ANNUAL REPORT
2018
Baloise Group
Unterkapitel Baloise Group
Annual Report 2018
Contents
BALOISE
Baloise key figures ................................................................. 4
At a glance .............................................................................. 5
Letter to shareholders ............................................................ 6
Baloise shares ........................................................................ 8
Core activities ...................................................................... 10
Strategy ................................................................................ 11
Brand .................................................................................... 14
REVIEW OF OPERATING PERFORMANCE
Group .................................................................................... 18
Switzerland .......................................................................... 22
Germany ............................................................................... 23
Belgium ................................................................................ 24
Luxembourg ......................................................................... 25
Asset management and banking .......................................... 26
Consolidated income statement .......................................... 27
Consolidated balance sheet ................................................. 29
Business volume, premiums and combined ratio ............... 30
Technical income statement ................................................ 32
Gross premiums by sector .................................................... 33
Banking activities ................................................................. 34
Investment performance ...................................................... 35
SUSTAINABLE BUSINESS MANAGEMENT
Responsibility ....................................................................... 40
Human resources ................................................................. 47
The environment .................................................................. 54
Risk management ................................................................. 58
Commitment to art ............................................................... 62
CORPORATE GOVERNANCE
Corporate Governance Report .............................................. 66
Appendix 1: Remuneration Report ....................................... 88
Appendix 2: Remuneration Report Report of the
statutory auditor to the Annual General Meeting
of Bâloise Holding Ltd, Basel ............................................. 114
FINANCIAL REPORT
Consolidated balance sheet ............................................... 118
Consolidated income statement ........................................ 120
Consolidated statement of comprehensive income .......... 121
Consolidated cash flow statement ..................................... 122
Consolidated statement of changes in equity ................... 124
Notes to the consolidated annual financial statements .... 126
Notes to the consolidated balance sheet .......................... 202
Notes to the consolidated income statement .................... 245
Other disclosures ............................................................... 256
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ..... 268
BÂLOISE HOLDING LTD
Income statement of Bâloise Holding Ltd .......................... 276
Balance sheet of Bâloise Holding Ltd ................................ 277
Notes to the financial statements of Bâloise Holding Ltd .. 278
Appropriation of distributable profit as proposed
by the Board of Directors ................................................... 287
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ..... 288
GENERAL INFORMATION
Glossary ............................................................................. 294
Addresses ........................................................................... 298
Information on the Baloise Group ...................................... 299
Financial calendar and contacts ........................................ 300
3
Baloise Group Annual Report 2018
Baloise
Baloise key figures
Baloise key figures
CHF million
Business volume
Gross premiums written (non-life)
Gross premiums written (life)
Sub-total of IFRS gross premiums written 1
Investment-type premiums
Total business volume
Operating profit (loss)
Profit / loss before borrowing costs and taxes
Non-life
Life 2
Banking
Other activities
Profit for the period
Balance sheet
Technical reserves
Equity
Ratios (per cent)
Return on equity (RoE)
Gross combined ratio (non-life)
Net combined ratio (non-life)
New business margin (life)
Investment performance (insurance) 3
Embedded value of life insurance policies
Embedded value (MCEV)
Annual premium equivalent (APE)
Value of new business
Key figures on the Company’s shares
Shares issued (units)
Basic earnings per share 4 (CHF)
Diluted earnings per share 4 (CHF)
Equity per share 4 (CHF)
Closing price (CHF)
Market capitalisation (CHF million)
Dividend per share 5 (CHF)
2017
2018
Change (%)
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
3,405.9
3,360.3
6,766.2
1,912.1
8,678.2
371.7
333.2
92.1
– 59.4
522.9
48,008.5
46,575.2
6,409.2
6,008.2
8.9
90.2
92.3
33.4
2.5
8.6
89.2
91.7
48.5
0.7
4,896.8
5,181.3
376.8
125.8
293.9
142.4
48,800,000
48,800,000
11.50
11.48
133.2
151.70
7,403.0
5.60
11.14
11.12
127.1
135.40
6,607.5
6.00
5.5
– 4.3
0.4
– 24.1
– 6.3
– 0.8
8.9
12.6
– 24.3
– 1.7
– 3.0
– 6.3
–
–
–
–
–
5.8
– 22.0
13.2
0.0
– 3.1
– 3.1
– 4.6
– 10.7
– 10.7
7.1
1 Premiums written and policy fees (gross).
2 Of which deferred gains / losses from other operating segments (31 December 2017: CHF 14.5 million; 31 December 2018: CHF 10.2 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 2018 based on the proposal submitted to the Annual General Meeting.
4
Baloise Group Annual Report 2018
Baloise
At a glance
At a glance
Equity of
CHF 6,008.2 million
Return on equity
(RoE) of
8.6 %
Profit for the period of
CHF 522.9 million
Profit (attributable to the
shareholders)
CHF 523.2 million
Dividend of
CHF 6.00 per share
(will be proposed to the
Annual General Meeting
on 26 April 2019)
– 24.1 %
lower business volume
with investment-type premiums
Net investment yield
of insurance assets
2.2 %
Net combined ratio of
New business margin of
91.7 %
48.5 %
5
Baloise Group Annual Report 2018
Baloise
Letter to shareholders
Dr Andreas Burckhardt, Chairman of the Board of Directors (on the left), and Gert De Winter, Group CEO (on the right), on site of the Baloise Park.
DEAR SHAREHOLDERS
The continuing success and strong positioning of Baloise
underpin its five-year strategic phase, Simply Safe, which is
intended to equip the Company to face the challenges of the
future. We are now two years into the initiative and the progress
made so far towards the strategic goals is extremely promising.
The holding company has already received CHF 864 million in
cash of the total target amount of CHF 2 billion, we have signed
up 304,000 new customers (our target: 1 million) and we are
among the top 23 per cent of the most attractive employers in
our sector in Europe (our ambition: top 10 per cent).
In 2018, Baloise’s profit for the period attributable to share-
holders amounted to CHF 523.2 million (2017: CHF 548.0 million).
In the non-life business, we achieved an improved net combined
ratio of 91.7 per cent (2017: 92.3 per cent) while in the life
business, stable interest rates and further portfolio reallocations
led to an improved EBIT of CHF 333.2 million (2017: CHF 306.0
million). In Asset Management, we achieved a net investment
yield on the insurance assets of 1.2 per cent (2017: 1.3 per cent).
The change in corporate culture that began two years ago
is being vigorously driven forward and we have achieved a balance
between the core business that underpins our current business
performance and the initiatives that are designed to secure our
future. Sustainable value generation requires a strong focus on
the core business, but at the same time it needs the core business
to be expanded and new, modern, streamlined business models
to be introduced. Only by balancing all these aspects can value
be continuously created. Baloise also has a strong balance sheet
and strong operational profitability, which has been optimised
in terms of risk-bearing capacity and earnings opportunities.
Ultimately, successful value management relies on having the
right corporate culture and the ability to adapt.
The value of Baloise is measured by the return on equities
or total shareholder return. It is driven by four, equally important
dimensions: profit, capital, cash and the value of optionalities.
The last of these is reflected in the development opportunities
created by Baloise. They influence the future value and therefore
have to be taken into account in the value appraisal. Cash and
profit reflect the current earnings power of the Baloise Group,
while capital indicates the resilience of the Company’s financial
position. The value of optionalities includes the effect of capital
6
Baloise Group Annual Report 2018
Baloise
Letter to shareholders
spending and initiatives that should generate additional income
from existing and new areas of business in future. The Company
has a dynamic process in place to ensure that these innovations
bring the Baloise business model in line with the needs of the
future.
In the existing business model, Baloise is driving forward
the adjustment and renewal of its core business with services
such as a simplified digital claims handling process, property
insurance and cyber insurance. When developing new areas of
business, we have four approaches: we invest in young compa-
nies, develop our own start-ups, acquire companies and enter
into partnerships. For example, we are investing up to CHF 50 mil-
lion in insurtech and fintech companies in partnership with the
investment firm Anthemis. We are working to develop start-up
companies with digital insurer FRIDAY in Germany and Mobly in
Belgium, a platform for mobility services that focuses on the
used car sector. But we are also buying companies such as the
removals platform MOVU in Switzerland and Drivolution in
Belgium, a company specialising in drive safety for fleets. Finally,
we are entering into partnerships such as that with the Basel-
bieter Kantonalbank and Bank Cler in Switzerland, which offer
our insurance services in combination with new customer
solutions via their sales channels.
At the beginning of this phase, the focus is still not yet on
profitability. However, it is important to get as many initiatives
as possible from the growth phase onto the road to success.
Over the past year, we have also implemented a number of
organisational changes. The demands placed on IT systems at
Baloise have always been immense, but are now skyrocketing
due to the rapid pace of the innovation process and the new
challenges of digitalisation. The Board of Directors of Baloise
has therefore created a Group IT corporate division in order to
simplify the IT landscape, leverage synergies and drive forward
the change process and further digitalisation with the necessary
speed and sense of purpose. Alexander Bockelmann has been
appointed to the newly created post of Chief Technology Officer.
The first two years of the new strategy have focused on
Baloise’s objectives and strategic direction. The experience
gathered during this period has been used to make necessary
and useful adjustments, setting the course for the coming years.
Agility in the implementation of this strategy will be crucial to
our future success. With the support of our employees and
a strong corporate culture to build on, we believe we are on the
right track. Our shareholders should also be able to reap the
benefit. As an indicator of the confidence we have in our targets,
the Board of Directors will be asking the Annual General Meeting
to increase the dividend by CHF 0.40 to CHF 6.00.
“The course is set for the next stage of the
strategic phase.”
Basel, March 2019
Dr. Andreas Burckhardt
Gert De Winter
Chairman of the Board of Directors
Group CEO
The Baloise innovation cycle is a four-phase process. As
well as launching new initiatives, it is important to have a system
in place to halt those that are less successful while they are still
in their early stages. The more phases an initiative goes through,
the more resources and capital expenditure it consumes. The
initial, exploratory phase requires little capital spending and
generally lasts one to two weeks. Thanks to the strong entre-
preneurial spirit that now exists within the Company, the
pipeline is currently well stocked. If an idea makes it through
the first couple of weeks, it enters a two to three month validation
phase which culminates in a “minimal viable product”. This then
passes to the third phase – incubation – which can last up to
a year. The objective for the end of the incubation phase is to
have a marketable product that can be used to invest in growth,
i. e. to increase the number of customers and the level of revenue.
Baloise can invest in such a phase itself or bring in third parties.
7
Baloise Group Annual Report 2018
Baloise
Baloise shares
A difficult year on the stock markets
Geopolitical risks and concerns about a slowdown in global economic growth made 2018 a year of
volatile stock markets and significant price falls. Baloise shares* were unable to escape these challenging
market conditions and weakened broadly in line with the Swiss Market Index (SMI). Nevertheless,
distributions to shareholders remain reliable and attractive – the dividend was raised by 7 per cent.
After a very positive trading year in 2017, 2018 was characterised
by high levels of volatility and falling prices. The turbulent
market conditions were caused by concerns about inflation, fears
that the central banks might normalise their monetary policy
more quickly than expected, geopolitical risks and worries about
a slowdown in the global economy. The market sentiment was
primarly affected by protectionist measures in the US, the Brexit
process and the new coalition government of two Eurosceptic
parties in Italy and its budget dispute with the EU.
The aforementioned events created turbulence in the finan-
cial markets, despite a solid economic foundation supported
by strong fundamentals. The US was a case in point – the tax
reform and expansionary fiscal policy measures gave the
country’s economy a significant boost. The global economic
outlook remains positive overall, even though leading indicators
have recently started to show signs of a slowdown in growth.
The normalisation of the central banks’ monetary policy is
also advancing. The European Central Bank terminated its asset
purchase programme at the end of 2018 and announced that it
was planning to start raising its key interest rate from September
2019. In the US, the Federal Reserve raised its base rate four
times in 2018 to counteract rising levels of inflation. Its target
rate band is now 2.25 – 2.50 per cent. In December, however,
the Fed lowered the number of interest-rate hikes planned for
2019 from three to two in light of early indications of a slowdown
in economic growth. Investors reacted with disappointment, as
they had expected an even more cautious approach.
Following their excellent performance in 2017, Baloise
shares were adversely affected by the aforementioned factors
in 2018. As at the end of the year, Baloise shares traded at
CHF 135.40 and thus 10.7 per cent below the closing price of
the prior year. The European insurance sector index (STOXX
Europe 600 Insurance Index, SXIP) suffered similar losses and
closed 10.3 per cent lower than in 2017. Two of Switzerland’s
main share indices followed the same downward trend. The Swiss
8
Market Index and the Swiss Leader Index fell by 10.2 per cent
and 14.6 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 26 April 2019 that a cash dividend
of CHF 6.00 per share be paid for the 2018 financial year, an
increase of CHF 0.40 compared with the dividend for 2017. This
would represent an attractive dividend yield of 4.4 per cent of
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
2018, the programme had resulted in the purchase of 1,336,575
treasury shares, returning CHF 198.5 million to shareholders
(number of shares bought back and aggregate value of buy-backs
in 2018: 913,125 shares, worth CHF 135.1 million).
Year (CHF million)
2014
2015
2016
2017
2018
Total
Cash dividends
Share buy-backs
Total
250.0
250.0
260.0
273.3
292.81
1,326.1
–
59.1
54.8
63.3
135.1
312.3
250.0
309.1
314.8
336.6
427.9
1,638.4
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 26 April 2019.
* Baloise shares = shares of Bâloise Holding Ltd.
Baloise Group Annual Report 2018
Baloise
Baloise shares
SHAREHOLDER STRUCTURE
The shares in Bâloise Holding Ltd are widely held and their free
float remains unchanged at 100 per cent. During the 2018
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 15 October 2018, several
collective investments managed by Credit Suisse Funds AG,
based in Zurich, together rose above the threshold of 3 per cent
stipulated in the aforementioned Article. Further information
on Baloise’s significant shareholders as at 31 December 2018
can be found in table 13 on page 285.
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)
31.12.2014
31.12.2015
31.12.2016
31.12.2017
31.12.2018
127.80
129.90
101.60
127.60
136.30
109.60
128.30
131.00
103.20
151.70
159.40
121.35
6,390.0
6,380.0
6,415.0
7,403.0
15.15
14.63
8.44
1.04
10.96
10.65
11.64
1.10
11.53
11.22
11.13
1.04
11.50
11.48
13.19
1.14
135.40
159.40
131.60
6,607.5
11.14
11.12
12.15
1.07
50,000,000
50,000,000
50,000,000
48,800,000
48,800,000
Minus the number of treasury shares (units)
3,048,791
3,464,540
2,499,945
1,327,993
2,218,134
Number of shares in circulation (units)
Average number of shares outstanding 2
Dividend per share 3 (CHF)
Dividend payout ratio 3
Dividend yield 3
46,951,209
46,535,460
47,500,055
47,472,007
46,581,866
46,921,282
46,721,219
46,381,359
47,641,577
46,979,421
5.00
33.0
3.9
5.00
45.6
3.9
5.20
45.1
4.1
5.60
48.7
3.7
6.00
53.9
4.4
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 253 of the Financial Report).
3 2018 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 2013 – 2018
BALN
CHF 0.10
1.241.051
CH0012410517
SIX Swiss Exchange
200
150
100
50
100 % registered shares
2013
2014
2015
2016
2017
2018
1 31 December 2012 = 100
Bâloise Holding registered shares (BALN)
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index (SMI)
9
Baloise Group Annual Report 2018
Baloise
Core activities
Our core activities
BELGIUM
Hamburg
Business volume (CHF million)
Life: 166.1
Non-life: 1,099.6
Investment-type premiums: 456.6
Employees: 1,224
Net combined ratio: 92.3 %
LUXEMBOURG
Business volume (CHF million)
Life: 80.5
Non-life: 134.5
Investment-type premiums: 1,116.0
Employees: 475
Net combined ratio: 89.9 %
SWITZERLAND
Antwerp
Brussels
Bad Homburg
Luxembourg
Business volume (CHF million)
Life: 2,728.0
Non-life: 1,349.2
Investment-type premiums: 112.3
Employees: 3,782
Net combined ratio: 84.5 %
Sales force assets under management: CHF 2,082 million
Credit assets from the sales force: CHF 986 million
Wealth & pensions advisory mandates: 2,193
Return on equity: 7.5 %
Employees: 360
Business volume (CHF million)
Total assets under management: 86,182
Assets under management third-party assets: 8,964
Insurance assets: 801
Employees: 147
Cost / Income ratio: 45.1 %
10
Basel
Solothurn
GERMANY
Business volume (CHF million)
Life: 385.7
Non-life: 803.1
Investment-type premiums: 227.1
Employees: 1,722
Net combined ratio: 95.8 %
Life
Investment-type premiums
Non-life
Baloise Group Annual Report 2018
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 was 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 7,200 Baloise employees in Switzerland, Belgium,
Germany and Luxembourg. Baloise aims to establish an agile
and entrepreneurial corporate culture in which its employees,
on a daily basis, see the world through the eyes of the customer.
The idea is to develop services and solutions that go beyond
the traditional insurance business.
The new strategy is in line with principles of corporate
responsibility and sustainable business management, an approach
that Baloise has pursued for a number of years now. The new
focus on the customer goes beyond that of a traditional service
provider. For this reason, greater importance needs to be attached
to the society in which the customers – but also Baloise as
a Company – exist. Baloise believes that this new strategy will
bolster its efforts to make further improvements in the area of
sustainable business management.
CUSTOMERS
Baloise is becoming the first choice for people who want to feel
“simply safe”. An even stronger focus on customer needs,
tailored omnichannel communication and innovative products
and services in the areas of insurance, assistance and pensions
will help Baloise to attract an additional 1 million customers by
2021. This would represent an increase of 30 per cent on 2016.
EMPLOYEES
The workforce is key to implementing the new corporate strategy.
That is why Baloise wants to become an employer of choice
in its industry. Progress will be measured by a performance
indicator that shows how often Baloise is recommended as
an employer.
SHAREHOLDERS
Thanks to sustained improvements in profitability in its 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 2018
Baloise
Strategy
From strategic initiatives to ecosystems
Acquire
Partner
2018: + 186,000
Ambition 2021: + 1,000,000
2018: top 23 %
Ambition 2021: top 10 %
2018: CHF 449 mn
Ambition 2021: CHF 2 bn
12
Drivolution
MOVU
Good Drive
FRI:DAY
Mobly
Cler
Carhelper
KASKO
younGo
Single item
insurance
TRANSPORT
HOME
EXTENDING BEYOND TRADITIONAL INSURANCE BUSINESS: ECOSYSTEMS REPRESENTING THE AREAS OF FUTURE SUCCESSBaloise’s strategic ambitions are based on its excellent track record over the past decade, with one of the most profitable non-life portfolios in Europe, a strong position in core markets, cutting- edge IT systems and digital processes, and for-ward-looking capital management and risk man-agement. Based on these strengths, Baloise is continuing to invest in the future. More than 50 initiatives have been launched since the start of Simply Safe and, in combination with a cultural transformation campaign, are injecting momentum into the new ecosystems: personal transport, home, life, pensions, health and business services.CUSTOMERSAmbition: 1 million additional customersPROGRESS MADE 2018 304,000: sum since the start of the Simply Safe strategy 864,000: sum since the start of the Simply Safe strategyEMPLOYEESAmbition: leading employer amongst European financialsSHAREHOLDERSAmbition: CHF 2 billion cash remittance to the holding Baloise Group Annual Report 2018
Baloise
Strategy
Incubate
Test
Culture
Optimisation &
Extension of the
Core Business
Invest
Ecosystems
younGo
Möbel
Pfister
E-Games
Cler
BLKB
UPC
MOVU
KASKO
Perspectiva
Hypopotamus
B-Tonic
picsure
Cyber
(Retail)
MONVISO
Baloise Life
Advice
Real estate fund
Fasoon
Third-party
asset
management
Cyber
(Enterprise)
HOME
LIFE, PENSIONS & HEALTH
BUSINESS SERVICES
13
Baloise Group Annual Report 2018
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 2018
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
38 Sustainable business management
64 Corporate Governance
116 Financial Report
274 Bâloise Holding Ltd
292 General information
Review of operating
performance
GROUP ......................................................................... 18
Baloise on course for success after two years
of Simply Safe .................................................................... 18
SWITZERLAND ............................................................ 22
Profitable non-life business and encouraging increase in
new business .................................................................... 22
GERMANY ................................................................... 23
Growth in the target segments and stabilisation of the
combined ratio .................................................................. 23
BELGIUM .................................................................... 24
Market growth outstripped; strong profitability
and innovation .................................................................. 24
LUXEMBOURG ............................................................. 25
High profitability and strong growth in non-life business .... 25
ASSET MANAGEMENT AND BANKING ........................... 26
Encouraging rise in income ................................................ 26
FINANCIAL INFORMATION ............................................ 27
Consolidated income statement ........................................ 27
Consolidated balance sheet .............................................. 29
Business volume, premiums and combined ratio .............. 30
Technical income statement .............................................. 32
Gross premiums by sector ................................................. 33
Banking activities ............................................................. 34
Investment performance ................................................... 35
Unterkapitel Baloise Group Annual Report 2018
Review of operating performance
Group
Baloise on course for success after two years
of Simply Safe
Baloise can look back on a successful 2018. The results show that its chosen strategic direction is the
right one. In the last few years, more than 50 initiatives have been launched that are driving the digital
and cultural transformation. At the same time, Baloise’s operational success shows that its core business
remains strong. 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. As a result, the contribution to EBIT from the life business again rose significantly in
2018. The non-life portfolio’s good profitability can be seen from the further improvement of the combined
ratio, which was achieved despite the adverse impact of severe winter storms.
OVERVIEW
In 2018, Baloise’s profit attributable to shareholders was down
slightly year on year at CHF 523.2 million (2017: CHF 548.0 million).
The volume of business fell by 6.3 per cent to CHF 8,678.2 million
(2017: CHF 9,260.8 million), primarily because of a sharp reduc-
tion in investment-type premiums and the continuation of the
strict underwriting policy in the traditional life business. There
was an encouraging rise in earnings before interest and tax
(EBIT), which climbed by 7.8 per cent to CHF 737.5 million (2017:
CHF 684.1 million).
In the second year of Simply Safe, significant progress was
made on the strategic objectives to be achieved by 2021. The
number of customers increased by 186,000. The total number of
new customers therefore stands at 304,000. The cash upstream
to Bâloise Holding is exceeding expectations and amounted to
CHF 449 million in 2018. So far, CHF 864 million of the targeted
CHF 2 billion has been achieved. Progress has also been made
in terms of making it into the top 10 per cent of employers in the
industry, with Baloise now in the top 23 per cent (2017: top 25
per cent). In view of the strong annual financial results for 2018
overall, the 2019 Annual General Meeting will be asked to raise
the dividend by CHF 0.40 to CHF 6.00.
The non-life business generated premium income reported
under IFRS of CHF 3,405.9 million (2017: CHF 3,229.3 million),
a year-on-year rise of 5.5 per cent. All business units contributed
to this improvement. EBIT in the non-life business came to
CHF 371.7 million and was thus on a par with the strong prior-year
figure (2017: CHF 374.7 million). The net combined ratio improved
to 91.7 per cent, which was 0.6 percentage points lower than the
already very good figure reported a year ago.
The volume of traditional life business amounted to CHF 3,360.3
million in 2018, a year-on-year fall of 4.3 per cent (2017: CHF 3,512.0
million). This further reduction was due to the underwriting
policy, which remains restrictive in view of the negative interest-
rate situation. EBIT in the life business rose once again in 2018,
advancing by 8.9 per cent to CHF 333.2 million (2017: CHF 306.0
million). The reason for this improvement was the ongoing
optimisation of the business mix and the reduced need to
strengthen reserves.
At CHF 1,912.1 million, the volume of investment-type
premiums was down substantially compared with the prior year
(2017: CHF 2,519.5 million) owing to the smaller underwriting
volume in Luxembourg. Following strong growth in previous
years, the main reasons for this decrease were volatility in the
stock markets and postponement of sales due to the implemen-
tation of new regulatory requirements.
Gains on investments achieved for insurance assets amounted
to CHF 1,250.7 million, which was lower than the figure for 2017
of CHF 1,621.6 million. This was due to the drop in realised gains
compared with the prior year. The difficulties presented by the
interest-rate environment were largely overcome by means of
systematic reallocation among the asset classes. Current income
decreased slightly, by CHF 17.9 million, to reach CHF 1,282.6
million. The gains on investments achieved for insurance assets
equated to a net return of 2.2 per cent. The rate of return on
insurance assets according to IFRS was 0.7 per cent, representing
a decrease on the 2.5 per cent rate of return according to IFRS
in 2017.
18
Baloise Group Annual Report 2018
Review of operating performance
Group
In operational terms, the EBIT generated by the banking business
was encouraging at CHF 92.1 million (2017: CHF 81.8 million).
This equated to a year-on-year rise of 12.6 per cent.
Consolidated equity fell by 6.3 per cent year on year to reach
CHF 6,008.2 million at the end of 2018 (31 December 2017:
CHF 6,409.2 million). This decrease was due to the lower
valuation of available-for-sale securities with characteristics of
liabilities and equity and to the ongoing share buy-back.
BUSINESS VOLUME IN 2018 (GROSS)
BY STRATEGIC BUSINESS UNIT
As a percentage
Switzerland
Germany
Belgium
Luxembourg
48.3
16.3
19.8
15.3
Baloise remains strongly capitalised, as confirmed when
Standard & Poor’s raised the Company’s credit rating from “A”
to “A +” in 2018. In the Swiss Solvency Test (SST), a ratio of over
200 per cent is expected as at 1 January 2019.
10.0 per cent. EBIT in the non-life business was only slightly
lower than in the prior year, falling to CHF 371.7 million (2017:
CHF 374.7 million). The net combined ratio improved to an
excellent 91.7 per cent, which was 0.6 percentage points below
the good ratio reported a year ago (2017: 92.3 per cent). The
main reason for this improvement was a higher profit on claims
reserves. The net combined ratio in the German business was
also encouraging, as it stabilised at 95.8 per cent.
FRIDAY, Germany’s leading digital insurance company, has
received a “media for equity” investment in a volume of around
CHF 43 million. SevenVentures – the investment arm of Pro-
SiebenSat.1 Media SE – and media investor German Media Pool
have acquired a stake in the start-up, which Baloise founded
around two years ago when it announced its Simply Safe strategy.
Following their investment, SevenVentures and German Media
Pool now hold a combined 18.2 per cent stake in FRIDAY. With
a stake of 81.8 per cent, Baloise remains the majority shareholder
and is investing a further sum of around CHF 85 million as part
of the ongoing development of this business. FRIDAY enjoyed
another successful year in 2018. The Berlin-based firm doubled
the number of new customers to around 30,000 (2017: 15,000).
NET COMBINED RATIO
As a percentage
BUSINESS VOLUME
CHF million
Total business volume
Life
Non-life
Investment-type
premiums
2017
2018
+ / – %
9,260.8
3,512.0
3,229.3
2,519.5
8,678.2
3,360.3
3,405.9
1,912.1
– 6.3
– 4.3
5.5
– 24.1
2018
2017
2016
2015
2014
91.7
92.3
92.2
93.3
93.6
NON-LIFE DIVISION: IMPROVED PROFITABILITY AND
SUSTAINED GROWTH
The non-life division saw a further rise in the volume of premiums
(in Swiss francs). At CHF 3,405.9 million, it was up by 5.5 per
cent compared with 2017. In local currency terms, the increase
was 3.1 per cent. All of the strategic business units reported
growth. While Switzerland’s growth was 1.9 per cent, Belgium
achieved 10.1 per cent, Germany 5.4 per cent and Luxembourg
LIFE DIVISION: FURTHER IMPROVEMENT IN THE
EBIT CONTRIBUTION
The ongoing improvements to the business mix in view of the
extremely low level of interest rates and the sharp contraction
of business involving investment-type premiums in Luxembourg
were reflected in the decrease in the life business volume, which
fell by 12.6 per cent to CHF 5,272.4 million. In the traditional
life business, the volume of premiums decreased by 4.3 per cent
to CHF 3,360.3 million (2017: CHF 3,512.0 million) in line with
the strategy. The volume of investment-type premiums dropped
19
Baloise Group Annual Report 2018
Review of operating performance
Group
by a substantial 24.1 per cent to CHF 1,912.1 million (2017:
CHF 2,519.5 million). This was primarily attributable to the
performance of the business in Luxembourg. Following more
than ten years of double-digit growth rates, with assets under
management more than doubling to CHF 10 billion since 2012,
the volume of premiums underwent a correction in 2018 because
of reduced demand resulting from volatility and uncertainty in
the capital markets last year and from the postponement of
sales due to the implementation of new regulatory requirements.
At CHF 456.6 million and CHF 112.3 million respectively, the
volume of investment-type premiums in Belgium and Switzerland
was on a par with the prior-year level. In Germany, investment-
type premiums increased by an encouraging 9.7 per cent to
CHF 227.1 million (2017: CHF 207.1 million).
EBIT in the life business was even higher than in the prior
year, with a further substantial rise of CHF 27.2 million or 8.9 per
cent to CHF 333.2 million (2017: CHF 306.0 million). This increase
was predominantly driven by the shift in the portfolio towards
products that tie up less capital and by the overall reduced need
to strengthen reserves thanks to the more stable interest-rate
environment. Moreover, the risk result in Switzerland benefited
from a non-recurring effect resulting from an adjustment to the
biometric basis. The new business margin improved to 48.5 per
cent thanks to the selective underwriting policy and the better
business mix (2017: 33.4 per cent). The interest margin in the life
business stood at 1.3 per cent (2017: 1.14 per cent). The positive
operating income resulted in an increase in the embedded value
of the life insurance business from CHF 4,896.8 million to
CHF 5,181.3 million in 2018. The value of new business also
rose, reaching CHF 142.4 million (2017: CHF 125.8 million).
ASSET MANAGEMENT AND BANKING DIVISION:
EARNINGS REMAIN STABLE
In operational terms, the EBIT generated by the banking business
was encouraging at CHF 92.1 million (2017: CHF 81.8 million).
This equated to a year-on-year rise of 12.6 per cent. Baloise
Bank SoBa and Baloise Asset Management played the biggest
part in this division’s stable profit contribution. Net new assets
in the business with third parties came to CHF 801 million,
representing a significant increase compared with the prior-year
figure of CHF 406 million.
INVESTMENTS: SOLID RESULTS IN A
QUIET MARKET ENVIRONMENT
The gains on the investment of insurance assets amounted
to CHF 1,250.7 million, which was below the 2017 level of
CHF 1,621.6 million. The difficulties presented by the interest-rate
environment were largely overcome by means of systematic
reallocation. Current income decreased slightly, by CHF 17.9
million, to reach CHF 1,282.6 million. There was limited appeal
in the reinvestment of maturing bonds denominated in Swiss
francs. Baloise therefore avoided reinvesting them for the most
part and instead opted for currency-hedged euro-denominated
bonds. It continued to build up its portfolio of investment
PROPRIETARY INVESTMENTS BY CATEGORY 1
INVESTMENT COMPONENTS IN 2018
31.12.2017
31.12.2018
+ / – %
CHF million
Investment property
Equities
Alternative financial assets
7,480.3
3,633.6
1,112.6
7,904.0
2,834.6
1,153.6
Fixed-income securities
33,388.2
31,798.7
Mortgage assets
10,596.4
10,724.9
Policy loans and other loans
5,972.1
5,671.3
Derivatives
362.4
453.9
Cash and cash equivalents
2,133.2
2,543.5
Total
64,678.9
63,084.5
5.7
– 22.0
3.7
– 4.8
1.2
– 5.0
25.2
19.2
– 2.5
1 Excluding investments for the account and at the risk of life insurance policyholders
and third parties.
20
As a percentage
Fixed-income securities
Mortgage assets
Investment property
Policy loans and other loans
Equities
Cash and cash equivalents
Alternative financial assets
Derivatives
50.4
17.0
12.5
9.0
4.5
4.0
1.8
0.7
Baloise Group Annual Report 2018
Review of operating performance
Group
ASSETS HELD BY BALOISE
as at 31 December 2017
CHF million
Non-life
Life
Banking
Investments for own account and at own risk
9,605.9
48,141.2
7,397.8
Asset portfolio for the account and at risk of life insurance policyholders and third parties 1
14,543.8
Total recognised assets
Third-party assets
as at 31 December 2018
CHF million
9,605.9
62,685.0
7,397.8
Non-life
Life
Banking
Investments for own account and at own risk
9,388.5
46,612.6
7,572.9
Asset portfolio for the account and at risk of life insurance policyholders and third parties 1
–
Total recognised assets
Third-party assets
9,388.5
46,612.6
7,572.9
1 Including CHF 54.1 million (2017: CHF 70.5 million) in other assets (precious metal holdings from investment-linked life insurance policies).
Total for the
Group
64,678.9
15,027.4
79,706.3
8,958.6
Total for the
Group
63,084.5
14,133.7
77,218.2
8,963.6
EQUITY REMAINS ROBUST
Consolidated equity fell by 6.3 per cent year on year to reach
CHF 6,008.2 million at the end of 2018 (31 December 2017:
CHF 6,409.2 million). This decrease was due to the lower valu-
ation of available-for-sale securities with characteristics of
liabilities and equity and to the ongoing share buy-back. Under
the programme to buy back more than 3 million shares, which
began in April 2017, a total of 1,336,575 shares had been
repurchased by the end of 2018. This meant CHF 198.5 million
was returned to the shareholders. Baloise remains strongly
capitalised, as confirmed when Standard & Poor’s raised the
Company’s credit rating from “A” to “A +” in 2018. In the Swiss
Solvency Test (SST), a ratio of over 200 per cent is expected as
at 1 January 2019. The SST ratio will be disclosed at the end of
April 2019.
property and mortgages with stable income, thereby slightly
mitigating the effect of declining income.
At CHF 386.6 million, the gains recognised in the income
statement were down by CHF 180.9 million compared with the
prior year. Significantly smaller gains were realised on bonds
than in 2017. As a result of the strong correction in the stock
markets in December 2018, gross impairment losses were
CHF 66.7 million higher than in 2017, which had been an excep-
tionally good year for the stock markets. The currency-related
losses of CHF 192.3 million were attributable to currency hedging
costs and to currency effects arising on unhedged currency
exposures. The gains on investments achieved for insurance
assets equated to a net return of 2.2 per cent, which was lower
than the net return of 2.9 per cent achieved in 2017. This was
primarily due to the reduction in realised gains. Unrealised gains
fell by CHF 864.8 million on the back of the poor performance
of equities and the widening of spreads. 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
0.7 per cent, representing a decrease on the 2.5 per cent rate
of return according to IFRS in 2017.
21
Baloise Group Annual Report 2018
Review of operating performance
Switzerland
Switzerland
Profitable non-life business and encouraging increase
in new business
2017, EBIT returned to a normal level. Basler Switzerland’s profit
contribution in 2018 remained healthy at CHF 554.2 million
(2017: CHF 618.4 million).
The year-on-year increase in premiums in the non-life
division was even higher than in 2017, with the volume climbing
by 1.9 per cent to CHF 1,349.2 million in 2018. There was also
an encouraging rise in new customers that was partly thanks to
the YounGo product line. At the same time, EBIT in the non-life
business advanced by 5.8 per cent to CHF 317.5 million. The net
combined ratio stood at an outstanding 84.5 per cent, which
was just 1.0 percentage point higher than the exceptionally good
prior-year figure. The level of claims incurred in 2018 was higher
than in the prior year, for example as a result of storm Burglind.
Reflecting the strategy being pursued, the life division
registered a decrease in premiums in 2018. Their volume declined
by CHF 176.3 million, or 6.1 per cent, to CHF 2,728.0 million
(2017: CHF 2,904.3 million). There was a fall in single premiums
in the individual life insurance business but an increase in the
net inflows generated for Baloise Bank SoBa. At CHF 382.3 mil-
lion, periodic individual premiums were on a par with the prior
year (2017: CHF 383.5 million). The partially autonomous col-
lective foundation Perspectiva continued to generate strong
growth, and the total number of companies signed up rose to
1,345 in 2018 (2017: 749). EBIT in the life business amounted
to CHF 176.9 million (2017: CHF 264.8 million). The significant
year-on-year difference was due to the reduction in net gains
on investments on the back of market volatility in 2018 as well
as lower realised gains on investments.
The banking business of Baloise Bank SoBa (all figures
reported according to local accounting standards) continues to
perform well, 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 38 per cent to 2,193. EBIT came to CHF 29.1 million,
which was slightly below the prior-year figure of CHF 30.7 million.
This decrease was due to the acquisition costs that were incurred
as a result of the higher number of mandates.
Life: 65.1 %
Non-life: 32.2 %
Investment-type premiums: 2.7 %
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
2017
2018
+ / – %
4,340.6
3,015.9
1,324.6
83.5
618.4
4,189.5
2,840.3
1,349.2
84.5
554.2
– 3.5
– 5.8
1.9
1.0
– 10.4
BASLER VERSICHERUNGEN SWITZERLAND
Basler Switzerland again reported an outstanding level of profit
in 2018, albeit slightly below the record prior-year figure, which
had been influenced by large non-recurring effects. Once again,
the quality of the non-life portfolio in particular was demon-
strated by the excellent combined ratio and exceptionally good
technical result. These were achieved despite the increase in
claims incurred as a result of winter storms and other factors.
The overall volume of business contracted by 3.5 per cent to
CHF 4,189.5 million. This decrease was exclusively attributable
to the traditional life business, where – in line with the strategy
– a very restrictive underwriting policy is being applied due to
the interest-rate situation.
