ANNUAL REPORT
2019
Baloise Group
Unterkapitel Baloise Group
Annual Report 2019
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
Asset management and banking .......................................... 20
Switzerland .......................................................................... 22
Germany ............................................................................... 23
Belgium ................................................................................ 23
Luxembourg ......................................................................... 24
Consolidated income statement .......................................... 26
Consolidated balance sheet ................................................. 28
Business volume, premiums and combined ratio ............... 29
Technical income statement ................................................ 31
Gross premiums by sector .................................................... 32
Banking activities ................................................................. 33
Investment performance ...................................................... 34
SUSTAINABLE BUSINESS MANAGEMENT
Responsibility ....................................................................... 38
Responsible investment ....................................................... 48
Human resources ................................................................. 50
The environment .................................................................. 56
Risk management ................................................................. 60
Commitment to art ............................................................... 63
CORPORATE GOVERNANCE
Corporate Governance Report .............................................. 67
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 .......................... 204
Notes to the consolidated income statement .................... 245
Other disclosures ............................................................... 257
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ..... 270
BÂLOISE HOLDING LTD
Income statement of Bâloise Holding Ltd .......................... 278
Balance sheet of Bâloise Holding Ltd ................................ 279
Notes to the financial statements of Bâloise Holding Ltd .. 280
Appropriation of distributable profit as proposed
by the Board of Directors ................................................... 290
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ..... 291
GENERAL INFORMATION
Alternative Performance Measures .................................... 296
Glossary ............................................................................. 300
Addresses ........................................................................... 304
Information on the Baloise Group ...................................... 305
Financial calendar and contacts ........................................ 306
3
Baloise Group Annual Report 2019
Baloise
Baloise key figures
Baloise key figures
CHF million
Business volume
Gross non-life premiums written
Gross life premiums written
Sub-total of IFRS gross premiums written 1
Investment-type premiums
Total business volume
Operating profit (loss)
Profit / loss for the period before borrowing costs and taxes
Non-life
Life 2
Asset Management & Banking
Other activities
Consolidated profit for the period
Balance sheet
Technical provisions
Equity
Ratios (per cent)
Return on equity (RoE)
Gross non-life combined ratio
Net non-life combined ratio
New business margin (life)
Investment performance (insurance) 3
New life insurance business
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)
2018
2019
Change (%)
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
3,542.1
4,060.3
7,602.4
1,907.5
9,509.9
398.9
274.8
91.1
– 41.0
689.5
46,575.2
48,333.3
6,008.2
6,715.6
8.6
89.2
91.7
48.5
0.7
293.9
142.4
11.1
88.3
90.4
37.3
4.7
413.5
154.0
48,800,000
48,800,000
11.14
11.12
127.1
135.40
6,607.5
6.00
15.02
14.99
145.3
175.00
8,540.0
6.40
4.0
20.8
12.4
– 0.2
9.6
7.3
– 17.5
– 1.1
– 31.0
31.9
3.8
11.8
–
–
–
–
–
40.7
8.1
0.0
34.8
34.8
14.3
29.2
29.2
6.7
1 Premiums written and policy fees (gross).
2 Of which deferred gains / losses from other operating segments (31 December 2018: CHF 10.2 million; 31 December 2019: CHF –1.8 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 2019 based on the proposal submitted to the Annual General Meeting.
4
Baloise Group Annual Report 2019
Baloise
At a glance
At a glance
Profit (attributable
to the shareholders) of
CHF 694.2 million
Net combined ratio of
90.4 %
83 %
of employees
recommend Baloise
as an employer
Dividend of
CHF 6.40 per share
(to be proposed to the
Annual General Meeting
on 24 April 2020)
Equity of
CHF 6,715.6
million
– 0.2 %
decline in volume of
business with
investment-type
premiums
Return on equity
(RoE) of
11.1 %
New business margin
in the life business of
37.3 %
Net investment yield on
insurance assets of
2.3 %
– 7.1 %
CO2 reduction
+209,000
additional customers
BBB
improved sustainability
rating from MSCI
5
Baloise Group Annual Report 2019
Baloise
Letter to shareholders
Dr Andreas Burckhardt, Chairman of the Board of Directors (right), and Gert De Winter, Group CEO (left), with a view from the 23rd floor of Baloise Park.
DEAR SHAREHOLDERS,
Baloise achieved very good results in 2019, reporting a profit
attributable to shareholders of around CHF 694 million. This
equates to a year-on-year increase of 32.7 per cent that was
thanks to non-recurring positive effects (including tax-related)
of CHF 148.6 million. The non-life business proved very profit-
able, improving its combined ratio yet again to 90.4 per cent.
Margins in the life business remain adequate, despite the low
interest rates. We are on track to achieve the targets defined for
our Simply Safe strategic phase, which will continue until the
end of 2021. In three years, Baloise has signed up 514,000 new
customers and transferred CHF 1.3 billion in cash to the holding
company, and we have now moved into the top 15 per cent of
the most attractive employers in the European financial sector.
Last year, Baloise also sharpened its strategic focus. It used
its insights from the first three years of the Simply Safe strategic
phase to set priorities for its digital initiatives. Baloise had
initially experimented in various different areas, gaining inval-
uable experience, but is now concentrating on the ‘Home’ and
‘Mobility’ ecosystems. This is where it sees the greatest oppor-
tunities for building on its robust core business by expanding
the portfolio of services for its customers. Baloise also made
huge progress with strengthening, optimising and diversifying
its core business. In the life business, it is continuing to improve
the business mix by focusing on risk and unit-linked products.
The Company also capitalised on the opportunities for growth
in Switzerland presented by the withdrawal of a competitor. The
strategic reallocation of the non-life portfolio in Germany is
having a positive impact. The German business’s turnaround is
reflected in a considerable increase in new customers. The 2019
results for the Luxembourg business unit were also robust.
Baloise unlocked opportunities and possibilities in Belgium’s
attractive non-life insurance market when it acquired insurance
company Fidea NV in the first half of the year. The announced
acquisition of Athora’s non-life insurance portfolio will also
markedly strengthen the market position of the Belgian business.
These two acquisitions will underpin Belgium’s role as a second
key pillar within the Baloise Group alongside the Swiss business.
They will also help to diversify the business. The Athora port-
folio will significantly strengthen Baloise’s position in the
Wallonia region of Belgium. Baloise is now among the four
6
Baloise Group Annual Report 2019
Baloise
Letter to shareholders
largest insurance companies in Belgium’s attractive non-life
insurance market. Baloise Asset Management expanded its range
of asset management services for external customers in
Switzerland and invested in a number of large-scale real-estate
projects. In the context of Baloise’s sustainability activities, the
responsible investment policy applicable to insurance assets
was extended to all of the products managed by Baloise Asset
Management for external customers at the start of this year.
MOVING TOWARDS PLATFORM-BASED INTEGRATION OF
SERVICES
Focusing on the ‘Home’ and ‘Mobility’ ecosystems, Baloise plans
to widen the range of services that it offers outside its core
business. To this end, it has expanded the ‘Mobility’ ecosystem
last year. Baloise invested in companies such as Zurich-based
start-up gowago.ch, a marketplace for car leasing platforms that
enable customers to arrange leasing for used cars easily,
transparently and affordably from the comfort of their own home.
The two start-ups that we ourselves have established in European
markets, Mobly in Belgium and FRIDAY in Germany, have enabled
us to gain invaluable knowledge and experience in the ‘Mobility’
ecosystem. Building on this, we plan to expand the mobility
platform even more. In the ‘Home’ ecosystem, we have developed
various services in Switzerland and Belgium for homeowners,
tenants and landlords. We have also expanded such services
by cooperating with partners and through the acquisition of
start-ups. One example is our long-term equity investment in
devis.ch, a Swiss marketplace on which tradespeople and
cleaners can offer services for inside and outside the home. We
will expand this marketplace in cooperation with MOVU, our
digital platform for home-moving services in Switzerland. In
Belgium, another phase of a pilot project is just getting under
way, in which various services for professional and private
landlords will be offered on a platform. Integrating it with
facilities management solutions would create the potential to
bring together all landlord-relevant services on a single platform.
Baloise will host its next Investor Day at the end of October
2020, at which we will provide further details about the ecosys-
tems and market opportunities.
By sharpening our strategic focus, we are delineating the
range of services for our future business activities more precisely.
This focus makes it easier to accelerate the implementation of
initiatives over the next two years of the Simply Safe strategic
phase. And we are optimistic about achieving our targets for
this phase. At our Investor Day in October, we will provide a
progress report and look ahead to the next strategic phase.
For several weeks now, the Company has been severely
impacted by the coronavirus COVID-19 outbreak and the
necessary measures taken by governments to contain it. We
remain confident that the course taken by Baloise will bring us
lasting success going forward, even during these difficult and
still uncertain times. This confidence is also reflected in our
dividend policy: the Board of Directors will ask the Annual
General Meeting to increase the dividend by CHF 0.40 to
CHF 6.40.
Basel, March 2020
Dr Andreas Burckhardt
Gert De Winter
Chairman of the Board of Directors
Group CEO
7
Baloise Group Annual Report 2019
Baloise
Baloise shares
An excellent trading year
The 2019 trading year was characterised by geopolitical risks and a global economic environment shaped
by weak growth prospects. The equity markets seemed largely unperturbed by concerns about a global
recession and performed exceptionally well. Baloise shares * outperformed the Swiss Market Index (SMI)
with an impressive gain of 29.2 per cent. On top of this positive result, distributions to shareholders also
remained reliable and attractive. The Board of Directors proposes to raise the dividend for 2019 by 7 per
cent to CHF 6.40.
Compared with the ups and downs of 2018, the 2019 trading
year went exceptionally well. The upward trend in the equity
markets was driven primarily by the central banks, who provided
economic support with their expansionary monetary policy
measures. Geopolitical risks in connection with Brexit and the
US-China trade dispute were the only factor causing intermittent
spikes in volatility.
In contrast to the upbeat equity markets, macroeconomic
data showed signs of an (at times pronounced) slowdown in
economic growth, especially in Europe. The global outlook
currently suggests that the economy is turning the corner. In
recent data, positive and negative indicators for the eurozone
were fairly evenly balanced. The US, on the other hand, contin-
ued to enjoy solid economic growth in 2019 thanks to healthy
levels of consumer spending and higher government spending.
The conclusion of a ‘phase-one agreement’ between the US and
China prevented a further escalation of the trade dispute and
thus averted greater pressure on the global economy.
Forecasts for 2019 had predicted a gradual normalisation
of monetary policy, but concerns about the slowdown in eco-
nomic growth prompted the central banks to return to expan-
sionary measures. The US Federal Reserve lowered its key
interest rate three times in 2019, bringing it down by 75 basis
points in total to a new target band of 1.50 – 1.75 per cent. The
European Central Bank kept its key interest rate unchanged, but
announced a new open-ended asset purchase programme with
a monthly purchase volume of EUR 20 billion, which was launched
on 1 November 2019. The ECB also raised the penalty interest
rate for banks that park their excess liquidity at the ECB to minus
0.5 per cent. The Swiss National Bank announced after its last
meeting in December 2019 that it would keep its key interest
rate unchanged at minus 0.75 per cent.
Baloise shares made substantial gains in 2019. As at the
end of the year, Baloise shares traded at 175.00 CHF – 29.2 per
cent above the closing price of the prior year. This means that
8
Baloise shares performed even better than the European
insurance industry index (STOXX Europe 600 Insurance Index,
SXIP), which went up by 24.7 per cent in 2019. With a gain of
29.2 per cent, Baloise shares also outperformed the Swiss
Market Index (SMI), which recorded a gain of 26.0 per cent over
the same period.
DIVIDENDS PAID TO SHAREHOLDERS
The Board of Directors of Bâloise Holding Ltd will propose to the
Annual General Meeting on 24 April 2020 that a cash dividend
of CHF 6.40 per share be paid for the 2019 financial year, an
increase of CHF 0.40 compared with the dividend for 2018. This
would represent an attractive dividend yield of 3.7 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
2019, the programme had resulted in the purchase of 2,434,075
treasury shares, returning CHF 388.5 million to shareholders.
Of this volume, 1,097,500 shares worth CHF 190.0 million in
total were bought back in 2019.
* Baloise shares = shares of Bâloise Holding Ltd.
Baloise Group Annual Report 2019
Baloise
Baloise shares
Year (CHF million)
2015
2016
2017
2018
2019
Total
Cash dividends
Share buy-backs
Total
250.0
260.0
273.3
292.8
312.3 1
1,388.4
59.1
54.8
63.3
135.1
190.0
502.3
309.1
314.8
336.6
427.9
502.3
1,890.7
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 24 April 2020.
SHAREHOLDER STRUCTURE
The shares in Bâloise Holding Ltd are widely held and their free
float remains unchanged at 100 per cent. There were no material
changes in the Company’s shareholder base in 2019. Further
information on Baloise’s significant shareholders as at
31 December 2019 can be found in table 14 on page 288.
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)
31.12.2015
31.12.2016
31.12.2017
31.12.2018
31.12.2019
127.60
136.30
109.60
128.30
131.00
103.20
151.70
159.40
121.35
135.40
159.40
131.60
6,380.0
6,415.0
7,403.0
6,607.5
10.96
10.65
11.64
1.10
11.53
11.22
11.13
1.04
11.50
11.48
13.19
1.14
11.14
11.12
12.15
1.07
175.00
186.60
135.80
8,540.0
15.02
14.99
11.65
1.20
50,000,000
50,000,000
48,800,000
48,800,000
48,800,000
Minus the number of treasury shares (units)
3,464,540
2,499,945
1,327,993
2,218,134
3,238,607
Number of shares in circulation (units)
Average number of shares outstanding 2
Dividend per share 3 (CHF)
Dividend payout ratio 3
Dividend yield 3
46,535,460
47,500,055
47,472,007
46,581,866
45,561,393
46,721,219
46,381,359
47,641,577
46,979,421
46,219,774
5.00
45.6
3.9
5.20
45.1
4.1
5.60
48.7
3.7
6.00
53.9
4.4
6.40
42.6
3.7
1 Calculation is based on the profit for the period attributable to shareholders and the equity attributable to shareholders.
2 Relevant for calculation of earnings per share (see page 253 of the Financial Report).
3 2019 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 2014 – 2019
BALN
CHF 0.10
1.241.051
CH0012410517
SIX Swiss Exchange
150
100
50
2014
2015
2016
2017
2018
2019
100 % registered shares
1 31 December 2013 = 100
Bâloise Holding registered shares (BALN)
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index (SMI)
9
Baloise Group Annual Report 2019
Baloise
Core activities
Our core activities
BELGIUM
Hamburg
Business volume (CHF million)
Life: 181.7
Non-life: 1,251.1
Investment-type premiums: 504.1
Employees: 1,594
Net combined ratio: 94.5 %
LUXEMBOURG
Antwerp
Brussels
Business volume (CHF million)
Life: 76.8
Non-life: 136.7
Investment-type premiums: 1,054.3
Employees: 542
Net combined ratio: 97.7 %
SWITZERLAND
Bad Homburg
Luxembourg
Business volume (CHF million)
Life: 3,422.9
Non-life: 1,344.2
Investment-type premiums: 153.4
Employees Swiss offices: 3,869
Net combined ratio: 87.9 %
Basel
Solothurn
Customer assets under management generated by sales force: CHF 2,256.8 million
Lending-business assets generated by sales force: CHF 1,087.3 million
GERMANY
Wealth & pensions advisory mandates: 2,646
Return on equity: 7.7 %
Employees: 379
Business volume
Total assets under management: CHF 59.7 billion
Third-party assets under management: CHF 10,749 million
Net new third-party assets: CHF 841 million
Employees: 159
Cost / income ratio: 53.0 %
10
Business volume (CHF million)
Life: 377.9
Non-life: 790.0
Investment-type premiums: 195.6
Employees: 1,641
Net combined ratio: 90.9 %
Life
Investment-type premiums
Non-life
Baloise Group Annual Report 2019
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 strategy are the strong core
business and the unique corporate culture that exists among
the around 7,600 Baloise employees in Switzerland, Belgium,
Germany and Luxembourg. Baloise aims to establish an agile
and entrepreneurial culture that creates value for its stakehold-
ers and 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 strategy is in line with principles of corporate responsi-
bility 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 and environment in which the customers – but also Baloise
as a Company – exist. Baloise believes that this strategy bolsters
its efforts to make further improvements in the area of sustaina-
ble business management. The foundations for this are provided
by the Baloise value creation model (see page 38).
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 indi-
cator that shows how often Baloise is recommended as an
employer.
SHAREHOLDERS
Thanks to sustained improvements in profitability in its life
business and its banking business, as well as innovative
products and services such as the mobile insurer, cash of
CHF 2 billion will flow into Bâloise Holding between now and
2021. This benefits shareholders directly because Baloise will
continue to pursue its attractive dividend policy and will repur-
chase 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 2019
Baloise
Strategy
From strategic initiatives to ecosystems
2019: + 209,000
Ambition 2021: + 1,000,000
2019: top 15 %
Ambition 2021: top 10 %
2019: CHF 455 mn
Ambition 2021: CHF 2 bn
12
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, digital processes, and forward-looking capital manage-ment and risk management. Based on these strengths, Baloise is continuing to invest in the future, adding value and aiming to be more than a traditional insurance company. Dozens of ini tiatives have been launched since the start of Simply Safe and, in combination with a cultural transformation campaign, are injecting momentum into the focus ecosystems of ‘Mobility’ and ‘Home’.CUSTOMERSAmbition: 1 million additional customersPROGRESS MADE 2019 514,000: sum since the start of the Simply Safe strategy 1,319,000: 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 2019
Baloise
Strategy
13
Baloise Group Annual Report 2019
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 2019
Baloise
Brand
“We make it simple to feel safe –
as a reliable partner, who’s easy to
interact with and truly cares.”
Brand promise
(what)
Brand personality
(how)
Brand essence
Brand benefit
Safety
Simplicity
Partnership
Feeling safe
made simple.
e
l
b
a
i
l
e
r
y
s
a
e
g
n
i
r
a
c
Appearance
Communication
Behaviour
Products / Services
Peace of mind
A feeling of relief,
reassurance and
security.
15
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
66 Corporate Governance
116 Financial Report
276 Bâloise Holding Ltd
294 General information
Review of operating
performance
GROUP ......................................................................... 18
Baloise can look back on a very successful 2019 ............... 18
ASSET MANAGEMENT AND BANKING ........................... 20
SWITZERLAND ............................................................ 22
GERMANY ................................................................... 23
BELGIUM .................................................................... 23
LUXEMBOURG ............................................................. 24
FINANCIAL INFORMATION ........................................... 26
Consolidated income statement ........................................ 26
Consolidated balance sheet .............................................. 28
Business volume, premiums and combined ratio .............. 29
Technical income statement .............................................. 31
Gross premiums by sector ................................................. 32
Banking activities ............................................................. 33
Investment performance ................................................... 34
Unterkapitel Baloise Group Annual Report 2019
Review of operating performance
Baloise can look back on a very successful 2019
Great innovative strength, a very healthy core business and two acquisitions were the main features of
an extremely successful 2019. Last year marked the half-way point in Baloise’s current strategic phase,
and firm foundations for the future were laid. Baloise is well on track to achieve its targets for employee
satisfaction, customer growth and cash generation. The first two years of the five-year Simply Safe stra-
tegic phase were dominated by initial experiments with new digital products and services, whereas in
the years ahead Baloise’s focus will be trained on the ‘Home’ and ‘Mobility’ ecosystems.
