
207.0
0.5
207.5
359.1
0.8
359.9
the annual general meeting of the following aGMs voted to recognise the dividends receivable for the 2017 financial year as
accrued income:
▸
▸
▸
▸
7 March 2018: Baloise asset Management Schweiz aG (Basel) and Baloise asset Management international aG (Basel)
13 March 2018: Haakon aG (Basel)
21. March 2018: Basler Versicherung aG (Basel) and Basler leben aG (Basel)
22. March 2018: Baloise Bank SoBa aG (Solothurn)
6. 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
31.12.2016
31.12.2017
40.0
62.0
102.0
40.0
62.0
102.0
275
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
7. LONG-TERM EQUITY INVESTMENTS
Company
Basler Versicherung aG, Basel
Basler leben aG, Basel
Baloise Bank SoBa aG, Solothurn
Baloise asset Management Schweiz aG, Basel
Baloise asset Management international aG, Basel
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 alternative investments partner S.à r.l., Bertrange (luxembourg)
Baloise private equity partner S.à r.l., Bertrange (luxembourg)
Baloise Finance (Jersey) ltd, St. Helier (Jersey)
1 investments stated as a percentage are rounded down.
Total
shareholding
as at
31.12.2016
(with voting
rights)
Total
shareholding
as at
31.12.2017
(with voting
rights)
Share capital
as at
31.12.2017
Capital share
(per cent)1
(per cent)1
Currency
(million)
(million)
100.00
100.00
100.00
100.00
100.00
100.00
74.75
100.00
100.00
100.00
100.00
100.00
–
–
100.00
100.00
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
cHF
cHF
cHF
cHF
cHF
cHF
cHF
cHF
eUR
cHF
eUR
eUR
eUR
eUR
cHF
75.0
50.0
50.0
1.5
1.5
0.1
0.2
7.5
<0.1
250.0
224.3
0.1
<0.1
<0.1
1.3
75.0
50.0
50.0
1.5
1.5
0.1
0.1
7.5
<0.1
250.0
224.3
0.1
<0.1
<0.1
1.3
276
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
8. LONG-TERM INTEREST-BEARING LIABILITIES
31.12.2017
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-bearing liabilities
9. TREASURY SHARES
Number of registered shares
Balance as at 1 January 2016
purchases
Sales
conversion convertible bonds
Disposals in connection with share participation programmes
Balance as at 31 December 2016
purchases
Sales
Reduction of share capital
Disposals in connection with share participation programmes
Balance as at 31 December 2017
Interest rate
Issued
Maturity date
Amount CHF million
2.250 %
2.875 %
3.000 %
2.000 %
1.750 %
1.125 %
01.03.2012
01.03.2019
14.10.2010
14.10.2020
07.07.2011
07.07.2021
12.10.2012
12.10.2022
26.04.2013
26.04.2023
19.12.2014
19.12.2024
Low
in CHF
High
in CHF
Average
share price
(CHF)
103.69
121.80
124.55
129.26
111.61
125.80
135.86
126.79
158.89
131.25
149.88
129.27
175.0
300.0
250.0
150.0
225.0
150.0
1,250.0
Number
2,572,720
581,402
– 768,901
– 660,973
– 99,504
1,624,744
468,450
– 345,943
– 1,200,000
– 50,848
496,403
277
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
10. CHANGES IN EQUITY
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 2016
5.0
11.7
3.5
allocation 2016
Dividend
additions
change in treasury shares
Recognition / reversal
profit for the period
Balance as at 31 December 2016
allocation 2017
Dividend
additions
Reduction of share capital
change in treasury shares
Recognition / reversal
profit for the period
Balance as at 31 December 2017
–
–
–
–
–
–
5.0
–
–
–
– 0.1
–
–
–
4.9
–
–
–
–
–
–
11.7
–
–
–
–
–
–
–
11.7
–
–
–
–
– 1.2
–
2.3
–
–
–
–
–
3.8
–
6.1
387.6
185.0
–
–
–
1.2
–
573.8
29.0
–
–
– 126.6
–
– 3.8
–
472.4
435.4
– 185.0
– 250.0
–
–
–
289.2
289.6
– 29.0
– 260.0
–
–
–
–
367.3
367.9
– 194.8
–
–
–
38.2
–
–
– 156.6
–
–
–
126.7
– 41.9
–
–
– 71.8
648.4
0.0
– 250.0
0.0
38.2
0.0
289.2
725.8
0.0
– 260.0
0.0
0.0
– 41.9
0.0
367.3
791.2
278
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
11. SIGNIFICANT SHAREHOLDERS
the information available to the company reveals that the following significant shareholders and shareholder groups linked by
voting rights held long-term equity investments in the company within the meaning of section 663c of the Swiss code of obliga-
tions (oR) as at 31 December 2017:
per cent
Shareholders
chase nominees ltd.1
BlackRock inc.