The business model combining banking and insurance
gained further momentum, with net inflows generated by the
insurance sales force increasing to CHF 99.4 million at Baloise
Bank SoBa. Following the exceptionally high figure reported in
22
BUSINESS VOLUMECHF million (as a percentage of the Group)4,189.5 (48.3 %) Baloise Group Annual Report 2018
Review of operating performance
Germany
Germany
Growth in the target segments and stabilisation of
the combined ratio
The non-life division reported encouraging growth of 5.4 per
cent with a volume of business of CHF 803.1 million (2017:
CHF 762.0 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. Corporate customer business is declining, primarily
a reflection of the planned restructuring being carried out in
these segments. The optimisation of the business mix is paying
off. The adjusted net combined ratio improved by 2.9 percentage
points to 95.8 per cent (2017 adjusted: 98.7 per cent). In 2018,
Basler Germany was therefore below its short- to medium-term
target range of 96 to 98 per cent.
Premiums in the life division increased by 1.7 per cent to
CHF 385.5 million. In 2017, they had been adversely affected by
the sale of a closed life insurance portfolio, whereas the volume
in 2018 held steady year on year. Biometric products and
business involving investment-type premiums performed well.
These now account for around 90 per cent of new business.
Investment-type premiums therefore increased by a substantial
9.7 per cent to CHF 227.1 million (2017: CHF 207.1 million).
Life: 27.2 %
Non-life: 56.7 %
Investment-type premiums: 16.0 %
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
2017
(restated) 1
2018
+ / – %
1,348.2
1,415.9
586.3
762.0
98.7
– 40.2
612.8
803.1
95.8
6.0
5.0
4.5
5.4
– 2.9
n. a.
1 Change of chief operating decision-maker for the medical malpractice portfolio from
Germany to Group business.
BASLER VERSICHERUNGEN IN GERMANY
EBIT in the German business recovered to reach CHF 6.0 million
in 2018 (2017 adjusted: loss of CHF 40.2 million). This was due
to the transfer of a hospital liability portfolio to a run-off unit.
Moreover, the level of large claims incurred was far lower than
in 2017. The volume of business in the German company improved
by 5.0 per cent to CHF 1,415.9 million thanks to expansion in
the target segments (2017: CHF 1,348.2 million).
23
BUSINESS VOLUMECHF million (as a percentage of the Group)1,415.9 (16.3 %) Baloise Group Annual Report 2018
Review of operating performance
Belgium
Belgium
Market growth outstripped; strong profitability
and innovation
Belgian non-life business again registered strong growth,
expanding by 10.1 per cent to CHF 1,099.6 million (2017:
CHF 999.0 million). This shows that Baloise Insurance Belgium
was able to hold its own in a very competitive market. In fact,
it outstripped the growth of the market as a whole. As a result
of this growth, the Belgian market now accounts for 32.3 per
cent of the Baloise Group’s total non-life premiums.
In the life business, there was substantial growth in periodic
and single premiums, both of which increased by more than
11 per cent. The volume of business therefore grew by 5.9 per
cent to CHF 622.7 million. The traditional life business expanded
by 11.6 per cent to CHF 166.1 million, mainly thanks to a rise in
periodic premiums. Investment-type premiums were up by
3.9 per cent to CHF 456.6 million (2017: CHF 439.3 million). As
well as performing well in its core business, Baloise Insurance
Belgium is also highly innovative. The Baloise start-up Mobly
has registered more than 30,000 downloads of its app for
services in the second-hand car market and is looking to expand
abroad. Baloise has also launched B-Tonic, a platform in the
health and well-being ecosystem. The services offered on the
platform are designed to motivate customers to get fitter and
live more healthily.
Life: 9.2 %
Non-life: 63.8 %
Investment-type premiums: 26.5 %
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
2017
2018
+ / – %
1,587.1
588.1
999.0
91.9
140.8
1,722.3
622.7
1,099.6
92.3
199.0
8.5
5.9
10.1
0.4
41.3
BALOISE INSURANCE BELGIUM
Baloise Insurance in Belgium again delivered a very robust
operating performance in 2018. The volume of business increased
by a substantial 8.5 per cent to CHF 1,722.3 million (2017:
CHF 1,587.1 million), which was primarily due to the strong
growth of the life and non-life business. Profitability in the
non-life business was maintained at the prior-year level. The
net combined ratio was only slightly higher year on year at
92.3 per cent (2017: 91.9 per cent). EBIT rose by 41.3 per cent
to CHF 199.0 million, partly due to the reversal of additional
reserves in the life business that had been created in prior years
because of the low-interest-rate environment but are now no
longer required.
24
BUSINESS VOLUMECHF million (as a percentage of the Group)1,722.3 (19.8 %) Baloise Group Annual Report 2018
Review of operating performance
Luxembourg
Luxembourg
High profitability and strong growth in
non-life business
The non-life business again saw stronger growth and also
improved its profitability. In this segment, Bâloise Assurance’s
growth is outstripping that of the market. Premiums in the
non-life business increased by 10.0 per cent to CHF 134.5 million
(2017: CHF 122.3 million). Profitability was even better than in
2017. The net combined ratio decreased by 1.6 percentage points
to 89.9 per cent (2017: 91.5 per cent).
Despite the smaller volume of business involving invest-
ment-type premiums, the life business was a major driver of
business performance. Investment-type premiums amounted
to CHF 1,116.0 million in 2018 (2017: 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. Assets under
management stood at CHF 10.7 billion. They have thus doubled
since 2012 thanks to robust premium growth and good port-
folio management.
Premiums amounted to CHF 80.5 million in the traditional
life business (2017: CHF 79.6 million). This equated to a small
year-on-year rise of 1.1 per cent.
Life: 6.0 %
Non-life: 10.1 %
Investment-type premiums: 83.8 %
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
2017
2018
+ / – %
1,963.5
1,841.2
122.3
91.5
27.5
1,331.0
1,196.5
134.5
89.9
24.7
– 32.2
– 35.0
10.0
– 1.6
– 10.2
BÂLOISE ASSURANCES LUXEMBOURG
The business volume of the Luxembourg business unit contracted
to CHF 1,331.0 million in 2018 (2017: CHF 1,963.5 million). This
was attributable to the business involving investment-type
premiums. Following more than ten years of double-digit growth,
a correction has now taken place in this business. Moreover,
new regulatory requirements and their implementation have
resulted in the postponement of sales of specific products. The
prevailing uncertainty in the capital markets also had an
adverse effect.
25
BUSINESS VOLUMECHF million (as a percentage of the Group)1,331.0 (15.3 %) Baloise Group Annual Report 2018
Review of operating performance
Baloise Asset Management
Asset management and banking
Encouraging rise in income
Perspectiva, a partially autonomous occupational pension
solution for SMEs of all sizes that uses our investment vehicles.
The Perspectiva Relax investment vehicle grew by 43.6 per cent
compared with 2017. Its volume as at the end of 2018 stood at
CHF 448 million.
Baloise Immobilien Management AG was granted a licence
to operate as a fund management company by the Swiss Financial
Market Supervisory Authority and launched the Baloise Swiss
Property Fund, a real-estate fund for qualified investors. On
1 October 2018, a total of 35 properties with a value of CHF 352.3
million were transferred from the insurance investments to the
real-estate fund, which was subscribed to by a broad range of
customers. Baloise Life Ltd also participates in the fund. At the
end of December, the property portfolio was expanded with an
investment of CHF 86.5 million in Infracore SA, a company
specialising in Swiss real estate in the healthcare market.
Baloise Immobilien Management AG is coordinating the
construction of the three new buildings at Baloise Park, the
headquarters of the Baloise Group. The skeleton of the 24- storey
skyscraper was completed in 2018. Baloise Park will be ready
to welcome its first tenants in spring 2020.
The choice of funds was also extended for retail investors
last year. The focus was on investment funds with flexible equity
exposures that can capture gains when equity markets rise and
reduce the downside risk when they fall (e. g. BVG-Mix Dynamic
Allocation 0-80). As an investor with a long-term horizon, Baloise
Asset Management has integrated the Responsible Investment
directives (RI) into its approach for investing insurance assets
and signed up to the Principles for Responsible Investments
(PRI). And for many years now, Baloise Asset Management has
followed the recommendations of the Swiss Association for
Responsible Investments (SVVK-ASIR). From 1 January 2019, its
processes will take into account additional ESG criteria (envi-
ronmental, social and corporate governance) for the first-time
investment of insurance assets.
Volatility returned to the capital markets in 2018, following the
longest bull run in the history of the US stock market. Risk-prone
asset classes experienced some sharp price falls.
As at 31 December 2018, total assets under management
stood at CHF 55,929 million, a decrease of 2.1 per cent on the
prior year. Income amounted to CHF 129.2 million, a year-on-year
rise of 25.2 per cent. This increase was predominantly attributable
to the income of Baloise Immobilien Management AG, which
commenced operations in the year under review.
Baloise Asset Management primarily manages the assets
of the Baloise Group, but also looks after third-party assets.
Business with third parties was further expanded in 2018, partly
due to the launch of investment funds specifically focused on
the needs of external institutional customers. Net new assets in
the business with third parties came to CHF 801 million (Baloise
Group), representing a significant increase compared with the
prior-year figure of CHF 406 million. Real estate accounted for
CHF 318 million (39.7 per cent) of this total. The inflow of new
funds can also be attributed to the collective foundation
26
TOTAL ASSETS UNDER MANAGEMENT INCL. BALOISE GROUPCHF million86,182ASSETS UNDER MANAGEMENT THIRD-PARTY ASSETSCHF million8,964NET NEW ASSETS THIRD-PARTIESCHF million801BALOISE ASSET MANAGEMENTTOTAL INCOME CHF 129.2 millionCOST / INCOME RATIO45.1 % NO. OF EMPLOYEES147 Baloise Group Annual Report 2018
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
2014
2015
2016
2017
2018
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
6,737.0
– 209.0
6,528.0
1,701.9
1,521.8
1,476.6
1,392.5
1,376.0
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
96.1
– 1,087.8
130.4
6.2
227.6
10,372.8
8,877.9
8,910.2
9,417.1
7,276.6
– 5,666.4
– 5,352.4
– 5,664.2
– 5,726.5
– 5,904.4
– 1,469.5
– 1,241.9
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
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 9,444.3
– 8,158.6
– 8,226.6
– 8,733.0
– 6,539.1
Profit before borrowing costs and taxes
928.6
719.2
683.6
684.1
737.5
1 In line with the accounting principles applied by the Baloise Group, investment-type insurance premiums are not included in premiums earned and policy fees.
2 Including financial liabilities held for trading purposes (derivative financial instruments).
27
Baloise Group Annual Report 2018
Review of operating performance
Consolidated income statement
FIVE-YEAR OVERVIEW
CHF million
2014
2015
2016
2017
2018
Profit before borrowing costs and taxes
928.6
719.2
683.6
684.1
737.5
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
– 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
– 39.9
697.6
– 174.7
522.9
523.2
– 0.3
11.14
11.12
2014
2015
2016
2017
2018
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
6,766.2
1,912.1
8,678.2
Investments for the account and at the risk of life insurance policyholders
10,904.2
10,873.2
12,001.0
14,543.8
13,640.8
Net combined ratio
Funding ratio (non-life) (per cent)
93.6
182.9
93.3
192.4
92.2
188.5
92.3
193.3
91.7
179.4
28
Financial instruments with characteristics of equity
13,451.2
13,770.8
14,305.6
15,874.9
Financial instruments with characteristics of liabilities
34,461.6
33,248.4
33,766.5
35,360.1
Baloise Group Annual Report 2018
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
318.3
1,041.2
221.1
7,904.0
14,137.9
33,775.1
16,396.2
914.8
2,036.6
73.5
4,036.1
2014
2015
(restated)
2016
2017
2018
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
353.3
1,002.5
138.4
7,480.3
18,165.9
16,656.6
16,354.7
16,568.6
613.2
2,153.5
48.3
653.9
3,921.5
39.8
757.3
4,024.3
69.3
800.4
3,305.1
88.8
2,969.6
2,839.8
3,173.3
3,551.6
79,342.3
78,782.3
80,614.3
84,523.9
80,854.8
2014
2015
(restated)
2016
2017
2018
5,791.3
5,418.9
5,741.3
6,346.2
39.7
34.7
32.4
63.0
5,970.6
37.6
5,831.0
5,453.6
5,773.7
6,409.2
6,008.2
176.4
5,789.7
1,065.5
250.8
7,379.5
909.7
299.0
7,070.0
944.9
145.3
6,341.9
922.4
73,511.4
73,328.7
74,840.6
78,114.7
74,846.6
46,575.2
21,539.0
117.3
5,707.2
907.8
Gross technical reserves
48,738.9
45,776.6
46,209.0
48,008.5
Liabilities arising from banking business and financial contracts
17,740.8
19,012.0
20,317.7
22,696.5
Total equity and liabilities
79,342.3
78,782.3
80,614.3
84,523.9
80,854.8
29
Baloise Group Annual Report 2018
Review of operating performance
Business volume, premiums and combined ratio
Business volume, premiums
and combined ratio
BUSINESS VOLUME
2017
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written2
Investment-type premiums
Total business volume
2018
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written 2
Investment-type premiums
Total business volume
Group
Switzerland
Germany
(restated) 1
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
762.0
379.2
1,141.2
207.1
1,348.2
999.0
148.8
1,147.8
439.3
1,587.1
122.3
79.6
201.9
1,761.6
1,963.5
Group
Switzerland
Germany
Belgium
Luxembourg
3,405.9
3,360.3
6,766.2
1,912.1
8,678.2
1,349.2
2,728.0
4,077.2
112.3
4,189.5
803.1
385.7
1,188.7
227.1
1,415.9
1,099.6
166.1
1,265.7
456.6
1,722.3
134.5
80.5
215.0
1,116.0
1,331.0
1 Change of chief operating decision-maker for the medical malpractice portfolio from Germany to Group business.
2 Premiums written and policy fees (gross).
30
Baloise Group Annual Report 2018
Review of operating performance
Business volume, premiums and combined ratio
NET COMBINED RATIO
2017
as a percentage of premiums earned
Claims ratio 2
Expense ratio
Combined ratio
2018
as a percentage of premiums earned
Claims ratio 2
Expense ratio
Combined ratio
1 Change of chief operating decision-maker for the medical malpractice portfolio from Germany to Group business.
2 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 account 1
Premiums written and policy fees for own account
Funding ratio (per cent)
1 Not including capitalised settlement premiums.
Group
Switzerland
Germany
(restated) 1
Belgium
Luxembourg
60.7
31.6
92.3
56.6
26.9
83.5
62.1
36.6
98.7
57.3
34.6
91.9
61.5
30.0
91.5
Group
Switzerland
Germany
Belgium
Luxembourg
59.9
31.8
91.7
57.5
27.0
84.5
2017
59.7
30.5
90.2
59.7
36.1
95.8
Gross
2018
58.6
30.6
89.2
57.9
34.4
92.3
2017
60.7
31.6
92.3
56.6
33.3
89.9
Net
2018
59.9
31.8
91.7
2017
2018
5,924.8
3,065.0
193.3
5,777.1
3,220.1
179.4
31
Baloise Group Annual Report 2018
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 reserves 1
Change in other technical reserves
Technical expenses
Total technical result for own account
Investment income (gross)
Realised gains and losses on investments 2
Investment management expenses
Other financial expenses and income
Gains or losses on investments
Profit before borrowing costs and taxes
Borrowing costs
Income taxes
Profit for the period (segment result)
Non-life
2017
2018
2017
Life 3
2018
3,229.3
– 14.9
3,214.4
3,405.9
– 29.2
3,376.7
3,512.0
3,360.3
–
–
3,512.0
3,360.3
– 1,881.0
– 2,018.2
– 3,845.5
– 3,886.2
– 35.7
– 2.5
50.6
– 21.0
– 1,003.5
– 1,064.0
– 87.7
– 409.2
– 302.7
291.7
324.0
– 1,133.2
888.5
– 505.7
– 348.6
– 491.7
– 162.6
– 184.5
– 20.8
– 24.6
55.8
11.9
0.2
14.8
– 79.9
66.2
0.4
0.0
18.6
– 99.2
5.0
4.3
3.9
1.3
8.5
3.4
4.9
1.3
– 6.4
– 6.5
3,051.8
3,192.2
3,491.1
3,335.7
– 1,825.2
– 1,952.0
– 3,840.5
– 3,877.7
– 23.9
– 2.4
51.0
– 21.0
– 988.6
– 1,045.4
211.8
213.2
102.7
– 27.0
– 125.9
163.0
374.7
–
– 100.2
274.5
224.8
198.7
35.3
– 30.1
– 57.1
146.9
371.7
–
– 70.4
301.3
– 83.5
– 405.3
– 301.4
– 1,139.6
1,087.3
1,001.4
– 95.4
– 547.8
1,445.6
306.0
– 2.8
– 14.2
289.0
891.9
– 500.8
– 347.2
– 498.2
1,083.9
– 986.8
– 102.9
837.1
831.3
333.2
– 10.1
– 61.1
261.9
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 2017: CHF 14.5 million; 31 December 2018: CHF 10.2 million).
32
Baloise Group Annual Report 2018
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)
2017
2018
+ / – %
374.9
130.9
343.2
1,062.3
1,025.9
187.3
78.6
26.3
396.9
146.6
341.0
1,115.2
1,084.5
196.3
86.4
38.8
3,229.3
3,405.9
5.9
12.0
– 0.6
5.0
5.7
4.8
9.9
47.5
5.5
2017
2018
+ / – %
3,553.7
2,477.8
2,759.1
2,513.3
– 2,519.5
– 1,912.1
3,512.0
3,360.3
– 22.4
1.4
– 24.1
– 4.3
33
Baloise Group Annual Report 2018
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
34
2017
2018
85.6
76.3
0.7
1.4
82.1
101.9
0.7
2.6
164.0
187.3
– 60.1
– 14.8
– 75.0
89.0
0.6
– 7.8
81.8
– 15.8
66.0
– 67.5
– 21.1
– 88.6
98.7
0.6
– 7.2
92.1
– 18.3
73.8
31.12.2017
31.12.2018
8,958.6
8,963.6
31.12.2017
31.12.2018
–
11.9
–
172.7
6,227.2
186.4
12.6
787.1
–
11.5
–
160.1
6,253.6
181.1
7.6
959.0
7,397.8
7,572.9
Baloise Group Annual Report 2018
Review of operating performance
Investment performance
Investment performance
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.
2018 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)
Fixed-income
securities
Equities
Investment
property
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives,
cash and cash
equivalents
Total
686.4
– 91.7
128.0
61.4
276.6
106.5
266.9
64.3
18.1
– 44.4
1,376.0
96.1
– 541.8
– 363.1
–
–
30.6
– 874.3
– 43.6
9.4
32,593.4
0.0
– 5.7
– 179.3
3,234.1
– 5.5
– 9.3
373.8
– 13.8
317.4
– 8.3
– 4.0
– 80.6
517.3
7,692.1
16,482.4
3,879.6
63,881.7
4.9
1.9
– 0.1
0.8
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
35
Baloise Group Annual Report 2018
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
REALISED GAINS AND LOSSES IN INSURANCE1
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 INSURANCE1
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
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
Non-life
Life
43.0
36.8
2.8
95.7
7.2
13.2
– 0.1
232.2
90.8
16.2
586.2
66.8
92.3
– 0.5
2018
Total
275.3
127.6
19.0
681.9
74.0
105.5
– 0.6
213.2
1,087.3
1,300.5
198.7
1,083.9
1,282.6
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
2017
Total
111.1
138.2
73.2
374.5
2.0
35.9
– 33.8
102.7
– 259.2
– 293.0
339.3
442.0
Non-life
Life
14.7
57.0
3.3
91.0
3.6
10.1
– 36.9
– 54.8
0.4
5.2
– 8.4
35.3
0.3
56.1
– 41.9
64.3
Non-life
Life
2017
Total
Non-life
Life
952.4
1,076.4
312.5
6,502.5
2,543.9
800.0
7,454.9
3,620.3
1,112.6
1,001.9
771.0
325.6
6,876.4
2,050.5
828.1
2018
Total
105.7
60.6
13.3
– 91.7
0.7
61.2
– 50.3
99.6
2018
Total
7,878.3
2,821.5
1,153.6
5,247.3
27,967.3
33,214.7
4,926.4
26,702.4
31,628.8
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
483.5
1,438.8
32.3
408.9
3,987.8
4,731.4
413.2
4,471.3
6,170.2
445.5
1,022.8
1,431.7
9,605.9
48,141.2
57,747.2
9,388.5
46,612.6
56,001.1
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
36
Baloise Group Annual Report 2018
Review of operating performance
Investment performance
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37
Unterkapitel 4 Baloise
16 Review of operating performance
38 Sustainable business management
64 Corporate Governance
116 Financial Report
274 Bâloise Holding Ltd
292 General information
Sustainable business
management
RESPONSIBILITY ......................................................... 40
How Baloise creates value ................................................ 40
HUMAN RESOURCES .................................................... 47
Establishing the culture of growth ..................................... 47
THE ENVIRONMENT ..................................................... 54
Environmental mission statement ..................................... 54
Protecting the environment over the long term .................. 55
RISK MANAGEMENT .................................................... 58
Baloise’s risk management is one of the main pillars
of its business model ........................................................ 58
COMMITMENT TO ART .................................................. 62
The Baloise Group’s commitment to art ............................. 62
Unterkapitel Baloise Group Annual Report 2018
Sustainable business management
Responsibility
How Baloise creates value
RESOURCES
INVESTORS
The shareholder base is broadly diversified. Most of
the shares are held by institutional investors from
Europe and the USA who have a long-term investment
horizon.
EMPLOYEES
PARTNERS
Using 21st century working models, we focus on
employees with initiative and offer opportunities for
internal mobility and development.
▸
Culture of growth and learning supported by
initiative, dialogue and performance to equip
the company for the future
Values-based culture
Equality-based working environment, and
communication on equal terms
Scope for personal initiative
Focus on development
Individual working models (remote working,
part-time, job-sharing) and a modern work
environment
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Baloise works with a wide network of distributors
(agents, brokers and banks), service providers,
advisors and start-ups in various markets. We work
with our partners to optimise and expand our core
business.
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Start-up fund: CHF 50 million for investment
in European, UK and US-based start-ups
Baloise’s own start-ups:e. g. FRIDAY, Mobly
and Movu
Selected partners such as TCS, Bank Cler, BLKB,
Möbel Pfister and many others
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RELIABLE.
The funding of risk protection
for customers and of the return
on equities for shareholders is
balanced and robust.
EFFECT
ENGAGED.
Inspired employees
with a strong sense of personal
responsibility
deliver the right solutions for
our customers.
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SIMPLY
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AND B A N K I N
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A G EME
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S H A R E
D ERS
Our shareholders expect a long-term attractive invest-
ment. The high level of security comes from a strong
balance sheet, a proactive approach to risk manage-
ment and a conservative investment policy.
Through our ambition of achieving a cash upstream
of CHF 2 billion to Bâloise Holding by 2021, we are
creating the financial basis for investment in future
growth in order to continue our attractive and con-
sistent distribution policy.
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Committed employees strengthen customer relation-
ships and foster long-term customer loyalty.
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Among the top 10 % of employers in the
insurance sector by 2021
Enhancing the employability of our employees
through continuing professional development
Competitive basic salaries, variable remunera-
tion, and attractive profit-sharing and employee
retention schemes
Average length of service is 13 years
Teamwork, individual responsibility
Appreciative working environment
Loyal and satisfied employees who make
a difference to the customer experience
The strength and innovation of the Baloise partner-
ships ensure competitiveness and enable future
growth.
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Fast pace of innovation through shortened pro-
duct development time. Around 30 new products
in 2018
Ability to respond quickly to customer needs and
come up with new products in weeks rather than
months
Around 50 start-ups in the portfolio / funding
initiatives for innovative solutions for tomorrow’s
market
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INVESTORS
EMPLOYEES
PARTNERS
40
Baloise Group Annual Report 2018
Sustainable business management
Responsibility
CUSTOMERS
SOCIETY
ENVIRONMENT
We have a strategy of seeking out customers who
are cautious and careful, and to whom safety and
security are as important as they are to Baloise. Our
customer base includes private and corporate cus-
tomers. We gained 186,000 new customers in 2018.
We involve customers in our product design process
through customer forums, panels and surveys
because we want to do more than cover risks: we want
to make customers feel more safe and secure in their
everyday live.
Baloise assumes responsibility as an employer,
partner to its customers and member of society in
a variety of ways, including
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sponsorship
CSR activities in all countries
art collection / art prize
commitment to voluntary work
Group Compliance is a key part of our corporate
governance and deals with socially relevant matters
such as privacy, money laundering and corruption.
In addition, our code of conduct sets out rules for
how we interact with our employees.
Baloise is committed to the responsible use of natural
resources in its day-to-day operations.
▸
First insurance company to sign up to the
insurance declaration on sustainable
development of the United Nations Environment
Programme (UNEP) in 1995
Own environmental mission statement since
1999
Signed up to the Principles for Responsible
Investment (PRI) in 2018
Supporter of the “environmental platform”,
a business initiative of the Basel region
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CUSTOMER
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BUSIN
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G S ERVIC
SIMPLY
SAFE
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ASSE T M A
AND B A N K I N
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S H A R E
D ERS
«Simply Safe» strengthens the focus on customer
needs, supports tailored omnichannel communication
and innovative products and services in the areas of
insurance, assistance and pensions.
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Target is to attract 1,000,000 new customers
between 2017 and 2021 (+ 30 %)
Strong insurance collective
Baloise does everything it can to make the lives
of its customers safer and more secure
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SUSTAINABLE.
Simple processes and good
relationships shape the lifelong
partnership with customers
that share our values to create
a sustainable future.
INNOVATIVE.
Employees and external
partners operate a functioning
innovation network that can
respond quickly.
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Maintenance and expansion of the community
sharing the risk
At Baloise, we manage and coordinate this
community, and we protect it in the interest
of the various stakeholders
Baloise’s actions have an impact on the
relationship between business and the
general public
Helping to shape society and promote sustain-
able development, both within and outside our
own business
Baloise is working to continuously reduce its direct
environmental footprint and use of non-renewable
resources by using economical, smart, energy-efficient
buildings. It observes the same principles in the pro-
curement and use of office equipment and materials.
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Energy-efficiency in buildings and IT
Reducing CO2 emissions
Use of 100 % hydroelectric power in Switzerland
Training for employees to raise awareness of
environmental impact
Integration of ESG criteria into our investment
universe
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CUSTOMERS
SOCIETY
ENVIRONMENT
41
Baloise Group Annual Report 2018
Sustainable business management
Responsibility
Responsibility
TAKING RESPONSIBILITY
Insurance companies grew out of the idea of risk sharing. The
strength of the community sharing the risk is determined by the
sum of the sense of responsibility of each individual member
of the community. As insurers, we have always been aware of
the importance of taking responsibility and of endeavouring to
promote sustainable development in all of our activities. This
basic tenet has remained unchanged since the foundation of
Baloise in the 19th century. Insurance companies are still based
on a community of policyholders. At Baloise, we manage and
coordinate this community, and we protect it in the interest of
the various stakeholders. Responsible and socially engaged
behaviour is also part of Baloise’s current strategy, Simply Safe.
Ultimately, our actions affect the relationship between business
and the general public. The Swiss Federal Council regards
responsible companies as a vital factor in the success of the
Swiss economy and is helping to shape a framework for corporate
social responsibility. It has published a position paper and an
action plan on companies’ responsibility towards society and
the environment.
www.csr.admin.ch
Baloise inherently supports these efforts and is adopting the
position taken by the Federal Council to enable it to continually
adapt to the prevailing social conditions and become a better
corporate citizen. With its new strategy and new focus on cus-
tomers, Baloise is emphasising that aspects of sustainable
business management cannot be viewed in isolation from the
commercial management of a company. The Company itself has
a long tradition of embracing its corporate social responsibility.
Every day, through its insurance and pension solutions, Baloise
not only looks after individuals but also protects companies,
economies and communities and helps them to function properly,
which in turn boosts economic and social stability in the coun-
tries where it and its customers operate. It must be able to offer
the sort of long-term security that cannot be sustained by the
pursuit of short-term profits alone. When it comes to life insur-
ance, for example, Baloise thinks and acts on a long-term basis,
examines risks – such as cyber risks – that may arise in the future
and mitigates these in a thorough and professional manner.
Baloise is realigning its sustainable business management with
the Baloise value creation model (see pages 40and 41). It is based
on the International Integrated Reporting Council (IIRC) model,
but focuses specifically on the Baloise business model, the aspects
that are important to the Company and its corporate values.
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 – as well as the environment around us. Baloise’s
policies are based on the United Nations’ sustainable develop-
ment goals (SDGs), in particular SDG 3 (good health and well-
being), SDG 5 (gender equality), SDG 8 (decent work and economic
growth), SDG 10 (reduced inequalities), SDG 11 (sustainable
cities and communities), SDG 12 (responsible consumption and
production) and SDG 13 (climate action).
RESPONSIBILITY TO EMPLOYEES
Baloise’s responsibility as an employer is manifested in the new
strategy with a clear employee-oriented objective. The Company
wants to position itself as one of the most attractive employers
in its industry. To achieve this aim, it offers its staff the scope
required to contribute to its success and to develop both per-
sonally and professionally. This results in satisfied employees,
helping Baloise to become an employer of choice in the insurance
sector. This involves creating a working environment that is
focused on the health and well-being of its staff (SDG 3) and
where gender equality is paramount (SDG 5). By improving the
employability of our employees, we aim to not only increase our
attractiveness as an employer but also create opportunities for
economic growth by producing well-trained employees (SDG 8).
The Company’s appeal as an employer is measured regularly
across the Group through “pulse checks”. 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. At Baloise in
Switzerland, the concept of social partnership has a long tradi-
tion. The Company’s employee commission (MAKO) was founded
in 1970, i. e. long before 1993, when the Swiss federal govern-
ment passed a co-determination act that gave employees the
legal right to have a say in the workplace and to be given
42
Baloise Group Annual Report 2018
Sustainable business management
Responsibility
information on particular matters. To this day, the rights of the
MAKO go well beyond the provisions of that legislation. There
is also a code of conduct, which contains the essential ethical
and legal regulations that govern employees’ behaviour. Baloise
has always promoted an employee-focused corporate culture
across the Group, involving employees at different levels in
shaping the working environment (see also the chapter on human
resources). 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
WE TAKE RESPONSIBILITY
SDG 3: good health and well-being
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Corporate health management at all national units
Baloise Code (see chapter “Sustainable business management / Human resources”)
SDG 5: gender equality
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Salaries that are in line with market rates; difference between the genders within a statistically insignificant range
Baloise Code of Conduct on equal treatment and sexual harassment (www.baloise.com/code-of-conduct)
SDG 8: decent work and economic growth
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Ongoing professional development for our employees
Friendly Work Space quality seal (see chapter “Sustainable business management / Human resources”)
SDG 10: reduced inequalities
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Action plan to promote diversity
Yellow Equities gender-friendly life insurance (www.baloise.ch/yellowequities)
Europaforum for regular dialogue among employee representatives from every national unit
SDG 11: sustainable cities and communities
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Raising of employees’ awareness of environmental issues
Promotion of use of public transport
Application of the standards for sustainable construction in Switzerland (SNBS) at the new Baloise Park development
SDG 12: responsible consumption and production
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Implementation of measures for sustainable business operations
(see chapter “Sustainable business management / The environment”)
Signing of and compliance with the Principles for Responsible Investment (PRI)
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SDG 13: climate action
▸ Member of the “environmental platform” initiative in the Basel region
▸
Reduction of our investment portfolio’s carbon footprint by investing responsibly in accordance with the PRI
(www.unpri.org)
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Baloise Group Annual Report 2018
Sustainable business management
Responsibility
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, which represents a proportion of
trainees in the workforce of just under 3 per cent. 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”
Code of Conduct: www.baloise.com/code-of-conduct
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RESPONSIBILITY TO THE CUSTOMER
Customer focus is central to the Company’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 cus-
tomers exist. New risks (e. g. cyber risks) are identified and made
insurable, enabling Baloise to promote innovation and social
development for corporate and retail clients. To foster the
required proactive mindset, the Company encourages employees
to ask themselves every day what they can do to make the
customer feel “simply safe” – in line with the Baloise strategic
maxim. One way to achieve this 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 strengthens the insurance collective
through its strategy of seeking out customers who are cautious
and careful, and to whom safety and security are as important
as they are to Baloise. 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 do everything it can
to help make customers’ broader environment safer. The cus-
tomers themselves also get a say, through customer forums,
panels and surveys.
Prevention, safety and security have a long tradition at
Baloise. In Switzerland, Basler Insurance operates the Baloise
cloud seeder, a specially equipped light aircraft, to protect the
population against hail damage. The three-year pilot programme
was launched in 2018.
44
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. Similarly, Baloise in Switzerland was involved in work
to help prevent addiction among young people for a number of
years, with employees visiting schools several times a year to
talk about the subject. This task has now been taken over by
our partner TCS.
www.baloise.ch/de/ueber-uns/engagement/hagelflieger.html
www.fondsemilieleus.be
www.cktgmbh.ch/themen/sucht/modul.php
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
policies, makes a significant contribution to the positioning of
the Baloise Group. As a European insurer with Swiss roots,
Baloise possesses a strong balance sheet and strong operational
profitability, which have been optimised in terms of the risks
capacity 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 keep its promise to share-
holders. This has enabled Baloise to pursue an attractive and
sustainable dividend policy for a number of years now. Its very
strong capital base was acknowledged by the ratings agency
Standard & Poor’s last year when it raised the Company’s credit
rating from “A” with a positive outlook to “A +” with a stable
outlook. The new credit rating means Baloise has now attained
a top position among the field of medium-sized European
insurers. Standard & Poor’s awarded this credit rating in recog-
nition of Baloise’s excellent capitalisation – which is comfort-
ably above the AAA level according to the S&P capital model
– as well as its high operational profitability, robust risk manage-
ment and solid competitive position in its profitable core markets.
www.baloise.com/rating
▸
Chapter “Sustainable business management /
Risk management”
Baloise Group Annual Report 2018
Sustainable business management
Responsibility
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’s environmental policies focus on responsible con-
sumption and production (SDG 12) and climate action (SDG 13).
The Company uses natural resources prudently and responsibly.
This responsibility relates to its own energy requirements but
also extends to its investments and the procurement of products
and services. As we are an insurance company, we do not produce
any goods. At our sites, we predominantly require energy for
electricity and heating. We also monitor the impact of travel,
both business trips during working hours and journeys to and
from work. 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 to separate their waste for recycling.
Baloise also endeavours to make a contribution to sustain-
able cities and communities (SDG 11) by raising employees’
awareness and providing them with information on environmen-
tal topics. They are encouraged to use public transport whenever
possible. In Belgium, Baloise conducted a transport review in
collaboration with the city of Antwerp, resulting in the develop-
ment of a travel action plan and a business plan. Each employee’s
commuting route was analysed to determine how it could be
optimised and which mode of transport would be most appro-
priate. In Switzerland, Baloise is a member of the “environmental
platform” initiative in the Basel region (www.klimaplattform-
basel.ch). This platform facilitates the sharing of knowledge
among businesses and supports climate protection and sustain-
able development in the local region. 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.
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 group-
wide environmental audit within the annual report.
Chapter “Sustainable business management /
▸
The environment”
www.klimaplattform-basel.ch
RESPONSIBILITY IN SOCIETY
Baloise believes it has a responsibility to society in its role as
a corporate citizen and conducts its business activities pursuant
to the applicable legal provisions and in compliance with the
constitution of the Swiss Confederation. Anyone involved in the
insurance sector or the financial markets is subject to an approval
requirement which demands an assurance of proper business
conduct. This stipulates that the Board of Directors and the
Corporate Executive Committee must organise Baloise in such
a way as to ensure it complies with all applicable laws, including
constitutional human rights, at all times. The Swiss Financial
Market Supervisory Authority (FINMA) continuously monitors
compliance with this approval requirement.
For many years, Baloise has also been a committed advocate
of voluntary work. 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 voluntary work. 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. Five Baloise
employees in Switzerland are currently members of cantonal
parliaments, and many others are involved in politics at local
level. Karin Keller-Sutter, a former member of the Baloise Board
of Directors, was appointed President of the Council of States
(upper chamber of the Swiss parliament) for 2018 before being
elected to the Swiss Federal Council in December of last year.
Furthermore, the Company 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. Baloise runs a number of projects and
initiatives that benefit society in its various national subsidiaries
(see also weblinks to the activities of the national companies).
Since 2012, Baloise has given its employees in Switzerland
the opportunity to do valuable voluntary work in the community
and environmental sectors. Baloise is mainly involved with four
institutions, the Entlebuch UNESCO biosphere reserve, the “just
for smiles” foundation, the “beider Basel” animal shelter and
the PluSport disabled sports day. In Belgium, employees from
all sites get involved in events for the “Warmest Week Music for
Life” initiative as part of the “Baloise For Life” week at the end
45
Baloise also promotes the cultural diversity of society through
its sponsorship activities. The Company sponsors the arts and
has funded the Baloise Art Prize for 20 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.
Since 2013, Baloise has been the presenting sponsor of Baloise
Session, a prestigious music festival in Basel with an intimate
club-like setting in which the audience sit at tables. Baloise
session is an important cultural event that enhances the repu-
tation of the city of Basel. In Belgium, Baloise is a major sponsor
of cycling. Sport Vlaanderen-Baloise is a professional cycling
team that focuses on the Pro Tour competition’s Benelux races
and the international calendar for professional continental
cycling teams in Europe. It receives financial backing from
Baloise. The team’s overriding objective is to provide professional
support for talented young riders.