OVERVIEW
Baloise can look back on a very successful 2019 that was
impressive on all fronts. Boosted by a non-recurring tax effect,
the profit attributable to shareholders of CHF 694.2 million was
up by 32.7 per cent compared with 2018. Even adjusted for this
effect, Baloise still achieved a very good profit that was higher
than the 2018 profit of CHF 523.2 million. Earnings before
interest and tax (EBIT) fell slightly, by 1.8 per cent, to CHF 723.9
million (2018: CHF 737.5 million).
The 9.6 per cent jump in the volume of business to CHF
9,509.9 million was very satisfying (2018: CHF 8,678.2 million).
As well as robust organic growth in the national Baloise com-
panies (in local currency terms), there were two main reasons
for this increase. Firstly, the volume of premiums in the life
business was pushed up by around CHF 560 million due to the
withdrawal of a competitor from comprehensive insurance
solutions in the group life business in Switzerland and by CHF
46.7 million due to the acquisition of Belgian insurer Fidea NV.
Secondly, the acquisition of Fidea NV caused the volume of
premiums in the non-life business to go up by around CHF 112.6
million. The effect on the volume of premiums of purchasing the
non-life portfolio of Athora on 4 November 2019 will be visible
for the first time in the financial results for the first half of 2020.
The profitability of Baloise’s non-life business improved yet
again year on year. The lowest ever net combined ratio of 90.4
per cent (2018: 91.7 per cent) is proof positive of the portfolio’s
outstanding quality and the favourable level of claims in 2019.
The latter also benefited the German business, where the net
combined ratio of 90.9 per cent was significantly lower than the
target range of 96 per cent to 98 per cent.
BUSINESS VOLUME
CHF million
Total business volume
Life
Non-life
Investment-type
premiums
2018
2019
+/ – %
8,678.2
3,360.3
3,405.9
1,912.1
9,509.9
4,060.3
3,542.1
1,907.5
9.6
20.8
4.0
– 0.2
In an environment characterised by uncertainty surrounding
interest rates, EBIT attributable to the life business was at the
good level of CHF 274.8 million, although this was lower than
the 2018 figure of CHF 333.2 million, which had been boosted
by a non-recurring effect. EBIT attributable to the life business
was therefore much higher than the minimum expectation for
2019 of CHF 200 million, despite the signals to the contrary in
the fourth quarter of 2019 in connection with the environment
of persistently low interest rates.
Baloise expanded its range of asset management services
for external customers and invested in a number of large-scale
real-estate projects. There have been net inflows of more than
CHF 2 billion since the start of the strategic phase in 2017 (2019:
around CHF 841 million). In the context of Baloise’s sustaina-
bility activities, the responsible investment policy for asset
management applicable to insurance assets was extended to
all of the products managed by Baloise Asset Management for
external customers with effect from 1 January 2020. Overall,
the markets take a positive view of the progress made regarding
18
Baloise Group Annual Report 2019
Review of operating performance
sustainability. In July 2019, for example, MSCI upgraded Baloise’s
sustainability rating from BB to BBB.
During the Simply Safe strategic phase, Baloise is aiming
to become more than just a traditional insurance company. To
this end, it has been experimenting with various innovative
partnerships, technologies and product ideas over the past few
years. In 2019, the ‘Home’ and ‘Mobility’ ecosystems became
the main focus, and this will be further accentuated in the years
ahead.
EBIT in the non-life business increased significantly year on year,
advancing by 7.3 per cent to CHF 398.9 million (2018: CHF 371.7
million). The net combined ratio improved yet again to reach an
excellent 90.4 per cent, which was 1.3 percentage points below
the very good ratio reported a year ago (2018: 91.7 per cent).
The main reasons for this improvement were the low level of
claims in 2019 and a higher profit on claims reserves. The net
combined ratio in the German business was also encouraging
at 90.9 per cent, which was well below the target range of 96
per cent to 98 per cent.
BUSINESS VOLUME IN 2019 (GROSS)
BY STRATEGIC BUSINESS UNIT
As a percentage
Switzerland
Germany
Belgium
Luxembourg
51.7
14.3
20.4
13.3
NET COMBINED RATIO
As a percentage
2019
2018
2017
2016
2015
90.4
91.7
92.3
92.2
93.3
NON-LIFE DIVISION: COMBINED RATIO AT RECORD LOW
The volume of premiums in the non-life business rose once again
thanks to the acquisition of Fidea and the related increase in
premiums of CHF 112.6 million. The total volume increased by
4.0 per cent to CHF 3,542.1 million (2018: CHF 3,405.9 million).
In local currency terms, the increase was 6.5 per cent. The
volume of premiums in Switzerland was close to the prior-year
level at CHF 1,344.2 million (down by 0.4 per cent below).
Translated into Swiss francs, the volume of premiums in Germany
fell by 1.6 per cent to CHF 790.0 million due to currency effects.
But in local currency terms, the volume swelled by 2.1 per cent.
Belgium and Luxembourg notched up growth in the volume of
premiums, both in Swiss francs and in the local currency. The
acquisition of Fidea provided a boost to premiums of CHF 112.6
million in Belgium, where the total volume jumped by 13.8 per
cent to CHF 1,251.1 million (local currency terms: 18.1 per cent).
Non-life premiums in the Belgian business are thus on a par
with the volume in Switzerland, thereby diversifying the port-
folio at Group level and helping to create stability. Luxembourg
also delivered healthy growth of 1.7 per cent to reach CHF 136.7
million. In local currency terms, the increase was 5.6 per cent.
LIFE DIVISION: SHARP RISE IN THE VOLUME OF PREMIUMS
The volume of life business received a boost of around CHF 560
million owing to the withdrawal of a competitor from business
involving comprehensive insurance solutions for occupational
pensions in Switzerland. The total volume rose by 13.2 per cent
to CHF 5,967.7 million (2018: CHF 5,272.4 million). In the tradi-
tional life business, the volume of premiums therefore increased
by 20.8 per cent to CHF 4,060.3 million (2018: CHF 3,360.3
million). The volume of investment-type premiums remained on
a par with the prior-year figure at CHF 1,907.5 million (2018: CHF
1,912.1 million).
EBIT in the life business amounted to CHF 274.8 million in
2019 (2018: CHF 333.2 million). EBIT attributable to the life
business was therefore much higher than the minimum expec-
tation for 2019 of CHF 200 million, despite the signals to the
contrary in the fourth quarter of 2019 in connection with the
environment of persistently low interest rates. The decrease in
EBIT of 17.5 per cent arose mainly because the prior-year figure
had been boosted by a non-recurring effect. Reserves no longer
needed in the Belgian life business had been reversed in 2018.
19
Baloise Group Annual Report 2019
Review of operating performance
Moreover, the risk result at Basler Switzerland had benefited
from an adjustment to the biometric basis. The new business
margin stood at 37.3 per cent in 2019 thanks to the selective
underwriting policy and the better business mix.
ASSET MANAGEMENT AND BANKING
For the stock markets, 2019 was one of the best years in their
history. The indices were at record levels at the end of the year.
The SMI, for example, achieved an overall rate of return of around
30 per cent. Once again, this was made possible by the ultra-ex-
pansionary monetary policy of central banks worldwide, which
has been keeping interest rates at persistently low levels. The
trade dispute between the US and China created volatility in the
markets at times. In these market conditions, and given the
ongoing hunt for returns, the property market saw further
compression of yields.
INSURANCE ASSETS: SOLID INVESTMENT YIELD
The start of 2019 was dominated by a global slowdown of growth
that was triggered by greater political uncertainty, primarily
relating to the trade dispute between the US and China. This
held back the manufacturing industry and led to bouts of vola-
tility in the financial markets. The central banks’ U-turn in the
middle of the year, which saw a return to interest-rate cuts and
more expansionary monetary policy, helped to calm investors.
As a result, the equity markets soared to record highs. The Swiss
Market Index gained more than 25 per cent in value in 2019.
The gains on the investment of insurance assets amounted
to CHF 1,355.7 million, which was above the 2018 level of
CHF 1,250.7 million. Current income fell to CHF 1,176.5 million
owing to the persistently low level of interest rates (2018: CHF
1,282.6 million). Baloise largely avoided reinvesting maturing
bonds denominated in Swiss francs, switching instead to
euro-denominated bonds that offered higher yields after currency
hedging costs. It specifically opted for investments in mortgages
and senior secured loans with stable income, thereby slightly
mitigating the effect of declining income.
At CHF 573.4 million, the capital gains recognised in the
income statement were up by CHF 186.8 million compared with
the prior year. These positive contributions stemmed from
private equity, the wind-down of the hedge fund portfolio, gains
realised on bonds and increases in the value of properties.
Impairment losses were down by CHF 12.4 million year on year.
The losses relating to currency hedging costs and currency
effects arising on unhedged currency exposures improved by
CHF 15.1 million to CHF 177.2 million owing to lower currency
hedging costs.
The gains on investments achieved for insurance assets
equated to a net return of 2.3 per cent, which was up a little on
the 2018 figure of 2.2 per cent. Unrealised gains rose by CHF
1,354.7 million owing to changes in interest rates, the narrowing
of spreads and the uptrend in equity markets. 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 4.7 per cent, representing a substantial increase on the
0.7 per cent rate of return according to IFRS in 2018.
PROPRIETARY INVESTMENTS BY CATEGORY 1
INVESTMENT COMPONENTS IN 2019
31.12.2018
31.12.2019
+/ – %
CHF million
Investment property
Equities
Alternative financial assets
7,904.0
2,834.6
1,153.6
8,120.1
3,576.6
1,102.8
Fixed-income securities
31,798.7
34,587.6
Mortgage assets
10,724.9
11,069.3
Policy loans and other loans
5,671.3
5,743.6
Derivatives
453.9
469.7
Cash and cash equivalents
2,543.5
2,412.6
Total
63,084.5
67,082.4
2.7
26.2
– 4.4
8.8
3.2
1.3
3.5
– 5.1
6.3
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
51.6
16.5
12.1
8.6
5.3
3.6
1.6
0.7
Baloise Group Annual Report 2019
Review of operating performance
ASSETS HELD BY BALOISE
as at 31 December 2018
CHF million
Investments for own account and at own risk
Asset portfolio for the account and at risk
of life insurance policyholders and third parties1
Total recognised assets
Third-party assets
as at 31 December 2019
CHF million
Investments for own account and at own risk
Asset portfolio for the account and at risk
of life insurance policyholders and third parties1
Total recognised assets
Third-party assets
Non-life
Life
Asset
Management
and Banking
Total for the
Group
9,388.5
46,612.6
7,572.9
13,640.8
63,084.5
14,133.7
9,388.5
60,253.4
7,572.9
77,218.2
8,963.6
Non-life
Life
Asset
Management
and Banking
Total for the
Group
10,396.8
49,711.3
7,911.1
15,337.8
10,396.8
65,049.1
7,911.1
67,082.4
15,939.0
83,021.4
10,748.6
1 Including CHF 70.3 million (2018: CHF 54.1 million) in other assets (precious metal holdings from investment-linked life insurance policies).
BALOISE ASSET MANAGEMENT: SIGNIFICANT INCREASE IN
EXTERNAL CUSTOMERS’ ASSETS
As at 31 December 2019, the total assets under the management
of Baloise Asset Management stood at CHF 59.7 billion, a rise of
7 per cent on the prior year. The large volume increase was due
not only to a strong performance but also to additional inflows,
which included both insurance assets and assets in external
customer business. The increase in insurance assets was primar-
ily due to the acquisition of Belgian insurance company Fidea,
which contributed a volume of around CHF 1.5 billion.
The volume growth was also reflected in the increase in
income, which rose by 3 per cent year on year to reach CHF 133.5
million (based on local accounting standards and excluding
transfer transactions). Business with external customers was
expanded substantially in 2019. Net new assets amounted to CHF
841 million, a year-on-year increase of 5 per cent.
At the start of September 2019, Baloise Immobilien Manage-
ment AG carried out the first capital increase for the Baloise Swiss
Property Fund, which it had launched in October 2018. The cap-
ital increase met with huge interest and was heavily oversub-
scribed. Inflows into the fund amounted to around CHF 200 million.
The Baloise Swiss Property Fund reached the end of its first
financial year at the end of September 2019. A distribution yield
of 2.83 per cent (relative to the OTC price) exceeded investors’
expectations. The fair value of the portfolio, which now has 55
properties, amounted to CHF 565.9 million as at 30 September
2019. The fund managers intend to further expand the property
portfolio during the second financial year (2019/2020).
When it purchased a long-term equity investment in Infracore
in 2018, the Baloise Group broke into the highly promising niche
market of healthcare real estate. It continued to pursue its strat-
egy in this area in the reporting year. Baloise’s stake stood at 25.9
per cent at the end of 2019.
The three new buildings being built at Baloise Park will be
the Baloise Group’s headquarters in Basel and are due for com-
pletion in 2020: Alongside the head office building, the two
investment properties will be partly used as a hotel and partly
as office space. Thanks to the excellent location, much of the
space has already been rented out on the basis of long-term leases.
In 2019, Baloise further expanded its range of innovative
asset management solutions for external customers, ensuring
they were fully aligned with customers’ requirements.
21
Baloise Group Annual Report 2019
Review of operating performance
For example, Baloise Global Bond CHF Optimized provides Swiss
pension funds with a bond solution that is geared entirely to the
needs of this group of investors in the current low-interest-rate
environment and thus stands out clearly from the competition.
Furthermore, senior secured loan investments were repositioned
and are now among the most attractive in the Swiss market, in
terms of both performance and costs.
Baloise Asset Management is opting for innovation and
technological advancements in order to stay competitive. For
example, it has entered into a strategic partnership with
Brainalyzed in the area of big data and artificial intelligence. The
objective is to cover a much larger investment universe and to
further increase the gains on investments in future, while keeping
resources at their existing level.
As an asset manager with a long-term focus, Baloise has been
taking aspects of socially responsible investing into consideration
for many years. It formalised this in 2019 with its responsible
investment (RI) policy. This policy was initially introduced for all
new inflows from 1 January 2019 and was extended to all insurance
assets in summer 2019. Since 1 July 2019, the RI policy has also
applied to all assets managed by Baloise in products for external
customers. The RI policy sets out the rules for the integration of
environmental, social and corporate governance criteria into
investment decisions. Baloise has signed up to the Principles for
Responsible Investment (PRI) and joined the Swiss Sustainable
Finance (SSF) network in order to strengthen engagement with its
customers, shareholders and employees.
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
2018
2019
+/ – %
4,189.5
2,840.3
1,349.2
84.5
554.2
4,920.5
3,576.4
1,344.2
87.9
500.2
17.4
25.9
– 0.4
3.4
– 9.7
BASLER VERSICHERUNGEN SWITZERLAND
Basler Versicherungen Switzerland remains the Group’s strongest
source of earnings and generates the greatest volume of premiums,
as could be seen from its excellent results for 2019. Earnings before
interest and tax, profitability and premium income remained at a
high level, collaboration with Baloise Bank SoBa was further
intensified across Switzerland and the innovation pipeline is full
of projects in the ‘Home’ and ‘Mobility’ ecosystems. The volume
of business rose by 17.4 per cent to CHF 4’920.5 million (2018: CHF
4,189.5 million), with the bulk of this increase attributable to the
growth of the volume of premiums in the group life business. EBIT
was down by 9.7 per cent year on year to CHF 500.2 million (2018:
CHF 554.2 million), mainly due to the reduction in realised gains
on investments and due to a slightly higher combined ratio.
The volume of premiums in the non-life division remained on
a par with the strong prior-year figure at CHF 1,344.2 million (2018:
CHF 1.349.2 million). Once again, Basler Switzerland signed up
numerous new customers for its services, thanks to the YounGo
insurance line, which is aimed at customers up to the age of 30,
the alliance with KASKO and a strong year for Movu.
The EBIT attributable to the Swiss non-life business fell to CHF
230.7 million (2018: CHF 317.5 million) owing to the aforementioned
effects. Having been at an excellent 84.5 per cent in 2018, the net
combined ratio returned to a normal level but was still very good
at 87.9 per cent.
In the life division, a competitor in the group life business
withdrew its comprehensive insurance products from the market,
resulting in a sharp rise in the volume of premiums. In 2019, gross
premiums written in the life business rose by 25.5 per cent overall
to reach CHF 3,422.9 million (2018: CHF 2,728.0 million). Of this
total, CHF 3,019.8 million was attributable to group life business
(2018: CHF 2,331.7 million).
In individual life insurance, premium income advanced by 1.7
per cent to CHF 403.1 million (2018: CHF 396.3 million).
The partially autonomous collective foundation Perspectiva
continued to generate strong growth, and the total number of
companies signed up rose to 2,133 in 2019 (2018: 1,345), includ-
ing around 9,800 policyholders and foundation assets of more
than CHF 700 million.
EBIT in the life business came to CHF 208.4 million and was
thus much higher than the prior-year figure (2018: CHF 176.9
million). This was primarily the result of higher gains realised on
investments and higher gains on investment property.
The banking business 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 23.4
per cent to 2,646. EBIT was on a par with the prior year at CHF
28.5 million (2018: CHF 29.1 million). Basler Insurance and
Baloise Bank SoBa are increasingly offering additional advisory
services provided by specially trained financial advisors at the
general agents across Switzerland in order to further improve
their proximity to customers. This trend is driven by the expan-
sion of banking expertise, which is thus increasingly moving
away from some of Baloise’s own branches towards the general
22
Baloise Group Annual Report 2019
Review of operating performance
agents of Basler Insurance that already exist across Switzerland.
The additional expertise at the general agents of Basler Insurance
make it easier to offer solutions on a broader basis that are tailored
to customers’ personal situations.
KEY FIGURES FOR GERMANY
CHF million
Business volume
Of which: life
Of which: non-life
Net combined ratio (per cent)
Profit before borrowing costs
and taxes
2018
2019
+/ – %
1,415.9
1,363.5
612.8
803.1
95.8
6.0
573.5
790.0
90.9
20.2
– 3.7
– 6.4
– 1.6
– 4.9
236.7
BASLER VERSICHERUNGEN IN GERMANY
The German business’s turnaround is becoming increasingly
evident and it delivered a solid set of results for 2019. EBIT
jumped from CHF 6.0 million to CHF 20.2 million. One of the main
contributors to this rise was the non-life business, where the
ongoing portfolio restructuring and focus on profitable segments
are bearing fruit.