UBS Fund Management aG
lSV asset Management
nortrust nominees l td.1
Bank of new York Mellon n. V.1
credit Suisse Funds aG
Total
shareholding
as at
31.12.2016
Share of
voting rights
as at
31.12.2016
Total
shareholding
as at
31.12.2017
Share of
voting rights
as at
31.12.2017
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
8.1
>5.0
3.3
>3.0
3.5
5.8
<3.0
2.0
<2.0
2.0
0.0
0.0
0.0
<2.0
1 custodian nominees who hold shares in trust for third parties are counted as part of the free float under the SiX exchange regulations. Such shareholder groups are not subject
to disclosure requirements under Swiss stock market legislation.
12. CONTINGENT LIABILITIES
cHF million
collateral, guarantee commitments
31.12.2016
31.12.2017
57.8
534.8
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 2017. 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 guarantees all obligations of Baloise life ltd relating to the various tranches of the subordinated bonds,
which had a total nominal value of cHF 500 million as at the balance sheet date.
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.
279
Baloise Group annual Report 2017
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
13. 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 (2016: none).
14. 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 80 to 107 in the part of corporate governance. the key information
disclosed here includes
▸
▸
▸
▸
remuneration paid to the members of the Board of Directors,
remuneration paid to the members of the corporate executive committee,
loans and credit facilities granted to members of the Board of Directors and the corporate executive committee,
shares and options held by members of the Board of Directors and the corporate executive committee.
15. NET REVERSAL OF HIDDEN RESERVES
in 2017, no hidden reserves were reversed.
16. 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.
17. EVENTS AFTER THE BALANCE SHEET DATE
By the time that these annual financial statements had been completed on 21 March 2018, we had not become aware of any events
that would have a material impact on the annual financial statements as a whole.
280
Baloise Group annual Report 2017
Bâloise Holding ltd
proposel 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 367,343,969.45.
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
2016
2017
289,202,029.24
367,343,969.45
395,199.00
597,228.24
289,597,228.24
367,941,197.69
– 29,000,000.00
– 94,000,000.00
–
–
– 260,000,000.00
– 273,280,000.00
597,228.24
661,197.69
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 5.60 gross or cHF 3.64 net of withholding tax.
281
Baloise Group annual Report 2017
Bâloise Holding ltd
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basel
Phone
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Basel, 21 March 2018
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements (pages 270 - 280) of Bâloise
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
ended 31 December 2017.
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
judgement, 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 2017 comply with
Swiss law and the company’s articles of incorporation.
282
Baloise Group annual Report 2017
Bâloise Holding ltd
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 judgement, 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 responsibility 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 using a discounted cash flow analysis. The
determination whether a long-term equity investment 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 the judgement
involved but also based on the magnitude of the carrying 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 2017.
Our audit
response
283
Baloise Group annual Report 2017
Bâloise Holding ltd
Report of the statutory auditor
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor
Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there
are no circumstances incompatible with our independence.
In accordance with article 728a 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
Baloise Group annual Report 2017
Bâloise Holding ltd
Report of the statutory auditor
this page has been left empty on purpose.
285
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
58 corporate Governance
110 Financial Report
268 Bâloise Holding ltd
286 General information
General
information
GLOSSARY ................................................................ 288
ADDRESSES .............................................................. 292
INFORMATION ON THE BALOISE GROUP .................... 293
FINANCIAL CALENDAR AND CONTACTS ...................... 294
Unterkapitel Baloise Group annual Report 2017
General information
Glossary
Glossary
actuarial reserves
actuarial reserves are the reserves set aside to cover current
life insurance policies.
annual premium equivalent
the annual premium equivalent (ape) is the insurance
industry 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.