Baloise Group Annual Report 2018
Sustainable business management
Responsibility
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 ACTIVITIES OF THE
NATIONAL COMPANIES
▸
Baloise Group and Switzerland
www.baloise.com/responsibility
www.baloise.ch/de/ueber-uns/engagement.html
Belgium
https://www.baloise.be/nl/over-baloise-insurance/
voorstelling/sponsoring.html
Germany
www.basler.de/ueber-uns/unternehmen/
basler-versicherungen-stellen-sich-vor/
nachhaltigkeit.html
Luxembourg
www.baloise.lu/fr/assurance-baloise-luxembourg/
Qui-sommes-nous/engagements-sponsoring.html
▸
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of December. All proceeds from these activities go to charity,
represented by 24 non-profit organisations selected by
employees. More than EUR 60,000 has been collected over the
last few years. In Germany, a Christmas concert for all current
and former employees, along with their families and friends,
has been held in Hamburg for more than 30 years. The proceeds
from this event support the operations of charitable initiatives
in Hamburg.
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Baloise Group Annual Report 2018
Sustainable business management
Human resources
Establishing the culture of growth
Early success and the need for faster change
Dedicated employees build up strong customer relationships that in turn help the Company to achieve
its financial targets. This firmly held conviction is the basis for the Simply Safe strategy introduced in
2016. Many new aspects were implemented in 2017, thereby anchoring the “employee focus” element of
the strategy. In 2018, mid-way to 2021, Baloise notched up some early success but also identified the
need for further simplification and a faster pace of change if it is to achieve the objective of becoming
a leading employer in the industry.
managers worked together to prepare the implementation
planning for the coming quarter. This type of agile planning
resulted in greater transparency, a better understanding of
interdependencies and, ultimately, more commitment from
everyone involved.
A NEW APPROACH TO LEADERSHIP IS KEY TO SUCCESS
IN THE DIGITAL AGE
In 2018, Baloise afforded even greater attention to digitalisation
in the context of its growth strategy. To accelerate the process
of 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, the Company formulated an approach
to leadership for the digital age and integrated it into the tried-
and-tested Group-wide Baloise Campus management develop-
ment programme as well as similar local programmes. After all,
Baloise firmly believes that the professional development of its
managers is vital to the success of the digital transformation.
Also in 2018, a dedicated digital leadership programme
(DLP) for senior management was developed and piloted with
support from investment and consultancy partner Anthemis.
The DLP teaches senior managers about the paradigm shift that
is required as a result of the digital transformation and explores
subjects such as customers, digital strategy, organisation and
leadership.
KEY FIGURES
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7, 203 (2017: 7,286) employees respectively 6,571
(2017: 6,655) full-time equivalents.
43.6 per cent of all employees are women
(2017: 43.5 per cent).
The Baloise Group employs 283 (2017: 245) apprentices,
trainees and interns.
66.0 per cent of staff members working in our main
market of Switzerland participated in our Share
Participation Plan in 2018 (2017: 64.0 per cent).
Baloise employees work at the Company for an average
of 12.9 years.
Staff turnover as at 31 December 2018 amounted
to 5.9 per cent (end of 2017: 5.2 per cent).
BALOISE’S EVOLUTION: SHARED JOURNEY FROM A PROUD
PAST TO A SUCCESSFUL FUTURE
For the past three years, Baloise has been pursuing a growth
strategy that is based both on its strong core business and on
its unique corporate culture. The transition to a culture of growth
is clear to see, and many initiatives – such as those aimed at
encouraging innovation, enablement and career development
– made a positive impact in 2018. This was also reflected in the
employee engagement survey conducted during the year under
review.
Alongside people development, another area of focus in
2018 was organisational development. There was a particular
emphasis on supporting forms of agile collaboration. One stand-
out example was the introduction of a big-Group planning event
(PI planning) in the Swiss Group life and non-life businesses,
at which around 200 experts, departmental representatives and
47
Baloise Group Annual Report 2018
Sustainable business management
Human resources
Baloise’s leadership approach
The essence of our approach to leadership is aimed
at facilitating three shifts:
▸
▸
From expert to coach
From “command and control” to
“challenge and support”
From “either / or” to “both”
▸
VIRAL CHANGE AND PERSONAL INITIATIVE: DRIVING CHANGE
FROM THE BOTTOM UP
The concept of viral change was introduced in 2017. In the
reporting year, responsibility for the concept was handed to the
“sparks”: highly engaged and well-connected employees who
ensure that the Baloise Code remains in the spotlight and initi-
atives such as the TopicTable are launched. This is speeding up
the cultural transition, while the voluntary nature of the result-
ing networks contributes to eliminating obstacles and makes
interdepartmental collaboration easier. International focal
topics will be introduced in 2019 that will build on these initial
achievements and help to shift the emphasis away from indi-
vidual initiatives to a multinational “social movement”.
TopicTable
The TopicTable was set up in line with two of the
behaviours enshrined in the Baloise Code: “Appre-
ciate colleagues: build personal connections” and
“Share insights: collaborate beyond your role”.
Every day, anyone who wishes can organise a
“TopicTable” at lunchtime in the staff canteen on
a particular issue or even their hobby. This gives
employees from across the Company the chance
to discuss such topics informally, both with like-
minded people and with those offering a different
perspective.
48
DIALOGUE AS THE BASIS FOR OUR SUCCESS;
CONTINUOUS IMPROVEMENT
Our three established formats for dialogue between managers
and employees are the bedrock of the Baloise culture. All three
focus on development for the future. However, this is a continuous
process, rather than an annual event taking place on set dates.
That is why the performance and talent development process
was simplified in 2017. To emphasise the ongoing nature of the
dialogue, the “feedback day” concept was introduced in 2018.
In the individual development dialogue, an employee and
1.
their manager talk specifically about the employee’s skill
set and behaviour. The focus is on continuous learning
at both professional and personal level, particularly
in relation to the skills that are needed to achieve the
envisioned growth. The meetings are structured around
a talent assessment questionnaire that covers the skills
relevant to growth.
3.
2. The managerial feedback session is aimed at continually
improving the capabilities of managers. Every two years,
all employees are given the opportunity to fill out a ques-
tionnaire for their manager on the twelve growth-relevant
management competencies of the Baloise Leadership
Compass. Afterwards, the manager discusses the results
with his or her team.
In the years in between, the biennial employee engage-
ment survey is conducted at departmental level in order
to identify and discuss areas that have potential for
improvement. Each quarter, “pulse checks” take place in
which 30 per cent of employees are polled on whether
they would recommend the Company as a good employer.
These surveys provide a regular indication of whether
Baloise is getting closer to its goal of becoming a leading
employer in its industry.
Baloise Group Annual Report 2018
Sustainable business management
Human resources
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 that Baloise needs if it is to
achieve its strategic objectives.
Feedback day
“Do you want to go for a walk with me and give me
some feedback? Yes. No. Maybe.” In the spring,
posters featuring this question were used to make
Baloise employees more aware of the important
issue of feedback and to prompt them to ask a
colleague to go on a “feedback walk”. The initiative
was designed to shine the spotlight on using
feedback as part of a continuous improvement
process.
MID-TERM RESULT: TOP 23 PER CENT AFTER TWO YEARS;
TARGET: TOP 10 PER CENT
In autumn 2018, the Group-wide employee engagement survey
was carried out again. The questionnaire is primarily aimed at
gauging levels of engagement and enablement among employees.
Responses to the question “Would you recommend Baloise as
an employer?” are crucial to measuring achievement of the target
of being in the top 10 per cent of European financial institutions.
In the year under review, 76 per cent of the total workforce
(around 4,700 employees) took part in the survey. The results
from the 2016 survey put Baloise in the top 30 per cent. In 2018,
the Company moved up into the top 23 per cent thanks to 82 per
cent of respondents stating that they would recommend Baloise
as an employer. This positive trend had already been apparent
from the slight improvement in the results of the quarterly pulse
checks. In terms of both engagement and enablement, Baloise
improved on the already high level that it had reached in 2016.
Overall, 78 per cent of employees rated their own engagement
as positive (increase of 1 percentage point); the figure for
enablement was 77 per cent (increase of 3 percentage points).
Baloise thus stands head and shoulders above its European
competitors. The biggest positive changes were in relation to
innovation (increase of 8 percentage points to 77 per cent),
development opportunities (increase of 7 percentage points to
72 per cent) and respect and appreciation (increase of 7 per-
centage points to 76 per cent), i. e. precisely the areas in which
Baloise has launched a number of initiatives since embarking
on Simply Safe. The areas with potential for improvement that
were identified in 2016 – achieving career goals, addressing
behaviour that is out of step with our values and having sufficient
resources to be able to work effectively – also scored better in
2018. These increases are proof positive of the benefits of
feedback and of investing in projects such as the “change of
perspective” initiative for career development. The task now is
to maintain this positive trend and move up the final 13 percent-
age points in order to reach the top 10 per cent by 2021.
49
Baloise Group Annual Report 2018
Sustainable business management
Human resources
Kununu ranking
Baloise’s positive rating as an employer is also
reflected in our Kununu ranking. Our score of 3.98
points (out of a possible five) puts us in a respect-
able third place among all of the major Swiss
insurers (including health insurance companies).
The employer comparison site enables former and
current employees to anonymously rate aspects
such as working atmosphere, manager behaviour
and work-life balance.
CONTINUOUS IMPROVEMENT; INTERDEPARTMENTAL
COLLABORATION; PERFORMANCE AND TALENT
DEVELOPMENT PROCESSES
Development is not an annual event. Performance is not due to
the efforts of just one person. These statements are reflected
in our performance and talent development process, which
incorporates regular meetings between managers and employees
to ensure continuous learning and clarity about common objec-
tives. Since the start of 2018, there have also been overarching
team objectives that are founded on the belief that good
interaction within teams and between departments and divisions
of the Group will lead to better performance.
In the established annual process of talent development
for well-qualified high-potential employees, Baloise is also
continuing to identify talented young employees and key indi-
viduals, find potential successors and agree targeted develop-
ment activities for them.
INDIVIDUAL WORKING MODELS:
FLEXIBLE, FAMILY-FRIENDLY, MOBILE
Employees are key to the achievement of our targets. This state-
ment is underlined by the current corporate strategy, which puts
the emphasis on our employees as one of three main focal points.
To this end, Baloise has set itself the objective of offering every
employee suitable working conditions in addition to encourag-
ing their development, engaging in honest dialogue with them
and giving them the opportunity to help shape the Company.
This can be seen from our flexible working models, which include
options to work part-time and from home, an inhouse crèche
and an extensive corporate health management service. Baloise
is also investing in employees’ individual development through
the “change of perspective” initiative, which offers flexible
placements of between one day and several months.
Change of perspective
Under the temporary job change initiative,
employees perform a new role or work on Group-
wide projects for a defined period of time, 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. In
2018, there were 81 such temporary job changes.
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 col-
league for one day, ask them questions and take
on board invaluable information and ideas for their
own work.
50
Baloise Group Annual Report 2018
Sustainable business management
Human resources
BALOISE IN THE LABOUR MARKET –
AUTHENTIC AND APPROACHABLE
Baloise wants to become an employer of choice in the financial
services sector. The way in which we present ourselves in the
labour market has a direct impact on this objective, not least
because competition for the best brains remains fierce due to
demographic change. The analysis of target groups carried
out in late 2017 / early 2018 confirmed our existing view that
a particular focus is required on recruiting IT workers, insurance
advisors and apprentices for commercial vocations. Various
initiatives have been introduced to tackle this challenge,
including a new employee referral scheme that emerged as the
third biggest source of applicants and the most important hiring
channel in 2018.
Baloise also overhauled its employer brand as part of
a Group-wide project in 2018. The resulting unique selling
propositions are designed to portray the Company in a targeted
and concise manner in the job market. Implementation cam-
paigns are planned for 2019.
Baloise generally engages with potential candidates in
various ways, including through our careers blog, through our
profiles on social media and at university fairs. Concepts aimed
at particular target groups, such as “bring a friend” events, have
also been tested with success. All of these activities are aimed
at conveying an authentic, attractive and unique image of Baloise
that will enable it to attract sufficient and, above all, the right
candidates.
Baloise offers an appealing range of training opportunities.
Around 283 young people currently work as apprentices, interns
and temporary student workers under the established training
scheme. The Company’s graduate trainee programme, now in
its 26th year, 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
can be found in a wide range of roles, departments and manage-
ment levels within the Company. Previously only available in
Switzerland, the programme was rolled out to all other national
units in 2018.
Activities in 2018 –
spreading the word about Baloise as an employer
▸
▸
▸
▸
▸
6 graduate fairs
10 workshops and other events
2 WhatsApp taster days
105 blog articles
20 videos and podcasts
SHARED GOALS; LOCAL FOCAL POINTS
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.
The emphasis in Switzerland was again on the transition
to a culture of growth. In 2018, the focus was on encouraging
agile working methods and enhancing the working environment.
Further managers rotated jobs in 2018, which helped to drive
the “change of perspective” initiative at this level. Drawing on
input from the previous year’s “Baloise wants to know” work-
shops, which were initiated by the employee commission, Baloise
made a number of changes to make it more attractive in the
labour market. This included a clear commitment to part-time
working models, for example a quota of “60 per cent” positions
that should make Baloise more appealing to women returning
to work. Furthermore, annual leave has been standardised at
five weeks across the board and parental leave for expectant
mothers has been simplified and expanded. Workshops are not
the only forum for employees’ interests, however. The employee
commission represents the interests of the workforce at monthly
meetings with the Executive Committee and employees participate
in various committees, such as the body responsible for assign-
ing functions to pay categories. Another topic of particular focus
in Switzerland was diversity. Networks, such as for the internal
LGBTQ community, are now actively supported.
In Germany too, everything centred on the cultural transition.
A particular emphasis was the approach to leadership. The
related activities included working on the results of the 2017
managerial feedback, holding regular meetings for divisional,
departmental and team managers and providing development
opportunities devised by the leadership working group. The
Chief Executive Officer released a weekly video blog, thereby
giving clear and direct insights into strategic matters and
51
Baloise Group Annual Report 2018
Sustainable business management
Human resources
Diversity at the Swiss offices
▸
▸
39 nationalities
100 per cent return rate after maternity leave
(2015 / 2016)
20 per cent of employees work part-time
(75 per cent women, 25 per cent men)
40 per cent of those promoted in 2017
were women
▸
▸
decisions and prompting debate by addressing specific issues.
Initiatives and formats relating to the digital transformation and
agility became embedded and now cover a broad section of the
workforce. The employee engagement survey in the year under
review showed improved results following activities such as
development dialogues and medium-term changes of perspec-
tive. The target agreement process helped to give employees a
better understanding of their part in the Company’s success and
how they can make a meaningful contribution. Moreover, the
works councils are invited to participate in the different formats
for cooperation and involvement, enabling them to represent
employees’ interests from the outset.
In Belgium, the focus for 2018 was on support for innovation
and on manager and employee development. An innovation
competition was run for the second time, in which 30 teams
submitted ideas on an area defined by the management team.
Seven teams were selected to present their idea to the manage-
ment team. As part of a new programme, manager development
was concentrated on the topics of personal ambition and col-
lective leadership and on the change in the management approach
from expert to coach and from “command and control” to
“challenge and support”. A new learning management system
was introduced to drive employee development within the
organisation and to promote new forms of learning. The action
plan signed off in 2017 to promote diversity was rolled out.
Related activities – such as reverse mentoring, where senior
managers learn from millennials – were organised with the help
of ambassadors. Monthly meetings with the works council and
internal trade union representatives are another way in which
employees’ interests are upheld.
52
A focal point in Luxembourg in 2018 was to encourage employees
to be innovative by asking them to participate in activities such
as an innovation project competition. The “sneak preview”
training courses were continued with the aim of piquing
employees’ interest in continuing professional development;
the central topic for 2018 was customer focus. The broad-rang-
ing training programme was further expanded, with a particular
emphasis on English for everyone. The latter also had a positive
impact on the results of the employee engagement survey in
the reporting year. To raise its profile in the labour market,
Baloise increased its attendance at recruitment and HR forums.
BALOISE’S 7,203 EMPLOYEES IN 2018 BY COUNTRY
Switzerland
Germany
Belgium
Luxembourg
Per cent
Employees
52.5
23.9
17.0
6.6
3,782
1,722
1,224
475
Friendly Work Space
Baloise was labelled a Friendly
Work Space® for the first time
back in 2010. This certification
has to be renewed every three
years, and Baloise was recer-
tified in both 2013 and 2016.
In fact, it achieved the highest
score in 2016 and is the leading company in the
financial services / insurance sector.
Baloise Group Annual Report 2018
Sustainable business management
Human resources
FAIR PAY BASED ON PERFORMANCE AND TARGETS
Baloise attaches great importance to rewarding its employees
for their performance, including through monetary compensation.
It therefore offers performance- and target-oriented remuneration
packages that are based on fair principles and an updated
framework of performance management. The total remuneration
package consists of competitive base salaries, a range of variable
remuneration components, fringe benefits and attractive employee
incentives and loyalty bonuses.
Overall, remuneration is regarded as a hygiene factor rather
than a strategic selling point. It is determined by the following
criteria:
▸
▸
▸
▸
Competitiveness in the marketplace
Individual performance and the Company’s success
Fairness and transparency
Sustainability
With effect from 2018, the system of performance-related
remuneration based solely on individual performance was
abolished. Now, variable remuneration is systematically aligned
to the attainment of overarching Company targets by means of
the performance pool. The variable pay components are allocated
on the basis of team performance and employees’ individual
contribution to their team’s success, another factor being
interdepartmental and international cooperation. This should
motivate employees to work towards the success of areas beyond
their own sphere of responsibility.
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. The packages
also feature attractive fringe benefits that are awarded regard-
less of function and seniority.
In 2018, Baloise voluntarily conducted an internal wage
equality analysis to ensure that it offers equal pay. To do so, it
used the same tool (Logib) as when it participated in the official
wage equality dialogue in 2013 / 2014. The analysis revealed
that unexplainable differences between wages for men and
women are still well below the tolerance limit of 5 per cent. So
that this good statistic is maintained going forward, the Company
will step up its efforts to ensure equal remuneration for men
and women when it comes to hiring and pay rises.
Further information on the remuneration system and the
remuneration paid in the reporting year can be found in the
remuneration report on pages 88 to 113.
EMPLOYEE STORIES AND THE LATEST FROM THE COMPANY
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 itself
as an employer. The following platforms are used to present
career stories, the corporate culture, employees and the latest
news and events at Baloise.
Careers website:
www.baloise.com/careers
Careers blog:
www.baloise.com/karriereblog
Facebook:
www.facebook.com/baloisegroup
YouTube:
www.youtube.com/baloisegroup
Instagram:
www.instagram.com/baloisejobs
Xing:
www.xing.com/companies/baloisegroup
LinkedIn:
www.linkedin.com/company/baloisegroup
Twitter:
www.twitter.com/baloise_jobs
53
Baloise Group Annual Report 2018
Sustainable business management
The environment
Environmental mission statement
In 1995, Baloise became one of the first insurers to sign the insurance industry declaration on sustainable
development formulated by the United Nations Environment Programme (UNEP). It drew up its own
environmental guidelines in 1999 in order to give concrete form to this general commitment. From the
outset, it was deemed important to embed sustainability throughout the Company and in all day-to-
day business activities.
What are Baloise’s sustainability principles? Which issues take greatest priority? And what are the key
principles? The sustainability guidelines adopted in 1999 provide a framework for action and form the
basis of all environmental and social activities at Baloise.
PRINCIPLE
As a signatory to the UNEP declaration, Baloise strives for sus-
tainable development from an ecological, economic and social
point of view. As a primary insurer, Baloise is prepared to assume
responsibility for the preservation of the natural environment.
STAFF AND PUBLIC
Baloise trains its employees with regard to environmental
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 (ISO 14001
onwards) on the basis of identifiable operational and product-
related factors. It also advises industrial clients on risk reduction
and risk prevention.
LONG-TERM FINANCIAL ASSETS
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 coordina-
tion unit which implements the environmental mission statement.
This working group is made up of representatives drawn from
all key corporate functions.
54
Baloise Group Annual Report 2018
Sustainable business management
The environment
Protecting the environment over the long term
Environmental protection at Baloise is focused on reducing CO2 emissions and promoting alternative
energy sources. The Company’s initiatives are guided by recognised directives. It always pursues
a pragmatic and practical approach and it helps the environment because it believes this is the right
thing to do. Baloise has set itself an ongoing objective of making continual improvements in all areas.
CONTINUOUS REDUCTION OF CO2 EMISSIONS SINCE 2000
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 2015 Paris Agreement, the successor to the Kyoto Protocol,
has spurred the Company on in its 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 an 18-year period, Baloise has cut absolute
CO2 emissions from 53,580 tonnes to 14,772 tonnes. This is
equivalent to a 72.4 per cent reduction in CO2 emissions, while
emissions per employee fell by 30 per cent over the same period,
from four tonnes to 2.8 tonnes.
FOCUS ON OPTIMISED OPERATIONS IN 2018
Measures aimed at a lasting reduction in energy consumption
in Switzerland and Germany focused on optimising how buildings
are run. The periods during which the air conditioning system
is on were adjusted, and default temperatures in office areas
over winter and summer were modified to ensure a more sus-
tainable use of energy.
The introduction of a range of working models further
increased the efficient use of space in all buildings. Following
a review of employee catering at headquarters in Basel in 2015
TOTAL CO2 EMISSIONS IN TONNES
CO2 EMISSIONS PER EMPLOYEE IN KILOGRAMME
42,000
36,000
30,000
24,000
18,000
12,000
6,000
0
4,800
4,400
4,000
3,600
3,200
2,800
2,400
2,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CO2 emissions for the Group
CO2 emissions in Switzerland
CO2 emissions in Switzerland
CO2 emissions for the Group
55
Baloise Group Annual Report 2018
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
2016 absolute
2017 absolute
2018 absolute
Relative Unit
+ / – %
5,290
137,151
15
18,236,089
10,380,219
47,128 m3
465 t
5,148
136,601
15
5,214
142,409
14
headcount
ERA m2
number of buildings
19,137,677
18,314,747
3,513 kWh / employee
9,830,542
47,768 m3
413 t
8,269,769
45,421 m3
58 kWh / m2
35 l / employee / day
300 t
58 kg / employee
1.3
4.3
– 1
– 4.3
– 15.9
– 4.9
– 27.4
2.0 % recycled
89.0 % chlorine-free-bleached
9.0 % chlorine-bleached
76.0 million
A4 sheets
811 t
72.4 million
A4 sheets
1,009 t
66.1 million
A4 sheets
12,679 A4 sheets /
– 8.7
employee
843 t
162 kg / employee
– 16.5
53.0 % paper / cardboard
7.0 % other materials
2.0 % special waste
38.0 % misc. waste / refuse
18.4 million km
22.5 million km
22.4 million km
4,290 km / employee
– 0.4
23.1 % km by air
52.3 % km by road
24.6 % km by public transport
CO2 emissions
14,257 t
15,579 t
14,773 t
2,833 kg / employee
– 5.2
with a focus on regionality, seasonality and animal welfare, the
Company embarked on the refurbishment of its employee
cafeteria in 2018 with a view to improving energy efficiency and
the use of space.
By replacing several hundred lights with LED lighting and
using LEDs in all new installations in its buildings, the Company
switched to a technology that will save energy for years to come.
FOCUS ON PERSONAL TRANSPORT IN BELGIUM AND
LUXEMBOURG TO REDUCE TRAFFIC PROBLEMS
Electric vehicles were purchased in Belgium and Luxembourg
to provide emission-free modes of transport. The employees in
Belgium have access to eight electric vehicles, while those in
Luxembourg have access to two. This allows for the bulk of
day-to-day business to be conducted with zero emissions.
The CO2 emissions of the Belgian vehicle fleet were reduced
to 111g / km in 2018. In Luxembourg, Basler joined the state-run
car sharing platform (https://de.copilote.lu) as part of European
Mobility Week.
56
Baloise Group Annual Report 2018
Sustainable business management
The environment
RIGHT AROUND THE WORLD WITH SWISS SOLAR POWER
Since 2015, Baloise customers and employees have been able
to charge their electric vehicles at Baloise’s company head-
quarters using solar power. The facility, which does not cost
anything to use, has proved very popular. During a very sunny
2018, enough solar-generated electricity was drawn from the
“pumps” to power a total of almost 80,000 kilometres – equiv-
alent to nearly two emission-free trips 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. This service has been
maintained at a consistent level since its introduction.
FRIDAY OFFERS CAR INSURANCE WITH BUILT-IN
CLIMATE PROTECTION
Since October 2018, FRIDAY customers have been able to make
their own contribution to climate protection by offsetting the
CO2 emitted by their cars. FRIDAY, the online car insurance pro-
vider owned by Baloise in Germany, aims to reach customers
who care about the environment but cannot do without a car,
for example because they need it for work. The product was
developed in cooperation with myclimate, a renowned climate
protection organisation that – like FRIDAY – has its roots in
Switzerland. The climate protection contribution is calculated
based on the estimated annual mileage. Emissions that are offset
include carbon dioxide (CO2), other harmful greenhouse gases
such as methane (CH4) and nitrous oxide (N2O), and so-called
“grey” emissions, which are generated during the production
of the vehicle, the construction of the road infrastructure and
the production, transport and processing of crude oil.
This contribution is invested in climate protection projects,
jointly chosen with myclimate, that meet the highest standards
(Gold Standard, CDM, Plan Vivo) and are proven to reduce
damaging CO2 emissions.
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 comfort-
ably 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.
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
72.4 per cent of the 7,200 or so people working for the Baloise
Group. Per-employee consumption of heating has been reduced
by around 35 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 which will be implemented in each country over the
coming years.
www.baloise.com/responsibility
57
Baloise Group Annual Report 2018
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 2018.
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 risk and market risk, as well as the opera-
tional risk arising from business activities.
Risk governance and risk culture: this involves
encouraging 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.
▸
▸
▸
▸
58
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 2018
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
Organisational 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).
59
Baloise Group Annual Report 2018
Sustainable business management
Risk management
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. For this, risk
metrics 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 circum-
stances and can meet its obligations 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 corpo-
rate 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-
warning indicators to mitigate the risks taken.
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. Risk owners
and risk controllers tasked 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 pillars 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.
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 Group-wide standards;
▸
▸
▸
reporting risks;
complying with risk processes and procedures;
communicating with external partners such as auditors,
corporate supervisory bodies and credit rating agencies.
The business units are responsible for local implementation of
the standards and requirements specified by the Baloise Group.
Overall responsibility lies with the Baloise Group’s Chief Financial
Officer, followed by its Chief Risk Officer.
60
Baloise Group Annual Report 2018
Sustainable business management
Risk management
The Baloise Group uses a system of limits in order to mitigate its
risks holistically at an aggregate level. This system tracks the
risk capital held by the Baloise Group and individual business
units in a timely manner. Issue-specific risks are monitored
individually by imposing limits, as illustrated by the following
examples:
▸
Actuarial risk is determined by underwriting guidelines
on which local underwriters base their decisions. Risk
metrics analysis of the deductibles payable supplements
the Company’s key reinsurance strategies.
Appropriate reporting procedures are used to monitor
market risk and financial-structure risk across all business
units. In addition to upper limits on equity exposures, for
example, there are clear and binding guidelines on bond
ratings. The applicable “Basel” approach and advanced
statistical methods are used to assess credit risk. In addi-
tion, the overall solvency position is regularly monitored.
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), a risk report
that has to be prepared annually, 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 remuneration paid to executives.
STRATEGIC RISK MANAGEMENT
The 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.
This process provides a comprehensive 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 manage-
ment system. These targets form part of the overall objectives
agreed with local management teams.
OUR PROFESSIONAL RISK MANAGEMENT DEMONSTRATED
ITS PROVEN STRENGTHS IN 2018
Baloise’s risk strategy principles are designed for the long term,
as shown by the Company’s excellent risk positioning in 2018.
This is underlined by the improvement in the credit rating from
Standard & Poor’s, which was upgraded to A + with a stable
outlook, and by the reconfirmed assessment of enterprise risk
management as “strong”.
Risk management approaches that have been tried and
tested for many years were maintained in 2018:
▸
The Baloise Group’s investment strategy continues to
focus on diversification and on the basic principle of only
investing in assets that risk management can itself fully
and accurately evaluate.
Baloise continued to actively manage its credit risk
and currency risk.
▸
▸ With a net equity exposure of 5.6 per cent at 31 December
▸
▸
▸
2018, Baloise’s equity investments in the reporting year
lay comfortably within its risk-bearing capacity.
The high quality of recurrent investment income generated
by Baloise’s stable real-estate portfolio proved to be
a valuable source of revenue.
There is a particular focus on the management of 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 91.7 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 2018 Financial Report (section 5. Management of insurance
risk and financial risk, pages 153 to 195).
61
Baloise Group Annual Report 2018
Sustainable business management
Commitment to art
The Baloise Group’s commitment to art
Art provides a space for reflection and a lens through which to view the world in a different way. It should
stimulate discussion. Baloise’s art collection is an important part of its corporate culture. Baloise
believes that the privilege of owning art comes with an obligation to make it accessible to the wider
public. Its commitment also extends to providing recognition and support for contemporary artists.
TAKING RESPONSIBILITY – AN IMPORTANT ASPECT OF
CORPORATE CULTURE
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.
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
Baloise has a long-standing tradition of promoting talent. For
many years, its training and development programmes have
provided an entry into careers with substance. 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. For these people,
Baloise offers a launchpad for a long and successful future.
Its commitment to sponsoring modern art – through acqui-
sitions 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 supporting the development of young and emerging artistic
talent.
For 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
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 significant
event.
Due to its prestige, the Baloise Art Prize has 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.
The 2018 Baloise Art Prize was awarded to Suki Seokyeong
Kang and Lawrence Abu Hamdan. Kang’s award was for her
installation, which plays with different materials, shapes and
colours. The work is based on translation of these different media
into a visual language of “jeongganbo”, a traditional Korean
notation system. It organises squares into a grid system accord-
ing to rules regarding pitch and length of musical notes.
Lawrence Abu Hamdan’s video and sound installation “The
Shouting Valley” is based on an actual event: the crossing of
the border between Syria and Israel in the Golan Heights by
a group of Palestinians on 15 May 2011. The acoustic phenom-
enon of the wandering, intensifying voices produced by the
topography of the valley invites us to draw parallels with the
wider geopolitical context.
62
Baloise Group Annual Report 2018
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 the prize 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 the “cornerstones” for Baloise Park seemed
an obvious choice. 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.
The 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, although in keeping with the Baloise
corporate philosophy, the upper floors will also display works
from the collection in specially provided spaces.
THE ART COLLECTION
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 inclusion 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 customer centre at the new headquarters in Basel: left, works by Thomas Ruff; right, a work by
Alain Huck. Photo: André-Marc Räubig.
63
Unterkapitel Corporate
Governance
CORPORATE GOVERNANCE REPORT ............................ 66
1. Structure of the Baloise Group and shareholder base ... 66
2. Capital structure ........................................................ 67
3. Board of Directors ...................................................... 68
4. Corporate Executive Committee ................................. 79
5. Remuneration, shareholdings and loans .................... 84
6. Shareholder participation rights ................................ 84
7. Changes of control and poison-pill measures ............. 85
8. External auditors ....................................................... 85
9. Information policy ...................................................... 86
Appendix 1: Remuneration Report ..................................... 88
Appendix 2: Report of the external auditors ..................... 114
4 Baloise
16 Review of operating performance
38 Sustainable Business Management
64 Corporate Governance
116 Financial Report
274 Bâloise Holding Ltd
292 General information
E
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Unterkapitel
Baloise Group Annual Report 2018
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.
This chapter reflects the structure of the SIX Corporate
Governance Guidelines as amended on 20 March 2018 in order
to enhance transparency and, consequently, improve compara-
bility 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 used to determine the content and scope of the dis-
closures on remuneration in the Remuneration Report (Appen-
dix 1 to the Corporate Governance Report, page 88 onwards).
The information contained in the Corporate Governance
Report refers to the situation on the balance sheet date
(31 December 2018). Additional reference is made to material
changes occurring between the balance sheet date and the print
deadline for the Annual Report. This includes the appointment
of Alexander Bockelmann to Corporate Division IT with effect
from 1 February 2019. The corporate division is responsible for
simplifying the Group’s IT landscape and, on the basis of the
strategy, driving forward the Group’s transformation and digi-
talisation. The organisational structure of Corporate Division IT
will be established during the course of 2019.
Sustainable business management has long played an
important role at Baloise and is described in a dedicated section
of the Annual Report from page 38 onwards.
66
▸
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 6,608 million as at 31 December 2018.
Information on Baloise shares can be found from page 8
▸
onwards.
Significant subsidiaries, joint ventures and associates as
at 31 December 2018 can be found from page 264
onwards in the notes to the consolidated annual financial
statements, which form part of the Financial Report.
Segment reporting by region and operating segment can
be found from page 197 onwards in the notes to the
consolidated annual financial statements within the
Financial Report section.
The Baloise Group’s operational management structure is
presented on page 82 onwards.
▸
▸
Shareholder base
As a public company with a broad shareholder base, Bâloise
Holding is a member of the SMI Mid (SMIM) Index.
Shareholder structure
A total of 20,377 shareholders were registered in Bâloise
Holding’s share register as at 31 December 2018. The number
of registered shareholders had decreased by 2.00 per cent
compared with the previous year. The “Significant shareholders”
section on page 285 provides information on the structure of
the Company’s shareholder base as at 31 December 2018.
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.
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
Treasury shares
Bâloise Holding held 1,640,025 treasury shares (3.36 per cent
of the issued share capital) as at 31 December 2018.
Bâloise Holding’s equity
The table below shows the changes in equity during the last
three reporting years.
Cross-shareholdings
There are no cross-shareholdings based on either capital owner-
ship or voting rights.
2. CAPITAL STRUCTURE
Dividend policy
Bâloise Holding pursues a policy of paying consistent, earnings-
related dividends. It uses other dividend instruments such as
share buy-backs and options to supplement conventional cash
dividends. Shareholders have received a total of CHF 1,638.4
million from cash dividends and share buy-backs over the last
five years.
Year (CHF million)
2014
2015
2016
2017
2018
Total
Cash dividends
Share buy-backs
Total
250.0
250.0
260.0
273.3
292.81
1,326.1
–
59.1
54.8
63.3
135.1
312.3
250.0
309.1
314.8
336.6
427.9
1,638.4
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 26 April 2019.
CHANGES IN BÂLOISE HOLDING’S EQUIT Y
(BEFORE APPROPRIATION OF PROFIT)
31.12.2016
31.12.2017
31.12.2018
5.0
11.7
2.3
573.9
289.6
– 156.6
725.9
4.9
11.7
6.1
472.4
367.9
– 71.8
791.2
4.9
11.7
6.4
566.1
412.6
– 206.7
795.0
CHF million
Share capital
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
Treasury shares
Equity attributa-
ble to Bâloise
Holding
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 regis-
tered shares with a par value of CHF 0.10 each (see article 3 [4]
of the Articles of Association).
www.baloise.com/rules-regulations
67
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
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 (see article 3 [3] of the Articles
of Association).
www.baloise.com/rules-regulations
Other equity instruments
The Company has no profit-participation certificates.
The Baloise Group’s consolidated equity
The Baloise Group’s consolidated equity amounted to CHF 6,008.2
million on 31 December 2018. Details of changes in consolidated
equity in 2017 and 2018 can be found in the consolidated
statement of changes in equity on pages 124 and 125 in the
Financial Report. All pertinent details relating to 2016 can be
found in the consolidated statement of changes in equity on
page 118 in the Financial Report within the 2017 Annual Report.
Bonds outstanding
Bâloise Holding and Baloise Life Ltd (with Bâloise Holding
acting as guarantor) have issued bonds publicly. As at the end
of 2018, a total of eight public bonds were outstanding. On
28 January 2019, Bâloise Holding will issue an additional bond
worth CHF 200 million, which will replace the Bâloise Holding
bond that matures in 2019. Details of outstanding bonds can
be found on pages 243 and 283 and on the website.
www.baloise.com/bonds
Credit rating
On 27 June 2018, credit rating agency Standard & Poor’s upgraded
the rating of the Swiss units Baloise Insurance Ltd and Baloise
Life Ltd from “A with a positive outlook” to “A + with a stable
outlook”. Standard & Poor’s awarded this credit rating in recog-
nition of Baloise’s excellent capitalisation – which is comfort-
ably above the AAA level according to the S&P capital model
– as well as its high operational profitability, robust risk manage-
ment and solid competitive position in its profitable core markets.
Information about the ratings of Bâloise Holding Ltd, the Belgian
subsidiary Baloise Belgium NV and the German subsidiary Basler
Sachversicherungs-AG, which were also upgraded, can be found
on the website.
www.baloise.com/s&prating
3. BOARD OF DIRECTORS
Election and term of appointment
The Board of Directors consisted of ten members last year. Since
1 January 2019, it has had nine members because Karin Keller-
Sutter stepped down from the Board of Directors with effect
from 31 December 2018 after being elected to the Swiss Federal
Council. Each member of the Board of Directors has been elected
for a term of one year at a time.
As at 31 December 2018, the average age on the Board of
Directors was 58 years.
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, Hugo Lasat, Dr Thomas von Planta, Thomas
Pleines and Professor Dr Marie-Noëlle Venturi - Zen-Ruffinen
were re-elected as members of the Board of Directors for a one-
year term until the end of the next Annual General Meeting.
Werner Kummer stepped down from the Board of Directors at
the 2018 Annual General Meeting. Professor Dr Hans-Jörg
Schmidt-Trenz was newly elected to the Board of Directors.