At CHF 1,363.5 million, the volume of business was down
by 3.7 per cent year on year (2018: CHF 1,415.9 million), although
this decline was primarily due to currency effects. The business
volume held steady in local currency terms. Business with
investment-type premiums contracted slightly compared with
2018. The rise in profitability seen in the first half of the year in
the non-life division is continuing. The volume of gross premiums
written came to CHF 790.0 million, which was slightly lower than
in the previous year due to currency effects (2018: CHF 803.1
million), while the net combined ratio stood at an excellent 90.9
per cent (2018: 95.8 per cent).
The improvement of the business mix – by reducing indus-
trial business and instead focusing on growing the business
with retail customers and with small and medium-sized enter-
prises – is increasingly paying off. At the same time, however,
the German business benefited from the low level of claims in
2019 and the low cost of basic claims. In 2019, Basler Germany
was therefore comfortably below its short- to medium-term
target range for the net combined ratio of 96 to 98 per cent.
The volume of premiums in the life division was also
impacted by currency effects. Gross premiums written in the
traditional life insurance business fell by 2.0 per cent to CHF
377.9 million (2018: CHF 385.7 million), although they rose by
1.7 per cent in local currency terms. The new business mix in
the life insurance segment remained positive with a very high
proportion of risk products and products with investment-type
premiums. These accounted for around 90 per cent of new
business. Following a strong year in 2018, investment-type
premiums decreased to CHF 195.6 million (2018: CHF 227.1
million). As well as delivering a healthy business performance,
Basler Germany worked on strengthening its quality of service
and improving customer satisfaction. It was awarded first place
for the second time in succession in the property broker sales
category and fourth place in the life insurance broker sales
category. In a cross-sectoral survey, customers ranked Basler
among Germany’s top 50 companies for service for the third
time in a row. These positive factors are one of the main reasons
for the sustained significant increase in new customers for Basler
in Germany over the past three years, thereby making a consid-
erable contribution to the strategic target at Group level.
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
2018
2019
+/ – %
1,722.3
622.7
1,099.6
92.3
199.0
1,936.9
685.8
1,251.1
94.5
195.2
12.5
10.1
13.8
2.2
– 1.9
BALOISE INSURANCE BELGIUM
For Baloise Insurance in Belgium, 2019 was a transformational
year. The acquisition of Fidea NV and the purchase of Athora’s
non-life portfolio enabled the Group’s Belgian business unit to
significantly strengthen its attractive non-life business and to
gain a broader foothold in the Wallonia region. Baloise Insurance
is now in the top four non-life insurance companies in Belgium.
The volume of business rose by a hefty 12.5 per cent to CHF
1,936.9 million (2018: CHF 1,722.3 million). All segments
contributed to this very healthy growth, with the CHF 159.3
million increase in premiums as a result of the Fidea acquisition
making the biggest impact. The effect of the full consolidation
of the two acquisitions will be visible in the half-year and annual
financial statements for 2020. In 2019, only some of Fidea’s
premiums and none of the increase in premiums resulting from
acquisition of the Athora portfolio were included.
23
Baloise Group Annual Report 2019
Review of operating performance
Baloise Insurance Belgium’s EBIT was on a par with the prior
year at CHF 195.2 million (2018: CHF 199.0 million). The prior-year
figure had been boosted by the reversal of reserves that were
no longer needed in the life business, whereas EBIT in 2019
benefited from a non-recurring effect in connection with the
first-time consolidation of the Fidea acquisition.
Belgian non-life business again registered strong growth,
expanding by 13.8 per cent to CHF 1,251.1 million owing to the
aforementioned acquisition (2018: CHF 1,099.6 million). Exclud-
ing this acquisition, growth amounted to 3.5 per cent (or 7.5 per
cent in local currency terms). As a result of this growth, the
Belgian market now accounts for about a third of the Baloise
Group’s total non-life premiums. It is therefore becoming a
second key pillar for non-life business within the Baloise Group.
The non-life business remains profitable, although the net
combined ratio of 94.5 per cent was not quite at the very good
prior-year level of 92.3 per cent. This deterioration was mainly
attributable to large and storm-related claims, above all in
connection with storm Eberhard.
In the life business, there was good growth in both periodic
and single premiums, which increased by 10.2 per cent and 3.8
per cent respectively. Total premiums in the traditional life
business therefore grew by 9.4 per cent to CHF 181.7 million
(2018: CHF 166.1 million). Investment-type premiums were up
by 10.4 per cent to CHF 504.1 million (2018: CHF 456.6 million).
With regard to innovation, further progress was made and
new initiatives were launched in 2019. Due to an increase in
demand, Baloise is offering new services in Belgium aimed at
preventing and protecting against cybercrime and bullying.
Through the online platform Gonna.be and the Baloise Insurance
Chair for Financial Welfare established at the Catholic University
of Leuven, Baloise is helping its customers to better understand,
and provide for, their financial future. B-Tonic, Baloise’s health
platform in Belgium, has introduced new ways of helping cus-
tomers to improve their physical and mental health.
24
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
2018
(restated) 1
2019
+/ – %
1,330.1
1,195.6
134.5
89.9
30.7
1,267.9
1,131.1
136.7
97.7
22.7
– 4.7
– 5.4
1.7
7.8
– 26.1
1 Change of chief operating decision maker for variable annuities products, which are
being run off in Liechtenstein.
BÂLOISE ASSURANCES LUXEMBOURG
The 2019 results for the Luxembourg business unit were robust,
although they were not as good as in 2018 owing to a higher
volume of claims and higher personnel and IT expenses due to
restructuring. Baloise’s volume of business in Luxembourg fell
by 4.7 per cent year on year to CHF 1,267.9 million (2018: CHF
1,330.1 million). As reported in the 2019 half-year financial
statements, current market conditions for investment-type
premiums are not very attractive. The decrease in these premi-
ums is the main reason for the overall reduction in the volume
of business in Luxembourg.
EBIT in the Luxembourg business was weighed down by a
large storm claim in the second half of the year, falling by CHF
8.0 million to CHF 22.7 million (2018: CHF 30.7 million). This
event caused the net combined ratio to increase by 7.8 percent-
age points to 97.7 per cent (2018: 89.9 per cent). Gross premiums
in the non-life business went up by 1.7 per cent to CHF 136.7
million, partly due to expansion of the network of brokers (2018:
CHF 134.5 million). In local currency terms, the rise was just
over 5.6 per cent.
Despite the smaller volume of business involving invest-
ment-type premiums, they were the major driver of business
volume in the Luxembourg business unit. They totalled CHF
1,054.3 million in 2019 (2018: CHF 1,116.0 million). The assets
under management in Luxembourg increased by 17.4 per cent.
This was thanks not only to new premiums but also the strong
performance of the capital markets in 2019 and the Luxembourg
business unit’s good customer relationship management. In the
traditional life business, gross premiums were down slightly on
the prior year at CHF 76.8 million (2018: CHF 79.6 million).
Baloise Group Annual Report 2019
Review of operating performance
EQUITY AND DIVIDEND: REQUESTED INCREASE IN THE
DIVIDEND TO CHF 6.40
Consolidated equity went up by 11.8 per cent year on year to reach
CHF 6,715.6 million at the end of 2019 (31 December 2018: CHF
6,008.2 million). This sharp rise was due to the level of profit for
the period and the higher valuation of available-for-sale securities
with characteristics of liabilities and equity. Baloise is thus
strongly capitalised, as underlined when Standard & Poor’s
affirmed the Company’s ‘A+’ credit rating in 2019. In the Swiss
Solvency Test (SST)*, a ratio of around 200 per cent is expected
as at 1 January 2020. The ratio is thus likely to be lower than at
1 January 2019 due to the acquisition of Fidea, capital market
effects and adjustments to the model.
The total shareholder return, i.e. the increase in value for
the shareholders of Baloise, stood at an excellent 34 per cent
in 2019. The programme launched in April 2017 in order to
repurchase more than three million shares had reached 96 per
cent of its target as at 6 March 2020 and will be completed in
April 2020. In 2019, a sum of CHF 190.0 million was returned to
shareholders; the total returned in the period from the start of
the share buy-back programme to 31 December 2019 was CHF
388.5 million. The Board of Directors of Bâloise Holding Ltd
intends to ask the 2020 Annual General Meeting to increase the
dividend to CHF 6.40 per share (2018: CHF 6.00).
INNOVATION PIPELINE: EXPANSION OF THE ‘HOME’ AND
‘MOBILITY’ ECOSYSTEMS AND DIGITALISATION OF THE CORE
BUSINESS
In 2019, the ‘Home’ and ‘Mobility’ ecosystems became the main
focus, and this will be further accentuated in the years ahead.
In the ‘Home’ ecosystem, Baloise teamed up with Movu to
invest in laundry services provider Bubble Box and in Devis.ch,
a platform for the services of tradespeople. In February 2020,
Baloise announced that it would invest in start-up Keypoint in
Belgium. Baloise and Keypoint are developing a new digital
assistant that is designed to simplify the work of property
managers.
There were also more far-reaching projects in the ‘Mobility’
ecosystem. Baloise and ‘ryd’ launched a connected car pilot
scheme. In autumn 2019, Baloise announced that it would invest
in car leasing platform gowago.ch.
Last year, Antwerp-based start-up Mobly, which belongs to
the Baloise Group, began offering a new type of personal transport
insurance policy, under which the whole family is insured for every
kilometre travelled, regardless of the mode of transport, and
only the actual kilometres driven in the policyholder’s own car
are paid for.
German digital insurer FRIDAY enjoyed another successful
year in 2019. During this period, it attracted more than 50,000
new customers with its straightforward digital processes and
products (2018: 30,000 new customers). One in two contracts
was entered into via FRIDAY’s direct channel. The published volume
of premiums amounted to around CHF 17 million in 2019. Alongside
car insurance, FRIDAY began offering home contents insurance in
summer 2019. It thus began its transformation from a pure-play
car insurance firm to a digital provider of property insurance. Since
autumn 2019, FRIDAY has been offering legal insurance for
motorists in cooperation with Roland Versicherung. Last year,
FRIDAY received a ‘media for equity’ investment in a volume of
around CHF 43 million from the ProSiebenSat.1 Media Group and
partners of German Media Pool. These partnerships will enable
FRIDAY to publicise its insurance products over the coming years
in the advertising outlets of the ProSiebenSat.1 Group, which have
a wide reach among the relevant target groups, as well as on TV
channels such as RTL II and Sport1, on radio stations and in daily
newspapers.
In its core business of insurance, Baloise invested in further
simplifying its processes for customers. The Easy Ask project, for
example, is resulting in a much leaner claims settlement process
and won the Swiss insurance industry special prize in 2019.
An overview of the innovative projects launched at Baloise
since the start of Simply Safe can be found here:
www.baloise.com/innovations
OUTLOOK
The World Health Organization (WHO) declared the coronavirus
outbreak a pandemic on 11 March 2020. The global situation and
the measures taken to contain the virus will have a significant
impact on the worldwide economy. At this point in time, it is not
possible to estimate the specific impact on Baloise. The very good
results for 2019 would indicate that Baloise is well on track to
achieve its targets for the Simply Safe strategic phase by 2021,
even in these difficult circumstances. At its next Investor Day in
October 2020, Baloise will be revealing how it plans to continue
creating lasting value for all of its stakeholders during the next
strategic phase after 2021.
* The SST ratio will be published at the end of April 2020.
25
Baloise Group Annual Report 2019
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
2015
2016
2017
2018
2019
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
7,571.3
– 241.5
7,329.8
1,521.8
1,476.6
1,392.5
1,376.0
1,257.0
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
336.1
1,709.5
130.4
6.2
227.6
126.0
10.8
227.7
8,877.9
8,910.2
9,417.1
7,276.6
10,996.9
– 5,352.4
– 5,664.2
– 5,726.5
– 5,904.4
– 6,090.4
– 1,241.9
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 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
– 956.7
117.0
– 554.6
– 816.0
– 91.4
– 17.2
– 1,388.0
– 475.7
– 8,158.6
– 8,226.6
– 8,733.0
– 6,539.1
– 10,273.0
Profit before borrowing costs and taxes
719.2
683.6
684.1
737.5
723.9
1 In line with the accounting principles applied by the Baloise Group, investment-type insurance premiums are not included in premiums earned and policy fees.
2 Including financial liabilities held for trading purposes (derivative financial instruments).
26
Baloise Group Annual Report 2019
Review of operating performance
Consolidated income statement
FIVE-YEAR OVERVIEW
CHF million
2015
2016
2017
2018
2019
Profit before borrowing costs and taxes
719.2
683.6
684.1
737.5
723.9
Borrowing costs
Profit before taxes
Income taxes
Profit for the period
Attributable to
Shareholders
Non-controlling interests
Earnings / loss per share
Basic (CHF)
Diluted (CHF)
ADDITIONAL INFORMATION INSURANCE
CHF million
Gross premiums written and policy fees
Investment-type premiums
Total business volume
Investments for the account and at the risk
of life insurance policyholders
Net combined ratio
Funding ratio (non-life) (per cent)
– 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
– 37.7
686.2
3.3
689.5
694.2
– 4.7
15.02
14.99
2015
2016
2017
2018
2019
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
7,602.4
1,907.5
9,509.9
10,873.2
12,001.0
14,543.8
13,640.8
15,337.8
93.3
192.4
92.2
188.5
92.3
193.3
91.7
179.4
90.4
179.8
27
Financial instruments with characteristics of equity
13,770.8
14,305.6
15,874.9
14,137.9
Financial instruments with characteristics of liabilities
33,248.4
33,766.5
35,360.1
33,775.1
Baloise Group Annual Report 2019
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
Gross technical reserves
Liabilities arising from banking business
and financial contracts
Derivative financial instruments
Other accounts payable
Deferred tax liabilities
Total liabilities
362.8
1,034.7
387.4
8,120.1
16,232.9
36,749.0
16,812.9
1,048.1
2,184.3
97.4
3,988.0
2015
(restated)
2016
2017
2018
2019
399.1
838.2
162.3
349.3
836.1
160.4
6,251.9
6,817.5
353.3
1,002.5
138.4
7,480.3
318.3
1,041.2
221.1
7,904.0
16,656.6
16,354.7
16,568.6
16,396.2
653.9
3,921.5
39.8
757.3
4,024.3
69.3
800.4
3,305.1
88.8
914.8
2,036.6
73.5
2,839.8
3,173.3
3,551.6
4,036.1
78,782.3
80,614.3
84,523.9
80,854.8
87,017.8
2015
(restated)
2016
2017
2018
2019
5,418.9
5,741.3
6,346.2
5,970.6
6,714.0
34.7
32.4
63.0
37.6
1.6
5,453.6
5,773.7
6,409.2
6,008.2
6,715.6
45,776.6
46,209.0
48,008.5
46,575.2
19,012.0
20,317.7
22,696.5
21,539.0
250.8
7,379.5
909.7
299.0
7,070.0
944.9
145.3
6,341.9
922.4
117.3
5,707.2
907.8
48,333.3
24,540.4
117.5
6,372.6
938.5
73,328.7
74,840.6
78,114.7
74,846.6
80,302.2
Total equity and liabilities
78,782.3
80,614.3
84,523.9
80,854.8
87,017.8
28
Baloise Group Annual Report 2019
Review of operating performance
Business volume, premiums and conbined ratio
Business volume, premiums
and combined ratio
BUSINESS VOLUME
2018
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written 2
Investment-type premiums
Total business volume
2019
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written 2
Investment-type premiums
Total business volume
Group
Switzerland
Germany
Belgium
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
Group
Switzerland
Germany
Belgium
3,542.1
4,060.3
7,602.4
1,907.5
9,509.9
1,344.2
3,422.9
4,767.1
153.4
4,920.5
790.0
377.9
1,167.9
195.6
1,363.5
1,251.1
181.7
1,432.8
504.1
1,936.9
1 Change of chief operating decision maker for variable annuities products, which are being run off in Liechtenstein.
2 Premiums written and policy fees (gross).
Luxem-
bourg
(restated) 1
134.5
79.6
214.0
1,116.0
1,330.1
Luxem-
bourg
136.7
76.8
213.5
1,054.3
1,267.9
29
Baloise Group Annual Report 2019
Review of operating performance
Business volume, premiums and conbined ratio
NET COMBINED RATIO
2018
as a percentage of premiums earned
Claims ratio 1
Expense ratio
Combined ratio
2019
as a percentage of premiums earned
Claims ratio 1
Expense ratio
Combined ratio
1 Including the profit-sharing ratio.
GROSS AND NET COMBINED RATIO
as a percentage of premiums earned
Claims ratio 1
Expense ratio
Combined ratio
1 Including the profit-sharing ratio.
FUNDING RATIO (NON-LIFE)
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.
30
Group
Switzerland
Germany
Belgium
Luxembourg
59.9
31.8
91.7
57.5
27.0
84.5
59.7
36.1
95.8
57.9
34.4
92.3
56.6
33.3
89.9
Group
Switzerland
Germany
Belgium
Luxembourg
57.9
32.5
90.4
60.6
27.3
87.9
2018
58.6
30.6
89.2
54.6
36.3
90.9
Gross
2019
57.2
31.1
88.3
59.8
34.7
94.5
2018
59.9
31.8
91.7
63.1
34.6
97.7
Net
2019
57.9
32.5
90.4
2018
2019
5,777.1
3,220.1
179.4
5,984.9
3,329.4
179.8
Baloise Group Annual Report 2019
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)
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 2018: CHF 10.2 million; 31 December 2019: CHF – 1.8 million).