Baloise
“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 par-
ticular insurance companies when selling insurance prod-
ucts. they are paid commission for the insurance policies
that they sell.
Business volume
the total volume of business comprises the premium income
earned from non-life and life insurance and from invest-
ment-linked life insurance policies during the reporting
period. the accounting principles used by the Baloise Group
do not allow premium income earned from investment-linked
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.
▸
▸
▸
▸
▸
▸
claims ratio
the total cost of claims settled as a percentage of total
premiums.
claims reserve
a reserve for claims that have not been settled by the end
of the year.
combined ratio
a non-life insurance ratio that is defined as the sum of the
cost of claims settled (claims ratio), total expenses (expense
ratio) and profit sharing (profit-sharing ratio) as a percentage
of total premiums. this ratio is used to gauge the profitability
of non-life insurance business.
Deferred taxes
probable future tax expenses and tax benefits arising from
temporary differences between the carrying amounts of
assets and liabilities recognised in the consolidated finan-
cial statements and the corresponding amounts reported
for tax purposes. the pertinent calculations are based on
country-specific tax rates.
embedded value
the market-consistent 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
non-life insurance business expenses as a percentage of
total premiums.
▸
▸
▸
▸
▸
▸
288
Baloise Group annual Report 2017
General information
Glossary
▸
▸
▸
▸
▸
▸
▸
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
statement in an insurance company’s annual report are
stated before deduction of reinsurance.
Group life business
insurance policies taken out by companies or their employee
benefit units for the occupational pension plans of their
entire workforce.
impairment
an asset write-down 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.
international Financial Reporting Standards
Since 2000 the Baloise Group has been preparing its con-
solidated financial statements in compliance with inter-
national Financial Reporting Standards (iFRS), which were
previously called international accounting Standards (iaS).
investments
investments comprise investment property, equities and
alternative financial assets (financial instruments with
characteristics of equity), fixed-income securities (financial
instruments 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.
investment-linked premium
premium income from life insurance policies under which
the insurance company invests the policyholder’s savings
for the latter’s own account and at his or her own risk. the
international Financial Reporting Standards applied by the
Baloise Group do not allow the savings component of this
premium income to be recognised as revenue on the income
statement.
legal quota
a legally or contractually binding percentage requiring life
insurance companies to pass on a certain share of their
profits to their policyholders.
▸ Minimum interest rate
the minimum guaranteed interest rate paid to savers under
occupational pension plans.
▸
▸
▸
net
the net figures shown on the balance sheet or income
statement in an insurance company’s annual report are
stated after deduction of reinsurance.
new business margin
the value of new business divided by the annual premium
equivalent (ape).
operating segments
Similar or related business activities are grouped together
in operating segments. the Baloise Group’s operating
segments are non-life, life, Banking (which includes asset
management), and other activities. the “other activities”
operating segment includes equity investment companies,
real estate firms and financing companies.
289
Baloise Group annual Report 2017
General information
Glossary
performance of investments
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 invest-
ments held.
periodic premium
periodically recurring premium income (see definition of
“premium”).
policyholder’s dividend
an annual, non-guaranteed benefit paid to life insurance
policyholders if the revenue generated by their policies is
higher and / or the risks and costs associated with their
policies are lower than the assumptions on which the cal-
culation of their premiums was based.
premium
the amount paid by the policyholder to cover the cost of
insurance.
premium earned
the proportion of the policy premium available to cover the
risk insured during the financial year, i. e. the premium minus
changes in unearned premium reserves.
profit after taxes
profit after taxes is the consolidated net result of all income
and expenses, minus all borrowing costs as well as current
and deferred income taxes. profit after taxes includes
non-controlling interests.
profit-sharing ratio
total profit sharing as a percentage of total premiums; profit
sharing is defined as the reimbursement of amounts to
non-life policyholders to reflect the profitability of insurance
policies.
▸
▸
▸
▸
▸
▸
Reinsurance
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.
Reserves
a measurement of future insurance benefit obligations
arising from known and unknown claims that are reported
as liabilities on the balance sheet.