68
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
Markus Neuhaus (born 1958, Switzerland) has been the Chairman
of the Board of Directors of PricewaterhouseCoopers AG since
July 2012 and served as its CEO for a period of nine years prior
to that. His term on the Board of Directors of PwC will end in
June 2019. Neuhaus, who has a law degree and is a certified tax
expert, is also Vice-Chairman of the Board of trustees of Avenir
Suisse, a member of economiesuisse’s Management Board and
Finance and Taxation Commission, Vice-Chairman of the Man-
agement Board of Zurich’s Chamber of Commerce and a member
of the Committee of Expertsuisse (formerly Treuhand kammer).
Both Christoph Mäder and Markus Neuhaus will be inde-
pendent non-executive directors.
Further information on the members of the Board of Directors
can be found on the website.
www.baloise.com/board-of-directors
Karin Keller-Sutter, who had been a member of the Board of
Directors and Remuneration Committee since 2013, stepped
down from the Board of Directors with effect from 31 December
2018 because she had been elected to the Swiss Federal
Council. Dr Georges-Antoine de Boccard is not standing for
re-election at the Annual General Meeting in 2019. De Boccard
(67) joined the Baloise Board of Directors in 2011 and is a member
of the Remuneration Committee and Investment Committee. All
other members of the Board of Directors are standing for re-elec-
tion in 2019.
The Board of Directors of Bâloise Holding has decided to
propose Christoph Mäder and Markus Neuhaus for election at
the Annual General Meeting on 26 April 2019. Christoph Mäder
(born 1959, Switzerland) is a qualified lawyer and, from 2000
to July 2018, was a member of the Syngenta International AG
executive team with responsibility for legal and tax. He was
a member of the Management Board of the Basel Chamber of
Commerce until June 2018. From 2006 to May 2018, he sat on the
Management Board of scienceindustries, serving as the asso-
ciation’s president between 2008 and 2014. He sits on the Board
of Directors of Lonza Group AG and EMS Chemie Holding AG and
is a member of the Executive Committee of economiesuisse.
MEMBERS
Dr Andreas Burckhardt, Chairman (since 2011), Basel
Dr Andreas Beerli, Vice-Chairman (since 2018),
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 Hans-Jörg Schmidt-Trenz, Hamburg (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
M
DC
C
M
C
M
DC
M
CH
CH
CH
CH
CH
B
CH
D
D
CH
1951
1951
1951
1966
1963
1964
1961
1955
1959
1975
1999
2011
2011
2014
2013
2016
2017
2012
2018
2016
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DIVERSITY ON THE BOARD OF DIRECTORS
Per cent
Professional background / experience / expertise *
Nationality
Insurance
Banking
Legal and governance
Risk management
CEO
Term of appointment
< 5 years
5 – 10 years
> 10 years
60.0
30.0
10.0
Switzerland
Germany
Belgium
30.0
40.0
50.0
20.0
60.0
Gender
Men
Women
70.0
20.0
10.0
80.0
20.0
* More than one category may apply.
Statutory rules concerning the number of permitted activities
The Articles of Association contain a provision (article 33)
concerning the maximum number of directorships that can be
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 numer-
ical 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 shareholders
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.
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 organisational
structures.
www.baloise.com/rules-regulations
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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 Remuneration
Committee have their own decision-making powers.
The committees appointed by the Board of Directors gener-
ally 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 Regu-
lations. 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 remu-
neration paid to the Board of Directors and the Corporate
Executive Committee has to be approved by the Annual General
Meeting. The Remuneration Committee approves the target
agreements and performance assessments that are applied to
the Corporate Executive Committee members in order to deter-
mine their variable remuneration. It also sanctions the remuner-
ation 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 remuner-
ation 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
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The full Board of Directors of Bâloise Holding met on five occa-
sions in 2018. All members of the relevant committee in each
case attended every one of the additional 15 committee meetings.
This means that the Board of Directors achieved an overall
meeting attendance rate of 99.1 per cent. Meetings of the Board
of Directors and its committees usually last half a working
day each.
The Chairman’s Committee convened six times in 2018, which
included one two-day strategy meeting. The Investment Commit-
tee met on three occasions. The Audit and Risk Committee held
four meetings, and the Remuneration Committee convened twice.
Meetings of the Board of Directors are regularly attended
by members of the Corporate Executive Committee. 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.
72
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.
Training and development
In preparation for their new role, the members of the Board of
Directors participate in a two-day introductory programme and
then receive ongoing training (at least once a year) in half-day
seminars on specific topics. In 2018, the Board of Directors held
a seminar for the purpose of training its members on value
management at Baloise.
Succession planning
Succession planning for the Board of Directors and the Corporate
Executive Committee is the responsibility of the Chairman’s
Committee. In appointing successors, care is taken to ensure
that the composition of the Board of Directors is balanced in
terms of the experience and knowledge of its members and their
nationality, term of appointment and gender (see diversity charts
on page 70). Any restrictions on availability and possible con-
flicts of interest arising from other mandates are also taken into
account. In 2018, the Board of Directors changed the Organisa-
tional Regulations so that the term of appointment for members
of the Board of Directors usually ends on the date of the Annual
General Meeting that follows the member’s 70th birthday (age
limit). There are changes to the Board of Directors on an ongoing
basis. In recent years, two members retired from the Board of
Directors after terms of 18 and 17 years respectively. The
average term of office is 5.2 years. The Chairman is currently
the longest-serving member of the Board of Directors, having
been in office for 19 years. The appointment of Christoph Mäder
and Markus Neuhaus, who have been nominated for the Board
of Directors (see page 69), would further increase the Board of
Directors’ experience with listed companies and in particular
with industrial companies and auditing firms.
Baloise Group Annual Report 2018
Corporate Governance
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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 Organi-
sational 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 58 onwards
and in the Financial Report starting on page 153.
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). 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.
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, and
a member of the Advisory Board of Accenture Schweiz. Dr Andreas Beerli
is an independent non-executive director.
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Georges-Antoine de Boccard (1951, Switzerland, Dr med.)
has been a member of the Board of Directors since 2011. He studied
medicine at the University of Geneva. He has been running his own
urological 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 CUGB (Centre d’Urologie Générale
Beaulieu). 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.
Christoph B. Gloor (1966, Switzerland, degree in business economics
HWV)
has been a member of the Board of Directors since 2014. He is the
Deputy Head of Wealth Management at Bank Vontobel AG in Zurich. Before
becoming a member of the Executive Committee and CEO of Notenstein
La Roche Privatbank AG, St. Gallen, he was Chief Executive Officer of Basel-
based private bank La Roche & Co AG. Prior to joining La Roche & Co AG
in 1998, he worked for Swiss Bank Corporation (SBC) before moving to
Vitra (Inter national). Christoph B. Gloor served as president of the
Association of Swiss Private Banks from November 2013 to February
2015 and was a member of the Board of Directors of the Swiss Bankers
Association from September 2013 to February 2015. He has been a mem-
ber of the Board of Managing Directors of the Basel Banking Association
since 2016. Christoph B. Gloor is an independent non-executive director.
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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 November 2017, serving in that role for one year. On
5 December 2018, she was elected to the Swiss Federal Council, which
resulted in her stepping down from the Board of Directors with effect
from 31 December 2018. Until 31 December 2018, Karin Keller-Sutter
sat on the boards of directors of the ASGA pension fund, Pensimo
Fondsleitung AG and the Pensimo investment foundation, was Chair-
woman of the Swiss Retail Federation and was a member of the executive
committee of the Swiss Employers’ Federation. She is an independent
non-executive director.
Hugo Lasat (1964, Belgium, Master in Economic Sciences, Master in
Finance)
has sat on 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 Management). He is
a guest professor at KU Leuven (Brussels Campus) and VIVES University
College and a member of the Financial Commission of the Belgian Red
Cross. Hugo Lasat is an independent non-executive director.
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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 consul-
tancy 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. Dr Thomas von Planta will step down from the Board of
Directors of the Bellevue companies in March 2019 and has been nominated
for the Board of Directors of BB Biotech AG. Previously, 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.
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.
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Hans-Jörg Schmidt-Trenz (1959, Germany, Prof. Dr rer. pol.)
has been a member of the Board of Directors since 2018. He has been
a professor of economics at Saarland University since 2000 and at the
University of Hamburg since 2008 and has been President of the HSBA
Hamburg School of Business Administration since 2004. From 1996 to
2017, he was Chief Executive Officer of the Hamburg Chamber of Commerce.
Professor Hans-Jörg Schmidt-Trenz is also Chairman of the European
Chief Executive Officers working group (since 2000), a member of the
board of trustees of HASPA Hamburger Sparkasse (since 1997), a member
of the advisory board of HanseMerkur (since 2015), a member of the
General Council and Executive Committee of the International Chamber
of Commerce (since 2014), a member of the Board of Directors of HIP
Hamburg Innovation Port (since 2017) and a representative and coun-
sellor of the Hamburg Chamber of Commerce (since 2017). Professor
Hans-Jörg Schmidt-Trenz 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, a member of the Board
of Directors of Banco Santander (Suisse) SA 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 in 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. He has been a member of the Corporate
Executive Committee and CEO of Corporate Division Switzerland since
March 2011, and as such has headed up the insurance and banking
business in Switzerland. Michael Müller is Vice President of the Swiss
Insurance Association (SVV) and a member of the Board of Foundation
of Stiftung Finanzplatz Basel and the Executive Board of the Association
of Basel Insurance Companies. He also sits on the board of the Promotion
Society of the Institute of Insurance Economics at the University of
St. Gallen.
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 and 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 Strategy and
Digital Transformation, M & A, Group Human Re sources, Legal and Tax,
Group Compliance, Run-Off Business and Group Procurement. Dr Thomas
Sieber serves on the panel of experts for the SWIPRA Foundation and
until the end of March 2018 sat on the Board of Directors at EuroAirport
Basel-Mulhouse-Freiburg.
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Carsten Stolz (1968, Germany / Switzerland, Dr rer. pol.)
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 in 2002. From 2009 to 2011,
Dr Carsten Stolz was the Baloise Group’s Head of Financial Account-
ing & Corporate Finance. Between 2011 and 2017 he was Head of Finance
and Risk, and thus a member of the Executive Committee, at Basler
Versicherungen, Switzer land. Dr Carsten Stolz became a member of the
Corporate Executive Committee in May 2017. He manages the Corporate
Division Finance with its departments Group Accounting & Reporting,
Financial Planning & Analysis, Group Risk Management, Corporate
Communications & Investor Relations and Corporate IT (as of 1 February
2019, a standalone corporate division headed up by Dr Alexander
Bockelmann) as well as the appointed actuary for Swiss business at
Baloise and the Head of Regulatory Affairs. Dr Carsten Stolz is a member
of the Finance and Regulation Committee of the Swiss Insurance Asso-
ciation (SVV).
With effect from 1 February 2019:
Alexander Bockelmann (1974, Germany, Dr)
will take charge of the newly created Corporate Division IT. He studied
in Germany and the UK, before completing his doctorate at the University
of Tübingen’s faculty of geosciences. Dr Alexander Bockelmann is a proven
expert in digitalisation and transformation, and has many years of
experience in the industry. He previously worked as an IT strategy and
transformation consultant at the Boston Consulting Group and in various
senior roles at Allianz SE in Germany and the USA. At the end of 2013,
he moved to UNIQA Insurance Group AG in Austria in the role of Group
CIO and ultimately became Chief Digital Officer on the Management Board.
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 manage-
ment agreements that assign executive functions to third parties.
Further information on the members of the Corporate Executive
Committee can be found on the website.
www.baloise.com/corporate-executive-committee
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Management structure
(as at: 31 December 2018)
GROUP CEO
Gert De Winter *
HEAD OF GROUP CEO OFFICE
Ruken Baysal
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE
IT 1
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
Carsten Stolz *
Matthias Henny *
Thomas Sieber *
Alexander Bockelmann*
(from 1/2/2019)
Michael Müller *
Jürg Schiltknecht
Henk Janssen
Romain Braas
Group Accounting & Reporting
Pierre Girard
Financial Planning & Analysis
Andreas Frick
Group Risk Management
Stefan Nölker
Asset Strategy &
Investment Controlling
Marc Dünki
Sales & Marketing
Robert Antonietti
Group Strategy &
Digital Transformation
Adrian Honegger
Mergers & Acquisitions
Philipp Hammel
Portfolio Management
Group Human Resources
Stephan Kamps
Stephan Ragg
Corporate Communications &
Investor Relations
Marc Kaiser
Operations
Bernd Maier
Group Legal & Tax
Andreas Burki
Product Management
Corporate Clients
Patric Olivier Zbinden
Product Management
Private Customers &
Specialised Financial Services
Life & Exclusive Distribution
Risk, Compliance &
Maximilian Beck
Finance & Asset Management
Operations & IT
Daniel Frank
Life & Finance
Alain Nicolai
Sales & Marketing
Laurent Heiles
Julia Wiens
Non-Life
Christoph Willi
IT / Operations
Ralf Stankat
Corporate IT
(from 1/2/2019: part of the new
Corporate Division IT)
Olaf Romer
Real Estate / CEO BIM
Group Compliance
Dieter Kräuchi
Peter Kalberer
Corporate Development &
Compliance
Run-off
Bruno Rappo
Group Procurement
Manfred Schneider
Appointed Actuary Switzerland
Fabian Kaderli
Thomas Müller
Regulatory Affairs
Fabian Berger
(from 1/3/2019: Gaby Lurie)
1 The organisational structure of the newly created Corporate Division IT will be established during the course of the 2019.
* Member of the Corporate Executive Committee.
82
Wolfgang Prasser
Sales &Marketing
Bernard Dietrich
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Clemens Markstein
Finance & Risk
Urs Bienz
Claims
Mathias Zingg
Corporate Legal
(from 1/1/2019: Risk,
Compliance & Actuarial
Function)
Patrick Van De Sype
(from 1/1/2019: Kathleen
Vergote)
Non-Life Retail
Noël Pauwels
Non-Life Corporate & Marine
Joris Smeulders
Joris Smeulders
ICT
Life
Wim Kinnet
Finance & Procurement
Gert Vernaillen
Human Resources &
General Services
Marc L’Ortye
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
GROUP CEO
Gert De Winter *
HEAD OF GROUP CEO OFFICE
Ruken Baysal
Group Accounting & Reporting
Asset Strategy &
Pierre Girard
Financial Planning & Analysis
Andreas Frick
Group Risk Management
Stefan Nölker
Investment Controlling
Marc Dünki
Sales & Marketing
Robert Antonietti
Group Strategy &
Digital Transformation
Adrian Honegger
Mergers & Acquisitions
Philipp Hammel
Portfolio Management
Group Human Resources
Stephan Kamps
Stephan Ragg
Corporate Communications &
Investor Relations
Marc Kaiser
Operations
Bernd Maier
Group Legal & Tax
Andreas Burki
Corporate IT
Real Estate / CEO BIM
Group Compliance
(from 1/2/2019: part of the new
Corporate Division IT)
Dieter Kräuchi
Peter Kalberer
Olaf Romer
Corporate Development &
Run-off
Compliance
Fabian Kaderli
Bruno Rappo
Group Procurement
Manfred Schneider
Appointed Actuary Switzerland
Thomas Müller
Regulatory Affairs
Fabian Berger
(from 1/3/2019: Gaby Lurie)
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE
IT 1
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
Carsten Stolz *
Matthias Henny *
Thomas Sieber *
Michael Müller *
Jürg Schiltknecht
Henk Janssen
Romain Braas
Alexander Bockelmann*
(from 1/2/2019)
Operations & IT
Daniel Frank
Life & Finance
Alain Nicolai
Sales & Marketing
Laurent Heiles
Life & Exclusive Distribution
Maximilian Beck
Finance & Asset Management
Julia Wiens
Non-Life
Christoph Willi
IT / Operations
Ralf Stankat
Product Management
Corporate Clients
Patric Olivier Zbinden
Product Management
Private Customers &
Specialised Financial Services
Wolfgang Prasser
Sales &Marketing
Bernard Dietrich
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Clemens Markstein
Finance & Risk
Urs Bienz
Claims
Mathias Zingg
Risk, Compliance &
Corporate Legal
(from 1/1/2019: Risk,
Compliance & Actuarial
Function)
Patrick Van De Sype
(from 1/1/2019: Kathleen
Vergote)
Non-Life Retail
Noël Pauwels
Non-Life Corporate & Marine
Joris Smeulders
ICT
Joris Smeulders
Life
Wim Kinnet
Finance & Procurement
Gert Vernaillen
Human Resources &
General Services
Marc L’Ortye
83
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
5. REMUNERATION, SHAREHOLDINGS AND LOANS
The Remuneration Report in Appendix 1 to the Corporate Gov-
ernance Report (page 88 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 for 2018 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 Remu-
neration in Listed Companies Limited by Shares (ERCO), article
663c (3) of the Swiss Code of Obligations (OR), the corporate
governance information guidelines published by SIX Swiss
Exchange AG (version as at 20 March 2018) 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 Corpo-
rate Governance Report (page 114 onwards).
6. SHAREHOLDER PARTICIPATION RIGHTS
Voting rights
The share capital of Bâloise Holding consists solely of uniform
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 Directors can approve exceptions to this provision if
a majority of two-thirds of all its members is in favour (article 5
of the Articles of Association). There are currently no exceptions.
Each shareholder can appoint a proxy in writing in order to
authorise another shareholder or an independent proxy to
exercise his or her voting rights. When exercising voting rights,
no shareholder can accumulate more than one fifth of the voting
shares at the Annual General Meeting directly or indirectly for
his or her own votes or proxy votes (article 16 of the Articles of
Association).
Powers of attorney and voting instructions may also be
given to an independent proxy electronically without requiring
a qualifying electronic signature (article 16 [2] of the Articles of
Association).
84
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 website.
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.
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
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 Annual General Meeting is held, giving details
of the motions to be put to the AGM (article 14 of the Articles of
Association).
EXTERNAL AUDITORS
8.
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. Christian Fleig has
held the post of auditor-in-charge since 2018. 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.
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.
EXTERNAL AUDITORS’ FEES
CHF
(including outlays and VAT)
Audit fees
Consulting fees
Total
2017
2018
5,637,503
5,431,077
519,930
219,306
6,157,433
5,650,383
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 2018, CHF 200,566 of the additional fees for consultancy
services were attributable to tax consultancy and legal advice
and CHF 18,740 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’ representatives.
85
Information events
Baloise provides detailed information about its business
activities as follows:
▸
Details about its financial performance, targets, strategies
and operations are provided at press conferences covering
its annual and half-year financial statements.
Teleconferences for financial analysts and investors
take place when the annual and half-year financial
statements are published. The events can then be down-
loaded as podcasts.
Shareholders are informed about business during the
year at the Annual General Meeting.
Roadshows are regularly staged at various financial
centres.
At its regular Investor Days, the Company presents its
corporate strategy and targets as well as any other
matters relevant to its business. The documents used for
this and the recording of the event are made publicly
available on various media.
Ongoing relationships are maintained with analysts,
investors and the media. Full details of individual Baloise
events can be accessed at www.baloise.com.
▸
▸
▸
▸
▸
Information about Baloise shares
Information about Baloise shares begins on page 8.
www.baloise.com/baloise-share
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
The performance of the external auditors and their inter action
with Group Internal Audit, Risk Management and Compliance
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.
INFORMATION POLICY
9.
Information principles
The Baloise Group provides (potential) shareholders, 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 share-
holders 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 tele conferences,
podcasts, videos and live streaming in order to make information
generally and easily accessible.
86
Baloise Group Annual Report 2018
Corporate Governance
Corporate Governance Report
Financial calendar
Important dates for investors are available at www.baloise.com.
This is where the publication dates for the annual and half-year
reports and the Q3 interim statement are listed and where the
date of the Annual General Meeting, the AGM invitation, the
closing date for the share register and any ex-dividend dates
are published.
www.baloise.com/calendar
Availability of documents
Annual and half-year reports, media releases, disclosures, recent
announcements, presentations and other documents are
available to the public at www.baloise.com. Please register for
the latest corporate communications at www.baloise.com/
mailinglist.
www.baloise.com/media
Contact
Corporate Governance
Baloise Group
Philipp Jermann
Aeschengraben 21
4002 Basel, Switzerland
Tel. + 41 (0)58 285 89 42
philipp.jermann@baloise.com
Investor Relations
Baloise Group
Markus Holtz
Aeschengraben 21
4002 Basel, Switzerland
Tel. + 41 (0)58 285 81 81
markus.holtz@baloise.com
87
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
Appendix 1: Remuneration Report
1. OVERVIEW OF REMUNERATION
REMUNERATION IN RELATION TO BUSINESS PERFORMANCE
REMUNERATION GUIDELINE
Basic salary
▸
▸
Aim for a position around the market median
Reflection of the responsibilities of the role and
the individual’s long-term performance
Short-term variable remuneration
▸
Influencing factors: the 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
▸
PERFORMANCE POOL
Total performance pool 2 for
Corporate Executive Committee (CHF million)
Performance pool factor 2
(%)
Profit vs performance pool factor2
2017
2.3
2018
2.0
120 %
100 %
750
625
500
375
250
125
0
2014
2015
2016
2017
2018
Profit (CHF million)
As a percentage of the expected value
150 %
125 %
100 %
75 %
50 %
25 %
0 %
APPROVED REMUNERATION VS. AMOUNT PAID OUT
Total shareholder return (TSR) vs performance pool factor 2
Approved
2017
Paid out
Approved
2018
Paid out
3.3
3.3
4.5
5.0 1
3.3
4.0
3.3
4.0
4.7
3.7
4.5
3.5
CHF million
Fixed remuneration of
Board of Directors
Fixed remuneration of
Corporate Executive
Committee
Variable remuneration of
Corporate Executive
Committee
62.5 %
50.0 %
37.5 %
25.0 %
12.5 %
0 %
–12.5 %
150 %
125 %
100 %
75 %
50 %
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.
2014
2015
2016
2017
2018
TSR (%) (left axis)
As a percentage of the expected value (right axis)
88
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
REMUNERATION OF THE CORPORATE EXECUTIVE COMMITTEE
Gert
De Winter
Michael
Müller
Dr Thomas
Sieber
Dr Carsten
Stolz 1
Dr Matthias
Henny 1
German
Egloff 2
Martin
Wenk 2
52 %
55 %
52 %
56 %
55 %
57 %
60 %
58 %
60 %
57 %
84 %
85 %
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
19 %
18 %
29 %
27 %
15 %
18 %
17 %
17 %
33 %
27 %
28 %
26 %
31 %
9 %
25 %
17 %
28 %
12 %
26 %
17 %
16 %
15 %
CHF 2.192 million
CHF 2.095 million
CHF 1.679 million
CHF 1.579 million
CHF 1.479 million
CHF 1.442 million
CHF 0.779 million
CHF 1.195 million
CHF 0.786 million
CHF 1.175 million
CHF 0.923 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 Since 1 Mai 2017
2 Until 30 October 2017
LONG-TERM VARIABLE REMUNERATION
Performance share units (PSUs)
Long-term variable remuneration for members of the Corporate
Executive Committee
Allocation
▸
Conversion
▸
▸
▸
p
u
o
r
g
r
e
e
P
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
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
0.0 and 2.0
Vesting period
Peer group
Upper quar tile
Median
Lower quar tile
Performance multiplier
2.0
1.5
1.0
0.5
0.0
n
o
i
s
r
e
v
n
o
c
U
S
P
2018 plan (ended)
Plan term 1 March 2015 – 28 February 2018
01.03.2015
28.02.2018
100 %
100 %
20 %
41 %
61 %
Profit for shareholders 1 March 2015 – 28 February 2018
01.03.2015
28.02.2018
100 %
100 %
20 %
12 %
33 %
Overview of ended and current plans
(as at 31 December 2018)
2012 to 2018 plans
1 Mar 2012 – 28 Feb 2015
1 Mar 2013 – 29 Feb 2016
1 Mar 2014 – 28 Feb 2017
37 %
74 %
50 %
75 %
15 %
6 %
1 Mar 2015 – 28 Feb 2018
20 %
41 %
1 Mar 2016 – 28 Feb 2019
– 12 %
7 %
1 Mar 2017 – 29 Feb 2020
4 %
3 %
1 Mar 2018 – 28 Feb 2021
– 9 % – 13 %
111 %
125 %
21 %
61 %
–4 %
6 %
–22 %
Share value at start
of PSU programme
Dividend payments
Change in share value
during programme term
Performance multiplier
89
Baloise Group Annual Report 2018
Corporate Governance
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, especially
the remuneration to be paid to the Chairman and members
of the Board of Directors and to the members of the Corpo-
rate 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).
▸
▸
▸
▸
90
The Remuneration Committee consists of at least three inde-
pendent members of the Board of Directors, who are elected
every year by the Annual General Meeting. Thomas Pleines
(Chairman), Karin Keller-Sutter
(Deputy Chairwoman),
Dr Georges -Antoine de Boccard and Prof. Hans-Jörg Schmidt-
Trenz were elected to the Remuneration Committee by the Annual
General Meeting on 27 April 2018. The Remuneration Committee
maintains a regular dialogue with senior management through-
out 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
2017 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 2018
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 remuneration
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 performance-
driven organisation, Baloise clearly and transparently aligns
team targets and the contributions of individual employees with
the Company’s targets, which are derived from its strategic
priorities. The amount of the individually specified variable
remuneration correlates with the individual contributions to
the achievement of targets. The total remuneration package –
which comprises basic salary and variable remuneration – offers
a sophisticated way of linking the performance of the team and
of individuals to Baloise’s success and recognising both accord-
ingly, 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 entitlements; 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 eco-
nomic value added (allowing for the level of risk taken). Variable
remuneration as a percentage of total compensation as well as
the proportion of remuneration paid in the form of restricted
shares (in the sense of a deferred compensation) increase
accordingly.
100 %
75 %
50 %
25 %
0 %
Management
level 3
Management
level 2
Corporate Executive
Committee
Deferred and restricted variable remuneration
Cash portion of short-term variable remuneration
Basic salary
91
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
Performance management system
In 2017, Baloise revised the performance management system
for short-term variable remuneration that had been in place since
2011. The short-term variable remuneration is closely linked to
achievement of the Company’s goals and is calculated solely
on the basis of the performance pool – the individual perfor-
mance-related pay element has been scrapped.
The performance management system thus 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”.
The performance management system applies to the members
of the Corporate Executive Committee and to the most senior
level of management and most other members of the management
team throughout the Baloise Group.
Market comparisons
Baloise regularly compares the salaries paid to its senior exec-
utives 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 Luxembourg)
uses function-specific peer groups. Each function being com-
pared is assigned to one of three distinct peer groups. Assign-
ment 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 employers – in
theory, at least – meet a certain function profile (i. e. competitors).
The first peer group replicates Baloise’s core market and
comprises direct insurers in the respective country. This peer
group is used for conventional insurance and sales functions
and for the local CEOs, executive directors and senior manage-
ment functions. The second peer group supplements the core-
market group by including further companies from the banking
and financial services sector in the respective country. This group
is designed to compare functions that demand considerable
financial expertise but do not necessarily require an insurance
background. The third peer group consists of companies of
a similar size and structure from various sectors and is used for
interdisciplinary functions.
Baloise regularly compares the salaries paid in its 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 insur-
ance-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 benchmarking surveys are fed into the Company’s
regular review of its salary structures and presented to the
Remuneration Committee.
Baloise also regularly conducts market comparisons of its
local functions in the countries outside Switzerland.
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 development.
Basic salary
The basic salary constitutes the level of remuneration that is
commensurate with the functions and responsibilities of the
position concerned as well as the employee skills and expertise
required in order to achieve the relevant business targets and
objectives. When determining the level of its basic salaries,
Baloise aims to position itself around the market median,
although the way in which this is done will vary depending
on local operating and market requirements. This remuneration
is paid by bank transfer. In order to ensure fairness and compli-
ance 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.
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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, the performance of the team and an employee’s
individual contribution to the team’s performance. The resulting
link between the Company’s profits and the performance of the
team as well as the individual is designed to incentivise staff to
achieve outstanding results and work towards the success of
areas beyond their own sphere of responsibility. Measurement
of the short-term variable remuneration paid to employees who
perform control functions (risk management, compliance, Group
Internal Audit) is structured in such a way that it is not determined
directly by the profitability of the unit being monitored or by the
profitability of individual products or transactions.
The remuneration paid to the insurance sales force is, by
its very nature, strongly performance-related in line with the
system of commissions commonly used in the insurance industry
as a whole. However, these commissions constitute selling
expenses rather than being regarded as variable remuneration
in the strict sense of the term. Consequently, they are not 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 91). 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 remu-
neration. This system also raises employees’ risk awareness and
encourages them to maintain sustainable business practices.
Two plans are available to individuals who wish to subscribe for
shares: the Share Subscription Plan and the Share Participation
Plan (see “7. Share Subscription Plan and Share Participation
Plan”).
From 2018, short-term variable remuneration will be based
exclusively on the performance pool.
Performance pool
The performance pool takes account of the entire Baloise Group’s
performance; its amount is determined by the Remuneration
Committee after the end of the financial year concerned, and it
factors in the following indicators resulting from systematic
analysis:
▸
Strategy implementation
The indicators are the three strategic goals set by Baloise
for the period 2017 to 2021, comprising a cash upstream
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 busi-
ness 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 Swiss Solvency
Test (SST) ratio, economic profit, the credit rating awarded
by Standard & Poor’s and assessments 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 35 European insurance companies
represented in the STOXX Europe 600 Insurance Index
(the composition of this index is shown in the table on
page 96).
▸
▸
▸
The evaluations by the Head of Group Human Resources and
others of strategy requirements that cannot be precisely mea-
sured and the assessments by the Chief Risk Officer and the
Head of Group Compliance of the risks taken are also based on
qualitative criteria and non-financial indicators such as the
efforts made in respect of talent management and staff engage-
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ment, senior managers’ risk behaviour, compliance with proce-
dures and regulations and the practising of a genuine compliance
culture, and the effectiveness of the internal control system.
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 consist-
ing of the achievement of targets (gauged by the extent to which
the teams have achieved their targets and objectives and by the
contributions of individual employees) as well as the conduct
and behaviour of employees. The individual performance pool
payment proposed by the respective line manager is discussed
by the relevant management team, compared with other depart-
ments and divisions, and adjusted where necessary. This process
ensures that risk-relevant behavioural attributes are factored
into the performance pool payments awarded to individuals.
This chosen system is centred on senior managers’ overall
assessment and the validation of individuals’ performance pool
payments at 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.
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.
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.
In addition to the individual targets, the awarding of per-
formance pool payments takes into account the contribution of
each individual member of the Corporate Executive Committee
to the achievement of the Company targets. The assessment of
target achievement and the allocation of the performance pool
is based on the reporting and the proposals made to the Remu-
neration Committee by the Chairman of the Board of Directors
(for the CEO) and by the CEO (for the members of the Corporate
Executive Committee). The Committee discusses each individual
member, assessing their performance during the year under
review and any changes compared to the prior year.
For the 2018 financial year the Remuneration Committee
decided, on the basis of a positive overall assessment, on
a factor of 100 per cent of the normally expected value of per-
formance 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:
The Remuneration Committee conducts a detailed assess-
ment of the Company’s performance once a year on the basis
Strategy implementation
How successfully were the strategic targets implemented?
Cash upstream
Customer growth
Employees
Baloise is on schedule with its Simply Safe strategic phase and making good progress in respect of all
three targets. In terms of moving closer to achieving the strategic objectives, it surpassed the interim
targets for 2018 both for cash and for new customers. The cash upstream for 2018 was CHF 449 million
(target for 2021: CHF 2 billion). The number of new customers increased by 186,000 to 304,000 (target
to be achieved by 2021: one million additional customers). Baloise narrowly missed its target for employee
ratings in the last financial year, although it made a significant improvement from the top 25 per cent to
the top 23 per cent (target to be achieved by 2021: top 10 per cent of employers in the industry).
Neutral / Positive
Main indicator
Key question
Sub-criteria
Appraisal
Rating
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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)
The Group’s profit for the period was in line with expectations. Reserve strengthening in respect of
a hospital liability insurance portfolio had an adverse effect. The combined ratio was reduced in all
national units, with Germany performing particularly well. The figures were bolstered by the interest
margin in life insurance, which was well above target.
Neutral
Main indicator
Key question
Sub-criteria
Appraisal
Rating
Risks taken
How should the operating performance be assessed from a risk perspective?
SST
Economic Profit
S&P rating
Internal perspective
Compliance
Baloise remains strongly positioned in the market despite the persistently difficult interest rate situation,
as evidenced by the very good SST ratio and the S&P rating of A + with a stable outlook. From a compliance
perspective, events in 2018 were dominated by the introduction of the new European General Data
Protection Regulation. All of the Company’s business units broadly met the legal and regulatory require-
ments of the new legislation. No material compliance violations were identified in the year under review.
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 (TSR) for 2018 is – 7.46 per cent, slightly outperforming the Swiss equities
market (SPI). In its peer group of companies on the STOXX® Europe 600 Insurance Index, Baloise is just
below the median.
Neutral / Negative
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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
2018
Performance pool
(as a percentage of
the normal
expected value)
Consolidated profit
for the period
(CHF million)
70 %
100 %
120 %
137 %
100 %
107 %
120 %
100 %
61.3
485.2
455.4
711.9
511.1
533.9
531.9
522.9
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 remu-
neration. 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 deciding
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 (total shareholder return or TSR)
relative to a peer group. This comparative performance multiplier
has been revised for allocations of PSUs from 2018 onward and
can now be anywhere between 0.0 and 2.0. The aim of this change
was to anchor the performance-related pay principle even more
firmly within the long-term variable remuneration structure. The
peer group comprises the 35 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 the Baloise TSR performs in line with the
median of the peer group. In this case the performance multiplier
would be 1.0. Participants receive more shares in exchange for
their PSUs if the Baloise TSR for the vesting period is higher than
the TSRs of the peer group. The multiplier reaches the maximum
of 2.0 if Baloise has the highest TSR of all companies in the peer
Companies in the STOXX Europe 600 Insurance Index (as at 31 December 2018)
ADMIRAL GRP
CNP ASSURANCES
NN GROUP
DIRECT LINE INSURANCE GROUP
OLD MUTUAL
STOREBRAND
SWISS LIFE HLDG
AEGON
AGEAS
ALLIANZ
ASR NEDERLAND NV
GJENSIDIGE FORSIKRING
PHOENIX GROUP HDG.
SWISS REINSURANCE COMPANY
HANNOVER RUECK
HELVETIA HLDG
POSTE ITALIANE
PRUDENTIAL
PZU GROUP
TRYG
ZURICH INSURANCE GROUP
ASSICURAZIONI GENERALI
HISCOX
AVIVA
AXA
BALOISE
BEAZLEY
JARDINE LLOYD THOMPSON
RSA INSURANCE GRP
LEGAL & GENERAL GRP
MAPFRE
SAMPO
SCOR
MUENCHENER RUECK
ST. JAMES’S PLACE CAPITAL
Source: http://www.stoxx.com/index-details?symbol=SXIP
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group. The multiplier amounts to 0 if the Baloise TSR is in the
bottom quartile of companies in the peer group. If this happens,
no prospective entitlements will be converted into shares.
Consequently, the performance multiplier increases on a linear
basis from the bottom quartile from 0.5 to 2.0. The performance
multiplier is defined for the entire vesting period ended, based
on the closing stock market prices on the final trading day of
the respective vesting period and taking the dividend payments
for the period into account.
Participants receive the pertinent number of shares once
the vesting period has elapsed, which means that for the PSUs
allocated in 2018 they receive their shares on 1 March 2021. 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
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 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
2018
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
01.03.2018
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
130.70
149.20
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
01.03.2021
1.182
1.24
0.64
0.58
0.77
1.21
1.50
1.05
1.34
0.894
1.034
0.864
86.05
91.00
64.40
78.50
113.60
124.00
126.00
130.70
149.20
135.404
135.404
135.404
101.71
112.84
41.22
45.53
87.47
150.04
189.00
137.24
199.93
120.764
138.964
116.444
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
125 %
21 %
61 %
– 4 %4
6 %4
– 22 %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 2018.
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Fringe benefits
Fringe benefits are generally defined as components of the total
remuneration package that are not dependent on either an
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 part-
nership 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 – irre-
spective of their amount – must be approved by the Remuner-
ation Committee. Inducement payments and severance packages
for the most senior managers must be approved by the Remu-
neration 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.
The parameters used to determine the subscription price
are decided each year by the Remuneration Committee. The
subscription price is based on the closing price before the first
day of the subscription period, on which a discount of 10 per
cent is granted (please refer to the accompanying table for
details). Once it has been calculated using this method, the
subscription price is published in advance on the intranet. The
shares needed for the Share Subscription Plan are purchased
in the market as and when required.
Applicable closing
quotation
Subscription
price
from
CHF
CHF
Share Subscription Plan for 2019
10.01.2019
143.80
129.42
(applies to variable
remuneration awarded for
the 2018 reporting period)
Share Subscription Plan for 2018
10.01.2018
156.20
140.58
(applies to the variable remunera-
tion granted for 2017 and to the
shares subscribed by the Chairman
and members of the Board of
Directors in 2018)
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
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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.
The parameters used to determine the subscription price
are decided each year by the Remuneration Committee. The
subscription price is based on the closing price before the first
day of the subscription period, from which discounted dividend
rights are deducted over a period of three years (please refer to
the accompanying table for details). Once it has been 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
Share Participation Plan for 2019
10.01.2019
143.80
125.44
(applies to variable
remuneration awarded for
the 2018 reporting period)
Share Participation Plan for 2018
10.01.2018
156.20
140.80
(applies to the variable remunera-
tion granted for 2017 and to the
shares subscribed by the Chairman
of the Board of Directors in 2018)
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.