Non-life
2018
2019
2018
Life 3
2019
3,405.9
– 29.2
3,376.7
3,542.1
– 31.2
3,511.0
3,360.3
4,060.3
–
–
3,360.3
4,060.3
– 2,018.2
– 2,184.4
– 3,886.2
– 3,906.0
50.6
– 21.0
183.5
– 20.1
– 1,064.0
– 1,116.8
324.0
373.2
888.5
– 1,186.9
– 505.7
– 348.6
– 491.7
66.7
– 328.2
– 1,294.1
– 184.5
– 214.9
– 24.6
– 26.6
66.2
0.4
0.0
18.6
– 99.2
77.9
21.4
0.1
20.6
8.5
3.4
4.9
1.3
6.3
8.6
2.8
1.3
– 94.9
– 6.5
– 7.6
3,192.2
3,296.1
3,335.7
4,033.7
– 1,952.0
– 2,106.5
– 3,877.7
– 3,899.7
51.0
– 21.0
204.9
– 20.0
– 1,045.4
– 1,096.2
224.8
198.7
35.3
– 30.1
– 57.1
146.9
371.7
–
– 70.4
301.3
278.2
176.6
50.8
– 30.6
– 76.2
120.7
398.9
– 0.4
– 34.2
364.3
891.9
– 1,178.3
– 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
69.5
– 326.9
– 1,301.7
999.9
1,925.6
– 105.7
– 1,243.3
1,576.5
274.8
– 10.3
51.8
316.3
31
2018
2019
+/ – %
396.9
146.6
341.0
1,115.2
1,084.5
196.3
86.4
38.8
407.7
154.3
339.7
1,163.6
1,135.2
194.9
91.9
54.8
3,405.9
3,542.1
2.7
5.3
– 0.4
4.3
4.7
– 0.7
6.4
41.2
4.0
2018
2019
+/ – %
2,759.1
2,513.3
3,384.1
2,583.7
– 1,912.1
– 1,907.5
3,360.3
4,060.3
22.7
2.8
– 0.2
20.8
Baloise Group Annual Report 2019
Review of operating performance
Gross premiums by sector
Gross premiums by sector
GROSS PREMIUMS BY SECTOR (NON-LIFE)
CHF million
Accident
Health
General liability
Motor
Property
Marine
Other
Inward reinsurance
Gross premiums written (non-life)
GROSS PREMIUMS BY SECTOR (LIFE)
CHF million
Business volume generated by single premiums
Business volume generated by periodic premiums
Investment-type premiums
Gross premiums written (life)
32
Baloise Group Annual Report 2019
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 borrowing costs and taxes
Borrowing costs
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
2018
2019
82.1
101.9
0.7
2.6
75.6
94.6
0.1
10.9
187.3
181.2
– 67.5
– 21.1
– 88.6
98.7
0.6
– 7.2
92.1
–
– 18.3
73.8
– 71.2
– 11.5
– 82.7
98.5
0.3
– 7.7
91.1
0.0
– 13.5
77.6
31.12.2018
31.12.2019
8,963.6
10,748.6
31.12.2018
31.12.2019
–
11.5
–
160.1
6,253.6
181.1
7.6
959.0
7,572.9
–
11.5
–
142.6
6,505.6
167.1
9.8
1,074.6
7,911.1
33
Baloise Group Annual Report 2019
Review of operating performance
Investment performance
Investment performance
2018 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
Fixed-income
securities
Equities
Investment prop-
erty
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
Change in unrealised gains and losses recognised directly
in equity
– 541.8
– 363.1
–
–
30.6
– 874.3
Investment management costs
Operating profit
Average investment portfolio
Performance (per cent)
– 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.
2019 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
Fixed-income
securities
Equities
Investment prop-
erty
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives, cash
and cash
equivalents
Total
622.0
– 79.5
103.4
134.1
282.6
216.9
239.1
82.6
9.9
– 17.9
1,257.0
336.1
Change in unrealised gains and losses recognised directly
in equity
1,087.6
290.7
–
–
– 23.6
1,354.8
Investment management costs
Operating profit
Average investment portfolio
Performance (per cent)
– 50.4
1,579.7
– 6.1
522.1
– 12.7
486.7
– 12.8
308.9
– 7.5
– 39.0
– 89.5
2,858.4
33,193.1
3,205.6
8,012.0
16,604.6
4,068.1
65,083.5
4.8
16.3
6.1
1.9
– 1.0
4.4
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
34
Baloise Group Annual Report 2019
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 INSURANCE 1
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Derivative financial instruments
Total capital gains and losses
ASSET ALLOCATION IN INSURANCE 1
as at 31.12.
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Derivative financial instruments
Cash and cash equivalents
Total
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
Non-life
Life
41.7
33.0
1.5
80.7
7.4
12.6
– 0.3
239.4
69.9
9.4
539.6
63.7
78.6
– 0.6
2019
Total
281.1
102.9
10.8
620.4
71.1
91.2
– 1.0
198.7
1,083.9
1,282.6
176.6
999.9
1,176.5
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
2018
Total
105.7
60.6
13.3
– 91.7
0.7
61.2
– 50.3
99.6
2018
Total
Non-life
Life
29.7
69.5
26.5
– 15.2
0.0
4.3
– 64.0
50.8
187.1
64.4
75.0
– 64.5
– 0.2
71.2
– 70.0
263.0
Non-life
Life
1,001.9
771.0
325.6
6,876.4
2,050.5
828.1
7,878.3
2,821.5
1,153.6
994.7
1,017.5
296.5
7,098.6
2,545.7
806.3
2019
Total
216.8
133.9
101.5
– 79.7
– 0.2
75.5
– 134.0
313.8
2019
Total
8,093.3
3,563.2
1,102.8
4,926.4
26,702.4
31,628.8
5,577.9
28,866.5
34,444.4
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
488.5
1,607.2
18.8
395.6
4,075.2
5,041.5
436.1
841.4
4,563.7
6,648.7
454.9
1,237.0
9,388.5
46,612.6
56,001.1
10,396.8
49,711.3
60,108.1
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
35
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
66 Corporate Governance
116 Financial Report
276 Bâloise Holding Ltd
294 General information
Sustainable business
management
RESPONSIBILITY ......................................................... 38
Baloise’s approach to sustainable value creation .............. 38
RESPONSIBLE INVESTMENT ........................................ 48
Investing sustainably......................................................... 48
HUMAN RESOURCES ................................................... 50
On the way to becoming a top employer ............................ 50
THE ENVIRONMENT ..................................................... 56
Environmental mission statement ..................................... 56
Protecting the environment over the long term .................. 57
RISK MANAGEMENT .................................................... 60
Baloise’s risk management is one of the main pillars
of its business model ........................................................ 60
COMMITMENT TO ART .................................................. 63
The Baloise Group’s commitment to art ............................. 63
Unterkapitel Baloise Group Annual Report 2019
Sustainable business management
Responsibility
Baloise value creation model
Baloise’s approach to sustainable value creation
Partners
Investors
Environment
Society
Resources
Customers
Employees
I N S URANCE
A
S
S
E
T
M
A
N
A
G
E
M
E
N
T
S
E
C
I
V
R
E
B A N KING S
Investors
Institutional and private investors and
shareholders who invest in Baloise
Partners
Innovation partners like start-ups,
outsourcing partners, suppliers, brokers
and agents
Environment
The direct environment which surrounds
Baloise at all locations and the global
environment we affect by our business
decisions and operations
Society
The communities we operate in at all
Baloise locations and the society of each
country
Customers
Private and corporate end customers at
all Baloise locations
Employees
Baloise Employees with any employment
contract at all Baloise locations
Employees
Increased employability
Customers
Enable development to achieve
personal and professional goals
Society
Enable modern and better education
as well as societal development
Investors
Partners
38
Effects
Employees
Environment
Climate protection
Customers
Environment
Society
Partners
Success through synergies
Investors
Attractive, sustainable and respon-
sible investment
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
Responsibility
Baloise aligns its sustainable business management with the Baloise value creation model (see illustra-
tion on the left). This 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 responsibility covers a broad range of activities and involves a broad
range of stakeholders – from shareholders and investors to employees and customers, partners, society
and the environment around us.
Baloise thinks and acts on a long-term basis, for example in its
life insurance business, prioritises high ethical standards in its
corporate management approach, monitors compliance with
norms, takes thorough and professional action to protect itself
against new types of risk, such as cyber risk, and takes account
of sustainability-related risks such as the impact of climate
change in its strategic risk management. Based on these
foundations, Baloise can draw on all the resources at its disposal
– including activities, measures and external conditions – to
generate an impact and thereby create value for the aforemen-
tioned stakeholder groups. This newly created value benefits
our stakeholder groups and Baloise itself. It becomes a fresh
resource in the ongoing value creation process and thus con-
tributes to the achievement of long-term sustainable develop-
ment goals.
www.baloise.com/corporate-governance
www.baloise.com/code-of-conduct
www.baloise.com/compliance
www.baloise.com/risk-management
TAKING RESPONSIBILITY AND CREATING VALUE
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 Simply Safe strategy.
At the heart of the value creation model of Baloise is its
corporate strategy, which emphasises that matters of sustain-
able business management cannot be viewed in isolation from
the commercial management of a company. In its role as an
insurance and pension provider with product and service eco-
systems that cut across asset management, banking and
insurance, Baloise not only looks after individuals but also
protects companies, economies and communities and helps
them to function properly – every day of the year. In doing so,
it boosts economic and social stability in the countries where
it and its customers operate. Baloise must be able to offer the
sort of long-term security that cannot be sustained by the
pursuit of short-term profits alone.
www.baloise.com/strategy
39
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
GUIDELINES AND MATERIALITY
Baloise’s value creation process is guided by the United Nations’
sustainable development goals (SDGs). An internal materiality
assessment identified the following SDGs as material for the
Company:
▸
▸
▸
▸
▸
▸
▸
▸
▸
▸
SDG 1 (no poverty)
SDG 3 (good health and well-being)
SDG 4 (quality education)
SDG 7 (affordable and clean energy)
SDG 8 (decent work and economic growth)
SDG 9 (industry, innovation and infrastructure)
SDG 10 (reduced inequalities)
SDG 12 (responsible consumption and production)
SDG 13 (climate action)
SDG 17 (partnerships for the goals)
SUSTAINABILITY GOVERNANCE
Since 2019, Baloise has been maintaining a sustainability
network, which includes all departments of Baloise that have
influence on this topic within the Group or are impacted by it.
This working group has the necessary expertise to develop and
regularly update the content of the sustainability approach,
including the value creation model. The Group Strategy Board,
which consists of the Corporate Executive Committee and the
CEOs of the national Baloise companies, decides on all matters
regarding the implementation and delivery of the content. The
Board of Directors is responsible for designing the sustainabil-
ity approach in detail and embedding it into the overall corporate
strategy and its monitoring. At the end of 2019, this governance
model was approved by the Group Strategy Board and the Board
of Directors.
40
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
CREATING VALUE FOR EMPLOYEES
Baloise’s responsibility as an employer is manifested in its
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. To this end, we create a working environment where the
health and well-being of staff is a central concern and where
equality, inclusion and diversity are top priorities. 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 creating well-trained employees. The
Company’s appeal as an employer is measured regularly across
the Group through ‘pulse checks’, which involve determining a
recommendation rate. Every three months, randomly selected
employees are asked to score Baloise in terms of attractiveness.
Baloise has been fostering a participation-based corporate
culture for many years and has continually developed this culture
over time, building on the stable foundations put in place long
ago. At Baloise in Switzerland, the concept of social partnership
has a long tradition. The Company’s employee commission
(MAKO) was founded in 1970, i. e. long before 1993, when the
Swiss federal government passed a co-determination act that
gave employees the legal right to have a say in the workplace
and to be given information on particular matters. To this day,
the rights of the MAKO go well beyond the provisions of Swiss
co-determination legislation. There is also a code of conduct,
which contains the essential ethical and legal regulations that
govern employees’ behaviour. Across the Group, Baloise gets
employees at different levels involved 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 competi-
tive economic environment. By giving young people their first
experience in the world of work – as trainees, interns and
temporary student employees – Baloise is also making an
investment in the future of the Company and the employment
markets of the countries in which it operates. Every year, across
the Group, Baloise trains over 281 people who are at the start
of their careers, which represents a proportion of trainees in
the workforce of just under 4 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’
www.baloise.com/code-of-conduct
STAKEHOLDERS: EMPLOYEES
Resources for value creation:
▸
Focus on professional and personal development
with scope for personal initiative
▸ Modern and future-oriented working models
▸
Competitive basic salaries, variable remuneration,
attractive profit-sharing programmes and employee
retention schemes
A work environment that promotes equality and
good health
A learning organisation that gives employees a say in
the further development of their professional skill set
A culture of curiosity, integrity and constructive criti-
cism as a basis for the creation of a comprehensive
network within Baloise
▸
▸
▸
Effect: increased employability
▸
Optimal alignment between employees’ modern skill
sets and the needs of the Company
Financially secure and healthy employees
Strong sense of loyalty in the workforce, resulting in
long average periods of employment at the Company
Opportunity to establish an extensive network among
colleagues and, as a result, the chance to work in
different positions over time
Among the top 10 per cent of employers in the insur-
ance sector by 2021
▸
▸
▸
▸
SDG 3, SDG 4, SDG 8, SDG 10
41
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
CREATING VALUE FOR CUSTOMERS
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 live. One way to achieve this is to provide services that
go beyond those offered by a traditional insurer because they
are positioned upstream or downstream of the insurance
product itself. New risks (e. g. cyber risks) are identified and
made insurable, enabling Baloise to promote innovation and
the social and economic development of 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. 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 particu-
lar risk, it is also about giving customers everyday peace of
mind. Baloise wants to do everything it can to help make cus-
tomers’ broader environment safer. The customers themselves
also get a say, through customer forums, panels and surveys.
Prevention, safety and security have a long tradition at
Baloise. In Switzerland, Baloise operates the Baloise cloud
seeder, a specially equipped light aircraft, to protect the pop-
ulation against hail damage. The three-year pilot programme
was launched in 2018.
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 was involved for a number of years
in work to help prevent addiction among young people in
Switzerland, 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
STAKEHOLDERS: PRIVATE AND CORPORATE CUSTOMERS
Promoting development to facilitate achievement of
personal and professional goals
▸
Safer lives thanks to a strong insurance collective
that continuously reinforces its resilience
Baloise strengthens its customers’ sense of security
to make them feel safer and more secure in their
everyday lives
Transparent and simple insurance products that can
reflect customers’ social and environmental values
One million new customers by 2021
▸
▸
▸
SDG 3, SDG 8, SDG 12
Resources for value creation:
▸
▸
Strong insurance collective
Identical underlying values regarding safety and
responsibility shared by customers and Baloise
Customer involvement through participation in
forums, panels and surveys
Ongoing simplification efforts in areas of relevance
to customers
▸
▸
42
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
CREATING VALUE FOR SHAREHOLDERS AND INVESTORS
The capital that is made available to Baloise by its shareholders
and investors 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 risk-bearing 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 shareholders and investors. This has enabled Baloise to
pursue an attractive and sustainable dividend policy for a
number of years now. Together with the Company’s efforts in
the area of sustainable development, these factors make Baloise
not only an attractive and sustainable investment target but
also a responsible one. Its very strong capital base was acknowl-
edged 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 recognition of Baloise’s excellent capitali-
sation – which is comfortably above the AAA level according to
the S&P capital model – as well as its high operational profita-
bility, robust risk management and solid competitive position
in its profitable core markets.
▸
Chapter ‘Sustainable business management /
Risk management’
www.baloise.com/rating
www.baloise.com/risk-management
STAKEHOLDERS: BALOISE’S INSTITUTIONAL AND PRIVATE
INVESTORS AND SHAREHOLDERS
Resources for value creation:
▸
A broadly diversified shareholder base, including insti-
tutional investors from Europe and the US (most with a
long-term investment horizon)
Open and transparent communication with all capital
market participants
Implementation of the ‘Simply Safe’ strategy, which
focuses not only on customer selection and expert
staff, but also on the commitment to be an attractive,
sustainable and responsible investment target for
shareholders and investors
Defined innovation strategy
▸
▸
▸
Effect: attractive, sustainable and responsible investment
target
▸
Strong total shareholder return as a result of attractive
and reliable dividends and optionality thanks to inno-
vation as a source of future value
One of the most profitable non-life portfolios in
Europe, a life insurance business that is well posi-
tioned to weather a challenging interest-rate environ-
ment, and steady and reliable contributions from
asset management and banking
Availability of a solid basis of facts for investment
decisions at all times
Generation of a cash upstream of CHF 2 billion to
Bâloise Holding by 2021
▸
▸
▸
SDG 8, SDG 9, SDG 12, SDG 13
43
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
CREATING VALUE FOR THE ENVIRONMENT
Baloise’s environmental policy focuses on promoting renewable
energies, developing infrastructure in a way that adds value and
taking action to combat climate change. The Company uses natu-
ral 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 have the option to
use public transport wherever possible and to separate their waste
for recycling.
Baloise also aims to raise employees’ awareness of environ-
mental issues and provides them with information on relevant
subjects in order to equip them with knowledge of possible
alternative actions or practices that are environmentally sustain-
able. In Belgium, Baloise conducted a transport review in collab-
oration with the city of Antwerp, resulting in the development of
a travel action plan. Bicycle leasing schemes and a gradual
changeover in the Company’s vehicle fleet from diesel engines to
fuel-efficient internal combustion engines and electric drives are
helping Baloise to continually reduce its CO2 emissions. In Swit-
zerland, Baloise is a member of the ‘environmental platform’ ini-
tiative in the Basel region. This platform facilitates the sharing of
knowledge among businesses and supports climate protection
and sustainable 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 con-
struction in Switzerland (SNBS) and sustainability specialists have
been involved in their design from the outset. The annual Group-
wide environmental audit within the annual report provides
information on Baloise’s progress regarding its environmental
footprint.
▸
Chapter ‘Sustainable business management /
The environment’
www.klimaplattform-basel.ch
Baloise is committed to environmental protection and is continu-
ally stepping up its efforts by launching new initiatives. This is why
the Company has adopted a responsible investment (RI) policy for
insurance assets. The RI policy sets out the rules for the integration
of environmental, social and corporate governance criteria into
investment decisions. In addition, the policy was also extended
to all assets managed by Baloise Asset Management in products
for external customers. Targeted investment can be used to exert
influence indirectly, e. g. with the aim of protecting the climate. To
emphasise its commitment, Baloise signed up to the Principles of
Responsible Investment (PRI) in 2018.
▸
Chapter ‘Sustainable business management /
Responsible Investment’
STAKEHOLDERS: ENVIRONMENT
Effect: climate protection
▸
▸
Reducing the carbon footprint of business activities
Raising awareness of environmental issues and
educating staff about relevant topics
Conserving resources (reducing water consumption,
energy consumption and waste)
Promoting renewable energies by increasing demand
through changes in our energy mix
Taking targeted action to combat climate change
through responsible investments in real estate and
other assets
▸
▸
▸
SDG 7, SDG 9, SDG 12, SDG 13
Resources for value creation:
▸
▸
Environmental mission statement since 1999
Commitment to use natural resources in a responsible
way and to reduce the carbon footprint of the business
on an ongoing basis
Climate and real-estate policy in connection with
responsible investments
Signing of the Principles of Responsible Investment
(PRI) in 2018
▸
▸
44
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
CREATING VALUE FOR 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 (see article 54 of the constitution
of the Swiss Confederation), at all times. The Swiss Financial
Market Supervisory Authority (FINMA) continuously monitors
compliance with this approval requirement.
The business model of Baloise, which protects customers
from falling into financial distress, plays an important part in
maintaining society’s prosperity. At the same time, it prevents
potential inequalities as a result of financial circumstances.
Baloise’s responsible investment policy rests on three
strategic pillars that have environmental and social effects and
an impact on good corporate governance: excluding producers
of controversial weapons and companies that generate 30 per
cent or more of their revenue from coal, integrating ESG (envi-
ronmental, social and corporate governance) factors into the
investment process by excluding companies with an ESG rating
lower than B (based on data from MSCI Ltd.) from the investment
universe of Baloise, and exercising voting rights held by Baloise
in Swiss companies.