Return on equity
a calculation of the percentage return earned on a company’s
equity capital during a financial year; it represents the profit
generated in a given financial year divided by the company’s
average equity during that period.
Risk scoring
Risk scoring uses analytical statistical methods to derive
risk assessments from collected data based on empirical
values. insurance companies use this kind of scoring to
ensure that the premiums they charge reflect the risks
involved.
Run-off business
an insurance policy portfolio that has ceased to accept new
policies and whose existing policies are gradually expiring.
Segment
Financial reporting in the Baloise Group is carried out in
accordance with international Financial Reporting Standards
(iFRSs), which require similar transactions and business
activities to be grouped and presented together. these
aggregated operating activities are presented in “segments”,
broken down by geographic region and business line.
▸
▸
▸
▸
▸
▸
▸
290
Baloise Group annual Report 2017
General information
Glossary
▸
▸
▸
▸
▸
▸
▸
Share buy-back programme
procedure approved by the Board of Directors under which
Baloise can repurchase its own outstanding shares. com-
panies in Switzerland open a separate trading line in order
to carry out such buy-backs.
Shares issued
the total number of shares that a company has issued;
multiplying the total number of shares in issue by their face
value gives the company’s nominal share capital.
Single premium
Single premiums are used to finance life insurance policies
at their inception in the form of a one-off payment. they are
mainly used to fund wealth-building 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 author-
ities 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 calculated
from a current perspective in accordance with generally
accepted principles.
technical result
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.
▸
▸
▸
Unearned premium reserves
Deferred income arising from premiums that have already
been paid for periods after the balance sheet date.
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’ divi-
dends (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.
291
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
MOBLY
Hessenstraatje 10
B-2000 antwerp
tel. + 32 491 19 18 49
info@mobly.be
www.mobly.be
Baloise Group annual Report 2017
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
MOVU
Universitätstrasse 63
cH-8006 Zürich
telefon + 41 44 505 14 14
captain@movu.ch
www.movu.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
FRI:DAY
Klosterstrasse 62
D-10179 Berlin
telefon + 49 30 959 983 200
info@friday.de
www.friday.de
292
Baloise Group annual Report 2017
General information
information on the Baloise Group
Information on the Baloise Group
the 2017 annual Report is published in German and english.
the German version is authoritative in the event of any discrep-
ancy. the Financial Report contains the audited 2017 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.
AVAILABILITY AND ORDERING
the 2017 annual Report and the Summary of the 2017 annual
Report will be available from 27 March 2018 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 forward-looking statements
that include forecasts of future events, plans, goals, business
developments and results and are based on Baloise’s current
expectations and assumptions. these forward-looking state-
ments should be noted with due caution because they inherently
contain both known and unknown risks, are subject to uncer-
tainty and may be adversely affected by other factors. conse-
quently, 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 insur-
ance 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
forward-looking statements or to allow for new information,
future events, etc. past performance is not indicative of future
results.
© 2018 Bâloise Holding ltd, 4002 Basel, Switzerland
Publisher Bâloise Holding ltd
corporate communications & investor Relations
Concept, design neidhartSchön aG, Zurich
Photography Dominik plüss, Basel
Publishing mms solutions ag, Zurich
English translation lingServe ltd (UK)
Printing Kreaflex ltd, oberwil
293
Baloise Group annual Report 2017
General information
Financial calendar and contacts
Financial calendar and contacts
27 MARCH 2018
Annual financial results
Media conference
conference call for analysts
27 APRIL 2018
Annual General Meeting
Bâloise Holding ltd
28 AUGUST 2018
Half-year financial results
conference call for analysts and the media
14 NOVEMBER 2018
Q3 interim statement
28 MARCH 2019
Annual financial results
Media conference
conference call for analysts
26 APRIL 2019
Annual General Meeting
Bâloise Holding ltd
Corporate Governance
philipp Jermann
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 89 42
philipp.jermann@baloise.com
Investor Relations
Marc Kaiser
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 81 81
investor.relations@baloise.com
Media Relations
Dominik Marbet
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 84 67
media.relations@baloise.com
www.baloise.com
294
Bâloise Holding Ltd
aeschengraben 21
cH-4002 Basel, Switzerland
www.baloise.com