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
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)
2017
2018
176,252
186,489
31.08.2020
31.08.2021
77.00
13.6
26.9
3,146
2,007
87.8
76.00
14.2
27.8
3,254
2,130
87.6
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in each subscription year. In 2018 the subscription price
amounted to CHF 76.00 (2017: CHF 77.00) and a total of 186,489
shares were subscribed (2017: 176,252). 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.
are subject to the same terms and conditions as all other insured
office-based members of staff. 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.
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).
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 (combi-
nation 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
100
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 104 and 105.
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-
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
rate Executive Committee and whenever matters of strategic or
long-term importance are being discussed.
The Chairman of the Board of Directors performs his various
functions on a full-time basis, in return for which he is paid
a fixed amount of remuneration. He is not entitled to any variable
remuneration and, consequently, he receives no performance-
related remuneration, no performance pool payments and no
allocation of PSUs. He is paid roughly a quarter of his 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.
12. REMUNERATION PAID TO THE MEMBERS
OF THE CORPORATE EXECUTIVE COMMITTEE
Please refer to the tables on pages 106 to 109.
The short-term variable remuneration paid to the members
of the Corporate Executive Committee is allocated from 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
Remuneration Committee decides on the performance pool
payments awarded to the individual members of the Corporate
Executive Committee, based on a proposal from the Chairman
of the Board of Directors for the Group CEO and from the Group
CEO for the other members of the Corporate Executive Commit-
tee. Each proposal is discussed individually at the Remuneration
Committee meeting. The allocation is based on (a) the individ-
ual’s contribution to achieving the strategic targets and (b) the
achievement of the individual targets, which are divided into
three categories:
▸
Team target: Collaboration across business units and
national subsidiaries, and across all functions and
departments, is assessed.
Individual target: The individual’s contribution to the
team target is assessed; relevant key projects or focus
topics for the member of the Corporate Executive Com-
mittee concerned are examined.
Development and conduct target: The professional and /
or personal development of each member of the Corpo-
rate Executive Committee is assessed, along with the
extent to which they have set an example by putting the
Baloise values into practice.
▸
▸
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.
101
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Remuneration Report
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
The Corporate Executive Committee members’ remuneration is
disclosed on pages 106 to 109 in accordance with the accrual
principle. The table includes all forms of remuneration awarded
for performance in 2018 even if individual components are not
paid until a later date.
rate Executive Committee member), the total value of the shares
granted in 2018 would have been CHF 2,682 million. The actual
value of the shares granted was CHF 2,219 million.
13. LOANS AND CREDIT FACILITIES
Please refer to the table on page 110.
14. SHARES AND OPTIONS HELD
Please refer to the tables on pages 111 and 112.
15. AMOUNTS OF TOTAL REMUNERATION AND VARIABLE
REMUNERATION
Please refer to the table on page 113.
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 113 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 2018 even
if individual components are not paid until a later date.
The total remuneration paid to the Corporate Executive
Committee for 2018 was slightly lower overall than in the pre-
vious year (sum total of basic salary plus variable remuneration
down by 12.9 per cent). The change can be explained as follows:
The additional costs arising from the changes to the
▸
Corporate Executive Committee in 2017 were not repeated
in 2018.
The basic salaries and, consequently, also the expected
values for the variable remuneration of the new Corporate
Executive Committee members are lower than those of
the outgoing members.
The performance pool factor, which is relevant for the
short-term variable remuneration, is lower than in the
prior year (100 per cent compared to 120 per cent), which
means the total allocated variable remuneration is lower.
▸
▸
The Annual General Meeting held on 28 April 2017 approved
a maximum amount of CHF 4,043 million for the fixed remuner-
ation (including pension contributions) payable to the Corporate
Executive Committee for 2018. The amount paid out was
CHF 3.994 million.
The Annual General Meeting held on 27 April 2018 also
approved a maximum amount of CHF 4,463 million for the var-
iable remuneration (including pension contributions) payable
for 2018. A total of CHF 3,473 million was paid out, meaning
that only around four-fifths of the approved sum was used.
On 1 March 2018, the performance share units allocated in
2015 were converted into shares. These PSUs had a value of
CHF 1,626 million at the time of allocation. Excluding one-off
items (forfeiture of rights following the resignation of a Corpo-
102
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This page has been left empty on purpose.
103
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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
Audit and Risk 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 BOARD OF DIRECTORS
2018
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 (until 27 April 2018)
62,500
139,167
0
0
1,320,000
311,895
2,217
139,167
69,447
494
Vice-Chairman of the Board of Directors
Chairman’s Committee
Chair of the Audit and Risk Committee
Dr Andreas Beerli
125,000
Vice-Chairman of the Board of Directors
(since 27 April 2018)
Chairman’s Committee
Audit and Risk Committee (until 27 April 2018)
Chair of the Audit and Risk Committee
(since 27 April 2018)
16,667
25,000
35,000
33,333
50,000
16,667
46,667
271,667
0
271,667
56,232
400
Dr Georges-Antoine de Boccard
125,000
225,000
0
225,000
56,232
400
Investment Committee
Remuneration Committee
Christoph B. Gloor
Investment Committee
Audit and Risk Committee
Karin Keller-Sutter
Remuneration Committee
Hugo Lasat
Investment Committee
Dr Thomas von Planta
Chairman’s Committee (since 27 April 2018)
Audit and Risk Committee
Thomas Pleines
Chair of the Remuneration Committee
Chairman’s Committee
125,000
125,000
125,000
125,000
125,000
Prof. Dr Hans-Jörg Schmidt-Trenz (since 27 April 2018)
83,333
Remuneration Committee
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen
125,000
Remuneration Committee (until 27 April 2018)
Audit and Risk Committee (since 27 April 2018)
50,000
50,000
50,000
50,000
50,000
50,000
33,333
50,000
70,000
50,000
33,333
16,667
33,333
225,000
5,966
230,966
56,232
400
175,000
5,966
180,966
43,720
175,000
0
175,000
43,720
208,333
5,966
214,299
43,720
311
311
311
245,000
9,798
254,798
61,152
435
116,667
0
116,667
0
0
175,000
5,966
180,966
43,720
311
Total for the Board of Directors
2,465,833
810,000
3,275,833
33,662
3,309,495
786,071
5,590
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 Kummer was elected before this change and therefore on the payment date in March 2018 received an additional two months’ remuneration on top of the four months’ remuneration
he was due for 2018 (half each in shares and cash). This does not include the fee for Mr Kummer’s service as Vice-Chairman of the Board of Directors, which was duly paid for the four-month
period up to his resignation from the Board of Directors.
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 140.58,
in line with the Share Subscription Plan). The Chairman of the Board of Directors received 1,109 shares in connection with the Share Subscription Plan (CHF 155,903, with a closed period of
five years instead of the usual three years) and 1,108 shares under the Share Participation Plan (CHF 155,992).
Pension contributions The information disclosed for 2018 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
remuneration
of basic salary Non-cash benefits
contributions
tion
Total basic salary
Variable remunera-
plus variable
tion as percentage
Pension
Total remunera-
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 are 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.
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Remuneration Report
(fixed)
Cash payment
Share Subscription Plan
Share Participation Plan
Performance share units (PSU)
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 remunera-
tion 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 are 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.
107
Baloise Group Annual Report 2018
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
2018
Gert De Winter
Group CEO
Michael Müller
Head of Corporate Division Switzerland
CHF
CHF
Number of shares
CHF
Number of shares
950,000
285,017
2,202
284,983
700,000
84,026
2,596
335,974
0
0
CHF
0
0
Granted in 2018
Number of PSUs
CHF
Number of shares
CHF
CHF
2,539
380,088
2,202
950,088
1,900,088
100 %
CHF
0
CHF
CHF
194,871
2,094,959
1,871
280,089
2,596
700,089
1,400,089
100 %
4,910
174,338
1,579,337
Dr Thomas Sieber
621,000
67
1,727
223,508
1,188
149,025
1,660
248,502
2,915
621,102
1,242,102
100 %
4,910
194,871
1,441,883
Head of Corporate Division Corporate Centre
Dr Carsten Stolz
500,000
150,072
695
89,947
478
59,981
1,337
200,149
1,173
500,149
1,000,150
100 %
4,910
189,966
1,195,026
Head of Corporate Division Finance
Dr Matthias Henny
500,000
125
1,390
179,894
956
119,981
1,337
200,149
2,346
500,149
1,000,150
100 %
4,910
169,966
1,175,026
Head of Corporate Division Asset Management
Total for the Corporate Executive Committee
3,271,001
519,307
8,610
1,114,306
2,623
328,987
8,744
1,308,977
11,233
3,271,577
6,542,578
100 %
19,640
924,011
7,486,229
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 2018 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 129.42.
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 125.44.
Performance share units (PSUs) These have been disclosed at their value of CHF 149.70 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.
108
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
2018
Gert De Winter
Group CEO
Michael Müller
Head of Corporate Division Switzerland
Head of Corporate Division Corporate Centre
Head of Corporate Division Finance
Head of Corporate Division Asset Management
(fixed)
Cash payment
Share Subscription Plan
Share Participation Plan
Performance share units (PSUs)
Total variable remuneration
Granted in 2018
CHF
CHF
Number of shares
CHF
Number of shares
Number of PSUs
CHF
Number of shares
CHF
CHF
950,000
285,017
2,202
284,983
2,539
380,088
2,202
950,088
1,900,088
100 %
CHF
0
CHF
CHF
194,871
2,094,959
700,000
84,026
2,596
335,974
1,871
280,089
2,596
700,089
1,400,089
100 %
4,910
174,338
1,579,337
0
0
CHF
0
0
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
67
1,727
223,508
1,188
149,025
1,660
248,502
2,915
621,102
1,242,102
100 %
4,910
194,871
1,441,883
Dr Carsten Stolz
500,000
150,072
695
89,947
478
59,981
1,337
200,149
1,173
500,149
1,000,150
100 %
4,910
189,966
1,195,026
Dr Matthias Henny
500,000
125
1,390
179,894
956
119,981
1,337
200,149
2,346
500,149
1,000,150
100 %
4,910
169,966
1,175,026
Total for the Corporate Executive Committee
3,271,001
519,307
8,610
1,114,306
2,623
328,987
8,744
1,308,977
11,233
3,271,577
6,542,578
100 %
19,640
924,011
7,486,229
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 2018 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 129.42.
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 125.44.
the payout expected at the end of the vesting period.
Performance share units (PSUs) These have been disclosed at their value of CHF 149.70 at the grant date and measured using a Monte Carlo simulation, which calculates a present value for
109
Baloise Group Annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
Total
2018
CHF
Dr Andreas Burckhardt
Chairman
Werner Kummer
(until 27 April 2018)
Vice-Chairman
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
Member
Thomas Pleines
Member
Prof. Dr Hans-Jörg Schmidt-
Trenz (since 27 April 2018)
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
2,623,673
2,623,451
0
0
0
0
0
0
0
0
–
0
–
0
0
0
0
0
0
0
0
0
2,623,673
2,623,451
660,000
660,000
1,690,895
1,793,515
2,200,000
1,500,000
3,145,165
1,826,741
2,860,000
2,160,000
4,836,060
3,620,256
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
2,623,673
2,623,451
0
0
0
0
0
0
0
0
–
0
–
0
0
0
0
0
0
0
0
0
2,623,673
2,623,451
2,350,895
2,453,515
5,345,165
3,326,741
0
7,696,060
5,780,256
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 (2018: 1 per cent), and they have a term of three years.
Other loans There are no policy loans.
110
Baloise Group Annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
2018
Quantity
Dr Andreas Burckhardt
Chairman
Werner Kummer
(until 27 April 2018)
Vice-Chairman
Dr Andreas Beerli
(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
Member
Thomas Pleines
Member
Prof. Dr Hans-Jörg Schmidt-
Trenz (since 27 April 2018)
Member
Prof. Dr Marie-Noëlle
Venturi - Zen-Ruffinen
Member
Total for the
Board of Directors
Percentage of issued
share capital
19,543
24,452
36,367
33,542
55,910
57,994
0.115 %
0.119 %
5,787
4,508
–
–
2,949
1,379
–
–
8,736
5,887
–
–
0.018 %
0.012 %
–
–
1,808
2,298
2,487
2,397
4,295
4,695
0.009 %
0.010 %
1,686
3,176
2,487
2,397
4,173
5,573
0.009 %
0.011 %
7,312
7,693
2,264
2,283
9,576
9,976
0.020 %
0.020 %
425
806
2,156
2,086
2,581
2,892
0.005 %
0.006 %
0
0
1,375
1,686
1,375
1,686
0.003 %
0.003 %
111
439
1,000
1,311
1,111
1,750
0.002 %
0.004 %
1,141
1,631
2,530
2,475
3,671
4,106
0.008 %
0.008 %
–
0
0
0
42,321
40,495
–
1,000
–
1,000
–
0.002 %
1,375
56,369
1,686
50,863
1,375
98,690
1,686
91,358
0.003 %
0.202 %
0.003 %
0.187 %
0.087 %
0.083 %
0.116 %
0.104 %
0.202 %
0.187 %
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 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.
111
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
SHARES HELD BY MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
(AS AT 31 DECEMBER)
Quantity
Gert De Winter
Group CEO
Michael Müller
Discretionary shares
Restricted shares
Total share ownership
Percentage of issued
share capital
Prospective
entitlements (PSUs)
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
16,246
19,206
4,578
5,735
20,824
24,941
0.043 % 0.051 %
7,340
8,471
Head of Corporate Division Switzerland
16,816
18,863
7,585
8,154
24,401
27,017
0.050 % 0.055 %
5,847
5,630
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
6,100
8,167
21,435
20,601
27,535
28,768
0.056 % 0.059 %
5,741
5,351
Dr Carsten Stolz
Head of Corporate Division Finance
1,500
3,293
1,870
2,314
3,370
5,607
0.007 % 0.011 %
2,351
2,862
Dr Matthias Henny
Head of Corporate Division Asset
Management
German Egloff (until 30 October 2017)
9,264
7,247
22,928
21,236
32,192
28,483
0.066 % 0.058 %
3,236
3,417
Head of Corporate Division Finance
966
-
-
18,349
8,915
–
–
19,315
– 0.040 %
12,600
– 0.026 %
–
–
4,406
4,406
–
–
3,685
54,577
56,776
85,660
58,040 140,237 114,816
0.287 % 0.235 % 33,327
25,731
Martin Wenk (until 30 October 2017)
Head of Corporate Division
Asset Management
Total for the members of the
Corporate Executive Committee
Percentage of issued share capital
0.112 % 0.116 % 0.176 % 0.119 % 0.287 % 0.235 %
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 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 2016, 1 March 2017 and 1 March 2018).
112
Baloise Group Annual Report 2018
Corporate Governance
Remuneration Report
TOTAL AND VARIABLE REMUNERATION IN THE BALOISE GROUP
2017
In cash
In shares
Prospective
entitlements
Total
In cash
In shares
Prospective
entitlements
2018
Total
Total remuneration
CHF million
Total variable remuneration
(total pool)
CHF million
Number of beneficiaries
Of which commission paid
to insurance sales force
735.7
5.6
4.7
746.0
726.9
5.2
5.0
737.1
155.3
5,237
5.6
138
4.7
65
165.6
146.8
4,931
5.2
184
5.0
67
157.0
CHF million
105.5
0.0
0.0
105.5
104.8
0.0
0.0
104.8
Of which other forms of
variable remuneration
CHF million
47.3
5.6
4.7
57.6
40.0
5.2
5.0
50.3
Total outstanding
deferred remuneration
CHF million
Debits / credits for
remuneration for previous
reporting periods
recognised in profit or loss
0.0
103.5
14.6
118.1
0.0
92.7
14.7
107.4
CHF million
– 0.2
0.0
0.0
– 0.2
– 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
0.2
5
2.3
52
0.0
0
0.0
0
0.0
0
0.0
0
0.2
2.3
0.0
6
5.4
44
0.0
0
0.0
0
0.0
0
0.0
0
0.0
5.4
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.
113
Baloise Group Annual Report 2018
Corporate Governance
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basle
Phone
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the General Meeting of
Bâloise Holding AG, Basel
Basel, 22 March 2019
Report of the statutory auditor on the remuneration report
We have audited the accompanying remuneration report of Bâloise Holding AG for the year
ended 31 December 2018.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the
remuneration report in accordance with Swiss law and the Ordinance. The Board of Directors
is also responsible for designing the remuneration system and defining individual
remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We
conducted our audit in accordance with Swiss Auditing Standards. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the remuneration report complies with Swiss law and articles 14–16
of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in
the remuneration report with regard to compensation, loans and credits in accordance with
articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatements in the remuneration report,
whether due to fraud or error. This audit also includes evaluating the reasonableness of the
methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
114114
Baloise Group Annual Report 2018
Corporate Governance
Report of the statutory auditor
Opinion
In our opinion, the remuneration report for the year ended 31 December 2018 of Bâloise
Holding AG complies with Swiss law and articles 14–16 of the Ordinance.
Ernst & Young Ltd
Christian Fleig
Licensed audit expert
(Auditor in charge)
Patrick Schwaller
Licensed audit expert
115115
Unterkapitel 4 Baloise
16 Review of operating performance
38 Sustainable business management
64 corporate Governance
116 Financial Report
274 Bâloise Holding ltd
292 General information
Financial Report
consolidated balance sheet ............................................. 118
consolidated income statement ...................................... 120
consolidated statement of comprehensive income ......... 121
consolidated cash flow statement .................................. 122
consolidated statement of changes in equity .................. 124
NOTES TO THE CONSOLIDATED
ANNUAL FINANCIAL STATEMENTS .............................. 126
1. Basis of preparation ................................................. 126
2. application of new financial reporting standards ...... 126
3. consolidation principles and accounting policies ..... 130
4. Key accounting judgements,
estimates and assumptions ..................................... 150
5. Management of insurance risk and financial risk ....... 153
6. Basis of consolidation .............................................. 196
7. information on operating segments
(segment reporting) ................................................. 197
NOTES TO THE CONSOLIDATED BALANCE SHEET ........ 202
8. property, plant and equipment ................................. 202
9. intangible assets ..................................................... 204
10. investments in associates ........................................ 207
11. investment property ................................................ 209
12. Financial assets ....................................................... 209
13. Mortgages and loans ................................................ 214
14. Derivative financial instruments ............................... 215
15. Receivables .............................................................. 217
16. Reinsurance assets ................................................... 217
17. Receivables from reinsurers ..................................... 218
18. employee benefits ................................................... 219
19. Deferred income taxes ............................................. 228
20. other assets ............................................................ 230
21. non-current assets and disposal groups
classified as held for sale ......................................... 231
22. Share capital ........................................................... 232
23. technical reserves (gross) ....................................... 233
24. liabilities arising from banking business
and financial contracts ............................................. 242
25. Financial liabilities ................................................... 243
26. non-technical provisions ......................................... 244
27. insurance liabilities ................................................. 244
NOTES TO THE CONSOLIDATED
INCOME STATEMENT .................................................. 245
28. premiums earned and policy fees .............................. 245
29. income from investments for
own account and at own risk ..................................... 245
30. Realised gains and losses on investments ............... 246
31. income from services rendered ................................ 249
32. other operating income ........................................... 249
33. classification of expenses ....................................... 250
34. personnel expenses ................................................. 250
35. Gains or losses on financial contracts ....................... 251
36. income taxes ............................................................ 252
37. earnings per share ................................................... 253
38. other comprehensive income ................................... 254
OTHER DISCLOSURES ............................................... 256
39. acquisition and disposal of companies .................... 256
40. Related party transactions ....................................... 258
41. Remuneration paid to the Board of Directors
and the corporate executive committee ................... 258
42. contingent and future liabilities ................................ 259
43. operating leases ...................................................... 262
44. claim payments received from
non-Group insurers .................................................. 263
45. Significant subsidiaries, joint ventures
and associates ......................................................... 264
46. changes to shareholdings ........................................ 266
47. Structured entities ................................................... 266
48. Joint arrangements .................................................. 266
49. events after the balance sheet date .......................... 266
REPORT OF THE STATUTORY AUDITOR
TO THE ANNUAL GENERAL MEETING OF
BÂLOISE HOLDING LTD, BASEL .................................. 268
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Unterkapitel
Baloise Group annual Report 2018
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
118
Note
31.12.2017
31.12.2018
8
9
10
11
12
12
13
14
15
16
17
18
15
15
19
20
21
353.3
1,002.5
138.4
7,480.3
318.3
1,041.2
221.1
7,904.0
4,402.9
3,657.0
11,472.0
10,481.0
8,488.9
8,002.5
24,870.1
23,771.4
2,001.1
2,001.2
15,791.7
15,470.5
776.8
800.4
3.0
468.3
38.2
444.1
3.3
403.1
440.9
88.8
43.6
925.8
914.8
–
457.2
41.9
433.3
7.3
325.7
406.9
73.5
61.1
349.1
70.5
3,551.6
1,041.1
248.9
54.1
4,036.1
–
84,523.9
80,854.8
Baloise Group annual Report 2018
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
non-technical provisions
Derivative financial instruments
insurance liabilities
liabilities arising from employee benefits
other accounts payable
Deferred tax liabilities
current income tax liabilities
other liabilities
liabilities included in non-current assets and disposal groups classified as held for sale
Total liabilities
Total equity and liabilities
Note
31.12.2017
31.12.2018
22
23
24
25
26
14
27
18
19
21
4.9
346.2
– 152.3
– 4.3
6,151.7
6,346.2
63.0
4.9
352.3
– 291.8
– 515.4
6,420.5
5,970.6
37.6
6,409.2
6,008.2
48,008.5
46,575.2
2,814.2
7,628.8
2,924.7
6,997.5
12,253.6
11,616.9
1,742.9
1,744.5
49.0
145.3
1,706.3
1,394.4
593.1
922.4
81.5
131.1
643.6
63.7
117.3
1,829.8
1,220.7
675.9
907.8
67.4
105.1
–
78,114.7
74,846.6
84,523.9
80,854.8
119
Baloise Group annual Report 2018
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)
120
Note
2017
2018
28
28
28
29
30
30
31
32
33
33
33
35
33
25
36
37
6,726.4
– 183.4
6,542.9
6,737.0
– 209.0
6,528.0
1,392.5
1,376.0
427.8
696.5
116.9
5.5
235.0
96.1
– 1,087.8
130.4
6.2
227.6
9,417.1
7,276.6
– 5,726.5
– 5,904.4
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 8,733.0
– 6,539.1
684.1
737.5
– 34.3
649.8
– 39.9
697.6
– 117.9
531.9
– 174.7
522.9
548.0
– 16.1
11.50
11.48
523.2
– 0.3
11.14
11.12
Baloise Group annual Report 2018
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
2017
2018
531.9
522.9
– 0.7
1.3
72.4
9.9
– 21.4
61.6
4.6
9.6
118.5
– 7.7
– 26.7
98.3
change in unrealised gains and losses on available-for-sale financial assets
– 182.5
– 909.1
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
7.5
78.1
– 2.5
197.0
119.3
38.1
255.1
– 3.8
– 7.7
– 0.7
271.0
– 52.5
116.2
– 586.6
316.6
– 488.3
848.5
34.7
863.4
– 14.9
21.8
12.9
121
Baloise Group annual Report 2018
Financial Report
consolidated cash flow statement
Consolidated cash flow statement
cHF million
Cash flow from operating activities
profit before taxes
Adjustments for
Note
2017
2018
649.8
697.6
Depreciation, amortisation and impairment of property, plant and equipment and of intangible assets
8 / 9
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
9
82.7
– 6.4
– 5.5
– 1,087.2
7.9
– 81.7
405.2
– 17.9
1,872.4
27.8
72.0
102.0
67.1
– 0.9
– 6.2
981.0
6.4
– 25.8
– 501.4
– 5.0
– 744.7
26.5
140.4
581.9
11
11
– 567.2
157.7
– 407.5
69.6
– 3,562.6
– 3,720.8
3,739.0
3,883.7
– 6,538.7
– 6,160.9
5,969.7
6,541.7
– 2,972.1
– 2,446.7
2,768.5
– 453.4
62.4
34.3
– 90.1
568.6
2,499.2
– 376.5
130.6
39.9
– 136.5
1,132.6
25
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
122
Baloise Group annual Report 2018
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
2017
2018
8
9
39
39
25
25
25
– 21.7
8.4
– 27.6
0.1
– 250.4
37.7
–
–
5.5
– 32.3
5.8
– 51.1
1.9
– 0.5
15.0
– 87.8
–
6.5
– 247.9
– 142.4
496.5
– 225.0
– 30.9
– 101.9
91.9
– 0.3
– 248.5
– 18.2
–
–
– 35.9
– 192.0
58.5
– 8.3
– 264.0
– 441.7
302.5
548.4
3,173.3
302.5
– 48.7
124.5
3,551.6
3,551.6
548.4
–
– 63.9
4,036.1
2,133.2
2,543.5
0.1
1,418.3
3,551.6
77.1
749.7
98.4
– 40.5
0.0
1,492.6
4,036.1
184.8
705.2
93.2
– 27.5
123
Baloise Group annual Report 2018
Financial Report
consolidated statement of changes in equity
Consolidated statement of changes in equity
2017
cHF million
Balance as at 1 January
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
4.9
346.2
– 152.3
– 4.3
6,151.7
6,346.2
63.0
6,409.2
124
Baloise Group annual Report 2018
Financial Report
consolidated statement of changes in equity
2018
cHF million
Balance as at 1 January
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
4.9
346.2
– 152.3
– 4.3
6,151.7
6,346.2
–
523.2
523.2
– 511.0
– 511.0
9.6
– 501.4
532.9
21.8
Total
equity
6,409.2
522.9
– 488.3
34.7
63.0
– 0.3
13.1
12.9
38
22
39
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 14.1
– 177.9
20.1
38.4
–
–
–
–
–
–
–
–
–
–
–
–
–
– 264.0
– 264.0
– 8.3
– 272.4
–
–
–
–
–
–
–
– 192.0
58.5
–
–
–
–
–
–
–
–
– 192.0
58.5
–
– 29.4
– 29.4
– 0.5
– 0.5
Balance as at 31 December
4.9
352.3
– 291.8
– 515.4
6,420.5
5,970.6
37.6
6,008.2
125
Baloise Group annual Report 2018
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 ten 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 SiX Swiss exchange.
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. 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 22 March 2019 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.
2. APPLICATION OF NEW FINANCIAL REPORTING STANDARDS AND RESTATEMENTS
2.1 Newly applied IFRSs and interpretations
IFRS 15 Revenue from Contracts with Customers
iFRS 15 replaces iaS 18 (Revenue), iaS 11 (construction contracts) and a number of other revenue-related interpretations for
annual periods from 2018 on. 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 was used for first-time adoption, which means no prior-period figures have to be restated.
Due to the exemptions for insurance contracts and financial instruments, there is no material effect on the consolidated financial
statements.
IFRS 9 Financial Instruments (deferral approach selected until 31 December 2021)
the Baloise Group is utilising the temporary exemption from iFRS 9 in connection with the amendments to iFRS 4 insurance
contracts. it qualifies for a temporary exemption from iFRS 9 because liabilities relating to the insurance business constituted
87 per cent of the total carrying amount of all liabilities as at 31 December 2015 (cHF 63.7 billion of totally cHF 73.3 billion). there
have been no changes to business activities since then, so 31 December 2015 continues to be the relevant date for calculating
the proportion of liabilities relating to the insurance business. the qualitative factors within the meaning of iFRS 4.20 F b) are,
firstly, Baloise’s assignment to the StoXX europe 600 insurance index under stock-market law and, secondly, Bâloise Holding aG’s
regulatory categorisation by FinMa as an insurance group.
By opting to apply the temporary exemption, the Baloise Group is adopting the deferral approach, which enables it to adopt
iFRS 9 and iFRS 17 simultaneously with effect from 1 January 2022. Until these standards are adopted, there will be no effect on
profit for the period or on balance sheet line items.
126
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
31.12.
cHF million
Financial instruments with characteristics of equity
equities
equity funds
Mixed funds
Bond funds
Real estate funds
private equity
Hedge funds
Financial instruments with characteristics of liabilities
public corporations
industrial enterprises
Financial institutions
other
Mortgages and loans
Mortgages
promissory notes and registered bonds
time deposits
employee loans
Reverse repurchase agreements
other loans
Derivative financial instruments
interest rate instruments
equity instruments
Foreign currency instruments
Receivables
Receivables from financial contracts
other receivables
Receivables from investments
cash and cash equivalents
Voluntarily measured at amortised cost or fair value
through other comprehensive income under IFRS 9
Mandatorily measured at fair value through
profit or loss under IFRS 9
Carrying
amount
Fair value
Change in fair
value balance
compared with
Carrying
amount
Fair value
Change in fair
value balance
compared with
2018
2018
2017
2018
2018
2017
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,423.1
19,700.0
– 541.1
6,549.2
6,635.7
10.0
6,549.3
6,709.0
10.8
– 1,275.1
– 24.1
– 0.1
10,724.9
11,127.8
4,318.0
4,644.8
114.0
– 402.2
952.0
28.2
–
218.7
–
–
–
–
952.0
28.7
–
226.6
–
–
–
–
325.7
406.9
327.9
406.9
2,543.5
2,543.5
11.2
1.5
–
20.7
–
–
–
– 3.0
– 75.6
– 33.9
410.3
1,700.2
1,700.2
– 927.3
104.0
323.6
95.4
611.4
783.0
370.6
15.0
106.3
59.5
–
–
4.5
–
–
–
104.0
323.6
95.4
611.4
783.0
370.6
15.0
106.3
59.5
–
–
4.6
–
–
–
14.9
40.6
– 28.2
101.1
63.6
– 22.5
– 1.9
85.9
– 11.4
– 0.2
–
– 24.8
–
–
–
17.7
16.8
– 14.1
284.7
61.8
107.4
–
–
–
–
284.7
61.8
107.4
–
–
–
–
41.0
10.8
39.7
–
–
–
–
127
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK AT AMORTISED COST
OR FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME UNDER IFRS 9
as at 31.12.2018
cHF million
Financial assets of
a debt nature
public corporations
industrial enterprises
Financial institutions
other
Mortgages and loans
Mortgages
promissory notes and
registered bonds
time deposits
employee loans
Reverse repurchase
agreements
other loans
other receivables
Receivables from
financial contracts
other receivables
Receivables from
investments
AAA
AA
A
Lower than BBB
or no rating
BBB
Carrying
amount
Impairment
Fair Value lower
than BBB
or no rating
6,362.4
181.1
4,823.6
–
115.6
1,951.8
–
–
–
5.0
–
2.2
120.5
9,257.2
763.9
456.0
10.0
909.3
2,079.8
25.9
–
–
1,579.9
2,617.5
867.7
–
8,777.5
61.1
–
–
–
941.9
1,624.2
233.9
–
813.9
62.1
67.5
–
–
281.7
18,423.1
1,362.5
254.5
–
108.6
163.2
858.5
28.2
–
6,549.2
6,635.7
10.0
10,724.9
4,318.0
952.0
28.2
–
–
– 1.2
– 0.7
–
– 18.8
–
–
0.0
–
281.7
1,362.5
254.5
–
118.5
170.1
858.6
28.7
–
25.4
122.4
22.7
43.2
218.7
– 0.9
44.8
–
19.8
97.9
–
104.7
36.5
–
18.3
25.0
41.8
–
–
180.7
127.1
325.7
406.9
–
– 1.3
– 1.2
–
180.7
127.1
531.8
2,543.5
–
531.8
cash and cash equivalents
970.9
422.4
576.5
the carrying amount of the financial asset before impairment pursuant to iFRS 4.39 G a) is obtained by adding together the carrying amounts and impairment losses shown in the table above.
IFRSs and interpretations not yet applied
2.2
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 2018 consolidated annual financial statements:
Standard /
Interpretation
iFRS 16
iFRS 9
iFRS 17
Content
leases
Financial instruments
insurance contracts
Applicable to annual periods
beginning on or after
1.1.2019
1.1.20221
1.1.20221
1 Decision by the iaSB on 14 november 2018 to postpone introduction by one year. the decision to take the deferral approach means that iFRS 9 will be adopted for the first time
simultaneously with iFRS 17 on 1 January 2022.
128
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
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. 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. the modified retrospective method is being used for first-time adoption.
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. equity is not affected by the application
of this standard.
there will also be immaterial changes to the presentation of the income statement and cash flow statement because borrowing
costs and depreciation, amortisation and impairment will be affected. no material effect on the profit for the period is expected.
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.
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 2022.
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 2022.
Rather than changing the business model of insurers, iFRS 17 affects their reporting. the most important changes relate to the
methodology for measuring contracts. 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 particu-
larly 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 cHF millions, 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
31.12.17
31.12.18
Ø 2017
Ø 2018
1.17
0.97
1.13
0.98
1.11
0.98
1.16
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 property 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 (incl. internally developed assets), external it consulting (in connection
with software that has been developed) 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 classified
according to the purpose for which most of its floor space is used. if, owing to a change of use, an investment property held by
the Baloise Group becomes the latter’s owner-occupied property, it is reclassified as property, plant and equipment. any such
reclassification is based on the property’s fair value at the reclassification date. By contrast, if one of the Baloise Group’s owner-
occupied properties becomes an investment property owing to reclassification, then, on the date this change of use takes effect,
the difference between the property’s carrying amount and its fair value is recognised in profit or loss in the event of an impairment;
or, if the property’s fair value exceeds its carrying amount, then the difference is recognised directly in equity as other compre-
hensive income. 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 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”. appropriately
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 accounting
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 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 char-
acteristics 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 “other comprehensive income” 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 – if applicable – are disclosed in chapter 21.
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, Germany and Belgium. 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 discounting. the third component consists of reserves for annuities that are discounted using basic actuarial principles
such as mortality and the technical interest rate and are largely derived from claims in the motor, liability and accident insurance
businesses.
actuarial methods are used to calculate by far the largest proportion of claims reserves. to this end, the Baloise Group selects
actuarial forecasting methods that are appropriate for each sector, insurance product and existing claims history. additional
market data and assumptions obtained from 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 (LAT)
a 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
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 Non-technical provisions
non-technical 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 over a particular period of time, because the customer receives the benefit of the
service provided by the Baloise Group while he or she is using it.
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 instruments
as “available for sale” and measure them at fair value. chapter 12 contains information on the fair values of the financial instruments
with characteristics of liabilities that are classified as “held to maturity”.
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 Non-technical provisions
the measurement of non-technical 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 9.1. 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). 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 bank. the loan portfolio is reviewed and analysed on an
ongoing basis. a range of tools is used for this purpose, including standardised credit regulations and procedures, scoring and
rating procedures, focusing on low-risk markets and the use of an automated arrears system. the information obtained is incorporated
into credit decisions. Balance sheet risks (interest rate and liquidity risks) are managed by the bank’s asset and liability management
(alM) committee. the data and key figures required are determined and calculated using a specialist it application.
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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 and in Bad Homburg (Germany) and by 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 450 million.
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notes to the consolidated annual financial statements
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
156
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 2018
Financial Report
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
157
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notes to the consolidated annual financial statements
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 2018, 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 4,164.1 million (2017: cHF 4,600.2
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 317.5 million (2017: cHF 349.3 million) in claims payments (after taxes) before reinsurance.
in 2018, Baloise’s run-off portfolio consisted of two subportfolios: an older portfolio with reserves, the majority of which
comprise obligations that the Baloise Group entered into up to the start of the 1990s in the london market, and a new portfolio
formed in 2018 for the hospital liability business in Germany. the sensitivities of the two portfolios are analysed separately. the
“london market” portfolio is mainly affected by 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 5.9 million after taxes
and before reinsurance (2017: cHF 6.0 million) for this reserve.
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the hospital liability business in Germany was discontinued in 2018 and transferred to the Group’s run-off portfolio. in the
calculation of claims reserves for this portfolio, Baloise is guided by the relevant study from 2017 published by the German
insurance association (GDV) because it has insufficient claims data of its own. the current gross claims reserves amount to
cHF 301.5 million. the constantly changing level of claims in this sector makes it extremely difficult to estimate the total expense.
However, assuming variation of 10 per cent (as used for the other part of the run-off), the effect would be around cHF 20.9 million
after taxes and before reinsurance.
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
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Total
Year in which the claims occurred
690.7
723.1
777.9
732.2
768.5
733.6
707.8
704.8
729.5
759.4
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
670.6
657.4
641.0
634.4
638.6
632.8
617.2
615.0
608.5
608.5
685.4
675.1
666.9
659.6
653.0
650.4
641.8
629.5
–
736.5
731.0
729.1
722.7
717.3
701.6
701.2
–
–
751.1
736.9
726.3
717.0
710.5
705.9
–
–
–
768.2
764.1
764.7
756.3
752.1
–
–
–
–
715.7
701.2
695.9
688.5
–
–
–
–
–
667.8
657.6
650.9
–
–
–
–
–
–
689.5
675.0
–
–
–
–
–
–
–
728.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
629.5
701.2
705.9
752.1
688.5
650.9
675.0
728.9
759.4
6,899.9
–
–
–
–
–
–
–
–
–
–
claims paid
– 567.0
– 581.0
– 627.3
– 640.0
– 678.3
– 613.5
– 577.4
– 591.4
– 580.6
– 397.4 – 5,854.0
Gross claims reserves
41.5
48.5
73.9
65.9
73.8
75.0
73.5
83.6
148.3
362.0
1,046.0
Gross claims reserves
prior to 2009 (including
large claims and
assumed business)
Gross provision
for annuities (non-life,
including iBnR)
Reinsurers’ share
Net claims reserves
160
400.7
745.1
– 46.8
2,145.0
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
For greater clarity, the following analysis of claims trends is shown in euros.