▸
Chapter ‘Sustainable business management /
Responsible investment’
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 events but it also meets its own responsibility
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,
served as President of the Council of States (upper chamber of
the Swiss parliament) in 2018 before becoming a member of the
Swiss Federal Council on 1 January 2019. Furthermore, the
Company creates and preserves jobs that add value and it pays
taxes from its profits that help to fund the public sector. By
generating profits, Baloise is also able to be an active partner
in many areas of society. In its various national subsidiaries,
Baloise runs a number of projects and initiatives that benefit
society, mostly with a focus on improving and modernising
education.
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 of
December. All proceeds from these activities go to charity,
represented by 24 non-profit organisations selected by employ-
ees. 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. In
2019, a ‘volunteer day’ was held across all German locations
for the first time. As part of this event, all employees were allowed
to spend one full working day volunteering for a social or envi-
ronmental cause.
In Luxembourg, Baloise has been offering a corporate social
responsibility (CSR) fund in its life insurance product portfolio
since the end of 2019. The Company also holds conferences and
runs campaigns to educate its employees and customers about
sustainability topics and promote a sustainable lifestyle.
Baloise also promotes the cultural diversity of society
through its sponsorship activities. For example, the Company
has promoted art through the Baloise Art Prize for more than 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 prestig-
ious 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 reputation of the city of Basel.
In Belgium, Baloise is a major sponsor of cycling. Sport
45
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
Vlaanderen – Baloise is a professional cycling team for promis-
ing young athletes 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.
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
Belgium
www.baloise.be/nl/over-ons/csr-en-sponsoring
Germany
www.basler.de/ueber-uns/unternehmen/basler-
versicherungen-stellen-sich-vor/nachhaltigkeit
Luxembourg
www.baloise.lu/en/insurance-baloise-luxem-
bourg/Who-are-we/sponsorship-engagement
▸
▸
▸
STAKEHOLDERS: SOCIETY
Resources for value creation:
▸
Corporate social responsibility activities with a focus
on environmental, social and education projects
Promotion and support of volunteer work (social,
environmental, political)
Baloise Art Prize/promotion of art and access to art
(preserving culture, fostering education)
Strong compliance as a core element of corporate
governance (e. g. code of conduct)
Responsible investment policy
Sponsorship
▸
▸
▸
▸
▸
46
Effect: modern and better education and social
development
▸
▸
▸
Ensuring knowledge transfer (e. g. digitalisation)
Promoting education and volunteering
Ensuring a solid and trust-based relationship between
the business sector and the public
▸ Maintaining a strong community with a sense of
solidarity
Enabling communities to improve their infrastructure
thanks to engagement from Baloise
Investing in industries that are sustainable and
important for society
Promoting cultural diversity
▸
▸
▸
SDG 1, SDG 4, SDG 8, SDG 9, SDG10
Baloise Group Annual Report 2019
Sustainable business management
Responsibility
CREATING VALUE FOR PARTNERS
Baloise has a broad network of partners with which it maintains
cooperative relationships. Its links with different partners, such
as innovation partners, start-ups, outsourcing partners, sup-
pliers, brokers and agents, form a network that unlocks syner-
gies, promotes knowledge transfer and promises success
through mutual benefits. In addition to partnerships in Switzer-
land, which mainly revolve around innovation, the Company
maintains partnerships in Germany and Belgium, primarily with
agents and brokers. This pooling of expertise enables Baloise
to keep development times very short and quickly offer its
customers new, innovative products that are tailored to their
needs. To ensure that our suppliers and outsourcing partners
also comply with our sustainability principles, we integrate the
approval of our sourcing guidelines by the relevant partners
into our processes.
www.baloise.com/vendor
STAKEHOLDERS: INNOVATION PARTNERS, OUTSOURCING
PARTNERS, SUPPLIERS, BROKERS AND AGENTS
Resources for value creation:
▸
A broad network of sales partners (agents, banks,
brokers), service providers, advisers and start-ups
Start-ups founded by Baloise (e. g. FRI:DAY, Mobly)
and innovation processes (e. g. F10 in Switzerland)
▸
Effect: success as a result of synergies
▸
Protection of competitiveness and facilitation of
future growth
Innovative strength
Fast pace of innovation thanks to shortened product
development time
Around 50 start-ups in the portfolio/funding initia-
tives for innovative solutions for tomorrow’s market
Quick and targeted fulfilment of the needs of custom-
ers and partners
Ability to respond to customer needs rapidly and
develop new products within a short period of time
Strong relationships with sales partners, agents and
brokers
▸
▸
▸
▸
▸
▸
SDG 8, SDG 9., SDG 12, SDG 17
47
Baloise Group Annual Report 2019
Sustainable business management
Responsible investment
Responsible investment
Investing sustainably: Group-wide implementation of
the responsible investment strategy
Baloise Asset Management, the asset management company
of the Baloise Group, is getting behind the Group’s sustainabil-
ity strategy and taking responsibility for the area of investment
strategies in relation to both the investment of insurance assets
of the Baloise Group and the investment of assets from external
customers such as pension funds.
In 2019, Baloise Asset Management made a big step forward
in the field of responsible investing: since 1 January 2019, the
responsible investment (RI) policy has applied to all new inflows
in the insurance business. As early as summer 2019, Baloise
Asset Management was able to announce that all assets per-
taining to the insurance policy portfolio had been brought in
line with the requirements of the RI policy. From 1 January 2020,
the RI policy will also apply to all assets managed by Baloise in
products for external customers.
As an asset manager with a long-term perspective, Baloise
is confident that integrating environmental, social and corporate
governance (ESG) criteria into the investment process will have
a positive impact on the risk/return profile. It will also enable
Baloise to reduce ESG risks that have an adverse financial impact.
On this basis, we regard the integration of ESG criteria as an
additional risk management instrument. We would like to
manage long-term climate risks and make a positive contribution
to the transformation process. With regard to the United Nations’
sustainable development goals, we are therefore focusing pri-
marily on climate protection, i.e. sustainable development goal
no. 13 (climate action).
OUR APPROACH TO RESPONSIBLE INVESTING
Our approach to responsible investing involves taking account
of ESG factors in the investment decision-making process.
Baloise Asset Management has developed a responsible
investment (RI) policy to provide guidance on implementation
of the responsible investment approach. This policy governs
the integration of ESG factors into investment decisions and is
based on three strategic pillars, as illustrated below.
1. Exclusion: we exclude companies from the investment
2.
universe. Companies can be excluded if they pursue busi-
ness activities that are linked to controversial weapons or
if they are involved in the coal industry (more than 30 per
cent of total revenue).
Integration: we integrate sustainability factors into
investment analysis by taking ESG ratings into account.
Companies with a rating lower than B (according to data
from MSCI Inc.) will not be included in the investment
universe.
3. Proxy voting: as a responsible shareholder, we exercise
our voting rights in respect of Swiss shares on the basis
of the principles of good and ethically sound corporate
governance.
ESG integration
Securities with an ESG
rating lower than “B”
(according to MSCI data)
are not part of the
investment universe.
Exclusion
Producers of controversial
weapons (incl. SVVK-
ASIR list) and coal
producers (≥ 30 % of
revenue) are excluded.
Proxy voting
We assume our responsibility as
shareholders and exercise our
voting rights on Swiss shares.
Baloise has signed up to the Principles for Responsible Invest-
ment (PRI), which are supported by the United Nations, and
joined the Swiss Sustainable Finance (SSF) network in order to
strengthen engagement with Baloise’s customers, shareholders
and employees. In addition, representatives of our asset man-
agement team participate in working groups of the Swiss
Insurance Association (SVV), the Swiss Funds & Asset Manage-
ment Association (SFAMA) and the SSF network that are tasked
with further developing and promoting responsible investment
in the Swiss market.
48
Baloise Group Annual Report 2019
Sustainable business management
Responsible investment
ROBUST GOVERNANCE FOR RESPONSIBLE INVESTMENT
Baloise Asset Management has adapted its governance struc-
tures to reflect the responsible investment approach and the
associated integration of ESG criteria into the investment
decision-making process and incorporate the necessary moni-
toring of the responsible investment rules. The job of our new
Responsible Investment Committee (RIC) is to develop the
responsible investment strategy and monitor the investment
policy. The responsible investment core team is in charge of the
implementation and specification of the responsible investment
policy.
NEXT STEPS IN 2020
Baloise Asset Management remains committed to promoting
the further development of its sustainable investment strategy,
e. g. by working towards the implementation of an active own-
ership strategy. In addition, we are making efforts to improve
our reporting on the integration of sustainability criteria into
our investment analysis. For example, we would like to better
inform our customers about the ways in which we take account
of sustainability criteria in the products that they are invested
in. We also monitor new regulatory developments in Europe very
carefully. After all, we want to be in the best possible position
to meet the needs of our customers within the Group.
SUSTAINABILITY RATING UPGRADE
In July 2019, MSCI Inc. upgraded Baloise Insurance from a BB
rating to a BBB rating. Improvements in the area of responsible
investing were among the aspects specifically acknowledged
as part of this decision. The BBB rating puts Baloise above the
industry’s standard rating of BB, which applies to 33 per cent
of all companies in the ‘multi-line insurance & brokerage CH’
segment. MSCI ESG Research is the biggest global provider of
sustainability analyses and ESG ratings.
www.baloise-asset-management.com/de/ch/ueber-uns/verant-
wortungsbewusstes-investieren
Baloise responsible investment guidelines
▸
Responsible investing requires concerted
action. Since 2018, we have been a signatory
of the six Principles for Responsible Invest-
ment (PRI).
In investment analysis, a long-term holistic
investment horizon is essential for a positive
risk/return profile. This is why we integrate
ESG factors into our investment process.
Existing investments are reviewed at regular
intervals to ensure compliance with the
responsible investment rules across the dif-
ferent insurance business units.
▸
▸
▸ We make our voice heard. As a responsible
shareholder, we exercise our voting rights in
respect of Swiss shares on the basis of the
principles of good and ethically sound corpo-
rate governance.
▸ We report on our activities in a transparent
and proactive manner.
49
Baloise Group Annual Report 2019
Sustainable business management
Human resources
On the way to becoming a top employer
At the core of the Baloise strategy lies our conviction that dedicated employees build strong customer
relationships. Strong customer relationships help Baloise to achieve its financial targets. By adopting
this strategic direction, Baloise as an employer is taking responsibility for its employees – part of its
commitment to corporate citizenship and sustainable business management.
the labour market – particularly in a sector that is generally
regarded as conservative and less attractive. What do the
Company’s culture and philosophy represent? Why should tal-
ented individuals choose Baloise as an employer? We are very
popular among our own employees; the challenge is to take this
positive view of Baloise as an employer into the outside world
and raise awareness of it. Following the review of its employer
brand core in 2018, a high-impact employer branding campaign
was launched in Switzerland in 2019. This showed how Baloise
actively engages with the world of work, has much more to offer
than the insurance sector cliché would suggest, and is therefore
able to convincingly present itself as a modern employer.
AUTHENTIC AND APPROACHABLE
A company’s identity as a modern employer is also reflected at
all of its points of contact with applicants during the job appli-
cation process. To this end, Baloise has revised many of its job
adverts, making their language more authentic and adding
factual as well as entertaining content. Teams present them-
selves using video clips, job profiles are discussed in podcasts,
and employees are introduced through blog posts. Every
additional piece of content enhances the profile of Baloise as
an employer and provides insights into the Company. Baloise
endeavours to create an inspirational, collaborative experience
for applicants at every stage, from the initial job advert to the
interview all the way to the entry process or rejection. We are
aware that as an employer, we need to appeal to the employees,
not the other way around. Baloise has set itself the challenge
of being guided by the requirements of the applicants, and aims
to keep on surprising them.
KEY FIGURES
▸
▸
▸
▸
▸
▸
7,646 (2018: 7,203) employees. 42.9 per cent of all
employees are women (2018: 43.6 per cent).
The Baloise Group employs 281 apprentices, trainees
and interns (2018: 283).
67 per cent of staff members working in our main market
of Switzerland took part in our Share Participation Plan in
2019 (2018: 66 per cent).
Baloise employees work at the Company for an average of
12.8 years.
Staff turnover as at 31 December 2019 amounted to
6.3 per cent (end of 2018: 5.9 per cent).
In the most recent employee survey, the proportion who
would recommend Baloise as an employer was 83 per
cent.
STRATEGIC GOAL: IN THE TOP 10 PER CENT OF EMPLOYERS BY
2021
Baloise is on course to enter the top 10 per cent of employers in
the financial sector. The latest ‘pulse check’ in January 2020
showed another improvement in the proportion of employees
who would recommend Baloise as an employer. The Company
is now positioned in the top 15 per cent of employers (European
Financial Services benchmark of our analysis partners Korn
Ferry). This is a clear indication of the effectiveness of our
numerous initiatives to promote a learning culture, innovative
thought and modern working practices.
EMPLOYER BRAND: SURPRISINGLY MODERN
In its search for suitable talent and specialists, the Baloise Group
needs to position itself confidently against its competitors in
50
Baloise Group Annual Report 2019
Sustainable business management
Human resources
2019 employer campaign
How do we want to work? Baloise is evolving, as tradition clashes with innovation and digital transformation heralds
sweeping changes. The world of work is being redefined and Baloise is adapting to this change with an exploratory,
analytical stance. The questions raised by the Swiss employer campaign reflect the actual world of work within the Com-
pany. So far, Baloise has not found all of the answers, but it is re-evaluating the status quo and breaking with traditional
reputation patterns.
The campaign ran across Switzerland and was
reinforced with posters on public transport, an
advertising video on social networks, and a CEO
initiative on posters at train stations.
On two separate occasions, the CEO of Baloise
Switzerland, Michael Müller, spent a day taking
telephone calls on a range of subjects. He gave
advice to callers on career planning and jobs at
Baloise Group, and he talked about his own journey
from trainee to CEO. The initiative was covered by
several Swiss media organisations.
MODERN APPROACHES TO MARKETING
To attract talented individuals, Baloise puts an emphasis on
telling stories about employees and the Company. These stories
are published on its careers blog and then posted on social
media outlets such as Snapchat, Instagram, LinkedIn and
Facebook. Specifically tailored job adverts are also used on job
search platforms and in search engines.
The introduction of a new application system this year has
made an effective contribution to providing a user-friendly
selection and recruitment process. Applicants’ NPS increased
from +44 per cent to +55 per cent within one month of the system
being introduced.
BALOISE CULTURE: NEW COLLABORATION – LEARNING FROM
EACH OTHER
Digitalisation presents companies with major challenges. Which
tasks will remain? Which ones are going to disappear or change?
How is it possible to keep all employees on board as the Company
heads into an uncertain future? Baloise is pursuing a growth
strategy that focuses both on its strong core business and on
its unique corporate culture. In 2019, the Company continued
to drive forward changes in the way its employees work together
– towards increased collaboration and a permanent desire to
learn – based on specific Baloise behavioural values.
CULTURE OF DIALOGUE AND FEEDBACK
The changes brought about by digital transformation affect
everyone. Consequently, everyone needs to strive for develop-
ment towards increased collaboration and a new culture of
dialogue; across teams and departments, and between employ-
ees and managers. As hierarchies become flatter and each
individual acquires more personal responsibility, Baloise is
relying on three established approaches: continuous develop-
ment dialogue, regular leadership feedback and employee
surveys on the subject of engagement.
51
Baloise Group Annual Report 2019
Sustainable business management
Human resources
NEW FORMS OF COLLABORATION
As part of digitalisation, Baloise also continues to drive forward
agilisation, with decisions being taken at the point where the
expertise lies. This leads to changes in responsibilities and
creates new forms of collaboration. This is not a radical approach
on the part of Baloise, but rather a pragmatic one. Agile methods
are predominantly being tested where development is close to,
and aimed at, customers. Where is agility effective, and where
isn’t it? Baloise is learning as an organisation. In future, the
Company’s employees will intuitively be better able to recognise
the areas where agile working can provide added value and
intrinsically drive the necessary processes. Agility is not a
technocratic dogma that is an end in itself, but rather an approach
to achieving corporate goals.
GROWING MORE QUICKLY, CLOSER TO THE CUSTOMER
In order to allow its operating segments to grow more quickly,
Baloise is making some of them more agile. Expertise that already
exists in different areas of the Company is being consolidated.
These new methods and networks achieve results more quickly.
The restructured collaboration re-evaluates the status quo and
deliberately breaks traditional patterns of behaviour.
RESTRUCTURING OF BALOISE GROUP IT
Baloise is restructuring its IT functions into a multinational Group
IT. This will reduce internal complexity, enable innovations and
solutions to be implemented more quickly and efficiently, and
further establish agile working methods in IT. The basic philos-
ophy of the restructuring follows agile organisational forms and
approaches which focus on customers and ideally make it pos-
sible to provide all services – from initial request to delivery – from
a single source.
The IT governance for Baloise Group is also being reposi-
tioned. Employees from the major national Baloise companies
who have specific IT skills and expertise are going to form ‘guilds’,
teams of experts who will harmonise and define the IT standards
and goals of the Baloise Group. That process will lead to cultural
developments at all levels, as the guild representatives and the
implementing IT service or product owners in the agile teams act
as functional managers without a disciplinary hierarchy. This
develops and challenges the personal responsibility of the
employees, who become more engaged and take on more devolved
responsibility. With the guild approach, IT governance at Baloise
does not derive from a centralised team in some ivory tower, but
rather from the Group and for the Group, with the involvement of
the relevant local experts.
LEARNING ORGANISATION: BALOISE TAKES RESPONSIBILITY
FOR ITS EMPLOYEES
No one knows quite where the world of work is heading, so it is
all the more important to position oneself broadly. This requires
an extensive portfolio of experience and a wide range of skills.
With that in mind, Baloise actively supports its employees’
willingness to adapt and creates an environment in which a joy
of learning can thrive. The basis for this approach is a strong
belief that each one of us needs to greatly extend our portfolio
of knowledge, experience and abilities in order to survive in the
labour market of the future. We are therefore extending the
invitation to learn to all our employees.
PROMOTING INTERNAL MOBILITY
Apart from short visits to other departments, the main way in
which Baloise supports and encourages this approach is the
‘change of perspective’ initiative – providing temporary insights
into different areas of responsibility. Employees transfer to other
departments for a defined period of between a month and two
years, where they encounter different team dynamics, get
involved with new issues and gain experience. It is a very nat-
ural way of learning – at all levels. The ‘change of perspective’
initiative is already paving the way towards a learning organi-
sation in which the curiosity of the individual keeps the Company
as a whole competitive. Since the start of the initiative in May
2018, more than 120 employees have opted for a change of
perspective.
It is the personal responsibility of each individual employee
to continuously work on their own personal and professional
development. Online platforms for user-controlled learning, such
as Elucydate and LinkedIn Learning (2019, pilot) support this
intrinsic process. Employees take the initiative to develop new
skills and consequently improve their own position by acquiring
the tools they need to adapt within the world of work as require-
ments change.