ESTIMATED CUMULATIVE CLAIMS INCURRED IN GERMANY
2009
2010
2011
2012
2013*
2014*
2015*
2016*
2017*
2018*
Total
Year in which the claims occurred
288.0
302.5
290.8
297.4
367.7
306.0
303.2
318.6
340.5
345.5
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
286.4
289.0
294.6
294.8
295.1
297.1
296.2
296.7
297.6
297.6
299.7
305.6
305.8
306.0
307.9
305.2
304.9
304.7
–
297.6
300.9
306.6
309.8
311.7
311.3
310.1
–
–
298.4
302.5
304.3
302.6
303.2
302.9
–
–
–
370.3
371.0
379.3
379.8
380.8
–
–
–
–
316.1
319.9
320.4
314.5
–
–
–
–
–
304.9
304.5
301.4
–
–
–
–
–
–
314.3
313.6
–
–
–
–
–
–
–
331.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
304.7
310.1
302.9
380.8
314.5
301.4
313.6
331.2
345.5
3,202.3
–
–
–
–
–
–
–
–
–
–
claims paid
– 291.0
– 298.0
– 300.6
– 293.8
– 366.5
– 294.9
– 279.6
– 272.1
– 256.1
– 158.8 – 2,811.4
Gross claims reserves
6.6
6.7
9.5
9.1
14.3
19.6
21.8
41.5
75.1
186.7
Gross claims reserves
prior to 2009 (including
large claims and
assumed business)
Gross provision
for annuities (non-life,
including iBnR)
Reinsurers’ share
Net claims reserves
390.9
236.7
148.1
– 189.8
585.9
* the underwriting of hospital liability business was ended in 2018, and the entire portfolio has been transferred to the Group’s run-off business. the expenses for this business were
therefore removed from the expense triangle for Germany. the claims incurred for the years before 2013 were low, and they were included only as lump sums or as one-off or large claims.
consequently, they do not result in any changes to the expense triangle.
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notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN BELGIUM
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Total
Year in which the claims occurred
eUR million
at the end of the year in
which the claims ccurred
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
248.5
252.2
1264.5
2254.0
250.7
252.5
248.5
245.8
243.4
243.4
228.0
235.1
308.7
1412.4
2403.6
483.7
459.9
470.3
446.8
495.0
287.1
1308.0
2304.0
308.1
306.0
306.0
306.6
300.5
–
1395.1
2392.2
387.9
392.5
388.6
387.1
374.4
–
–
2426.5
421.9
412.9
410.7
416.9
417.5
–
–
–
402.5
398.0
396.7
394.4
388.2
–
–
–
–
494.3
488.7
483.4
479.1
–
–
–
–
–
476.0
480.7
478.9
–
–
–
–
–
–
478.9
470.5
–
–
–
–
–
–
–
483.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300.5
374.4
417.5
388.2
479.1
478.9
470.5
483.9
495.0
4,131.4
–
–
–
–
–
–
–
–
–
–
claims paid
– 217.0
– 265.2
– 330.8
– 364.9
– 348.5
– 425.8
– 378.4
– 383.1
– 341.9
– 241.5 – 3,297.1
Gross claims reserves
26.4
35.3
43.6
52.6
39.7
53.3
100.5
87.4
142.0
253.5
Gross claims reserves
prior to 2009 (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.
834.3
327.0
154.6
– 295.3
1,020.6
162
Baloise Group annual Report 2018
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notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN LUXEMBOURG
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Total
Year in which the claims occurred
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
17.5
125.0
123.6
24.0
23.6
236.8
343.8
49.8
49.6
50.3
16.9
121.5
21.3
21.1
236.2
342.0
41.7
42.5
42.6
42.6
122.0
21.8
21.7
237.0
341.9
41.6
42.5
42.4
–
42.4
22.7
22.6
235.3
339.7
39.2
39.8
39.7
–
–
24.5
236.5
339.9
39.3
39.9
40.1
–
–
–
237.8
341.2
40.5
40.7
40.6
–
–
–
–
340.8
40.5
40.8
40.5
–
–
–
–
–
44.0
44.3
43.9
–
–
–
–
–
–
47.2
46.3
–
–
–
–
–
–
–
46.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39.7
40.1
40.6
40.5
43.9
46.3
46.3
50.3
432.7
–
–
–
–
–
–
–
–
–
–
– 42.3
– 42.0
– 39.2
– 39.4
– 39.6
– 39.3
– 41.8
– 43.1
– 41.3
– 32.4
– 400.4
Gross claims reserves
0.3
0.4
0.6
0.7
1.0
1.2
2.1
3.2
5.0
17.9
Gross claims reserves
prior to 2009 (including
large claims and
assumed business)
Gross provision for
annuities (non-life,
including iBnR)
Reinsurers’ share
Net claims reserves
32.4
51.6
–
– 17.7
66.3
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.
in the course of harmonization and integration of aquired portfolios the data base was improved. thus causing adjustments in the diagonals of the incurred values for the years 2016
and 2017 as well as the concurrent payments. these adjustments had neither an effect on the gross claims reserves in the closing balance nor on the result.
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 97.6 years (2017: 85.7 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
31.12.2017
cHF million
Switzerland
individual life
Switzerland
group life
Germany
Belgium
Luxembourg
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
763.2
579.8
2,330.2
632.5
6,817.6
15,709.3
2.5 %
1.3 %
3,854.8
106.7
6,741.9
3.1 %
129.0
103.8
3,092.7
3.3 %
276.3
25.4
526.3
2.5 %
31.12.2018
cHF million
Switzerland
individual life
Switzerland
group life
Germany
Belgium
Luxembourg
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
691.2
539.2
2,395.7
605.9
6,604.4
15,659.1
2.5 %
1.3 %
3,538.8
112.8
6,312.8
3.0 %
21.7
119.2
3,032.7
3.1 %
254.8
19.6
509.9
2.3 %
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
2017
2018
2017
2018
2017
2018
2017
2018
687.9
671.0
2,145.3
1,916.4
22.4
21.8
252.5
224.3
the major risks accruing from term insurance include epidemics and terrorist attacks but also changes in lifestyle such as lack of
exercise. endowment policies incur significant risks arising from the increase in life expectancy, which is likely to continue due
to medical advances and rising living standards.
the risks listed above do not vary greatly within this area of activity.
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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Disability insurance relates to policy riders, i. e. premiums being waived if holders of life insurance policies that require periodic
payments of premiums become disabled, and to separate disability insurance. Measured against total actuarial reserves, disa-
bility 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
31.12.2017
Actuarial reserves
31.12.2018
CHF million
Share (%)
CHF million
Share (%)
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
11,036.9
9,403.7
1,728.5
11,203.8
33,372.9
1,545.7
1,287.8
2,833.5
30.5
26.0
4.8
30.9
92.2
4.3
3.6
7.8
37,436.2
100.0
36,206.4
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 34 million (2017: cHF 33 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 80 million (2017: cHF 76 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 only had a marginal effect. on balance there was a marginal effect
from the German units’ profitability in the reporting year (2017: marginal effect). the negative impact on equity amounted to
approximately cHF 4 million (2017: cHF 5 million). in Belgium, this scenario resulted in a increase in Dacs. in prior years, this
scenario had also led to a smaller provision for impending losses, which has no longer been needed since 2018. the positive
impact on the income statement therefore fell to around cHF 1 million (2017: cHF 12 million). the negative effect on unrealised
gains amounted to cHF 117 million (2017: cHF 119 million). in luxembourg, this scenario produced a marginal positive impact
on the income statement and an adverse effect of roughly cHF 14 million (2017: cHF 16 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 and a reduction in technical reserves. as a result of
the elimination of swaptions, the offsetting effect of interest-rate hedges was not repeated in 2018. this meant that the
overall effect rose to cHF 16 million (2017: cHF 10 million). the adverse impact on equity amounted to approximately cHF 162 mil-
lion (2017: cHF 186 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 prevailing
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 1 million (2017: cHF 3 million). the positive impact on their equity
amounted to approximately cHF 4 million (2017: cHF 5 million). in Belgium, this scenario resulted in an additional Dac write-down.
in prior years, this scenario had also led to a larger provision for impending losses, which has no longer been needed since
2018. the negative effect on the income statement therefore fell to around cHF 1.0 million (2017: cHF 24 million). the positive
effect on unrealised gains amounted to cHF 131 million (2017: cHF 135 million). in luxembourg, this scenario produced a
marginal negative impact on the income statement (2017: marginal negative impact) and a positive effect of roughly cHF 16 million
(2017: cHF 14 million) on the unrealised gains and losses recognised in equity. the resultant impact on the profitability and
equity of Baloise life (liechtenstein) aG was negligible. in Switzerland, this scenario resulted in a higher Dac write-down and
an increase in technical reserves. as a result of the elimination of swaptions, the offsetting effect of interest-rate hedges was
not repeated in 2018. this meant that the overall negative effect rose to cHF 25 million (2017: cHF 10 million). the positive
impact on equity amounted to approximately cHF 168 million (2017: cHF 185 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 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 development of 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 bank 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 27 million (2017: cHF 36 million).
including the impact on profit for the period, equity (after shadow accounting, deferred gains / losses and deferred taxes) would
have risen by cHF 219 million (2017: cHF 211 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 16 million (2017: cHF 21 million). including the impact on profit for the period, equity (after shadow
accounting, deferred gains / losses and deferred taxes) would have fallen by cHF 233 million (2017: cHF 238 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 and US dollars) for invest-
ment or diversification purposes, there may be currency effects in the income statement for both realised and unrealised positions.
to ensure compliance with the risk budget set for currency effects recognised in the income statement, the foreign exchange
management team first calculates adequate target hedge ratios, then implements the necessary hedging strategies taking into
account these target hedge ratios and the discretionary ranges allowed. it also takes advantage of phases when exchange rates
are overreacting by deliberately underweighting or overweighting the hedge ratios in relation to the defined benchmark. these
hedging strategies are implemented using forward FX contracts and FX options or combinations of options in which the selection
of the instruments to be used in each case depends on factors such as volatility and expected exchange rate movements.
the currency effect of foreign currency bonds or insurance-related foreign currency liabilities and changes in the fair value of
derivative financial instruments held for hedging purposes are always recognised in the income statement.
the Group-wide Risk Management Standards require currency risk and the effectiveness of the currency derivatives transacted
to be monitored on a continuous basis. the currency risk incurred must be proportionate to the potential superior return generated
by the diversification effect achieved in the portfolio.
the Swiss franc and the euro are used almost exclusively for the Baloise Group’s insurance activities, with the result that
technical reserves are also mainly in these currencies. there are also small technical liabilities in US dollars. these reserves are
generally covered by investments in the same currencies (natural hedges).
assuming that all other variables remain constant, fluctuations between transactional currencies and the functional currency
in financial balance sheet items (after deferred gains / losses and deferred taxes) in the amount of + / – cHF 0.01 (1 centime) would
have resulted in a change of + / – cHF 2.6 million (2017: + / – 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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Derivative financial instruments used as currency hedges of a net investment in a foreign operation
the Group’s own companies, Baloise alternative investment Strategies (luxembourg) ScS, Baloise private equity (luxembourg)
ScS and Baloise alternative invest S.a. Sica V-RaiF, manage the substantial investments in alternative financial assets such as
hedge funds, private equity and senior secured loans.
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 three foreign entities whose reporting currency is the US dollar. Restricting the
implementation 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
cHF million
amount recognised directly in equity
Hedge ineffectiveness reclassified to the income statement
Fair value assets
Fair value liabilities
2017
2018
2017
2018
14.3
14.5
2.3
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14.3
14.5
2.3
0.5
2017
2018
72.7
–
– 7.7
–
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 2018 the Group’s Swiss companies did hold a net position in euros equivalent to
cHF 1,096.7 million (2017: 837.1 million) and a net position in US dollars equivalent to cHF 277.0 million (2017: cHF 243.1 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 85 per
cent to 95 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
canton of Zurich
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
31.12.2018
3,489.3
2,672.6
1,895.0
1,560.8
1,513.1
1,055.2
961.1
696.5
678.6
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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
31.12.2017
31.12.2018
18,822.3
18,438.0
7,844.4
6,711.3
10.2
6,655.4
6,695.2
10.0
10,746.9
10,982.3
139.6
4,638.1
132.3
4,322.5
939.7
26.8
–
228.1
362.4
3.0
468.3
38.2
444.1
432.9
440.9
952.0
28.2
–
236.3
453.9
–
457.2
41.9
433.3
347.0
406.9
2,133.2
2,543.5
if no contractually irrevocable future loan commitments have been agreed, the maximum default risk of financial assets corresponds to the carrying amount of the assets for own account
and at own risk. in addition, guarantees and collateral for the benefit of third parties totalled cHF 524.7 million (2017: cHF 560.5 million).
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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.
175
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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
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
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
176
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notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED
promissory notes and registered bonds
1,951.8
2,079.8
as at 31.12.2018
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
6,362.4
181.1
4,828.6
–
115.6
–
9,257.2
763.9
456.6
10.0
1,579.9
2,618.3
885.8
–
941.9
1,629.7
236.9
–
909.3
8,677.3
798.2
–
–
–
–
5.0
143.9
–
0.1
–
0.0
2.2
120.5
970.9
25.9
–
–
25.4
3.8
–
65.4
7.6
5.6
19.8
97.9
422.4
–
61.1
–
–
–
122.4
174.3
–
318.6
14.2
3.7
104.7
36.5
576.5
–
62.1
67.5
–
–
22.7
9.8
–
8.3
0.5
0.3
18.3
25.0
41.8
296.7
18,438.0
1,462.5
287.3
–
108.5
132.3
167.7
858.5
28.2
–
59.1
122.1
–
56.6
19.5
282.4
179.7
105.2
531.8
6,655.4
6,695.2
10.0
10,608.9
132.3
4,322.5
952.0
28.2
–
234.6
453.9
–
449.0
41.9
292.0
324.7
385.0
2,543.5
14,682.0
14,150.6
15,173.4
3,863.0
4,698.2
52,567.1
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 2018, financial assets amounting to cHF 1.8 million (2017: cHF 1.9 million) and cash and cash equivalents of 0.1 million
(2017: 0.1 million) from collateral received were used.
177
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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
Gross amount
Impairment
Carrying amount
Gross amount
Impairment Carrying amount
2017
2018
–
2.9
0.8
–
–
– 2.9
– 0.8
–
–
–
–
–
–
1.2
0.7
–
–
– 1.2
– 0.7
–
–
–
–
–
135.1
– 20.4
114.7
128.3
– 18.8
109.5
–
–
–
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
–
–
–
0.0
–
10.4
–
–
0.3
134.7
2.2
23.2
301.0
–
–
–
0.0
–
– 8.7
–
–
– 0.1
– 37.3
– 1.3
– 1.2
– 69.4
–
–
–
0.0
–
1.8
–
–
0.1
97.4
1.0
21.9
231.7
178
Baloise Group annual Report 2018
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
179
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS OVERDUE BUT NOT IMPAIRED
as at 31.12.2018
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15.9
0.0
–
15.9
10.5
0.0
–
10.5
–
–
–
–
6.5
–
–
–
–
–
–
–
–
–
10.4
0.0
–
16.9
–
–
–
–
–
–
–
–
–
–
–
–
8.2
–
7.1
0.0
–
15.3
–
–
–
–
6.5
–
–
–
–
–
–
–
8.2
–
43.9
0.0
–
58.6
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.
180
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Financial Report
notes to the consolidated annual financial statements
liquidity management must take account of the maturity structure of liabilities as follows:
Total
15,657.9
2,103.8
8,941.7
2,269.5
28,972.8
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31.12.2017
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
non-technical provisions
Derivative financial instruments
insurance liabilities
other liabilities
contingent liabilities and capital commitments
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31.12.2018
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
non-technical provisions
Derivative financial instruments
insurance liabilities
other liabilities
contingent liabilities and capital commitments
‹ 1 year 2
1 – 3 years
4 – 5 years
> 5 years
Total Carrying amount
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
49.0
145.3
1,706.3
724.2
–
–
‹ 1 year 2
1 – 3 years
4 – 5 years
> 5 years
Total Carrying amount
2,819.5
5,552.0
3,614.9
213.3
43.9
70.8
1,137.3
734.9
1,031.8
1.6
91.2
–
610.2
10.9
5.5
691.9
22.9
716.4
1.8
683.1
7,518.7
708.6
0.9
20.5
0.1
3.8
15.9
101.8
671.2
483.3
373.7
8.0
20.5
0.4
17.7
17.6
2,924.7
6,997.5
2,924.7
6,997.5
11,616.9
11,616.9
1,905.8
1,744.5
63.7
117.3
1,829.8
779.3
1,781.6
Total
15,218.5
2,150.6
8,953.4
1,694.1
28,016.6
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.
63.7
117.3
1,829.8
781.0
–
–
181
Baloise Group annual Report 2018
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, 60 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. 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)
2017
2018
2017
2018
9.4
– 20.2
25.3
– 51.2
234.0
– 236.7
200.0
– 192.9
cHF million
Market price plus 10 %
Market price minus 10 %
182
Baloise Group annual Report 2018
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 chapters 3 and 4.
183
Baloise Group annual Report 2018
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
Financial instruments
with characteristics of equity
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
net asset value
n. a.
Financial instruments with characteristics of liabilities
present-value model
interest rate, credit spread
–
–
–
–
–
–
–
–
–
–
n. a.
–
investment property
DcF method
Discount rate 1
2.72 % – 5.57 % 3
Rental income 2 290 – 310 cHF million 3
Vacancy costs 1
13 – 19 cHF million 3
Running costs 1
25 – 31 cHF million 3
Maintenance costs 1
28 – 34 cHF million 3
capital expenditure 2
40 – 60 cHF million 3
inflation rate 2
0 % – 2 % 3
1 the lower these key input factors are, the higher the fair value of the investment property is.
2 the higher these key input factors are, the lower the fair value of the investment property is.
3 the input factor ranges shown essentially relate to the real estate portfolios held by the Baloise Group’s Swiss entities.
184
Baloise Group annual Report 2018
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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.
185
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notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
31.12.2017
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
16,668.5
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
6,431.3
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).
186
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FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
31.12.2018
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
Total carrying
amount
Total fair value
Level 1
Level 2
Level 3
3,657.0
3,657.0
331.3
331.3
1,861.1
298.8
473.2
32.5
8,002.5
9,353.8
9,353.8
–
23,771.4
23,771.4
22,371.4
1,400.0
1,322.7
–
–
–
–
Recognised at fair value through profit or loss
24.8
24.8
24.8
–
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
15,470.5
16,216.3
925.8
453.9
925.8
453.9
–
–
325.7
327.9
–
–
11.8
–
–
406.9
406.9
294.5
7,904.0
7,904.0
6,997.5
7,082.6
524.5
116.7
524.5
116.7
–
–
–
12.4
1,744.5
1,822.1
1,822.1
10,202.2
6,014.1
925.8
442.1
–
–
19.9
–
–
–
–
327.9
92.6
7,904.0
7,008.2
74.4
524.5
104.3
–
–
–
–
187
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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
–
–
–
–
–
–
188
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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
31.12.2018
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
10,149.7
10,149.7
9,923.4
–
226.3
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
1,976.4
1,976.4
1,753.6
110.0
112.8
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
other assets
–
460.9
–
460.9
–
196.5
–
264.3
Recognised at fair value through profit or loss
54.1
54.1
54.1
–
Liabilities measured on a recurring basis
liabilities arising from banking business and financial contracts
Recognised at fair value through profit or loss
11,092.4
11,092.4
10,982.4
Derivative financial instruments
0.7
0.7
–
110.0
0.7
–
–
–
–
–
189
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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
Changes in fair value of financial instruments
held at the balance sheet date and recognised in profit or loss
Financial
instruments with
characteristics
of equity
Available
for sale
Investment
property
Recognised at
fair value
through
profit or loss
Total
964.0
279.0
0.0
–
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
– 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.
190
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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
2018
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
Changes in fair value of financial instruments
held at the balance sheet date and recognised in profit or loss
Financial
instruments with
characteristics
of equity
Available
for sale
Investment
property
Recognised at
fair value
through
profit or loss
Total
1,206.5
225.0
7,480.3
407.5
8,686.8
632.5
–
–
–
–
–
–
– 144.8
– 69.6
– 214.4
–
–
–
–
–
– 1.9
64.4
– 26.6
1,322.7
–
–
–
–
23.3
23.3
–
–
106.5
5.2
– 49.3
–
–
104.6
69.6
– 75.8
7,904.0
9,226.7
1.0
94.2
95.1
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.
191
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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
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
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
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
0.8
–
–
–
–
–
–
–
– 0.8
–
0.0
–
–
1 changes in fair value recognised in profit or loss arise from realised gains and losses on investments, impairment losses or the reversal of impairment losses.
192
Total
87.7
119.9
–
–
– 31.2
–
–
124.7
– 25.5
0.4
16.7
292.7
0.5
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES AND CLASSIFIED AS LEVEL 3
2018
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
220.1
15.8
–
–
72.6
63.5
–
–
Disposals
– 29.4
– 16.8
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
–
–
0.1
–
28.4
– 8.7
226.3
–
–
1.8
– 7.5
3.2
– 3.9
112.8
Changes in fair value of financial instruments
held at the balance sheet date and recognised in profit or loss
28.3
3.1
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.
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
292.7
79.3
–
–
– 46.2
–
–
1.8
– 7.5
31.6
– 12.5
339.1
31.5
193
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
Reclassification of assets and liabilities from level 1 to level 2 and vice versa
assets and liabilities measured at fair value are generally reclassified from level 1 to level 2 if there is no longer deemed to be an
active market in these instruments owing to their low daily trading volumes or lack of liquidity or if the instruments concerned
have been de-listed. Financial instruments are reclassified from level 2 to level 1 for the exact opposite reasons.
no significant amounts of assets or liabilities measured at fair value were reclassified from level 1 to level 2 or vice versa
during the reporting period or in 2017.
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
calculation of the Solvency i ratio at Group level was discontinued when the results of the Swiss Solvency test were published for
the first time in the financial condition report on 30 april 2018.
194
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notes to the consolidated annual financial statements
5.11.2 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 target capital (capital required) for the SSt using a model approved by FinMa.
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. 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.
the results of the Swiss Solvency test for the Baloise Group are disclosed annually in the financial condition report, which is
published at the end of april.
5.11.3 Requirements under local legislation
individual Group companies are also subject to regulation under local legislation (in particular the Swiss Solvency text and
Solvency ii). 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.
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 key figures relating to banking operations 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.
195
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notes to the consolidated annual financial statements
6. BASIS OF CONSOLIDATION
6.1 2017 financial year
6.1.1 Acquisitions and foundations
on 11 January 2017, a controlling interest in Drivolution nV was acquired in Belgium.
in Germany, a start-up named FRiDaY was founded as a mobile insurer in Berlin. FRiDaY 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. FRiDaY’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 shareholding
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.
6.1.2 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.
6.1.3 Other changes in the group of consolidated companies
no companies were merged or liquidated in 2017.
196
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notes to the consolidated annual financial statements
6.2 2018 financial year
6.2.1 Acquisitions
no companies were acquired or founded in the year under review.
6.2.2 Disposals
the shares in Deutscher Ring Bausparkasse aG were sold to the BaWaG Group on 4 September 2018.
also in Germany, the shares in RolanD Rechtsschutz Beteiligung GmbH were sold in october 2018.
6.2.3 Other changes in the group of consolidated companies
the buyout of 0.16 per cent of the shares in artires aG (formerly pax anlage aG) caused non-controlling interests to fall by
cHF 0.5 million.
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, Group it, the holding
companies and the run-off portfolios for the london market and the German hospital liability business.
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 and was sold in 2018.
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.
Due to the change of chief operating decision maker for the hospital liability business in Germany in 2018, this business is
now reported within the Group business segment. the figures for the prior year have been restated accordingly. in 2018, the
Belgium segment and the life insurance segment both benefited from the reversal, recognised in profit or loss, of additional
reserves that are no longer needed.
197
Baloise Group annual Report 2018
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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
2017
2018
2017
(restated)
2018
2017
2018
2017
2018
2017
(restated)
2018
2017
(restated)
2018
2017
(restated)
2018
2017
4,231.7
– 83.7
4,148.0
4,073.9
– 89.9
3,984.1
1,143.0
– 91.4
1,051.7
1,191.7
– 105.2
1,086.5
1,133.5
– 98.0
1,035.6
1,250.8
– 114.7
1,136.0
202.4
– 18.9
183.6
214.6
– 18.7
195.9
6,710.7
– 292.0
6,418.8
6,731.0
– 328.6
6,402.4
124.7
– 0.5
124.2
125.9
– 0.4
125.5
– 109.1
– 119.9
109.1
0.0
119.9
0.0
6,726.4
– 183.4
6,542.9
6,737.0
– 209.0
6,528.0
investment income
867.4
871.0
260.9
246.5
241.9
240.5
20.1
22.5
1,390.3
1,380.4
4.3
4.1
– 2.0
– 8.5
1,392.5
1,376.0
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
155.3
43.1
40.8
0.0
179.2
5,433.9
– 29.5
0.0
– 10.4
– 43.9
60.4
0.0
144.9
5,005.9
– 43.0
0.0
208.3
102.7
28.7
5.5
42.1
138.1
– 167.7
22.9
6.2
46.8
42.5
18.3
2.9
–
16.5
– 17.1
– 38.4
3.5
–
41.0
1,699.9
1,379.2
1,357.6
1,365.5
39.9
5.5
45.7
6.2
35.7
–
37.8
–
– 3,829.7
– 3,876.6
– 1,035.0
– 1,062.9
– 722.8
– 804.0
– 143.6
– 5,701.6
– 5,887.1
– 5,726.5
– 5,904.4
– 148.4
38.7
– 55.7
227.5
33.6
– 47.3
– 428.2
– 457.1
– 51.4
– 0.7
– 18.3
– 52.9
– 0.3
– 0.4
– 192.1
45.0
– 156.8
– 179.0
– 30.2
– 21.3
– 26.6
179.2
52.3
– 201.6
– 173.3
– 26.4
– 19.0
– 14.9
– 321.8
– 278.3
– 144.1
– 106.5
– 68.9
51.4
– 247.0
– 107.2
– 13.5
– 0.1
– 66.2
– 42.6
41.9
54.1
– 263.6
– 119.8
– 15.5
– 0.1
– 11.1
– 48.4
– 4,815.5
– 4,451.7
– 1,740.0
– 1,373.2
– 1,216.8
– 1,166.5
– 8,490.9
– 6,425.8
– 8,733.0
– 6,539.1
Profit / loss before borrowing costs and taxes
618.4
554.2
– 40.2
Borrowing costs
Profit / loss before taxes
income taxes
Profit / loss for the period (segment result)
– 2.8
615.5
– 94.7
520.8
– 10.1
544.1
– 88.4
455.6
–
– 40.2
12.7
– 27.5
6.0
–
6.0
– 17.9
– 11.9
140.8
199.0
27.5
24.7
746.5
784.0
– 62.4
– 46.5
684.1
737.5
–
140.8
– 12.4
128.5
–
199.0
– 49.5
149.5
Segment assets as at 31.12.
46,200.1
45,409.1
14,364.9
12,792.3
10,828.4
10,591.9
12,652.5
11,956.7
84,046.0
80,750.1
1,854.3
2,036.5
– 1,376.4
– 1,931.8
84,523.9
80,854.8
198
– 541.0
9,237.4
7,209.7
9,417.1
7,276.6
108.0
– 1,051.2
23.4
34.3
– 11.9
– 36.7
160.4
170.4
– 135.0
– 151.5
– 242.4
– 267.9
– 56.6
– 193.6
193.6
– 63.6
– 223.6
223.6
– 1.7
498.0
19.1
–
27.0
746.0
2.8
–
– 114.2
– 61.6
6.9
– 20.1
– 48.9
– 1.6
0.0
– 468.8
– 10.3
– 718.6
–
27.5
– 2.4
25.1
– 2.5
– 801.0
24.7
–
19.5
3.9
–
10.3
9.3
– 21.8
– 57.1
– 1.7
0.0
790.9
– 20.7
565.6
–
24.7
– 4.3
20.4
404.4
662.2
91.5
5.5
264.8
48.8
5.5
– 471.1
142.0
– 479.5
– 763.3
– 96.7
– 22.1
– 579.8
– 518.7
111.5
6.2
252.3
44.3
6.2
458.8
149.4
– 534.4
– 807.3
– 96.5
– 19.4
764.6
– 453.8
26.8
373.3
–
–
– 86.1
– 70.3
6.4
– 3.4
– 1.7
– 8.4
–
– 37.6
– 234.4
– 435.7
– 2.8
743.7
– 96.8
646.8
– 10.1
773.8
– 31.4
– 93.9
– 160.2
613.7
– 21.1
– 114.9
39.0
290.5
–
–
– 84.9
– 47.0
2.1
– 2.8
– 2.1
– 7.4
–
28.1
– 222.9
– 336.9
– 29.7
– 76.2
– 14.5
– 90.7
–
–
–
–
–
–
–
–
–
61.2
6.4
– 67.6
0.9
– 0.9
28.0
0.2
4.0
161.4
193.6
–
–
–
–
–
–
–
–
–
67.6
0.6
– 68.2
1.4
– 1.4
21.7
0.2
8.6
193.1
223.6
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
Total
2018
96.1
– 1,087.8
130.4
6.2
227.6
–
6.2
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 39.9
697.6
– 174.7
522.9
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2017
2018
2018
2017
2018
2017
(restated)
2017
2018
2017
(restated)
2018
2017
(restated)
2018
2017
(restated)
2018
2017
Total
2018
4,231.7
– 83.7
4,148.0
4,073.9
– 89.9
3,984.1
1,143.0
– 91.4
1,051.7
1,191.7
– 105.2
1,086.5
1,133.5
– 98.0
1,035.6
1,250.8
– 114.7
1,136.0
202.4
– 18.9
183.6
214.6
– 18.7
195.9
6,710.7
– 292.0
6,418.8
6,731.0
– 328.6
6,402.4
124.7
– 0.5
124.2
125.9
– 0.4
125.5
– 109.1
– 119.9
109.1
0.0
119.9
0.0
6,726.4
– 183.4
6,542.9
6,737.0
– 209.0
6,528.0
investment income
867.4
871.0
260.9
246.5
241.9
240.5
20.1
22.5
1,390.3
1,380.4
4.3
4.1
– 2.0
– 8.5
1,392.5
1,376.0
– 1.7
498.0
19.1
–
27.0
746.0
2.8
–
– 114.2
– 61.6
6.9
– 20.1
– 48.9
– 1.6
0.0
– 468.8
– 10.3
– 718.6
– 2.5
– 801.0
24.7
–
19.5
404.4
662.2
91.5
5.5
264.8
108.0
– 1,051.2
111.5
6.2
252.3
– 541.0
9,237.4
7,209.7
23.4
34.3
160.4
–
26.8
373.3
–
39.0
290.5
3.9
–
48.8
5.5
44.3
6.2
– 242.4
– 267.9
–
–
– 143.6
– 5,701.6
– 5,887.1
10.3
9.3
– 21.8
– 57.1
– 1.7
0.0
790.9
– 20.7
565.6
– 471.1
142.0
– 479.5
– 763.3
– 96.7
– 22.1
– 579.8
– 518.7
458.8
149.4
– 534.4
– 807.3
– 96.5
– 19.4
764.6
– 453.8
– 8,490.9
– 6,425.8
– 86.1
– 70.3
6.4
– 3.4
– 1.7
– 8.4
–
– 37.6
– 234.4
– 435.7
– 84.9
– 47.0
2.1
– 2.8
– 2.1
– 7.4
–
28.1
– 222.9
– 336.9
– 11.9
– 36.7
–
–
–
–
170.4
– 135.0
– 151.5
427.8
696.5
116.9
5.5
235.0
96.1
– 1,087.8
130.4
6.2
227.6
9,417.1
7,276.6
–
5.5
–
6.2
– 5,726.5
– 5,904.4
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 8,733.0
– 6,539.1
684.1
737.5
– 34.3
649.8
– 117.9
531.9
– 39.9
697.6
– 174.7
522.9
–
– 56.6
– 193.6
193.6
–
61.2
6.4
– 67.6
0.9
– 0.9
28.0
0.2
4.0
161.4
193.6
–
–
–
–
–
–
– 63.6
– 223.6
223.6
–
67.6
0.6
– 68.2
1.4
– 1.4
21.7
0.2
8.6
193.1
223.6
–
–
–
–
–
Profit / loss before borrowing costs and taxes
618.4
554.2
– 40.2
140.8
199.0
27.5
24.7
746.5
784.0
– 62.4
– 46.5
–
27.5
– 2.4
25.1
–
24.7
– 4.3
20.4
– 2.8
743.7
– 96.8
646.8
– 10.1
773.8
– 31.4
– 93.9
– 160.2
613.7
– 21.1
– 114.9
– 29.7
– 76.2
– 14.5
– 90.7
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
– 428.2
– 457.1
1,699.9
1,379.2
1,357.6
1,365.5
– 3,829.7
– 3,876.6
– 1,035.0
– 1,062.9
– 722.8
– 804.0
155.3
43.1
40.8
0.0
179.2
5,433.9
– 29.5
0.0
– 148.4
38.7
– 55.7
– 51.4
– 0.7
– 18.3
– 2.8
615.5
– 94.7
520.8
– 10.4
– 43.9
60.4
0.0
144.9
5,005.9
– 43.0
0.0
227.5
33.6
– 47.3
– 52.9
– 0.3
– 0.4
– 10.1
544.1
– 88.4
455.6
208.3
102.7
138.1
– 167.7
28.7
5.5
42.1
39.9
5.5
– 192.1
45.0
– 156.8
– 179.0
– 30.2
– 21.3
– 26.6
–
– 40.2
12.7
– 27.5
22.9
6.2
46.8
45.7
6.2
179.2
52.3
– 201.6
– 173.3
– 26.4
– 19.0
– 14.9
6.0
–
6.0
– 17.9
– 11.9
42.5
18.3
2.9
–
16.5
35.7
–
– 68.9
51.4
– 247.0
– 107.2
– 13.5
– 0.1
– 66.2
– 42.6
–
140.8
– 12.4
128.5
– 17.1
– 38.4
3.5
–
41.0
37.8
–
41.9
54.1
– 263.6
– 119.8
– 15.5
– 0.1
– 11.1
– 48.4
–
199.0
– 49.5
149.5
– 321.8
– 278.3
– 144.1
– 106.5
– 4,815.5
– 4,451.7
– 1,740.0
– 1,373.2
– 1,216.8
– 1,166.5
Segment assets as at 31.12.