TRAINING OPPORTUNITIES
Baloise also promotes individual engagement, development and
enablement for its youngest employees. In close collaboration
52
Baloise Group Annual Report 2019
Sustainable business management
Human resources
Modern leadership approach: Challenge and
support
As detailed in the section on the employer cam-
paign, Baloise is re-evaluating the world of work
and therefore also its own approach to leadership.
Following on from this idea, managers become
coaches who work with their employees to create
an environment where everyone can achieve suc-
cess together. Commitment and initiative are
actively supported in order to accelerate the digi-
tal transformation. Team processes are redefined,
individual responsibility for actions increases.
In this way, Baloise gives every employee the
opportunity to play a leadership role. Managers
are no longer simply nominated ‘from above’;
instead, individuals who are motivated to take on
leadership tasks are able to apply. This mindset
has been integrated into the tried-and-tested
Group-wide Baloise Campus management devel-
opment programme, where it received a lot of
interest.
with their trainers, the apprentices shape their own learning
environment, bringing fun and curiosity to the process of
expanding their knowledge and discovering and developing their
personalities. There are currently 281 young people working as
apprentices at Baloise. The Company’s graduate trainee pro-
gramme, now in its 27th year, gives participants a deep insight
into various parts of the business and thus provides the ideal
preparation for a management or specialist role. They spend a
total of 16 months on secondment to four departments of their
choice, giving them access to a wide range of roles, departments
and management levels within the Company.
‘Friendly Work Space’
Baloise in Switzerland 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. The assessment for 2019 takes
place in February 2020.
REWARDING PERFORMANCE: A HOLISTIC APPROACH
Baloise takes a holistic approach to remuneration, in which pay
is determined by a combination of behaviour, performance and
development. This is based on our conviction that performance
does not simply manifest itself by measuring the achievement
of unilaterally set targets. Rather, performance is the result of
intrinsic motivation applied within an environment of individual
responsibility and freedom of action. Managers and employees
are engaged in a continuous dialogue about focus, targets,
performance, behaviour and development. In a world that is
undergoing rapid and permanent changes, a regular dialogue
ensures that performance targets are adjusted; and it also
tackles the question of how to provide ongoing development
for employees in order to enable them to improve their perfor-
mance on a long-term basis. This individual focus also has an
impact on the annually defined team objectives, as each indi-
vidual’s efforts contribute to the overall performance. Shared
responsibility leads to greater personal responsibility and ini-
tiative by the individual employees.
53
Baloise Group Annual Report 2019
Sustainable business management
Human resources
REMUNERATION PRINCIPLES
The overall level of remuneration is not regarded as a strategic
selling point. Baloise strongly believes that basing remuneration
on its competitiveness in the marketplace, individual perfor-
mance and the Company’s success, all guided by fairness,
transparency and sustainability, is compatible with its values.
Consequently, Baloise attaches great importance to reward-
ing its employees for their performance, including through
monetary compensation. It therefore offers remuneration
packages that are based on fair principles and an established
framework of performance management, and which take a range
of factors into account. The total remuneration package consists
of competitive base salaries, a range of variable remuneration
components, fringe benefits and attractive employee incentives
and loyalty bonuses.
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 115.
Careers website:
www.baloise.com/jobs
Careers blog:
www.baloise.com/karriereblog
Facebook:
www.facebook.com/baloisegroup
YouTube:
www.youtube.com/baloisegroup
Instagram:
www.instagram.com/baloisejobs
LinkedIn:
www.linkedin.com/company/baloisegroup
Twitter:
www.twitter.com/baloise_jobs
BALOISE’S 7’646 EMPLOYEES IN 2019 PER COUNTRY
Switzerland
Germany
Belgium
Luxembourg
Percent
Employees
50.6
21.5
20.8
7.1
3’869
1’641
1’594
542
With the amendment of the Equality Act, it has become manda-
tory for companies with 100 employees or more to carry out an
internal equal pay analysis. Baloise will be performing this
analysis by the end of June 2021 at the latest, and will then
notify employees and shareholders of the results. The Company
has already participated in the Swiss federal government’s
voluntary wage equality dialogue in 2013/2014, and confirmed
the results obtained there with an internal analysis in 2018.
54
Baloise Group Annual Report 2019
Sustainable business management
Human resources
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55
Baloise Group Annual Report 2019
Sustainable business management
The environment
Environmental mission statement
Baloise has had its own environmental mission statement since 1999. From the outset, it was deemed
important to embed sustainability throughout the company and in all day-to-day business activities.
This environmental mission statement became an integral element of our value creation approach for
sustainable development in 2018. This approach complements the mission statement for environmental
and social activities and has been incorporated into the Company’s overall sustainability management.
The environmental mission statement is part of our efforts to create environmental value to support the
achievement of the UN’s sustainable development goals, in particular no. 7 (affordable and clean
energy), no. 9 (industry, innovation and infrastructure), no. 12 (responsible consumption and produc-
tion) and, as a priority, no. 13 (climate action).
same principles in the procurement and use of office equipment
and materials. In doing so, it pays particular attention to its
published value creation model, its environmental mission
statement and its environmental audit.
▸
Chapter ‘Sustainable business management/
Responsibility’
www.baloise.com/vendor
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-re-
lated factors. It also advises industrial clients on risk reduction
and risk prevention.
ORGANISATION
The Corporate Executive Committee bears ultimate responsibil-
ity in environmental matters. Each Group company has a
coordination unit which implements the environmental mission
statement. This working group is made up of representatives
drawn from all key corporate functions.
PRINCIPLE
As a primary insurer, Baloise is prepared to assume responsi-
bility for the preservation of the natural environment. It focuses
on the responsible use of natural resources and the continuous
reduction of CO2 emissions. It is based on the concept of value
creation, which is not limited to the environmental impact of
operations, but also includes responsible investment by Baloise
Asset Management.
▸
Chapter ‘Sustainable business management/
Responsibility’
Chapter ‘Sustainable business management/
Responsible Investment’
▸
EMPLOYEES AND THE 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.
Regular employee surveys are part of an active stakeholder
dialogue. Baloise works hand in hand with other companies,
organisations and public authorities across all countries in which
it is active to find solutions to environmental problems. It par-
ticularly encourages the sharing of information within the
insurance sector, maintains an open dialogue with the public
and regularly reports on environmental projects and what has
been achieved. The environmental audit is presented on page
59.
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
56
Baloise Group Annual Report 2019
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 and the United Nations’
sustainable development goals. 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 adding value, including for the environment, and making continual improvements in all areas.
CONTINUOUS REDUCTION OF CO2 EMISSIONS SINCE 2000
Climate change is the challenge of the century. Since the 1997
Kyoto conference in Japan, 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 Manage-
ment 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 and the UN’s sustainable
development goals. Both absolute and relative CO2 emissions
have been reduced massively at Baloise since the year 2000.
Baloise cut absolute CO2 emissions from 53,580 tonnes in 2000
to 13,731 tonnes in 2019. This is equivalent to a 74.4 per cent
reduction in CO2 emissions, while emissions per employee fell
by 38 per cent over the same period, from 4 tonnes to 2.5 tonnes.
FOCUS ON OPTIMISED OPERATIONS IN 2019
In 2019, the focus was on the optimisation of building operations
and business processes at all locations, and on the construction
of Baloise Park at the Basel site in Switzerland. This required a
significant amount of capital investment.
NEW BUILDINGS AND OPTIMISED OPERATIONS AT THE
SWISS OFFICES
In a project scheduled for completion in 2020, Baloise is erect-
ing three new buildings in the Baloise Park 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. Baloise is basing its designs for the buildings on the
standards for sustainable construction in Switzerland (SNBS),
which means it will comfortably exceed the legal requirements
in terms of energy efficiency. An efficient energy centre will
provide power for all three buildings, which will be heated by
100 % renewable district heating.
In addition to the construction of the Baloise Park, the
recirculating coolers at the main office in Aeschengraben in Basel
have been completely replaced at a cost of almost CHF 3 million.
By using the latest technology, recooling can keep the temper-
ature in office areas at a comfortable level using 80 per cent
less water and 35 per cent less electricity. New frequency
transformers in the air conditioning units will save 25,000 kWh
a year, equivalent to the consumption levels of five family homes.
Following a review of employee catering at headquarters in
Basel in 2015 with a focus on regionality, seasonality and
animal welfare, the Company embarked on the refurbishment
TOTAL CO2 EMISSIONS IN TONNES
CO2 EMISSIONS PER EMPLOYEE IN KILOGRAMMES
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
CO2 emissions for the Group
CO2 emissions in Switzerland
CO2 emissions in Switzerland
CO2 emissions for the Group
57
Baloise Group Annual Report 2019
Sustainable business management
The environment
of its employee cafeteria in 2019 with a view to improving energy
efficiency and the use of space. The renovation will be completed
in the first half of 2020.
www.baloisepark.ch
ONCE AROUND THE WORLD WITH SOLAR POWER
Since 2015, Baloise customers and employees have been able
to charge their electric vehicles in Basel, and in Zurich since
2016,using solar power. The facility, which does not cost any-
thing to use, has proved very popular. As have the eco-friendly
electric bikes, which are used by the Company’s loss assessors
to get to local incidents. During a very sunny 2019, enough
solar-generated electricity was drawn from the ‘pumps’ to power
a total driving distance of almost 60,000 kilometres.
NEW SITE AND SYSTEMATIC WASTE SEPARATION IN
LUXEMBOURG
In Luxembourg, two electric vehicles have been made available
and new offices are at the planning stage. The new office build-
ing in Leudelingen will be the first in the country to be made
entirely of wood. The wood used in the building, which has been
given the name Wooden, is sourced exclusively from sustaina-
bly managed forests in Luxembourg. The wood design will be
less dusty and noisy to construct, making the build less disrup-
tive. It is made of pre-fabricated elements and is 40 per cent
lighter than concrete, which significantly reduces the number
of lorries needed to transport the elements to the construction
site. The building will be equipped with a photovoltaic (PV)
system and aims to achieve a BREEAM Excellent rating. This
certification system assesses the environmental and socio-cul-
tural aspects of a building’s sustainability performance. In
addition to its structural qualities, Wooden will also be the
second building in Luxembourg to take part in the WELL Building
Standard® certification process. Unlike similar schemes in the
construction sector, the focus here is on the residents. WELL
looks at ten areas that enable a holistic approach to well-being
in and around the building: air, water, food, light, physical
activity, temperature, noise, materials, mind and community.
The new office building will be easier to get to on public transport,
which will help to further reduce indirect CO2 emissions . Baloise
will also be implementing systematic waste separation at its
site in Luxembourg to recycle materials and return them to the
production cycle.
www.baloise.lu/en/insurance-baloise-luxembourg/Who-are-we/
news/2020/Wooden-Baloise-future-eco-friendly-building.html
58
LOW-CARBON TRANSPORT, SUSTAINABLE BUILDINGS AND
REFURBISHMENT AT THE SITE IN BELGIUM
In Belgium, Baloise is focusing on modernising and reusing an
existing building, which will be refurbished using state-of-the-
art technology instead of demolishing it and building a new one.
The new technology installed will include LED lighting with
daylight control and occupancy sensors (smart control), heating
and cooling via climate-control ceilings, rainwater harvesting,
solar panels for generating energy and innovative insulation of
the facade and the roofs, including the use of green roofs. The
windows will be replaced with thermal insulation glazing with
very high solar control properties to further reduce energy
consumption for heating and cooling. Material from the old
building will be reused wherever possible; where this is not
feasible, new high-quality, long-lasting materials will be used
instead.
Baloise is investing in a prototype for the future of office
working in Belgium. In March 2019, it bought the sustainable
building THE LINK from Ghelamco, making Baloise the largest
owner of office space in Antwerp. The office block was awarded
the BREEAM Excellent certificate for sustainability, and thanks
to a rating of E40 in the BEN scheme, it has been certified as
practically energy-neutral. The energy used in the building is
entirely from renewable sources.
Baloise has increased its employees’ use of bicycles by
introducing a bicycle leasing scheme, and the vehicle fleet is
being converted in stages from diesel engines to more fuel-ef-
ficient or electric models. The Company is also promoting more
environmentally friendly driving habits in its vehicle guidelines.
REDUCTION OF RESOURCE CONSUMPTION IN GERMANY
The lighting in the buildings at the Hamburg site has been
partially converted to LED, a more energy-efficient technology
in the long term. The motors in the main building’s ventilation
system have also been fitted with state-of-the-art frequency
transformers, and the conveyor washing machine has been
replaced with a new, more efficient one.
In Bad Homburg, projects were launched in 2019 to install
a PV system and retrofit LED lighting. The continual optimisation
of many operational parameters for heat generation has improved
overall energy consumption in the building. By switching to even
more environmentally friendly toilet paper and paper towels,
Baloise is stepping up its efforts to protect the environment in
Germany too.
The relocation of the Bremen office to a more efficient
building, the EUROPA-CENTER Airportstadt in Bremen, will allow
the Company to make long-term energy and cost savings. These
will be achieved by downsizing the offices and making better
use of the available space, for example.
Baloise Group Annual Report 2019
Sustainable business management
The environment
FRIDAY OFFSETS 302 TONNES OF CO2
Since October 2018, FRIDAY customers have been able to make
their own contribution to climate protection by offsetting the
CO2 emitted by their cars. Through its FRIDAY+ECO product, a
joint development with the well-known climate protection
organisation myclimate, Baloise’s German online mobile insurer
FRIDAY offset 302 tonnes of CO2 and other damaging greenhouse
gases, including methane and nitrous oxide, between October
2018 and March 2019. The climate protection projects chosen
meet the highest standards (Gold Standard, CDM, Plan Vivo).
www.friday.de
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 at all sites and at its computer
centres. The figures reported relate to the energy and resources
used by 72.4 per cent of the 7,600 or so people working for the
Baloise Group. Per-employee consumption of heating has been
reduced by around 33 per cent and of electricity by 42 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/sustainability
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
2017 absolute
2018 absolute
2019 absolute
Relative Unit
+/ – %
5,148
136,601
15
5,214
142,409
14
5,590
155,853
15
headcount
ERA m2
number of buildings
19,137,677
18,314,747
16,381,853
2,931 kWh / employee
9,830,542
47,768 m3
413 t
8,269,769
45,421 m3
300 t
9,553,480
41,341 m3
61 kWh / m2
30 l/employee / day
318 t
57 kg / employee
6.0 % recycled
84.0 % chlorine-free-bleached
10.0 % chlorine-bleached
72.4 million
A4 sheets
1,009 t
66.1 million
A4 sheets
843 t
62.7 million
A4 sheets
11,225 A4 sheets /
employee
922 t
165 kg / employee
7.2
9.4
1
– 10.6
15.5
– 8.9
6.0
– 5.1
9.4
51.0 % paper / cardboard
10.0 % other materials
2.0 % special waste
36.0 % misc. waste / refuse
22.5 million km
22.4 million km
20.7 million km
3,705 km / employee
– 7.4
20.6 % km by air
50.7 % km by road
28.7 % km by public transport
CO2 emissions
15,579 t
14,773 t
13,731 t
2,456 kg / employee
– 7.1
59
Baloise Group Annual Report 2019
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 pos-
sesses a strong balance sheet and strong operational profitability, which have been optimised in terms
of the risks taken and the earnings potential derived from the business.
Baloise’s risk management approach involves managing both
risk and value at the same time. It is based on innovative
standards so that Baloise can always keep its promise to its
customers.
separate risk controller (responsible for risk management and
control). The detailed risk map can be found on pages 158 and
159 of the 2019 Financial Report.
Risk management at Baloise is a standardised strategic and
operational system that is applied throughout the Group and
covers the following areas:
▸
Risk map: this forms the backbone of Baloise’s risk strat-
egy and defines the fundamental risk issues, such as
actuarial risk and market risk, as well as the operational
risk arising from business activities.
Risk governance and risk culture: this involves encourag-
ing risk awareness – how people perceive and respond to
risk – and establishing this mindset throughout the
organisation.
Risk measurement: this is used to identify and quantify
the risks inherent in all financial and business processes.
Risk processes: the risk organisation and its pertinent
standards are key aspects of risk management and oper-
ate in tandem with reporting, management and evalua-
tion processes.
Strategic risk management: its purpose is to optimise the
Group’s earnings potential while taking account of the
risks.
▸
▸
▸
▸
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
Business risk
Investment risk
Financial-structure risk
Business-environment risk
Operational risk
Leadership and information risk.
60
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), the compliance function and business continuity man-
agement (BCM) 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 (made up of members of the
Corporate Executive Committee) and the local risk committees
in each business unit (comprising members of the local senior
management teams) decide how the risk strategy is implemented
in day-to-day business. Bodies specially set up to examine
specific issues, such as asset/liability management, compliance,
IT risk and claims reserving, 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.
Baloise Group Annual Report 2019
Sustainable business management
Risk management
Group Risk Management is responsible for:
▸
developing consistent, mandatory risk models for the
entire Baloise Group;
They determine how the various risk issues are evaluated,
managed and reported. A number of risk limits act as early-warn-
ing indicators to mitigate the risks taken.
▸ monitoring Group-wide standards;
▸
▸
▸
reporting risks;
complying with risk processes and procedures;
communicating with external partners such as auditors
and corporate supervisory bodies.
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 Finan-
cial Officer, followed by its Chief Risk Officer.
RISK MEASUREMENT
The Baloise risk model standardises the process of quantifying
business risks and financial market risks across all strategic
business units. It is aligned to the principles and calculation
methods applied by the Swiss Solvency Test and with the
European Union’s Solvency II directives.
To this end, risk measurement metrics alone are used to
calculate a target capital figure (capital requirement), irrespec-
tive of any financial accounting treatment. This target capital
figure is constantly compared with the capital currently avail able
(the risk-bearing capital) to ensure that the Company remains
solvent even in adverse circumstances and can meet its obliga-
tions to policyholders at all times.
In addition to this holistic risk model, risk management uses
the risk map to identify, describe and evaluate specific risks.
Baloise’s corporate database of specific risks – which contains
a detailed description of the risks concerned, their classification
on the risk map, early-warning indicators and the quantitative
evaluation – is generated from this standardised process. The
risks are documented together with the measures needed to
mitigate them. The database is updated on an ongoing basis.
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 processes
on a mandatory basis. These standards stipulate methods, rules
and limits that must be applied throughout the Baloise Group.
The Baloise Group uses a system of limits in order to mitigate
its risks holistically at an aggregate level. This system tracks
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:
▸
Decisions on actuarial risk are made by the local under-
writers on the basis of underwriting guidelines. The Com-
pany’s key reinsurance strategies are supplemented by
risk-based rentention analysis.
Appropriate reporting procedures are used to monitor
market risk and financial-structure risk across all busi-
ness units. In addition to upper limits on equity expo-
sures, for example, there are clear and binding guidelines
on bond ratings. The applicable ‘Basel’ approach is used
to assess credit risk. In addition, the overall solvency
position is regularly monitored by the risk control func-
tion.
Baloise captures business-environment risk, operational
risk and strategic risk on both a standardised and indi-
vidual basis, and assesses their probability and potential
impact.
▸
▸
The Own Risk and Solvency Assessment (ORSA), a risk report
that has to be prepared annually, is discussed with the deci-
sion-makers so that suitable measures can be developed. The
results of the ORSA are also reported to the regulatory author-
ity. 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 standardised 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 strate-
gic risks and how they are managed. Strategic risk management
offers a clear picture of the risks involved in opening up new
business lines and of how to optimise the risk/return profile of
existing business.
Profit targets for individual business units that factor in
their specific risk situation are a major aspect of this risk man-
61
Baloise Group Annual Report 2019
Sustainable business management
Risk management
agement system. These targets form part of the overall objectives
agreed with local management teams.
BALOISE’S RISK MANAGEMENT DEMONSTRATED ITS PROVEN
STRENGTHS IN 2019
Baloise’s risk strategy principles are designed for the long term,
as shown by the Company’s excellent risk positioning in 2019.
This is underlined by the credit rating from Standard & Poor’s of
A + with a stable outlook. Additionally, Standard & Poor’s has a
favourable view of the Group’s strategic risk management,
risk-management culture, and risk controls.
Risk management approaches that have been well-estab-
Our risk management will continue to evolve over the coming
years, reaffirming Baloise’s standing as a company with an
outstanding risk strategy and risk positioning.
Further information on risk management can be found in
the 2019 Financial Report (section 5. Management of insurance
risk and financial risk, pages 155 to 197).
www.baloise.com/risk-management
lished for many years were maintained in 2019:
▸
The Baloise Group’s investment strategy continues to
focus on diversification. As has proved successful in the
past, changes to the investment strategy are made in
close consultation with the risk management function.
Baloise continues to actively manage credit risk and cur-
rency risk.
▸
▸ With a net equity exposure of 7.3 per cent as at
31 December 2019, Baloise’s equity investments in the
reporting year lay comfortably within its risk-bearing
capacity.
The high quality of recurrent investment income gener-
ated by Baloise’s stable real-estate portfolio proved to be
a valuable source of revenue.
There is a particular focus on the management of inter-
est-rate risk. Payment obligations to customers in future
years are matched to the greatest possible extent with
income earned from investments. Baloise’s real-estate
portfolio has proved very helpful in this respect. The
Company also invests in safe long-term bonds denomi-
nated in either Swiss francs or euros.
Baloise’s underwriting business has proved to be highly
consistent, with the Baloise Group’s net combined ratio
of 90.4 per cent demonstrating its excellent capabilities
in underwriting and managing non-life risk.
Sustainability is becoming an increasingly important
issue from a risk management perspective too. This can
be seen from its inclusion in the Group-wide risk manage-
ment standards and in the risk map.
▸
▸
▸
▸
62
Baloise Group Annual Report 2019
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
enriches our lives and stimulates discussion. The Baloise art collection is an important part of the Com-
pany’s corporate culture, as Baloise believes that the privilege of owning art comes with an obligation
to make it accessible to the wider public. In an extension of this principle, it has now set up a website
wholly dedicated to art and the Company’s connection to it. As well as presenting the themed exhibi-
tions at the Baloise Art Forum, the website www.baloiseart.com now also provides some glimpses into
the collection itself, showcasing a growing selection of artists and their work. The latest addition is a
section featuring the recipients of the Baloise Art Prize, now in its 22nd year.
CORPORATE COLLECTING – AN IMPORTANT ASPECT OF THE
CULTURE AT BALOISE
The primary objective of the collection is not to achieve mone-
tary gain, but to integrate spiritual and creative values into the
Company’s corporate culture. Since the late 1940s, the Baloise
art works have always been accessible both to employees and
visitors. The collection is on display in foyers, corridors, meet-
ing 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
Encouraging an understanding and enjoyment of art is as much a
part of the corporate culture as fostering new talent – both within
Baloise and externally, in the arts sector. For many years, Baloise
training and development programmes have provided access to
careers with substance. Those benefiting include apprentices,
interns and temporary student workers, while the Company’s
established graduate trainee programme gives its participants a
deep insight into various parts of the business and thus provides
the ideal preparation for a management or specialist role. For all
of these people, Baloise offers a launchpad for a long and suc-
cessful future.
Its commitment to sponsoring modern art – through acquisi-
tions 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.
Since 1999, Baloise has been awarding the annual Baloise
Art Prize at Art Basel, an international art fair. Two talented young
artists each receive CHF 30,000 in prize money, which is awarded
during a ceremony at the fair. After the announcement at the Art
Basel media conference, both the winners and the galleries enjoy
considerable attention at this globally significant event. The 2019
Baloise Art Prize was awarded to Giulia Cenci and Xinyi Cheng,
whose work was donated to the MUDAM in Luxembourg and the
Hamburger Bahnhof – Museum für Gegenwart – Berlin respectively.
ART AT THE BALOISE PARK COMPLEX
The Group headquarters at Baloise Park also provide space to
display the Baloise collection. The publicly accessible Art Forum
on the ground floor presents two exhibitions a year on different
themes, and in keeping with the Baloise corporate philosophy,
the upper floors 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 focus
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. For example, works by the 2016 winners, Mary Reid Kelley
(born 1979) and Sara Cwynar (born 1985), have been added to
the collection.
63
Baloise Group Annual Report 2019
Sustainable business management
Commitment to art
Mary Reid Kelley
«Nicki Minaj», 2015
48,4 x 42,7 cm
Collection of Baloise Group
Courtesy of the artist and Vielmetter Los Angeles
language. In this project, she took the unique approach of
sculpting and painting a range of portrait busts before taking
black-and-white photographs of them. Baloise acquired five works
from this series of photos, created in 2015, for its own collection.
The series includes literary greats as well as rap stars, all of whom
have inspired Mary Reid Kelley, who provides us with entertain-
ing and intelligent insights into her exceedingly rich world.
The judges of the 2016 Baloise Art Prize wrote in their report:
“Cwynar buys cast-off objects on eBay and purchases photo-
graphs in a second-hand store. These she organises and archives
.
Mary Reid Kelley
«Edgar Allan Poe (Stella)», 2015
54,9 x 38,1 cm
Collection of Baloise Group
Courtesy of the artist and Vielmetter Los Angeles
Although Mary Reid Kelley studied painting, her work is not
restricted to one medium. Her projects could be described as a
brilliant fusion incorporating cinema, theatre, drawing, painting,
photography and poetry. Language is a central element of Mary
Reid Kelley’s work, so it is hardly surprising that the artist has
portrayed figures who have influenced her relationship with
64
Sara Cwynar
Tracy (Calvin), 2017
108,4 x 136,3 cm
Collection of Baloise Group
Courtesy of the artist and Foxy Production, New York
by colour, material and subject matter. Social concerns, such
as the circulation and value of objects, as well as feminist issues
and the significance of personal incidents and historical events
all come into play. The artist poses crucial questions about what
photographed imagery means to us today, both individually and
socially. In so doing, she deploys an aesthetic that varies from
the deliberate parading of a do-it-yourself character to the
seductive power of professional advertising.”
The two large-scale images acquired for the Baloise collec-
tion show Tracy, a long-time friend of Cwynar. While Tracy chose
her clothes and make-up, and decided which poses to strike,
Cwynar selected the props, the arrangement and the lighting.
This collaboratively choreographed photographic work addresses
the symbols of our consumer society.
www.baloiseart.com
65
Unterkapitel Corporate
Governance
CORPORATE GOVERNANCE REPORT ............................. 67
1. Structure of the Baloise Group and shareholder base ... 68
2. Capital structure ........................................................ 69
3. Board of Directors ...................................................... 70
4. Corporate Executive Committee ................................. 80
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
36 Sustainable Business Management
66 Corporate Governance
116 Financial Report
276 Bâloise Holding Ltd
294 General information
E
C
N
A
N
R
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V
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G
E
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R
O
P
R
O
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Unterkapitel
Baloise Group Annual Report 2019
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 firmly believes that high-quality corporate
governance has a positive impact on its performance.
This chapter reflects the structure of the SIX Corporate
Governance Guidelines as amended on 20 June 2019 in order
to improve comparability with previous years and with other
companies. It includes the requirements of economiesuisse’s
Swiss Code of Best Practice for Corporate Governance, Appen-
dix 1 of 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
disclosures on remuneration in the Remuneration Report
(Appendix 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 2019). Additional reference is made to material
changes occurring between the balance sheet date and the print
deadline for the Annual Report.
Sustainable business management has long played an
important role at Baloise and is described in a dedicated section
of the Annual Report from page 36 onwards.
68
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 8,540 million as at 31 December 2019.
▸
Information on Baloise shares can be found from page 8
onwards.
Significant subsidiaries, joint ventures and associates as at
31 December 2019 can be found from page 260. onwards
in the notes to the consolidated annual financial state-
ments, which form part of the Financial Report.
Segment reporting by region and operating segment can be
found from page 199 onwards in the notes to the
consolidated annual financial statements within the Finan-
cial Report.
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 21,432 shareholders were registered in Bâloise Holding’s
share register as at 31 December 2019. The number of registered
shareholders had increased by 5.17 per cent compared with the
previous year. The “Significant shareholders” section on page
288 provides information on the structure of the Company’s
shareholder base as at 31 December 2019.
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-ex-
change-regulation.com/en/home/publications/significant-share-
holders.html
Baloise Group Annual Report 2019
Corporate Governance
Corporate Governance Report
Treasury shares
Bâloise Holding held (directly and indirectly) 2,741,099 treasury
shares (5.62 per cent of the issued share capital) as at 31 Decem-
ber 2019.
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
ownership 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 1,890.7
million from cash dividends and share buy-backs over the last
five years.
Year (CHF million)
2015
2016
2017
2018
2019
Total
Cash dividends
Share buy-backs
Total
250.0
260.0
273.3
292.8
312.3 1
1,388.4
59.1
54.8
63.3
135.1
190.0
502.3
309.1
314.8
336.6
427.9
502.3
1,890.7
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 24 April 2020.
CHANGES IN BÂLOISE HOLDING’S EQUIT Y
(BEFORE APPROPRIATION OF PROFIT)
31.12.2017
31.12.2018
31.12.2019
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
4.9
11.7
8.3
683.2
552.5
– 397.7
862.9
CHF million
Share capital
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
Treasury shares
Equity at-
tribut-able 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
26 April 2019 has authorised the Board of Directors until
26 April 2021 to increase the Company’s share capital by up
to CHF 400,000 by issuing up to 4,000,000 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
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Conditional capital
The 2004 Annual General Meeting created conditional capital.
This capital enables the Company’s share capital to be increased
by up to 5,530,715 registered shares with a par value of CHF 0.10
each (see article 3 [2] of the Articles of Association). This con-
stitutes a nominal share capital increase of up to CHF 553,071.50.
Conditional capital is used to cover any option rights or
conversion rights granted in conjunction with bonds and similar
securities. Shareholders’ pre-emption rights are disapplied.
Holders of the pertinent option rights and conversion rights are
entitled to subscribe for the new registered shares. The Board
of Directors may restrict or disapply shareholders’ pre-emption
rights when issuing warrant-linked bonds or convertible bonds
in international capital markets (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 6,715.6
million on 31 December 2019. Details of changes in consolidated
equity in 2018 and 2019 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 2017 can be
found in the consolidated statement of changes in equity on
page 124 in the Financial Report within the 2018 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 2019, a total of twelve public bonds were outstanding. Details
of outstanding bonds can be found on pages 242 and 286 and
on the website.
www.baloise.com/bonds
Credit rating
On 11 November 2019, credit rating agency Standard & Poor’s
confirmed the rating of the Swiss units Baloise Insurance Ltd
and Baloise Life Ltd as “A +” with a stable outlook. Stand-
ard & Poor’s awarded this credit rating in recognition of Baloise’s
excellent capitalisation – which is comfortably above the AAA
level according to the S&P capital model – as well as its high
operational profitability, robust risk management 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 Sachver-
sicherungs-AG, which were also reaffirmed, can be found on the
website.
www.baloise.com/rating
3. BOARD OF DIRECTORS
Election and term of appointment
The Board of Directors consisted of ten members last year.
Between 1 January 2019 and the Annual General Meeting on
26 April 2019, it had nine members because Karin Keller- Sutter
stepped down from the Board of Directors 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 2019, the average age on the Board of
Directors was 59 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 Andreas
Burckhardt, Christoph B. Gloor, Hugo Lasat, Dr Thomas von
Planta, Thomas Pleines, Professor Dr Hans-Jörg Schmidt-Trenz
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. Karin
Keller-Sutter stepped down from the Board of Directors with
effect from 31 December 2018, and Dr Georges-Antoine de
Boccard did so with effect form the 2019 Annual General Meeting.
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Christoph Mäder and Dr Markus R. Neuhaus were elected as
new members of the Board of Directors. All members of the
Board of Directors are standing for re-election in 2020.
Further information on the members of the Board of Directors
can be found on the website.
www.baloise.com/board-of-directors
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.
MEMBERS
Dr Andreas Burckhardt, Chairman (since 2011), Basel
Dr Andreas Beerli, Vice-Chairman (since 2018)
Oberwil-Lieli
Christoph B. Gloor, Riehen
Hugo Lasat, Kessel-Lo (B)
Christoph Mäder, Hergiswil
Dr Markus R. Neuhaus, Zollikon
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
C
M
DC
C
DC
M
M
CH
CH
CH
B
CH
CH
CH
D
D
CH
1951
1951
1966
1964
1959
1958
1961
1955
1959
1975
1999
2011
2014
2016
2019
2019
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
40.0
40.0
40.0
30.0
60.0
Gender
Men
Women
70.0
20.0
10.0
90.0
10.0
* More than one category may apply.
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, on the basis of the Organisa-
tional Regulations, authority on the matter is delegated to the
Chairman of the Board of Directors, its committees, the Group
CEO or the Corporate Executive Committee.
Article 716a of the Swiss Code of Obligations (OR) and clause
A3 of the Organisational Regulations state that the Board of
Directors’ main functions and responsibilities are to act as the
Company’s ultimate managerial and supervisory body, to
oversee the Company’s finances and to determine its organisa-
tional structures.
www.baloise.com/rules-regulations
Information on the Board of Director’s role in corporate social
responsibility can be found on page 40 of the Sustainability
Report.
72
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 proposals and motions. The Investment Committee
and the Remuneration Committee have their own decision-mak-
ing powers.
The committees appointed by the Board of Directors gen-
erally consist of four members, who are individually elected
every year by the Board of Directors. Article 7 ERCO requires the
members of the Remuneration Committee to be elected by the
Annual General Meeting. The Chairman and Vice-Chairman of
the Board of Directors are ex officio members of the Chairman’s
Committee. The Chairman of the Board of Directors is not allowed
to sit on the Audit and Risk Committee. The committees’ basic
functions and responsibilities are specified in the Organisational
Regulations. Additional specific regulations applicable to
individual committees govern administrative and other aspects.
www.baloise.com/rules-regulations
Functions and responsibilities of the committees
The Chairman’s Committee discusses key transactions, espe-
cially those involving strategic or personnel- related matters.
The Chairman’s Committee also performs the function of
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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 candi-
dates 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 remu-
neration policies applicable to the Corporate Executive Com-
mittee members and ensures that they are being correctly
implemented. It approves the variable remuneration granted to
individual members of the Corporate Executive Committee; this
remuneration has to be within the maximum amount approved
by the Annual General Meeting. Furthermore, it specifies the
total amount available in the performance pool.
The Audit and Risk Committee supports the Board of
Directors in its non-delegable overarching supervisory and
financial oversight functions (article 716a OR) by ascertaining
whether the internal and external control systems, including
risk management, are well organised and function properly, by
assessing the situation with respect to compliance in the
Company and by forming its own view of the Company’s separate
and consolidated annual financial statements. It receives reg-
ular reports on the work and findings of Group Internal Audit
and on cooperation with the external auditors.
Meetings of the Board of Directors and its committees
The Organisational Regulations stipulate that the full Board of
Directors must meet as often as business requires, but no fewer
than four times a year.
www.baloise.com/rules-regulations
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The full Board of Directors of Bâloise Holding met on eight
occasions in 2019. Each one of these meetings was attended
by the full complement of members. All members of the relevant
committee in each case attended every one of the additional
17 committee meetings. This means that the Board of Directors
achieved an overall meeting attendance rate of 100 per cent.
Meetings of the Board of Directors and its committees usually
last half a working day each.
The Chairman’s Committee convened seven times in 2019,
which included one two-day strategy meeting. The Investment
Committee met on three occasions. The Audit and Risk Committee
held five 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 Head of Corporate Division Finance. Those present
at Audit and Risk Committee meetings are the Head of Corporate
Division Finance, the Head of Group Internal Audit and, occa-
sionally, representatives of the external auditors, the Head of
Risk Management and the Head of Compliance. The main
attendees at Remuneration Committee meetings are the Group
CEO, the Head of the Corporate Centre and the Head of Group
Human Resources. Meetings of the Investment Committee are
usually attended by the Group CEO, the Head of Corporate
Division Asset Management, the Head of Investment Strategy
and Investment Control, the Head of Portfolio Management and
the Head of Real Estate. The Secretary to the Board of Directors
attends the meetings of the full Board of Directors and those of
its committees.
74
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. In 2019, the Board of Directors also anonymously
took part in an assessment on the topic ‘Speak up in boardrooms’
and received a report indicating how it compared with other
boards of directors. The report’s findings were discussed by the
Board of Directors.
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 2019, the Board of Directors held
a seminar for the purpose of training its members on innovation
and ecosystems.
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 72). Any restrictions on availability and potential
conflicts of interest rising from other mandates are also taken
into account. In 2018, the Board of Directors changed the
Organisational 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 4.9 years. The Chairman is currently
the longest-serving member of the Board of Directors, having
been in office for 20 years. The new appointments in 2019
further increased the Board of Directors’ experience with listed
companies and in particular with industrial companies and
auditing firms. No changes to the composition of the Board of
Directors are planned in 2020. One objective of the Board of
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Directors’ succession planning is to increase the proportion of
female members again.
Division of authorities, functions and responsibilities
between the Board of Directors and the Corporate Executive
Committee
The division of authorities, functions and responsibilities
between the Board of Directors and the Corporate Executive
Committee is governed by law, the Articles of Association and
the Organisational Regulations. The latter are reviewed on an
ongoing basis and updated as changing circumstances require.
www.baloise.com/rules-regulations
Tools used to monitor and obtain information on the
Corporate Executive Committee
Group Internal Audit reports directly to the Chairman of the Board
of Directors.
Effective risk management is essential for any insurance
group. This is why Baloise has devoted two separate chapters
to the subject of financial risk management: from page 60
onwards and in the Financial Report starting on page 155.