46,200.1
45,409.1
14,364.9
12,792.3
10,828.4
10,591.9
12,652.5
11,956.7
84,046.0
80,750.1
1,854.3
2,036.5
– 1,376.4
– 1,931.8
84,523.9
80,854.8
199
Baloise Group annual Report 2018
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
2017
3,214.4
– 162.6
3,051.8
Non-Life
2018
3,376.7
– 184.5
3,192.2
2017
3,512.0
– 20.8
3,491.1
Life
2018
3,360.3
– 24.6
3,335.7
213.2
198.7
1,087.3
1,083.9
113.1
101.2
3.1
– 23.5
– 10.9
1,392.5
1,376.0
102.7
–
23.5
0.0
57.3
3,448.5
– 52.9
0.0
35.3
–
31.1
–
81.9
3,539.3
– 48.6
–
– 1,881.0
– 2,018.2
– 38.1
67.7
– 468.4
– 490.6
– 27.0
– 0.2
– 0.8
29.6
66.6
– 481.6
– 530.6
– 30.1
– 0.2
0.1
– 235.5
– 3,073.7
– 203.2
– 3,167.7
339.3
662.2
21.8
1.7
218.9
5,822.2
– 45.3
1.7
– 3,845.5
– 496.9
13.1
– 13.7
– 275.3
– 95.4
– 21.8
– 560.9
– 219.7
– 5,516.2
64.3
– 1,051.2
27.6
1.9
185.2
3,647.5
– 43.0
1.9
– 3,886.2
382.8
16.7
– 54.2
– 280.2
– 102.9
– 19.0
795.0
– 166.4
– 3,314.3
Profit / loss before borrowing costs and taxes
374.7
371.7
306.0
333.2
– 78.5
– 59.4
684.1
737.5
Borrowing costs
Profit / loss before taxes
income taxes
Profit / loss for the period (segment result)
–
374.7
– 100.2
274.5
–
371.7
– 70.4
301.3
– 2.8
303.2
– 14.2
289.0
– 10.1
323.0
– 61.1
261.9
200
2017
2017
2018
2017
2018
2017
Other activities
Eliminated
Banking
2018
– 2.0
–
164.7
–
5.3
269.2
– 87.0
–
–
–
–
–
–
–
–
–
–
– 31.5
– 113.5
– 177.2
92.1
–
92.1
– 18.3
73.8
– 15.8
–
137.4
–
4.4
239.2
– 65.4
–
–
–
–
–
–
–
–
–
–
– 31.0
– 100.3
– 157.4
81.8
–
81.8
– 15.8
66.0
–
–
–
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
–
–
–
–
–
–
–
–
–
– 1.5
– 36.7
168.1
4.3
17.4
154.8
– 155.6
4.3
26.6
– 239.3
– 214.2
– 29.7
– 89.1
– 24.9
– 114.0
– 225.8
– 261.0
– 61.4
– 310.7
310.7
– 62.3
– 334.2
334.2
9,417.1
7,276.6
– 5,726.5
– 5,904.4
Total
2018
6,737.0
– 209.0
6,528.0
96.1
– 1,087.8
130.4
6.2
227.6
–
6.2
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 6,539.1
– 39.9
697.6
– 174.7
522.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
– 8,733.0
– 34.3
649.8
– 117.9
531.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 26.0
– 32.2
– 3.1
– 1.4
74.4
84.3
24.6
211.8
310.7
11.1
238.8
334.2
Baloise Group annual Report 2018
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
2017
2017
Non-Life
2018
3,376.7
– 184.5
3,192.2
35.3
31.1
–
–
–
81.9
3,539.3
– 48.6
29.6
66.6
– 481.6
– 530.6
– 30.1
– 0.2
0.1
–
371.7
– 70.4
301.3
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
– 3,845.5
– 496.9
13.1
– 13.7
– 275.3
– 95.4
– 21.8
– 560.9
– 219.7
– 5,516.2
– 2.8
303.2
– 14.2
289.0
Life
2018
3,360.3
– 24.6
3,335.7
64.3
– 1,051.2
27.6
1.9
185.2
3,647.5
– 43.0
1.9
– 3,886.2
382.8
16.7
– 54.2
– 280.2
– 102.9
– 19.0
795.0
– 166.4
– 3,314.3
– 10.1
323.0
– 61.1
261.9
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
– 1,881.0
– 2,018.2
– 235.5
– 3,073.7
– 203.2
– 3,167.7
Profit / loss before borrowing costs and taxes
374.7
371.7
306.0
333.2
2017
–
–
–
Banking
2018
–
–
–
213.2
198.7
1,087.3
1,083.9
113.1
101.2
– 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
– 2.0
–
164.7
–
5.3
269.2
– 87.0
–
–
–
–
–
–
– 32.2
–
– 31.5
– 113.5
– 177.2
92.1
–
92.1
– 18.3
73.8
–
–
–
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
– 1.5
– 36.7
168.1
4.3
17.4
154.8
– 155.6
4.3
–
–
–
–
–
– 1.4
–
26.6
– 239.3
– 214.2
– 78.5
– 59.4
– 31.4
– 109.9
12.3
– 97.6
– 29.7
– 89.1
– 24.9
– 114.0
Other activities
Eliminated
2017
2018
2017
2018
2017
–
–
–
–
–
–
–
–
–
6,726.4
– 183.4
6,542.9
3.1
– 23.5
– 10.9
1,392.5
1,376.0
Total
2018
6,737.0
– 209.0
6,528.0
–
–
– 225.8
–
– 61.4
– 310.7
310.7
–
–
–
–
–
–
74.4
–
24.6
211.8
310.7
–
–
–
–
–
–
–
– 261.0
–
– 62.3
– 334.2
334.2
–
–
–
–
–
–
84.3
–
11.1
238.8
334.2
–
–
–
–
–
427.8
696.5
116.9
5.5
235.0
96.1
– 1,087.8
130.4
6.2
227.6
9,417.1
7,276.6
–
5.5
–
6.2
– 5,726.5
– 5,904.4
– 535.0
80.8
– 482.1
– 765.8
– 77.2
– 21.9
– 613.4
– 591.8
– 8,733.0
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 6,539.1
684.1
737.5
– 34.3
649.8
– 117.9
531.9
– 39.9
697.6
– 174.7
522.9
201
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
Notes to the consolidated balance sheet
8. PROPERTY, PLANT AND EQUIPMENT
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
121.5
– 87.2
34.3
–
–
–
1.4
24.5
73.6
– 49.0
24.5
–
–
–
0.3
19.8
87.8
– 68.0
19.8
–
–
–
16.9
353.3
841.2
– 487.9
353.3
–
202
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
2018
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
Land
Buildings
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Total
64.5
1.6
–
– 1.9
–
210.1
9.1
–
– 2.2
–
– 7.5
– 15.7
–
34.3
4.9
–
–
–
– 0.1
–
24.5
4.8
–
– 0.4
–
–
–
19.8
11.8
–
0.0
–
0.0
–
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.
–
–
– 0.1
–
– 0.6
56.0
57.4
– 1.5
56.0
–
– 8.1
– 7.0
– 7.3
– 9.8
–
–
– 5.6
187.6
468.5
– 281.0
187.6
–
–
–
– 0.2
32.1
112.7
– 80.6
32.1
–
–
–
– 0.6
21.2
74.3
– 53.2
21.2
–
–
–
– 0.2
21.5
88.7
– 67.1
21.5
–
353.3
32.3
–
– 4.5
–
– 23.3
–
– 32.2
– 0.1
–
– 7.2
318.3
801.6
– 483.3
318.3
–
203
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
9.
INTANGIBLE ASSETS
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 December1
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
– 259.0
– 29.9
– 0.1
– 302.3
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
–
–
–
–
–
–
–
– 0.8
–
–
–
–
–
0.6
6.7
–
–
6.7
–
6.7
–
–
–
–
–
–
–
– 12.4
2.0
–
–
–
10.4
41.1
615.8
–
–
–
–
–
–
–
–
–
– 4.4
–
8.8
161.7
–
–
615.8
161.7
89.7
507.4
9.3
9.4
–
55.7
40.0
61.4
4.5
0.1
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
–
–
–
–
–
8.6
137.0
514.7
– 377.6
137.0
29.7
0.6
81.0
16.8
8.9
–
–
–
–
–
–
0.1
10.0
– 9.9
0.1
–
–
–
–
0.1
0.1
2.0
– 19.6
–
– 4.4
10.4
70.6
1,002.5
–
–
1,002.5
196.9
571.6
169.3
55.6
9.1
1,002.5
6.7
615.8
161.7
137.0
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
204
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
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
81.1
6.7
615.8
161.7
–
–
–
–
95.9
245.8
137.0
–
51.0
–
– 2.3
0.0
0.0
–
0.1
–
0.1
–
–
–
–
–
Total
1,002.5
–
51.1
341.7
– 2.3
0.0
0.0
–
– 253.9
– 33.9
– 0.1
– 341.3
2018
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
–
–
–
–
0.0
–
–
–
–
–
–
–
–
– 2.3
78.9
244.0
accumulated amortisation and impairment
– 165.1
Balance as at 31 December1
Segment as at 31 December 2018
Switzerland
Germany
Belgium
luxembourg
Group business
Total for geographic regions
78.9
21.8
16.3
16.9
23.9
0.0
78.9
–
–
–
–
–
–
–
– 0.9
–
–
–
–
–
– 0.2
5.6
–
–
5.6
–
5.6
–
–
–
–
–
–
–
– 52.6
1.9
–
–
–
21.5
– 21.4
661.1
–
–
–
–
–
–
–
–
–
– 1.7
–
– 4.1
147.8
–
–
661.1
147.8
110.0
523.7
19.9
7.5
–
44.2
38.3
60.5
4.4
0.3
–
–
–
–
–
– 4.1
147.8
542.2
– 394.4
147.8
33.2
0.4
76.6
17.6
20.0
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
5.6
661.1
147.8
147.8
–
–
–
–
–
–
0.1
1.1
– 1.0
0.1
–
–
–
–
0.1
0.1
1.9
–
–
– 1.7
21.5
– 32.1
1,041.2
–
–
1,041.2
209.2
584.4
173.9
53.4
20.4
1,041.2
205
Baloise Group annual Report 2018
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
Basler Financial Services GmbH
Bâloise Vie luxembourg S.a.
Bâloise assurances luxembourg S.a.
Baloise Belgium nV
Goodwill as at 31.12.
CHF million
Discount rate
per cent
Growth rate
per cent
2017
21.8
14.8
7.4
16.8
16.2
2018
21.8
14.3
7.1
16.2
15.6
2017
n. a.
7.2
7.0
7.0
7.0
2018
7.8
7.1
7.0
7.0
7.0
2017
n. a.
1.0
2.5
2.5
2.6
2018
1.5
1.0
2.5
2.5
2.6
the impairment test in 2018 did not reveal any need to recognise impairment losses.
the management is of the opinion that a possible change in the assumptions based on the exercise of appropriate discretion
would not have led, either in 2018 or in 2017, to the carrying amount of an entity being significantly higher than its recoverable value.
206
Baloise Group annual Report 2018
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
2017
2018
30.9.
26.9
175.5
202.4
30.9.
99.5
1.1
101.8
202.4
1. – 9.
188.6
30.9.
25.1
179.1
204.2
30.9.
97.8
1.6
104.8
204.2
1. – 9.
205.4
– 179.9
– 198.9
8.7
0.0
– 0.5
8.3
6.5
0.0
– 0.2
6.4
3.8
3.9
32.6 %
32.6 %
71.5
101.7
68.4
91.4
207
Baloise Group annual Report 2018
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.
2017
cHF million
Total
2018
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
66.9
1.7
2.0
4.7
8.4
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
152.7
1.9
–
0.6
2.5
in Switzerland, a 20 per cent stake in infracore Sa, which operates in the healthcare property market, was purchased in the year
under review.
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 2018 or 31 December 2017.
as at 31 December 2018, 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.
208
Baloise Group annual Report 2018
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
2017
2018
6,817.5
567.2
384.5
– 157.7
–
–
– 336.8
111.1
94.6
7,480.3
407.5
–
– 69.6
–
23.3
–
111.7
– 49.3
7,480.3
7,904.0
86.7
0.1
95.8
–
the increase in the portfolio during the reporting year was largely attributable to real estate acquired by Baloise’s Swiss entities.
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
31.12.2017
31.12.2018
4,402.9
343.3
3,657.0
331.3
8,488.9
8,002.5
24,870.1
23,771.4
29.2
24.8
38,134.4
35,786.9
13,100.6
51,235.0
12,126.1
47,913.0
1 of which financial assets totalling cHF 207.1 million (2017: cHF 184.3 million) involved insurance policies that had not been fully reviewed by the balance sheet date.
209
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
–
–
–
–
–
–
8,488.9
8,002.5
24,852.3
23,656.3
–
–
–
–
–
–
8,488.9
8,002.5
24,870.1
23,771.4
24.8
33,388.2
31,798.7
2,695.1
1,707.8
4,402.9
1,861.1
1,795.9
3,657.0
17.8
–
–
15.1
100.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
343.3
0.0
343.3
0.1
29.1
–
–
29.2
298.8
32.5
331.3
0.1
24.7
–
–
3,038.4
1,707.8
4,746.2
2,159.9
1,828.4
3,988.2
33,341.3
31,658.9
46.9
–
–
39.8
100.0
–
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.
210
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
–
–
–
–
–
–
–
–
–
–
–
–
2,695.1
1,707.8
4,402.9
1,861.1
1,795.9
3,657.0
8,488.9
8,002.5
24,852.3
23,656.3
17.8
–
–
15.1
100.0
–
8,488.9
8,002.5
24,870.1
23,771.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
343.3
0.0
343.3
0.1
29.1
–
–
29.2
298.8
32.5
331.3
0.1
24.7
–
–
3,038.4
1,707.8
4,746.2
2,159.9
1,828.4
3,988.2
33,341.3
31,658.9
46.9
–
–
39.8
100.0
–
24.8
33,388.2
31,798.7
211
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,514.2
7,079.9
8.0
956.6
10.0
8.0
904.6
10.0
Financial assets of a debt nature
8,488.9
8,002.5
24,870.1
23,771.4
Total
8,488.9
8,002.5
29,273.0
27,428.4
372.5
356.0
38,134.4
35,786.9
Secured financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
other
Total
11.7
–
901.9
–
913.6
11.3
–
857.0
–
868.2
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or a government
bond has been securitised as collateral.
4,402.9
3,657.0
343.3
331.3
4,746.2
3,988.2
2,627.5
1,700.2
2,627.5
1,700.2
69.8
24.7
57.9
510.4
719.4
393.1
75.0
27.8
88.9
611.4
783.0
370.6
11,290.8
7,836.4
5,742.7
0.2
11,343.1
6,647.4
5,780.9
–
247.2
1,375.7
3,684.4
0.2
5,307.5
354.7
1,311.3
4,162.3
–
5,828.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19.3
258.2
65.8
0.0
17.2
12.0
29.2
–
–
–
–
–
–
–
–
–
–
29.0
295.8
6.5
0.0
–
–
15.0
9.7
–
–
24.8
–
–
–
–
–
89.1
283.0
123.7
510.4
719.4
393.1
104.0
323.6
95.4
611.4
783.0
370.6
18,822.3
18,438.0
7,844.4
6,711.3
10.2
6,655.4
6,695.2
10.0
33,388.2
31,798.7
258.9
1,375.7
4,586.4
0.2
6,221.2
366.0
1,311.3
5,019.3
–
6,696.6
212
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2,627.5
1,700.2
69.8
24.7
57.9
510.4
719.4
393.1
75.0
27.8
88.9
611.4
783.0
370.6
4,402.9
3,657.0
11,290.8
7,836.4
5,742.7
0.2
11,343.1
6,647.4
5,780.9
–
Financial assets of a debt nature
8,488.9
8,002.5
24,870.1
23,771.4
8,488.9
8,002.5
29,273.0
27,428.4
247.2
1,375.7
3,684.4
0.2
5,307.5
354.7
1,311.3
4,162.3
–
5,828.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19.3
258.2
65.8
0.0
–
–
–
29.0
295.8
6.5
0.0
–
–
2,627.5
1,700.2
89.1
283.0
123.7
510.4
719.4
393.1
104.0
323.6
95.4
611.4
783.0
370.6
343.3
331.3
4,746.2
3,988.2
17.2
–
12.0
–
29.2
15.0
–
9.7
–
24.8
18,822.3
18,438.0
7,844.4
6,711.3
10.2
6,655.4
6,695.2
10.0
33,388.2
31,798.7
372.5
356.0
38,134.4
35,786.9
–
–
–
–
–
–
–
–
–
–
258.9
1,375.7
4,586.4
0.2
6,221.2
366.0
1,311.3
5,019.3
–
6,696.6
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or a government
bond has been securitised as collateral.
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,514.2
7,079.9
8.0
956.6
10.0
8.0
904.6
10.0
11.7
11.3
901.9
857.0
913.6
868.2
as at 31.12.
cHF million
public corporations
industrial enterprises
Financial institutions
other
Total
Carrying amount
Fair value
2017
2018
2017
2018
7,514.2
7,079.9
8,950.0
8,356.9
8.0
956.6
10.0
8.0
904.6
10.0
8.4
1,049.4
10.9
8.2
978.0
10.8
8,488.9
8,002.5
10,018.7
9,353.8
213
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2017
2018
2017
2018
9,840.2
139.4
4,638.1
939.7
26.8
–
9,818.1
132.2
4,322.5
952.0
28.2
–
– 20.4
– 18.8
–
–
–
0.0
–
–
–
–
0.0
–
9,819.8
139.4
4,638.1
939.7
26.8
–
9,799.3
10,237.2
10,202.2
132.2
4,322.5
150.0
5,076.4
140.5
4,649.4
952.0
28.2
–
940.9
27.3
–
952.0
28.7
–
240.5
245.0
15,824.6
15,498.0
– 12.4
– 32.9
– 8.7
– 27.5
228.1
236.3
236.8
243.4
15,791.7
15,470.5
16,668.5
16,216.3
776.6
0.2
776.8
925.7
0.1
925.8
–
–
–
–
–
–
776.6
0.2
776.8
925.7
0.1
925.8
776.6
0.2
776.8
925.7
0.1
925.8
Mortgages and loans
16,601.4
16,423.8
– 32.9
– 27.5
16,568.6
16,396.2
17,445.3
17,142.1
214
Baloise Group annual Report 2018
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
2017
2018
– 41.7
– 32.9
7.9
1.4
– 1.5
–
–
2.2
– 1.2
– 32.9
5.4
2.9
– 3.3
–
–
–
0.4
– 27.5
Fair value assets
Fair value liabilities
2017
2018
2017
2018
362.4
438.0
453.9
460.9
145.3
–
116.7
0.7
Derivative financial instruments as reported on the balance sheet
800.4
914.8
145.3
117.3
215
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2017
2018
–
–
1,094.9
1,254.8
208.5
1.6
–
–
56.3
1.6
–
–
–
50.2
27.8
–
58.8
20.4
165.7
205.5
–
–
–
–
–
60.9
–
20.0
–
–
–
71.2
–
29.7
–
–
1,305.1
1,312.7
243.7
284.7
80.9
100.9
–
2,127.4
777.6
–
–
1,518.1
521.7
–
2,905.0
2,039.8
9,022.4
8,197.4
–
1,242.3
–
–
–
871.4
–
–
–
38.7
12.3
–
51.0
57.2
–
10.5
–
–
–
50.7
11.1
–
61.8
105.1
–
2.3
–
–
–
2.6
6.9
–
9.5
43.5
–
11.4
–
–
10,264.6
9,068.8
67.7
107.4
54.9
–
–
7.7
–
7.7
5.7
–
2.3
–
–
8.1
14,474.7
12,421.3
362.4
453.9
145.3
116.7
–
–
–
–
–
–
–
–
1,751.7
1,764.3
14.3
14.5
–
–
2.3
–
–
0.5
the contract value or notional amount is used for derivative financial instruments whose principal may be swapped at maturity
(options, futures and currency swaps) and for instruments whose principal is only nominally lent or borrowed (interest rate swaps).
the contract value or notional amount is disclosed in order to express the aggregate amount of derivative transactions in which
the Baloise Group is involved.
216
Gross amount
Impairment
Carrying amount
Fair value
2017
2018
2017
2018
2017
2018
2017
2018
3.0
–
403.8
442.3
327.0
408.2
849.1
735.2
–
– 0.7
– 1.5
– 2.2
–
3.0
–
3.0
–
– 1.3
– 1.2
403.1
440.9
325.7
406.9
403.5
440.9
327.9
406.9
– 2.5
846.9
732.7
847.3
734.8
Baloise Group annual Report 2018
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
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
2017
2018
– 3.4
0.2
1.1
– 1.1
–
1.2
– 0.1
– 2.2
– 2.2
0.2
1.0
– 1.5
–
–
0.0
– 2.5
2017
2018
415.2
1.7
– 60.8
76.9
–
–
–
35.2
468.3
468.3
1.4
– 74.7
78.5
–
–
–
– 16.2
457.2
217
Baloise Group annual Report 2018
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
2017
2018
8.7
1.4
0.3
–
–
0.9
11.3
38.9
105.5
11.3
1.0
– 0.3
–
–
– 0.5
11.6
27.0
151.3
– 118.8
– 147.5
–
–
1.4
27.0
– 0.1
–
0.0
0.0
–
–
–
– 0.1
–
–
– 0.4
30.5
– 0.1
–
0.1
– 0.1
–
–
0.0
– 0.1
Receivables from reinsurers as at 31 December
38.2
41.9
218
Baloise Group annual Report 2018
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
2017
2018
2017
2018
3.3
7.3
–
–
–
–
–
–
–
–
115.0
–
87.9
–
1,242.7
1,099.7
28.5
8.2
27.8
5.3
3.3
7.3
1,394.4
1,220.7
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 partially in Belgium.
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.
219
Baloise Group annual Report 2018
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
220
2017
2018
2,374.8
2,538.4
15.2
110.3
37.9
1.1
79.9
30.9
12.7
– 4.6
33.1
– 0.5
62.9
39.5
– 111.7
– 167.4
–
–
–
–
–
–
–
–
2,538.4
2,514.3
2017
2018
– 2,848.5
– 2,929.0
– 87.6
– 17.9
– 37.9
– 53.6
19.7
12.6
– 1.7
– 25.9
111.7
–
–
–
– 89.9
– 14.5
– 33.1
113.6
–
– 36.8
0.7
–
167.4
–
–
–
– 2,929.0
– 2,821.6
Baloise Group annual Report 2018
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
2017
2018
– 843.2
– 852.1
– 17.0
– 11.5
–
14.6
– 3.0
– 3.6
– 68.1
–
33.8
0.6
45.4
–
– 16.4
– 11.6
–
15.5
– 5.2
15.2
30.3
– 0.1
32.4
– 0.4
–
–
– 852.1
– 792.4
31.12.2017
31.12.2018
2,538.4
2,514.3
– 2,929.0
– 2,821.6
– 852.1
– 792.4
–
–
– 1,242.7
– 1,099.7
221
Baloise Group annual Report 2018
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
Regular employee contribution
net interest cost
Unrecognised past service cost
Gains and losses on plan settlements
expected return on reimbursement rights
31.12.2017
31.12.2018
62.3
481.5
36.7
529.1
1,359.0
179.7
1,309.3
187.7
100.2
–
338.7
–
– 8.1
25.2
95.5
–
358.3
0.0
– 2.7
0.3
2,538.4
2,514.3
35.6
–
34.5
–
2017
2018
– 104.6
– 106.2
31.7
– 14.2
– 25.9
–
–
40.2
– 13.4
– 0.1
–
–
Total expenses for defined benefit plans recognised in the income statement
– 113.0
– 79.5
222
Baloise Group annual Report 2018
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
2017
2018
0.7
1.4
0.3
77.0
24.3
21.7
0.9
1.4
0.3
77.0
24.4
21.9
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
31.12.2017
31.12.2018
3,781.1
3,614.0
– 277.0
– 261.0
300.8
30.5
– 40.2
202.2
– 41.7
– 99.9
97.3
13.3
283.3
28.3
– 36.7
188.0
– 38.6
– 93.0
91.5
10.4
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.
223
Baloise Group annual Report 2018
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 69.0 million for the 2019 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 9.9 years; the average present value
factor for current benefit entitlements under pension commitments is 15.6 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 2018 totalled
cHF 27.8 million (2017: cHF 28.5 million). there were no disposals of plan assets for long-term employee benefits. Benefits paid
out amounted to cHF 3.1 million (2017: cHF 3.6 million).
224
Baloise Group annual Report 2018
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 2018, a sum of cHF 24.0 million (2017: cHF 24.4 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 until 1
Subscription price per share (cHF)
Value of shares subscribed (cHF million)
Fair value of subscribed shares on subscription date (cHF million)
employees entitled to participate
participating employees
SSp portion of variable remuneration
2017
2018
176,252
186,489
31.08.2020
31.08.2021
77.00
13.6
26.9
3,146
2,007
87.8
76.00
14.2
27.8
3,254
2,130
87.6
2017
34,738
2018
27,886
29.02.2020
28.02.2021
116.37
140.58
4.0
4.5
917
116
15 %
3.9
4.2
960
109
16 %
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.
225
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
18.4.3 Share Participation Plan
SHARE PARTICIPATION PLAN (SPP)
number of shares subscribed 1
Restricted until
Subscription price per share 2 (cHF)
Value of shares subscribed 2 (cHF million)
Fair value of subscribed shares on subscription date (cHF million)
employees entitled to participate
participating employees
Spp portion of variable remuneration
1 including shares financed by loans.
2 net of the discounted dividend right over three years.
2017
95,009
2018
76,442
29.02.2020
28.02.2021
114.49
140.80
10.9
12.4
889
96
6 %
10.8
11.4
931
93
7 %
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
2018
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
01.03.2018
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
130.70
149.20
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
01.03.2021
1.182
1.24
0.64
0.58
0.77
1.21
1.50
1.05
1.34
0.89 4
1.03 4
0.86 4
86.05
91.00
64.40
78.50
113.60
124.00
126.00
130.70
149.20
135.40 4
135.40 4
135.40 4
101.71
112.84
41.22
45.53
87.47
150.04
189.00
137.24
199.93
120.76 4
138.96 4
116.44 4
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
125 %
21 %
61 %
– 4 % 4
6 % 4
– 22 % 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 2018.
226
Baloise Group annual Report 2018
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 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
of which: expired (departures in 2018)
number of active pSUs as at 31 December 2018
Value of allocated pSUs on issue date (cHF million)
pSU expense incurred by the Baloise Group for 2016 (cHF million)
pSU expense incurred by the Baloise Group for 2017 (cHF million)
pSU expense incurred by the Baloise Group for 2018 (cHF million)
Plan 2016
Plan 2017
Plan 2018
69
40,748
– 604
40,144
– 413
39,731
– 272
39,459
5.3
1.3
1.9
1.7
65
67
33,698
33,237
–
–
– 263
33,435
– 303
33,132
4.7
1.1
1.6
–
–
–
–
0
33,237
5.0
1.2
227
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
19. DEFERRED INCOME TAXES
19.1 Deferred tax assets and liabilities
DEFERRED TA X ASSETS
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
2018
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
228
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation in
accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
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
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation in
accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
32.4
23.9
112.3
93.7
4.3
480.2
698.4
132.7
59.2
39.7
1,676.7
3.6
1.4
–
– 24.0
2.4
101.6
55.1
3.6
– 1.2
– 2.0
140.5
–
–
– 16.9
–
–
–
–
–
–
–
– 16.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1.3
– 0.1
– 1.4
– 1.3
– 0.1
– 13.9
– 27.5
– 3.4
– 2.0
– 0.4
34.7
25.2
94.1
68.4
6.6
568.0
726.0
132.9
55.9
37.3
– 51.2
1,749.1
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
DEFERRED TA X LIABILITIES
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
2018
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
3.5
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
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
3.8
5.9
227.4
50.2
348.9
79.6
75.4
271.9
1.3
1,375.3
70.6
2,510.3
– 0.9
0.3
10.5
9.4
– 2.6
2.0
– 4.8
–
0.1
206.3
– 9.1
211.2
–
–
–
–
–
–
–
– 102.6
–
–
–
–
–
–
–
23.0
–
–
–
–
–
–
– 102.6
23.0
–
–
–
–
–
–
–
–
–
–
–
–
– 0.1
– 0.2
– 7.7
– 0.4
– 2.2
– 0.1
– 2.0
– 5.2
– 0.1
– 40.3
– 0.1
– 58.3
2.7
6.0
230.3
59.1
367.0
81.4
68.6
164.2
1.4
1,541.4
61.4
2,583.5
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.
229
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
the Baloise Group had recognised deferred tax assets on tax loss carryforwards totalling cHF 228.6 million as at 31 December 2018
(2017: cHF 272.6 million). of this total, cHF 0.1 million will expire after one year, 0.0 million after two to four years and cHF 228.5 million
will expire after five years or more.
the Baloise Group has offsettable tax assets of cHF 69.6 million as at 31 December 2018 (2017: cHF 134.7 million), which it
can use until the end of 2025. in 2018, an impairment loss cHF 69.6 million was recognised on the tax credit.
no deferred tax assets had been recognised on tax loss carryforwards amounting to cHF 170.3 million as at 31 December 2018
(2017: cHF 261.7 million) because the relevant offsetting criteria had not been met. of this total, cHF 0.6 million will expire after
one year, a further cHF 17.4 million will expire after two to four years and cHF 152.3 million will expire after five years or more.
19.2 Deferred income taxes
cHF million
Deferred tax assets
Deferred tax liabilities
Total (net)
of which: recognised as deferred tax assets
of which: recognised as deferred tax liabilities
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
Other assets recognised at fair value through profit or loss
precious metals for the account and at risk of life insurance policyholders and third parties
Sub-total
Other assets
31.12.2017
31.12.2018
1,676.7
1,749.1
– 2,510.3
– 2,583.5
– 833.6
88.8
– 922.4
– 834.4
73.5
– 907.8
31.12.2017
31.12.2018
84.2
37.2
56.3
144.7
32.0
– 5.3
349.1
70.5
70.5
34.0
27.7
52.8
97.0
43.9
– 6.5
248.9
54.1
54.1
419.6
303.0
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.
230
Baloise Group annual Report 2018
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
2017
2018
2017
2018
0.3
0.4
336.8
653.5
41.3
8.3
0.5
1,041.1
–
540.5
79.4
23.7
643.6
– 19.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
on 14 December 2017, it was publicly announced that Basler lebensversicherungs-aG, based in Hamburg, and Basler Sach-
versicherungs-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.
the launch, announced in 2017, of a real-estate fund in Switzerland for institutional investors was completed in the year under
review. to this end, investment properties held by Baloise life ltd and Basler Versicherung aG were transferred to this new
real-estate portfolio. this affects the life and non-life segments in Switzerland. also the transactions relating to Deutscher Ring
Bausparkasse aG and RolanD Rechtsschutz Beteiligung GmbH announced in 2017 were completed in 2018.
in the year under review, no material events took place that satisfy the criteria for iFRS 5.
231
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
22. SHARE CAPITAL
2017
Balance as at 1 January
purchase / sale of treasury shares
capital increases
Share buy-back and cancellation
Balance as at 31 December
2018
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)
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
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
1,327,993
47,472,007
48,800,000
890,141
– 890,141
–
–
–
–
–
–
–
2,218,134
46,581,866
48,800,000
4.9
–
–
–
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 (2017: cHF 0.10). as far as individuals, legal entities and partnerships are concerned,
entry in the share register with voting rights is limited to 2 per cent of the registered share capital entered in the commercial
register. the Baloise Group buys and sells its own shares as part of its ordinary investing activities and for employee share
ownership programmes.
the annual General Meeting held on 27 april 2018 voted to pay a gross dividend of cHF 5.60 per share for the 2017 financial
year. this amounted to a total dividend distribution of cHF 273.3 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 264.0 million.
as at the balance sheet date (31 December 2018), a cumulative total of 1,336,575 shares in Bâloise Holding ltd had been
repurchased for a total amount of cHF 198.5 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.
232
Baloise Group annual Report 2018
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)
31.12.2017
31.12.2018
649.1
5,595.0
74.7
657.0
5,426.0
74.5
6,318.8
6,157.5
38,008.1
36,740.2
3,681.5
3,677.5
41,689.7
40,417.7
48,008.5
46,575.2
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
31.12.2017
Net
31.12.2018
649.1
5,082.5
512.5
0.1
649.3
–
–
–
–
657.0
4,955.0
471.0
– 1.2
655.9
–
–
–
–
5,595.0
– 438.3
5,156.7
5,426.0
– 423.6
5,002.4
74.7
–
74.7
74.5
–
74.5
Total technical reserves (non-life)
6,318.8
– 438.2
5,880.7
6,157.5
– 424.8
5,732.7
233
Baloise Group annual Report 2018
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
31.12.2017
613.3
8.8
27.0
649.1
0.1
0.1
– 0.1
0.1
613.3
9.0
27.0
649.3
622.5
8.5
26.0
657.0
– 1.5
0.3
–
– 1.2
879.0
3,508.7
1,207.2
5,595.0
– 50.4
– 99.1
– 288.8
– 438.3
828.6
3,409.6
918.4
5,156.7
849.7
3,422.4
1,153.9
5,426.0
– 51.0
– 106.0
– 266.6
– 423.6
Net
31.12.2018
621.0
8.8
26.0
655.9
798.7
3,316.3
887.3
5,002.4
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
2017
589.0
1.8
590.8
649.1
0.1
3,229.3
– 164.3
3,065.0
3,405.9
– 185.8
Net
2018
649.3
3,220.1
less: premiums earned during the reporting period
– 3,214.4
162.6
– 3,051.8
– 3,376.7
184.5
– 3,192.2
additions arising from acquisition of policy portfolios
and insurance companies
Disposals arising from sale of policy portfolios
and insurance companies
Reclassification to non-current assets
classified as held for sale
exchange differences
Balance as at 31 December
–
–
–
45.2
649.1
–
–
–
0.1
0.1
–
–
–
–
–
–
–
–
–
–
–
–
45.2
649.3
– 21.3
657.0
0.0
– 1.2
– 21.2
655.9
apart from the actual unearned premium reserves, this item includes health insurance reserves for old age and deferred unearned
premiums.
234
Baloise Group annual Report 2018
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
89.6
– 19.1
2.5
–
–
–
1.7
74.7
–
0.2
– 0.2
–
–
–
–
–
Gross
Reinsurance
assets
Net
2017
89.6
– 18.9
2.4
–
–
–
74.7
– 20.5
21.0
–
–
–
1.7
74.7
– 0.8
74.5
–
0.0
0.0
–
–
–
–
–
Net
2018
74.7
– 20.5
21.0
–
–
–
– 0.8
74.5
235
Baloise Group annual Report 2018
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)
2017
2018
5,307.8
– 393.2
4,914.7
5,595.0
– 438.3
5,156.7
1,936.3
– 87.3
1,849.0
2,036.9
– 135.8
1,901.1
– 913.3
– 911.9
– 991.8
– 960.3
– 1,825.2
– 1,952.0
–
–
218.1
218.1
–
–
– 103.3
– 103.3
5,156.7
5,002.4
438.3
423.6
5,595.0
5,426.0
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 70.7 million at the end of 2018 (2017: cHF 74.2 million). the
decrease was attributable to commutations of reserves and currency effects.
the net reserves for the hospital liability business in Germany amount to cHF 238.8 million and are also included in the total.
236
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
23.2 Technical reserves (life)
cHF million
actuarial reserves from non-unit-linked life insurance contracts 1
actuarial reserves from unit-linked life insurance contracts
Reserves for final policyholders’ dividends
Unearned revenue reserve
Structure of actuarial reserves (life)
policyholders’ dividends credited and provisions for future policyholders’ dividends
Total technical reserves (life)
1 the actuarial reserves include unearned premium reserves and claims reserves.
31.12.2017
31.12.2018
34,328.1
33,372.9
3,108.1
2,833.5
181.3
390.7
164.5
369.3
38,008.1
36,740.2
3,681.5
3,677.5
41,689.7
40,417.7
237
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
23.2.1 Maturity structure of technical reserves
cHF million
Actuarial reserves from non-unit-linked life insurance contracts
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
no determinable residual term
Business from Swiss occupational pension plans 1
Total actuarial reserves from non-unit-linked life insurance contracts
Actuarial reserves from unit-linked life insurance contracts
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
no determinable residual term
Total actuarial reserves from unit-linked life insurance contracts
Policyholders’ dividends credited
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
no determinable residual term
Total policyholders’ dividends credited
Provisions for future policyholders’ dividends
Up to 1 year
no determinable residual term
Total provisions for future policyholders’ dividends
31.12.2017
31.12.2018
1,256.3
3,123.1
3,314.7
6,062.6
9,229.9
1,119.7
3,072.2
3,253.7
5,813.0
8,910.5
11,341.6
11,203.8
34,328.1
33,372.9
84.8
341.1
365.8
416.7
1,899.7
3,108.1
86.6
252.4
214.4
296.7
182.9
1,032.9
96.3
261.3
350.8
394.0
1,731.1
2,833.5
76.1
218.4
197.9
259.9
161.2
913.5
88.9
2,559.7
2,648.6
102.2
2,661.7
2,764.0
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.
238
Baloise Group annual Report 2018
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
2017
2018
33,553.2
34,328.1
– 55.3
– 576.7
–
–
–
–
–
–
830.2
– 378.5
34,328.1
33,372.9
the actuarial reserves include unearned premium reserves and claims reserves.
the actuarial reserves for DpF business as at 31 December 2018 amounted to cHF 33,092.1 million (31 December 2017: cHF 34,046.7 million), while for non-DpF business they totalled
cHF 280.9 million (31 December 2017: cHF 281.4 million).
the actuarial reserves for assumed business (inward reinsurance) as at 31 December 2018 came to cHF 10.9 million (31 December 2017: cHF 10.5 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
2017
2018
2,727.3
255.4
– 236.9
– 5.8
175.6
–
–
–
3,108.1
276.3
– 200.3
– 6.3
– 257.8
–
–
–
192.7
– 86.4
3,108.1
2,833.5
239
Baloise Group annual Report 2018
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
2017
2018
185.1
– 7.0
6.2
– 20.8
–
–
–
6.8
11.0
181.3
181.3
– 6.8
10.7
– 19.6
–
–
–
3.4
– 4.6
164.5
Final policyholders’ dividends, which are only paid upon contract expiry, are funded and accrued over the duration of the policy in proportion to the profits attributable to the contract.
23.2.5 Unearned revenue reserve
cHF million
Balance as at 1 January
Reserved during the reporting period
change in balance
change due to unrealised gains and losses on investments (shadow accounting)
additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets classified as held for sale
exchange differences
Balance as at 31 December
2017
2018
347.6
19.2
– 8.0
0.1
–
–
–
390.7
18.6
– 25.9
0.4
–
–
–
31.7
390.7
– 14.5
369.3
240
Baloise Group annual Report 2018
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
2017
2018
1,033.1
1,032.9
45.4
40.1
– 108.6
– 132.9
–
–
–
63.1
1,032.9
2,376.3
– 771.4
115.3
– 103.8
290.0
663.0
–
–
–
–
–
–
– 26.7
913.5
2,648.6
– 663.0
164.3
– 106.3
336.8
426.1
–
–
–
79.3
– 42.7
2,648.6
2,764.0
Policyholders’ dividends credited and provisions for future policyholders’ dividends as at 31 December
3,681.5
3,677.5
241
Baloise Group annual Report 2018
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
2017
2018
2017
2018
2,814.2
2,814.2
2,924.7
2,924.7
–
–
–
–
225.1
820.0
–
8.9
36.8
5,107.8
104.2
1,300.6
–
0.0
25.4
135.2
–
–
8.3
34.5
5,324.5
90.4
1,372.9
–
0.0
31.6
225.0
820.0
–
8.9
36.8
5,144.1
107.3
1,371.4
–
0.0
25.4
135.2
–
–
8.3
34.5
5,354.2
93.1
1,425.8
–
0.0
31.6
7,628.8
6,997.5
7,738.9
7,082.6
12,253.6
11,616.9
12,253.6
12,253.6
11,616.9
12,253.6
11,616.9
11,616.9
Total liabilities arising from banking business and financial contracts
22,696.5
21,539.0
–
–
1 there are currently no internationally accepted mathematical methods available for determining the fair value of financial contracts with discretionary participation features (DpFs).
Savings deposits and customer deposits essentially consist of savings accounts, business accounts and deposit accounts held
by Swiss banking clients. the mortgage-backed bonds reported have all been issued by pfandbriefbank schweizerischer
Hypothekarinstitute aG.
the other financial contracts designated as at fair value through profit or loss largely relate to the life insurance liability
arising from investment-linked life insurance contracts involving little or no transfer of risk. the year-on-year change in this liability
consists entirely of the funds flowing into and out of the pertinent investment portfolio, the latter’s market-related price fluctuations
and exchange-rate movements.
242
Baloise Group annual Report 2018
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
2017
2018
1,470.4
496.5
–
496.5
– 225.0
34.3
– 30.9
– 2.2
1.1
1,742.9
–
–
–
–
39.9
– 35.9
– 2.4
1.5
1,742.9
1,744.5
no new bonds were issued in the year under review and no bonds were redeemed.
on 28 January 2019, Bâloise Holding ltd issued a bond totalling cHF 200 million (0.5 per cent, 2019 – 2025, iSin cH0458097976)
as part of its refinancing of the bond maturing on 1 March 2019.
TERMS & CONDITIONS GOVERNING DEBT OUTSTANDING (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
243
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
26. NON-TECHNICAL 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
Restructuring
Other
Total
Restructuring
Other
Total
2018
2017
80.0
0.6
–
68.7
0.6
–
– 25.6
– 25.6
11.3
–
–
–
5.8
43.2
49.0
–
–
–
–
–
–
–
–
–
0.2
15.7
15.9
21.5
12.5
34.0
– 0.8
– 5.6
–
0.7
5.8
– 15.2
– 2.5
–
1.6
43.2
– 16.0
– 8.1
–
2.2
49.0
– 0.7
– 2.6
–
– 0.7
23.4
– 11.0
– 4.1
–
– 0.3
40.3
– 11.7
– 6.7
–
– 1.0
63.7
the balance shown for other non-technical provisions includes typical amounts for legal advice and litigation risks. the recognition
of restructuring provisions in profit or loss and their usage not recognised in profit or loss primarily relate to the German entities.
the recognition of other non-technical provisions in profit or loss and their usage recognised or not recognised in profit or loss
primarily relate to the German and Swiss entities.
31.12.2017
31.12.2018
1,350.3
1,486.1
147.9
186.7
21.3
134.5
189.0
20.2
1,706.3
1,829.8
27. INSURANCE LIABILITIES
cHF million
liabilities to policyholders
liabilities to brokers and agents
liabilities to insurance companies
other insurance liabilities
Total insurance liabilities
244
Baloise Group annual Report 2018
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
3,229.3
– 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
Non-Life
Life
3,405.9
– 29.2
3,376.7
– 185.8
1.4
3,360.3
–
3,360.3
– 24.6
–
Total
2018
6,766.2
– 29.2
6,737.0
– 210.4
1.4
Total premiums earned and policy fees (net)
3,051.8
3,491.1
6,542.9
3,192.2
3,335.7
6,528.0
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
2017
2018
263.2
276.6
126.5
13.1
214.5
480.9
1.9
280.9
13.1
– 1.6
145.6
1.4
206.9
477.7
1.8
254.9
12.0
– 0.9
1,392.5
1,376.0
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 2.4 million had been recognised on impaired investments at the balance sheet date (2017: cHF 2.8 million).
245
Baloise Group annual Report 2018
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
2017
cHF million
Realised gains on sales and book profits
investment property
Held to maturity 1
available for sale
Recognised at fair value through profit or loss
carried at cost
Sub-total
Realised losses on sales and book losses
investment property
Held to 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
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.
246
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
30.2 Realised gains and losses on investments for own account and at own risk
2018
cHF million
Realised gains on sales and book profits
investment property
Held to maturity 1
available for sale
Recognised at fair value through profit or loss
carried at cost
Sub-total
Realised losses on sales and book losses
investment property
Held to maturity 1
available for sale
Recognised at fair value through profit or loss
carried at cost
Sub-total
Impairment losses recognised in profit or loss
Held to maturity
available for sale
carried at cost
Reversal of impairment losses recognised in profit or loss
Held to maturity
available for sale
carried at cost
Sub-total
Investment
property
Financial
assets of an
equity nature
Financial
assets of
a debt nature
Mortgages
and loans
Derivative
financial
instruments
264.5
–
–
–
–
–
–
–
0.3
309.5
198.0
6.1
–
–
–
264.5
315.6
198.3
– 157.9
–
–
–
–
–
–
– 126.8
– 20.2
–
–
– 62.0
– 224.6
– 3.4
–
– 157.9
– 147.0
– 290.0
–
–
–
–
–
–
–
–
– 93.8
–
–
–
–
– 93.8
–
–
–
–
–
–
–
–
–
–
5.6
65.8
71.4
–
–
–
– 4.1
– 2.8
– 6.8
–
–
– 3.3
–
–
3.1
– 0.3
Total
264.5
0.3
507.5
513.6
65.8
–
–
–
502.0
–
502.0
1,351.7
–
–
–
– 559.7
–
– 157.9
– 62.0
– 351.4
– 587.4
– 2.8
– 559.7
– 1,161.5
–
–
–
–
–
–
–
–
– 93.8
– 3.3
–
–
3.1
– 94.1
Total realised gains and losses on investments
106.5
74.7
– 91.7
64.3
– 57.7
96.1
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.
247
Baloise Group annual Report 2018
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
2017
2018
– 14.4
– 80.0
–
–
–
– 0.1
– 10.3
– 2.5
– 27.3
–
–
–
–
–
–
0.0
0.0
–
– 10.3
– 3.6
– 93.8
–
–
–
–
–
– 1.5
– 2.8
–
–
–
0.0
–
0.0
– 1.5
–
–
–
–
–
– 0.6
– 3.3
Total impairment losses on financial assets recognised in profit or loss
– 28.8
– 97.2
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 loss of cHF 129.5 million was reported for 2018 (2017: gain of cHF 98.0 million).
a gross currency loss of cHF 65.1 million was recognised directly in equity for the reporting year (2017: gain of cHF 116.6 million).
allowing for hedges of a net investment in a foreign operation (hedge accounting), a net loss of cHF 72.8 million was recognised
for 2018 (2017: net gain of cHF 194.8 million).
248
Baloise Group annual Report 2018
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
1 opposite negative effect on earnings of cHF – 8.8 million in 2017 as a result of applying the deferred gains / losses for policyholders’ dividends.
2017
2018
45.4
15.3
48.1
8.1
52.1
25.0
41.2
12.2
116.9
130.4
2017
2018
19.9
0.8
6.6
10.3
9.5
5.5
6.9
101.2
74.4
235.0
14.6
0.5
1.4
0.0
50.0
4.1
6.4
65.3
85.3
227.6
249
Baloise Group annual Report 2018
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
other 1
Total
1 this includes changes in deferred acquisition costs recognised in profit or loss, as shown in table 9.
34. PERSONNEL EXPENSES
total personnel expenses for 2018 came to cHF 890.3 million (2017: cHF 916.3 million).
2017
2018
– 801.4
– 776.7
– 42.0
– 32.3
– 50.4
– 73.4
– 42.7
– 41.1
– 45.7
– 32.4
– 34.9
– 66.6
– 43.4
– 6.8
– 544.2
– 606.9
– 13.1
– 6.5
–
– 106.5
– 163.3
– 12.0
– 1.2
–
– 66.9
– 218.9
– 1,916.9
– 1,912.4
250
Baloise Group annual Report 2018
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
2017
2018
– 49.7
– 49.7
– 0.1
– 9.4
– 12.1
6.8
– 19.8
– 11.1
– 45.7
– 518.1
– 518.1
– 49.0
– 49.0
0.0
– 9.6
– 5.3
6.6
– 15.1
– 10.6
– 34.1
884.3
884.3
Total gains or losses on financial contracts
– 613.4
801.2
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
–
–
–
–
–
–
251
Baloise Group annual Report 2018
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
2017
2018
– 134.1
16.2
– 117.9
– 104.0
– 70.7
– 174.7
36.2 Expected and current income taxes
the expected average tax rate for the Baloise Group was 18.8 per cent in 2017 and 20.7 per cent in 2018. these rates correspond
to the weighted average tax rates in those countries where the Baloise Group operates.
cHF million
profit before taxes
expected average tax rate (per cent)
Expected income taxes
Increase / reduction owing to
tax-exempt profits and losses
non-deductible expenses
withholding taxes on dividends
change in tax rates
change in unrecognised tax losses
recognition of tax credits
tax items related to other reporting periods
non-taxable measurement differences
intercompany effects
other impacts
Current income taxes
2017
2018
649.8
18.81 %
– 122.2
697.6
20.65 %
– 144.1
16.7
– 9.8
– 0.6
31.0
18.3
– 6.7
– 0.9
– 1.7
– 10.3
– 20.1
–
– 1.1
– 7.9
– 17.9
4.2
–
3.2
– 9.4
– 16.4
3.0
– 117.9
– 174.7
in 2018, the “other impacts” item was heavily affected by the impairment of a tax credit and by countervailing tax effects resulting from a real-estate portfolio transaction.
252
Baloise Group annual Report 2018
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 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)
2017
548.0
2018
523.2
47,641,577
46,979,421
11.50
11.14
2017
548.0
–
548.0
2018
523.2
–
523.2
47,641,577
46,979,421
97,459
61,603
–
–
47,739,036
47,041,024
11.48
11.12
the dilution of earnings was attributable to the performance Share Units (pSU) share-based payment plan.
253
Baloise Group annual Report 2018
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
2017
2018
– 0.7
1.3
72.4
9.9
– 21.4
61.6
4.6
9.6
118.5
– 7.7
– 26.7
98.3
369.4
– 551.9
– 182.5
– 726.3
– 182.9
– 909.1
7.5
–
7.5
72.7
5.4
78.1
0.2
– 2.6
– 2.5
197.0
119.3
38.1
255.1
– 0.9
– 2.8
– 3.8
– 7.7
0.0
– 7.7
–
– 0.7
– 0.7
271.0
– 52.5
116.2
– 586.6
Total other comprehensive income
316.6
– 488.3
254
Baloise Group annual Report 2018
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
2017
2018
299.9
– 577.8
0.1
– 26.1
1.0
3.6
–
– 1.3
– 19.7
0.5
– 1.5
– 4.6
Total deferred income taxes of items not to be reclassified to the income statement
– 21.4
– 26.7
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
120.8
– 1.5
– 15.4
0.8
– 50.1
– 16.5
– 0.1
38.1
171.3
– 0.2
1.5
0.1
– 66.5
5.3
4.6
116.2
Other comprehensive income after deferred income taxes
316.6
– 488.3
255
Baloise Group annual Report 2018
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 income 1
Goodwill / negative goodwill or proceeds from disposals
cash and cash equivalents used / received for acquisitions and disposals
cash and cash equivalents acquired / disposed of
Outflow / inflow of cash and cash equivalents
1 this includes primarily historical cumulative exchange differences.
256
Cumulative acquisitions
Cumulative disposals
2017
2018
2017
2018
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
653.5
42.0
8.8
–
–
– 40.5
– 688.4
–
44.5
–
15.8
37.7
15.0
–
–
– 7.8
–
–
29.9
– 44.5
– 7.1
– 21.7
37.7
–
37.7
–
–
–
–
–
15.0
– 15.8
– 0.6
– 1.4
15.0
–
15.0
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
in 2017, 84.9 per cent of the shares in the listed company pax anlage aG, Basel, were purchased. 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.
the purchase price paid in 2017 for Movu aG in Switzerland was cHF 25.6 million and the purchase price for Drivolution nV
in Belgium was cHF 2.0 million.
the disposals in 2017 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.
no companies were acquired in the reporting year.
the disposals in 2018 were the German companies Deutscher Ring Bausparkasse aG and RolanD Rechtsschutz Beteiligung GmbH.
these disposals had no material impact on the profit for 2018 because the companies’ assets and liabilities were already
treated as a disposal group and an impairment loss had been recognised on them in 2017 (note 21).
incremental acquisitions are not included in this table. that is why the outflow of cash and cash equivalents varies from the
presentation in the cash flow statement.
257
Baloise Group annual Report 2018
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 88 to 113).
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
2017
2018
2017
2018
2017
2018
31.12.2017
31.12.2018
31.12.2017
31.12.2018
cHF million
associates
Key management personnel
–
0.1
–
0.1
1.7
0.1
1.6
0.0
– 28.2
– 12.1
– 26.8
– 10.8
–
10.3
–
8.4
– 3.9
–
– 2.8
–
EXECUTIVE MANAGEMENT REMUNERATION
cHF million
Short-term employee benefits
post-employment benefits
payments under share-based payment plans
Total
2017
2018
– 7.7
– 1.3
– 3.2
– 6.3
– 1.0
– 3.5
– 12.1
– 10.8
15,583 shares worth cHF 2.3 million were repurchased from members of the corporate executive committee in 2018 (2017:
cHF 2.5 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 88 to 113 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
258
Baloise Group annual Report 2018
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 2018.
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.
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.
31.12.2017
31.12.2018
cHF million
Guarantees
collateral
Total guarantees and collateral for the benefit of third parties
of which: for the benefit of partners in joint ventures
of which: from joint ventures
of which: for the benefit of joint ventures
CREDIT RATINGS OF GUARANTEES AND COLLATERAL
31.12.2017
cHF million
Guarantees
collateral
31.12.2018
cHF million
Guarantees
collateral
AAA
–
–
AAA
–
–
AA
–
–
AA
–
–
A
30.3
–
A
30.5
–
51.5
509.0
560.5
–
–
–
Lower than BBB
or no rating
BBB
0.0
0.2
21.2
508.7
Lower than BBB
or no rating
BBB
–
0.1
21.4
472.7
51.9
472.8
524.7
–
–
–
Total
51.5
509.0
Total
51.9
472.8
259
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
42.1.3 Pledged or ceded assets, securities-lending assets and collateral held
CARRYING AMOUNTS OF ASSETS PLEDGED OR CEDED AS COLLATERAL
cHF million
Financial assets under repurchase agreements
Financial assets in the context of securities lending
investments
pledged intangible assets
pledged property, plant and equipment
other
Total
FAIR VALUE OF COLLATERAL HELD
cHF million
Financial assets under reverse repurchase agreements
Financial assets in the context of securities lending
other
Total
of which: sold or repledged
– with an obligation to return the assets
– with no obligation to return the assets
31.12.2017
31.12.2018
649.5
3,983.0
2,024.0
–
4,476.4
2,112.1
–
–
–
–
–
–
6,656.5
6,588.5
31.12.2017
31.12.2018
59.1
64.0
4,883.4
6,002.2
–
–
4,942.5
6,066.2
–
–
–
–
the Baloise Group engages in securities-lending transactions that may give rise to credit risk. collateral is required in order to
hedge these credit risks by more than covering the underlying value of the securities that are being lent (mainly bonds). the value
of the counterparty’s lending securities is regularly measured in order to minimise the credit risk involved. additional collateral
is immediately required if this value falls below the value of cover provided.
the Baloise Group retains control over the loaned securities throughout the term of its lending transactions. the income
received from securities lending is recognised in profit or loss.
260
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
42.2 Future liabilities
42.2.1 Capital commitments
cHF million
Commitments undertaken for future acquisition of
investment property
financial assets
property, plant and equipment
intangible assets
Total commitments undertaken
of which: in connection with joint ventures
of which: own share of joint ventures’ capital commitments
31.12.2017
31.12.2018
499.0
735.7
–
–
490.1
766.8
–
–
1,234.7
1,256.9
–
–
–
–
Due to plans to introduce new software, an in-depth analysis of future liabilities in respect of investment property was conducted.
this resulted in a better set of data that was used to assess the liabilities in the year under review and in the prior year. the prior-year
figures have been restated accordingly.
CREDIT RATINGS OF CAPITAL COMMITMENTS
31.12.2017
cHF million
capital commitments
31.12.2018
cHF million
capital commitments
AAA
199.2
AAA
117.4
AA
–
AA
–
A
61.5
Lower than BBB
or no rating
BBB
Total
–
974.1
1,234.7
A
Lower than BBB
or no rating
BBB
Total
110.9
–
1,028.6
1,256.9
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.
261
Baloise Group annual Report 2018
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
2017
2018
– 18.1
– 29.8
– 1.4
– 49.3
– 19.1
–
– 19.1
0.5
0.7
– 18.3
– 33.2
– 3.5
– 55.1
– 19.5
0.0
– 19.5
0.5
0.5
contingent lease payments are made in cases where the lease is indexed.
in connection with the introduction of iFRS 16 (for annual periods beginning on or after 1 January 2019), the leasing arrange-
ments underwent an in-depth analysis and the internal accounting principles were updated. this also resulted in a new set of data
in the system that was used to reassess the leases in the year under review and in the prior year. the prior-year figures have been
restated accordingly.
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
262
2017
2018
49.3
119.5
200.7
369.6
50.5
0.1
50.5
48.0
121.2
187.9
357.1
60.3
0.1
60.4
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
44. CLAIM PAYMENTS RECEIVED FROM NON-GROUP INSURERS
the companies in the Baloise Group received claim payments totalling cHF 0.0 million in 2018 (2017: 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.
263
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
45. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
entities are defined as significant if they either individually or together contribute a significant proportion of the gross premiums,
net income or total assets of the Baloise Group. other long-term equity investments may be included for qualitative reasons, e. g.
they are listed on a stock exchange.
Group’s
share of
voting
rights /
capital
(per cent) 2
Direct
share of
voting
rights /
capital
(per cent) 2
Primary
activity
Operating
segment 1
Method of
consoli-
dation 3
Currency
Share
capital
(million)
Total
assets
(million)
Gross
premiums /
policy fees
(million)
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
e
F
–
–
–
–
–
–
–
cHF
cHF
cHF
cHF
cHF
cHF
cHF
cHF
4.9
2,399.3
–
75.0
5,355.5
1,360.2
50.0 32,080.8
2,728.0
18.0
1.0
179.8
282.4
50.0
7,707.2
0.2
1.5
32.4
35.1
cHF
1.5
15.2
eUR
94.7
377.3
eUR
22.0
9,316.7
330.7
eUR
15.1
1,614.8
640.4
eUR
eUR
eUR
eUR
eUR
12.8
1.5
–
–
0.5
235.0
7.3
7.3
–
18.0
–
–
7.9
–
–
31.12.2018
Switzerland
Bâloise Holding ltd, Basel
Baloise insurance ltd, Basel
Baloise life ltd, Basel
artires aG, Basel 4
Baloise Wohnbauten aG, Basel
Baloise Bank SoBa aG, Solothurn
Haakon aG, Basel
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
85.04
85.04
85.04
100.00
100.00
100.00
74.75
74.75
100.00
100.00
Baloise asset Management Schweiz aG, Basel
investment
manage-
ment
Baloise asset Management international aG, Basel
investment
B
100.00
100.00
consulting
Germany
Basler Versicherung
Beteiligungen B. V. & co KG, Hamburg
Basler lebensversicherungs-
aktiengesellschaft, Hamburg
Basler Sachversicherungs-
aktiengesellschaft, Bad Homburg
Basler Beteiligungsholding GmbH, Hamburg
Basler Financial Services GmbH, Hamburg
Deutsche niederlassung der
FRiDaY insurance S.a., Berlin
oVB Holding aG, cologne
ZeUS Vermittlungsgesellschaft mbH, Hamburg
Holding
life
o
l
100.00
100.00
100.00
100.00
non-life
nl
100.00
100.00
Holding
other
non-life
other
other
o
o
100.00
100.00
100.00
100.00
nl
100.00
100.00
–
o
32.57
32.57
100.00
100.00
1 l: life, nl: non-life, B: Banking, o: other activities / Group business.
2 Shares stated as a percentage are rounded down.
3 F: Full consolidation, e: equity-accounted investment.
4 former pax anlage aG, Basel
264
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
31.12.2018
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 private equity (luxembourg) ScS,
luxembourg
Baloise alternative invest S.a. SicaV-RaiF,
luxembourg
Other territories
Bâloise participations
Holding B. V., amsterdam
Baloise life (liechtenstein) aG, Balzers
Baloise alternative investment Strategies
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
l
B
o
100.00
100.00
100.00
100.00
100.00
100.00
investment
l / nl
100.00
100.00
manage-
ment
investment
l / nl / o
100.00
100.00
manage-
ment
Holding
life
o
l
100.00
100.00
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
9,143.6
1,032.2
eUR
eUR
2.7
17.1
193.8
27.3
cHF
250.0
1,240.2
67.2
–
–
eUR
15.8
325.5
116.4
eUR
32.7
7,683.5
68.9
eUR
0.1
14.4
eUR
224.3
274.7
USD
0.0
642.7
USD
–
1,580.4
eUR
10.9
0.9
cHF
USD
7.5
0.0
2,926.3
397.9
–
–
–
–
–
0.9
–
265
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
46. CHANGES TO SHAREHOLDINGS
in 2018, there had been no transactions resulting in a change of control over a subsidiary.
47. STRUCTURED ENTITIES
47.1 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.
47.2 Non-consolidated structured entities
Baloise immobilien Management aG launched the Baloise Swiss property Fund (iSin cH 0414551033) for institutional investors
on 1 october 2018. to this end, investment properties held by Baloise life ltd and Basler insurance ltd were transferred to the
fund.
the fund is managed by Baloise immobilien Management aG. Baloise Group subsidiaries are invested in the fund. the Baloise
Group’s total exposure and its decision-making powers indicate that the requirements of iFRS 10 are not met, so the Baloise Swiss
property Fund is not included in the basis of consolidation.
48. JOINT ARRANGEMENTS
there were no joint arrangements in 2018 and in 2017.
49. EVENTS AFTER THE BALANCE SHEET DATE
on 10 February 2019, voters accepted the amendment of legislation on direct taxation in the canton of Basel-Stadt (Basel compromise
on tax proposal 17). the governing council of the canton of Basel-Stadt decided on 26 February 2019 that the rates of tax on profit
and capital would be lowered with effect from 1 January 2019. the other parts of the proposal will come into force later on,
potentially subject to the requirement that the federal proposal on tax reform and old-age and survivors’ insurance (StaF) is
accepted on 19 May 2019. it is proposed that status companies be abolished and replacement measures be introduced.
the lowering of the rates of tax on profit and capital will reduce the tax expense of the companies in the Baloise Group that
are based in the canton of Basel-Stadt and currently do not benefit from a special tax status. Further amendments to tax legislation
at canton level are expected over the course of 2019.
266
Baloise Group annual Report 2018
Financial Report
notes to the consolidated annual financial statements
this page has been left empty on purpose.
267
Baloise Group annual Report 2018
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, 22 March 2019
Report of the statutory auditor on the consolidated financial statements
Opinion
We have audited the consolidated financial statements (pages 118 - 266) of Bâloise Holding
Ltd and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as at
31 December 2018, 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 2018, 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.
268
Baloise Group annual Report 2018
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.
Our audit
response
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 142 to 144 and 233 to 236 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.
Based on our audit procedures we did not identify exceptions with
regard to the valuation and disclosure of claims reserves non-life.
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
269
Baloise Group annual Report 2018
Financial Report
Report of the statutory auditor
270
analysis”. We also refer to notes 3.19 and 23.2 on pages 144 to 146
and 237 to 241 of the Group’s financial statements.
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.
Based on our audit procedures we did not identify exceptions with
regard to the valuation and disclosure of life insurance technical
reserves.
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 134 to 136 and 209 to 213 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.
Based on our audit procedures we did not identify exceptions with
regard to the valuation and disclosure of investments without publically
available market values.
Baloise Group annual Report 2018
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.
271
Baloise Group annual Report 2018
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
Christian Fleig
Licensed audit expert
(Auditor in charge)
Patrick Schwaller
Licensed audit expert
272
Baloise Group annual Report 2018
Financial Report
Report of the statutory auditor
this page has been left empty on purpose.
273
Unterkapitel 4 Baloise
16 Review of operating performance
38 Sustainable business management
64 corporate Governance
116 Financial Report
274 Bâloise Holding Ltd
292 General information
Bâloise Holding Ltd
income statement of Bâloise Holding ltd ......................... 276
Balance sheet of Bâloise Holding ltd .............................. 277
notes to the financial statements of Bâloise Holding ltd ... 278
appropriation of distributable profit as proposed
by the Board of Directors ................................................ 287
Report of the statutory auditor to the
annual General Meeting of Bâloise Holding ltd, Basel ..... 288
D
t
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G
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i
D
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H
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Unterkapitel
Baloise Group annual Report 2018
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
Depreciation, amortisation and impairment
interest expenses
other expenses
Total expenses
Tax expense
Profit for the period
Note
2017
2018
2
3
4
5
406.8
33.8
6.9
447.5
– 46.6
–
– 30.5
– 2.8
– 79.9
432.2
21.6
37.3
491.1
– 37.6
– 1.8
– 35.2
– 2.6
– 77.2
– 0.3
– 2.0
367.3
411.9
276
Baloise Group annual Report 2018
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
31.12.2017
31.12.2018
6
7
8
9
10
11
12
96.1
359.9
2.8
458.8
36.5
341.7
7.5
385.7
102.0
1,860.8
1,962.8
529.7
1,786.1
2,315.8
2,421.6
2,701.5
3.4
1.6
–
27.7
340.0
1,250.0
7.7
7.4
3.5
175.0
21.2
620.0
1,075.0
4.4
1,630.4
1,906.5
4.9
11.7
6.1
4.9
11.7
6.4
472.4
566.1
0.6
367.3
– 71.8
791.2
0.7
411.9
– 206.7
795.0
2,421.6
2,701.5
277
Baloise Group annual Report 2018
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.
all amounts shown in these annual financial statements of Bâloise Holding ltd 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.
Cash and cash equivalents
cash and cash equivalents include bank deposits and cash equivalents such as call money, fixed-term deposits and money
market instruments. they are recognised at their nominal amount.
Receivables from Group companies
this line item includes expenses relating to the new financial year that have been paid in advance and income from the reporting
year that will not be received until a later date. it also comprises dividends approved by subsidiaries’ annual general meetings at
the balance sheet date, which Bâloise Holding reports as dividends receivable. they are recognised at their nominal amount.
Receivables from third parties
Receivables are recognised at their nominal amount less any impairment losses.
Loans to Group companies
these loans are measured at their nominal amount less any impairment losses. Specific write-downs are recognised for all identifiable
risks in accordance with the prudence principle.
Long-term equity investments
long-term equity investments are recognised individually at cost less any impairment losses.
278
Notes to the financial statements of Bâloise Holding Ltd
Baloise Group annual Report 2018
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.
279
Baloise Group annual Report 2018
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. OTHER INCOME
cHF million
Write-up on long-term equity investment
Sundry other income
Total other income
2017
2018
6.7
3.7
23.4
–
33.8
4.5
17.1
–
0.0
21.6
2017
2018
–
6.9
6.9
30.0
7.3
37.3
in 2018, the investment in Baloise Bank SoBa aG, Solothurn, was written-up by cHF 30 million to its acquisition cost.
4. ADMINISTRATIVE EXPENSES
cHF million
personnel expenses1
other administrative expenses
Total administrative expenses
1 Bâloise Holding ltd has no direct employees. all staff members are employed by Baloise insurance ltd, Basel.
5.
INTEREST EXPENSES
cHF million
interest on bonds
other interest expenses
Total interest expenses
280
2017
2018
– 33.5
– 13.1
– 46.6
– 22.1
– 15.5
– 37.6
2017
2018
– 30.5
–
– 30.5
– 28.7
– 6.5
– 35.2
Baloise Group annual Report 2018
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
NOTES TO THE BALANCE SHEET
6. RECEIVABLES FROM GROUP COMPANIES
cHF million
Dividends
other receivables
Total receivables from Group companies
31.12.2017
31.12.2018
359.1
0.8
359.9
341.3
0.4
341.7
the annual general meeting of the following aGMs voted to recognise the dividends receivable for the 2018 financial year as
accrued income:
▸
▸
▸
▸
27 February 2019: Haakon aG, Basel
18 March 2019: Baloise Bank SoBa aG, Solothurn
22 March 2019: Basler Versicherung aG, Basel and Basler leben aG, Basel
27 March 2019: Baloise asset Management Schweiz aG, Basel and Baloise asset Management international aG, Basel
7. LOANS TO GROUP COMPANIES
cHF million
Subordinated loans to Baloise Bank SoBa
Subordinated loans to Bâloise (luxembourg) Holding S.a.
loans to Bâloise (luxembourg) Holding S.a.
loans to Basler Versicherung Beteiligungen B. V. & co. KG
Total loans to Group companies
31.12.2017
31.12.2018
40.0
62.0
–
–
102.0
40.0
162.0
283.7
44.0
529.7
281
Baloise Group annual Report 2018
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
8. LONG-TERM EQUITY INVESTMENTS
Total
shareholding
as at
31.12.2017
(with voting
rights)
Total
shareholding
as at
31.12.2018
(with voting
rights)
Share capital
as at
31.12.2018
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
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
1.0
0.2
7.5
<0.1
250.0
224.3
0.1
<0.1
<0.1
0.3
75.0
50.0
50.0
1.5
1.5
1.0
0.1
7.5
<0.1
250.0
224.3
0.1
<0.1
<0.1
0.3
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.
9. CURRENT INTEREST-BEARING LIABILITIES TO THIRD PARTIES
31.12.2018
Securities with security number
Bond 14 829 501
Total current interest-bearing liabilities
Interest rate
Issued
Maturity date
Amount CHF million
2.250 %
01.03.2012
01.03.2019
175.0
175.0
282
Baloise Group annual Report 2018
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
10. LONG-TERM INTEREST-BEARING LIABILITIES TO THIRD PARTIES
31.12.2018
Securities with security number
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
11. TREASURY SHARES
Number of registered shares
Balance as at 1 January 2017
purchases
Sales
Reduction of share capital
Disposals in connection with share participation programmes
Balance as at 31 December 2017
purchases
Sales
Disposals in connection with share participation programmes
Balance as at 31 December 2018
Interest rate
Issued
Maturity date
Amount CHF million
2.875 %
3.000 %
2.000 %
1.750 %
1.125 %
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)
135.86
126.79
158.89
131.25
149.88
129.27
136.40
159.80
147.89
300.0
250.0
150.0
225.0
150.0
1,075.0
Number
1,624,744
468,450
– 345,943
– 1,200,000
– 50,848
496,403
965,475
0
– 56,586
1,405,292
283
Baloise Group annual Report 2018
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
12. CHANGES IN EQUITY
cHF million
Balance as at 1 January 2017
allocation 2017
Dividend
additions
Reduction of share capital
change in treasury shares
Recognition / reversal
profit for the period
Balance as at 31 December 2017
allocation 2018
Dividend
additions
change in treasury shares
Recognition / reversal
profit for the period
Share capital
Statutory retained earnings
Voluntary retained earnings
Treasury shares
Total equity
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
11.7
2.3
5.0
–
–
–
– 0.1
–
–
–
4.9
–
–
–
–
–
–
–
–
–
–
–
–
–
11.7
–
–
–
–
–
–
573.8
29.0
–
–
– 126.6
–
– 3.8
–
472.4
94.0
–
–
–
– 0.3
–
566.1
289.6
– 29.0
– 260.0
–
–
–
–
367.3
367.9
– 94.0
– 273.3
–
–
–
411.9
412.6
– 156.6
–
–
–
126.7
– 41.9
–
–
– 71.8
–
–
–
725.8
0.0
– 260.0
0.0
0.0
– 41.9
0.0
367.3
791.2
0.0
– 273.3
0.0
– 134.8
– 134.8
–
–
– 206.7
0.0
411.9
795.0
–
–
–
–
–
3.8
–
6.1
–
–
–
–
0.3
–
6.4
Balance as at 31 December 2018
4.9
11.7
284
Baloise Group annual Report 2018
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
13. SIGNIFICANT SHAREHOLDERS
the information available to the company reveals that the following significant shareholders and shareholder groups linked by
voting rights held long-term equity investments in the company within the meaning of section 663c of the Swiss code of obligations
(oR) as at 31 December 2018:
per cent
Shareholders
chase nominees ltd. 1
BlackRock inc.
UBS Fund Management aG
lSV asset Management
nortrust nominees ltd. 1
Bank of new York Mellon n. V. 1
credit Suisse Funds aG
Total
shareholding
as at
31.12.2017
Share of
voting rights
as at
31.12.2017
Total
shareholding
as at
31.12.2018
Share of
voting rights
as at
31.12.2018
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
10.5
>5.0
3.3
>3.0
3.4
4.3
3.0
2.0
<2.0
0.0
0.0
0.0
0.0
0.0
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.
14. CONTINGENT LIABILITIES
cHF million
collateral, guarantee commitments
31.12.2017
31.12.2018
534.8
533.5
Bâloise Holding ltd has 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 and RentaSafe
time (D-cHF). the maximum liability corresponds to the present value of the outstanding guaranteed insurance benefits as at
31 December 2018. 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. By taking suitable corporate actions, Bâloise Holding ltd (BH) provides a guarantee to Basler Sachversicherungs-
aktiengesellschaft, Bad Homburg (BSaG) that BSaG’s solvency ratio will not fall below a defined threshold. BSaG is obliged to
notify BH without undue delay so that BH can initiate the necessary measures to enable BSaG’s solvency ratio to remain above
the defined threshold.
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.
285
Baloise Group annual Report 2018
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
15. 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 88 to 113 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.
16. NET REVERSAL OF HIDDEN RESERVES
in 2018, no hidden reserves were reversed.
17. 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.
18. EVENTS AFTER THE BALANCE SHEET DATE
on 28 January 2019, Bâloise Holding ltd issued a bond totalling cHF 200 million as part of its refinancing of the bond maturing
on 1 March 2019.
286
Baloise Group annual Report 2018
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 411,909,124.75.
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:
Dividend
allocated to free reserves
Withdrawn from free reserves
Profit to be carried forward
2017
2018
367,343,969.45
411,909,124.75
597,228.24
661,197.69
367,941,197.69
412,570,322.44
– 273,280,000.00
– 292,800,000.00
– 94,000,000.00
– 119,000,000.00
–
–
661,197.69
770,322.44
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 6.00 gross or cHF 3.90 net of withholding tax.
287
Baloise Group annual Report 2018
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, 22 March 2019
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements (pages 276 - 286) of Bâloise
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
ended 31 December 2018.
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 2018 comply with
Swiss law and the company’s articles of incorporation.
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
288
Baloise Group annual Report 2018
Bâloise Holding ltd
Report of the statutory auditor
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 2018.
Based on our audit procedures we did not identify exceptions with
regard to the valuation of long-term equity investments.
Our audit
response
289
Baloise Group annual Report 2018
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
Christian Fleig
Licensed audit expert
(Auditor in charge)
Patrick Schwaller
Licensed audit expert
290
Baloise Group annual Report 2018
Bâloise Holding ltd
Report of the statutory auditor
this page has been left empty on purpose.
291
Unterkapitel 4 Baloise
16 Review of operating performance
38 Sustainable business management
64 corporate Governance
116 Financial Report
274 Bâloise Holding ltd
292 General information
General
information
GLOSSARY ................................................................ 294
ADDRESSES .............................................................. 298
INFORMATION ON THE BALOISE GROUP .................... 299
FINANCIAL CALENDAR AND CONTACTS ...................... 300
Unterkapitel ▸
▸
▸
▸
▸
▸
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.
expense ratio
non-life insurance business expenses as a percentage of
total premiums.
Baloise Group annual Report 2018
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.
▸
▸
▸
▸
▸
▸
294
Baloise Group annual Report 2018
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.
295
Baloise Group annual Report 2018
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.
▸
▸
▸
▸
▸
▸
▸
296
Baloise Group annual Report 2018
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.
297
Baloise Group annual Report 2018
General information
addresses
Addresses
SWITZERLAND
Basler Versicherungen
aeschengraben 21
postfach
cH-4002 Basel
tel. + 41 58 285 85 85
Fax + 41 58 285 70 70
kundenservice@baloise.ch
www.baloise.ch
Baloise Bank SoBa
amthausplatz 4
cH-4502 Solothurn
tel. + 41 58 285 33 33
Fax + 41 58 285 03 33
bank@baloise.ch
www.baloise.ch
Baloise Asset Management
aeschengraben 21
postfach
cH-4002 Basel
tel. + 41 58 285 72 99
assetmanagement@baloise.com
www.baloise-asset-management.com
MOVU
okenstrasse 6
cH-8037 Zürich
tel. + 41 44 505 14 14
captain@movu.ch
www.movu.ch
298
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
tel. + 49 30 959 983 200
info@friday.de
www.friday.de
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
posthofbrug 6 – 8
Box 5 / 102
B-2600 antwerp
tel. + 32 491 19 18 49
info@mobly.be
www.mobly.be
Baloise Group annual Report 2018
General information
information on the Baloise Group
Information on the Baloise Group
the 2018 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 2018 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 2018 annual Report and the Summary of the 2018 annual
Report will be available from 28 March 2019 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.
© 2019 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)
299
Baloise Group annual Report 2018
General information
Financial calendar and contacts
Financial calendar and contacts
Corporate Governance
philipp Jermann
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 89 42
philipp.jermann@baloise.com
Investor Relations
Markus Holtz
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 81 81
investor.relations@baloise.com
Corporate Communications
Dominik Marbet
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 84 67
media.relations@baloise.com
7 MARCH 2019
Annual financial results
Media conference
conference call for analysts
28 MARCH 2019
Annual Report
publication of the annual Report 2018
26 APRIL 2019
Annual General Meeting
Bâloise Holding ltd
28 AUGUST 2019
Half-year financial results
conference call for analysts and the media
13 NOVEMBER 2019
Q3 interim statement
12 MARCH 2020
Annual financial results
Media conference
conference call for analysts
26 MARCH 2020
Annual Report
publication of the annual Report 2019
24 APRIL 2020
Annual General Meeting
Bâloise Holding ltd
www.baloise.com
300
Bâloise Holding Ltd
aeschengraben 21
cH-4002 Basel, Switzerland
www.baloise.com