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 Execu-
tive 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. He acts as an independent adviser on the boards of directors
and advisory boards of companies and professional associations. He is a member of the
Advisory Board of Accenture Switzerland and, until the end of 2019, was a member of the
Board of Directors of Hamilton Insurance DAC, Dublin (formerly Ironshore Europe Inc.,
Dublin). Dr Andreas Beerli 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. Since November 2019, he has
been a director and limited partner in Basel-based private bank E. Gutzwiller & Cie,
Banquiers. He had previously been Chief Executive Officer of private bank La Roche &
Co AG before going on to become a member of the Executive Committee and CEO of
Notenstein La Roche Privatbank AG and Deputy Head of Wealth Management at Bank
Vontobel AG. Prior to joining La Roche & Co AG in 1998, he worked for Swiss Bank Corpora-
tion (SBC) before moving to Vitra (International). Christoph B. Gloor served as president of
the Association of Swiss Private Banks from November 2013 to February 2015 and was a
member of the Board of Directors of the Swiss Bankers Association from September 2013
to February 2015. He was a member of the Board of Managing Directors of the Basel
Banking Association until early April 2019. Christoph B. Gloor is an independent non-
executive director.
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Hugo Lasat (1964, Belgium, Master in Economic Sciences, Master in Finance)
has sat on the Board of Directors since 2016. He is the CEO of Brussels-based Degroof
Petercam Asset Management (DPAM), a member of the Board of Directors of Banque Degroof
Petercam France, President of DPAM France and a member of the Supervisory Board of
Degroof Petercam Asset Services, Luxembourg. He is also a member of the Board of Directors
of Arvestar Asset Management, Brussels. His managerial roles prior to that include CEO of
Amonis Pension Fund and CEO of Candriam Investors Group. He is a guest professor at KU
Leuven (Brussels Campus) and a member of the Financial Commission of the Belgian Red
Cross. Hugo Lasat is an independent non-executive director.
Christoph Mäder (1959, Switzerland, lawyer)
has sat on the Board of Directors since May 2019. From 2000 to July 2018, he was a member
of the Syngenta International AG executive team with responsibility for legal and tax. Until
June 2018, he was a member of the Management Board of the Basel Chamber of Commerce.
From 2006 to May 2018, Christoph Mäder was a member of the Management Board of
scienceindustries, and between 2008 and 2014 he also served as its president. He was
a member of the Executive Committee of economiesuisse until August 2019. He is a mem-
ber of the Board of Directors of Lonza Group AG, EMS Chemie Holding AG and, since June
2019, Assivalor AG. Christoph Mäder is an independent non-executive director.
Markus R. Neuhaus ( 1958, Switzerland, Dr iur., qualified tax expert)
has been a member of the Board of Directors since May 2019. He was the Chairman of the
Board of Directors of PricewaterhouseCoopers AG (PwC) from July 2012 to June 2019 and
served as its CEO for a period of nine years prior to that. He did not hold any operational
role at PwC from July 2012 and was not personally involved in the Company’s audit engage-
ment for Baloise (until 2015). He is a member of the Board of Directors of Barry Callebaut
AG, Orior AG, Galencia AG and Jacobs Holding AG. He is a member of the Tax Law Advisory
Board of LGT Vaduz. He is the Chairman of the Board of Directors of Zürcher Volkswirtschaft-
liche Gesellschaft, Vice-Chair of the Board of Trustees of Avenir Suisse, Vice Chairman of
the Foundation Board of stars – the leaders for the next generation, Vice-Chair of the
Management Board of Zurich’s Chamber of Commerce, Chairman of economiesuisse’s Finance
and Taxation Commission and a member of the Board of Trustees of the ETH Foundation.
Dr Markus R. Neuhaus 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 consultancy for M&A transactions and
capital market finance. He has sat on the Board of Directors of BB Biotech AG since March
2019 and on the Advisory Board of Harald Quandt Industriebeteiligungen since September
2019. Until March 2019, he was Chairman of the Board of Directors of Bellevue Group AG,
Bank am Bellevue AG and Bellevue Asset Management 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. 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. He chairs 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 is a professor of economics at
Saarland University and the University of Hamburg and Founding President of the HSBA
Hamburg School of Business Administration. From 1996 to 2017, he was Chief Executive
Officer of the Hamburg Chamber of Commerce and from 2000 to 2018 Chairman of the
European Chief Executive Officers working group. Hans-Jörg Schmidt-Trenz is Committee
Chair of the General Council and Executive Committee of the International Chamber of
Commerce’s World Chambers Federation. He is a member of the Board of Trustees of
Hamburger Sparkasse and the Hamburg Academic Foundation, sits on the advisory boards
of HIP Hamburg Innovation Port and HanseMerkur (until the end of 2019) and is a member
of the Board of Trustees of the Tafel foundation of Hamburg-Schleswig-Holstein (since 2019).
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 Uni-
versity 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 InternationalSA
and a member 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:
Head of Group Internal Audit:
Dr Philipp Jermann,
Rolf-Christian Andersen,
Buus (BL)
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 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. Gert De Winter has been Group
CEO since January 2016. He is 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, as Head of Asset Management (until 2010) and as CFO. In 2012, Dr Matthias
Henny joined the Baloise Group. As CEO of Baloise Asset Management AG he was respon-
sible 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
Controlling, Sales and Marketing, Portfolio Management, Operations, Real Estate, Corpo-
rate Development and Compliance.
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.
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Thomas Sieber (1965, Switzerland, Dr iur., M. B.L., lawyer, SCCM mediator, EMC INSEAD)
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 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 and Group Procurement. He will leave Baloise in the middle of 2020.
Dr Thomas Sieber sits on the Panel of Experts of SWIPRA Services AG.
Carsten Stolz (1968, Germany / Switzerland, Dr rer. pol.)
studied business economics at Fribourg University and gained a doctorate specialising in
financial management. He holds an Executive Master in Change from INSEAD. He joined
the Baloise Group in 2002 as Head of Financial Relations. From 2009 to 2011, he was the
Baloise Group’s Head of Financial Accounting & Corporate Finance. Between 2011 and 2017,
he was Head of Finance and Risk, and thus a member of the Executive Committee, at Basler
Versicherungen Switzerland. 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 and
Corporate Communications & Investor Relations 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 Association (SVV).
Alexander Bockelmann (1974, Germany, Dr rer. nat.)
has been Head of the newly created Corporate Division IT since February 2019. 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 management 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
81
Baloise Group Annual Report 2019
Corporate Governance
Corporate Governance Report
Management structure
(as at 31 December 2019)
GROUP CEO
Gert De Winter *
HEAD OF GROUP CEO OFFICE
Ruken Baysal
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE 1
IT
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
Carsten Stolz *
Matthias Henny *
Thomas Sieber *
Alexander Bockelmann *
Michael Müller *
Jürg Schiltknecht
Henk Janssen
Romain Braas
Group Accounting & Reporting
Pierre Girard
Asset Strategy
& Investment Controlling
Group Strategy
& Digital Transformation
Enterprise Architecture
Martin Fischer
Financial Planning & Analysis
IT Security & Compliance
Marc Dünki
Adrian Honegger
Andreas Frick
Business Development
Group Human Resources
Marc Etienne Cortesi
Group Risk Management
Alfonso Papa
Stephan Ragg
Stefan Nölker
Portfolio Management
Group Legal & Tax
Stephan Kamps
Andreas Burki
Corporate Communications
& Investor Relations
Marc Kaiser
Operations
Bernd Maier
Group Compliance
Peter Kalberer
IT Portfolio & Financials
Carsten Matschinsky
BizDevOps
Matthias Cullmann, Silvan Saxer
IT Sourcing
Appointed Actuary Switzerland
Real Estate
Mergers & Acquisitions
Alexander Bockelmann (a. i.)
Thomas Müller
Dieter Kräuchi
Philipp Hammel
Regulatory Affairs
Gaby Lurie
Corporate Development
& Compliance
Fabian Kaderli
Run-off
Bruno Rappo
Group Procurement
Collective Investments
Manfred Schneider
Robert Antonietti
Group Applications
Martin Fischer (a.i)
Group Infrastructure
Martines Sägesser
1 The Corporate Centre is being dissolved with effect from 30 June 2020. The Group Strategy & Digital Transformation, Group Human Resources,
Group Legal & Tax and Compliance divisions will fall under the remit of the Group CEO, while the Mergers & Acquisitions, Run-off and Group Procurement divisions will fall under the remit of the CFO.
* Member of the Corporate Executive Committee.
82
Life & Exclusive Distribution
Risk, Compliance & Actuarial
Operations
Product Management
Corporate Clients
Patric Olivier Zbinden
Product Management
Private Customers
& Specialised Financial
Services
Wolfgang Prasser (from
Maximilian Beck
Finance & Asset Management
Julia Wiens
Non-Life
Christoph Willi
Ralf Stankat
1 January 2020: Yannick Hasler)
IT / Operations
Sales &Marketing
Bernard Dietrich (from 1 January
2020: Mathias Zingg)
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Clemens Markstein
Finance & Risk
Urs Bienz
Claims
Mathias Zingg (from 1 January
2020: Thomas Schöb)
Daniel Frank
Finance
Alain Nicolai
Distribution
Laurent Heiles
IT
Filip Volders
Non-Life Corporates Clients
Function
Kathleen Vergote
Non-Life Retail
Noël Pauwels
& Marine
Joris Smeulders
Joris Smeulders
ICT
Life
Wim Kinnet
Finance & Procurement
Gert Vernaillen
Human Resources
& General Services
Marc L’Ortye
GROUP CEO
Gert De Winter *
HEAD OF GROUP CEO OFFICE
Ruken Baysal
Group Accounting & Reporting
Asset Strategy
Group Strategy
Enterprise Architecture
Pierre Girard
& Investment Controlling
& Digital Transformation
Martin Fischer
Financial Planning & Analysis
IT Security & Compliance
Marc Dünki
Adrian Honegger
Andreas Frick
Business Development
Group Human Resources
Marc Etienne Cortesi
Group Risk Management
Alfonso Papa
Stephan Ragg
Stefan Nölker
Portfolio Management
Group Legal & Tax
Stephan Kamps
Andreas Burki
Corporate Communications
& Investor Relations
Marc Kaiser
Operations
Bernd Maier
Group Compliance
Peter Kalberer
Appointed Actuary Switzerland
Real Estate
Mergers & Acquisitions
Alexander Bockelmann (a. i.)
Thomas Müller
Dieter Kräuchi
Philipp Hammel
IT Portfolio & Financials
Carsten Matschinsky
Matthias Cullmann, Silvan Saxer
BizDevOps
IT Sourcing
Group Applications
Martin Fischer (a.i)
Group Infrastructure
Martines Sägesser
Regulatory Affairs
Corporate Development
Run-off
Gaby Lurie
Bruno Rappo
Group Procurement
Collective Investments
Manfred Schneider
& Compliance
Fabian Kaderli
Robert Antonietti
Baloise Group Annual Report 2019
Corporate Governance
Corporate Governance Report
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE 1
IT
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
Carsten Stolz *
Matthias Henny *
Thomas Sieber *
Alexander Bockelmann *
Michael Müller *
Jürg Schiltknecht
Henk Janssen
Romain Braas
Operations
Daniel Frank
Finance
Alain Nicolai
Distribution
Laurent Heiles
IT
Filip Volders
Product Management
Corporate Clients
Patric Olivier Zbinden
Product Management
Private Customers
& Specialised Financial
Services
Wolfgang Prasser (from
1 January 2020: Yannick Hasler)
Sales &Marketing
Bernard Dietrich (from 1 January
2020: Mathias Zingg)
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Clemens Markstein
Finance & Risk
Urs Bienz
Claims
Mathias Zingg (from 1 January
2020: Thomas Schöb)
Life & Exclusive Distribution
Maximilian Beck
Risk, Compliance & Actuarial
Function
Finance & Asset Management
Julia Wiens
Non-Life
Christoph Willi
IT / Operations
Ralf Stankat
Kathleen Vergote
Non-Life Retail
Noël Pauwels
Non-Life Corporates Clients
& 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 2019
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 in 2019 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 June 2019) 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 2019
Corporate Governance
Corporate Governance Report
8. EXTERNAL AUDITORS
The external auditors are elected annually by the Annual General
Meeting. Ernst & Young AG (EY), Basel, has been the external
auditing firm for Bâloise Holding since 2016. Christian Fleig holds
the post of auditor-in-charge. In accordance with article 730a
(2) OR, the role of auditor-in-charge is rotated every seven years.
EY is the external auditing firm for almost all Group companies.
EXTERNAL AUDITORS’ FEES
CHF
(including outlays and VAT)
Audit fees
Consulting fees
Total
2018
2019
5,431,077
5,656,508
219,306
39,626
5,650,383
5,696,134
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 statutory and regulatory
special audits).
In 2019, CHF 39,626 of the additional fees for consultancy
services were attributable to tax consultancy and legal advice.
The services were rendered in accordance with the relevant
provisions on independence set forth in the Swiss Code of
Obligations, the Swiss Audit Supervision Act and FINMA-Circu-
lar 2013 / 3 on “auditing” (as at 26 June 2019) published by the
Swiss Financial Market Supervisory Authority (FINMA).
At its meetings, primarily at meetings about the annual and
half-year financial statements, the Audit and Risk Committee
received detailed explanations and documents about the exter-
nal auditors’ main findings from the auditors’ representatives.
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).
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.
85
Information events
Baloise provides detailed information about its business
activities as follows:
▸
Details about its financial performance, targets, strate-
gies and operations are provided at press conferences
covering its annual and half-year financial statements.
Teleconferences for financial analysts and investors
take place when the annual and half-year financial
statements are published. The events can then be 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 2019
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.
Before the start of the annual audit, the Audit and Risk
Committee reviews the scope of the audit and suggests areas
that require special attention. The Audit and Risk Committee
reviews the external auditors’ fees and independence 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 publica-
tions 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 2019
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 2019
Corporate Governance
Remuneration Report
Appendix 1: Remuneration Report
1. OVERVIEW OF REMUNERATION
B. SHORT-TERM VARIABLE REMUNERATION
A. 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
PERFORMANCE POOL
Total performance pool 2 for
Corporate Executive Committee (CHF million)
Performance pool factor 2
(%)
2018
2.0
2019
2.7
100 %
120 %
Short-term variable remuneration
▸
Influencing factors: the Company’s economic value
added, the performance of the team, and an employee’s
individual contribution to the team’s performance
Designed to incentivise staff to achieve outstanding
results
▸
Long-term variable remuneration
▸
▸
Supports the Company’s long-term development
Gives the top level of management a greater stake in
the performance of the Company
Fringe benefits
▸
Not dependent on either an individual’s function or
performance or the Company’s performance
Demonstration of Baloise’s close partnership with
employees and its respect for them
▸
Profit for the period vs. performance pool factor 2
750
625
500
375
250
125
0
150 %
125 %
100 %
75 %
50 %
25 %
0 %
2015
2016
2017
2018
2019
Profit for the period (CHF million)
As a percentage of the expected value
Total shareholder return (TSR) vs. performance pool factor 2
APPROVED REMUNERATION VS. AMOUNT PAID OUT
Approved
2018
Paid out
Approved
2019
Paid out
3.3
4.0
3.3
4.0
3.3
3.3
4.0
4.7 1
4.5
3.5
5.2
4.5
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 %
2015
2016
2017
2018
2019
TSR (%) (left axis)
As a percentage of the expected value (right axis)
1 Increase due to enlargement of the Corporate Executive Committee, 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 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.
88
Baloise Group Annual Report 2019
Corporate Governance
Remuneration Report
C. LONG-TERM VARIABLE REMUNERATION
Performance share units (PSUs)
Long-term variable remuneration for members of the Corporate
Executive Committee
Allocation
▸
The total amount for the allocation of PSUs is determined
by the Remuneration Committee
The Remuneration Committee decides on the allocation
of PSUs to each individual Corporate Executive Commit-
tee member
Conversion
▸
Performance criterion: profit for shareholders relative to the
peer group (STOXX Europe 600 Insurance) after three years
PSUs are a performance instrument with 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
▸
▸
p
u
o
r
g
r
e
e
P
2019 plan (ended)
Plan term 1 March 2016 – 28 February 2019
01.03.2016
28.02.2019
100 %
100 %
29 %
41 %
70 %
Profit for shareholders 1 March 2016 – 28 February 2019
01.03.2016
28.02.2019
100 %
100 %
29 %
13 %
42 %
Overview of ended and current plans
(as at 31 December 2019)
2013 to 2019 plans
1 Mar 2013 – 29 Feb 2016
50 %
75 %
125 %
1 Mar 2014 – 28 Feb 2017
1 Mar 2015 – 28 Feb 2018
1 Mar 2016 – 28 Feb 2019
15 %
20 %
29 %
6 %
41 %
41 %
1 Mar 2017 – 29 Feb 2020
34 %
52 %
1 Mar 2018 – 28 Feb 2021
17 %
33 %
1 Mar 2019 – 28 Feb 2022
8 %
21 %
61 %
70 %
86 %
50 %
8 %
Share value at start
of PSU programme
Dividend payments
Change in share value
during programme term
(current plans: as at
31 December 2019)
Performance multiplier
(current plans: as at
31 December 2019)
D. INDIVIDUAL REMUNERATION OF THE CORPORATE EXECUTIVE COMMITTEE
Gert
De Winter
Michael
Müller
Dr. Thomas
Sieber
Dr. Carsten
Stolz
Dr. Matthias
Henny
Dr. Alexander
Bockelmann 1
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
55 %
52 %
56 %
53 %
57 %
54 %
58 %
60 %
57 %
55 %
53 %
18 %
17 %
27 %
31 %
18 %
17 %
17 %
16 %
26 %
30 %
26 %
30 %
25 %
23 %
26 %
29 %
17 %
17 %
17 %
16 %
31 %
16 %
CHF 2.095 million
CHF 2.211 million
CHF 1.579 million
CHF 1.667 million
CHF 1.442 million
CHF 1.518 million
CHF 1.195 million
CHF 1.158 million
CHF 1.175 million
CHF 1.243 million
CHF 1.384 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 February 2019
89
Baloise Group Annual Report 2019
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 incen-
tives;
the structure and amount of overall remuneration paid
are consistent with Baloise’s risk policies and encourage
risk awareness.
▸
▸
The Remuneration Committee’s main functions and responsi-
bilities are to:
▸
submit proposals to the Board of Directors on the struc-
ture of remuneration to be paid in the Baloise Group,
especially the remuneration to be paid to the Chairman
and members of the Board of Directors and to the mem-
bers of the Corporate Executive Committee;
submit proposals to the Board of Directors – for approval
by the Annual General Meeting – on the amount of remu-
neration to be paid to the Chairman and members of the
Board of Directors and to the members of the Corporate
Executive Committee;
approve the basic salaries and the variable remuneration
paid to individual members of the Corporate Executive
Committee (in compliance with the pay caps stipulated
by the Annual General Meeting);
specify the total amount available in the performance
pool and the total amount set aside for the allocation of
performance share units (PSUs);
approve inducement payments and severance packages
that are granted to the most senior managers and which
in individual cases exceed CHF 100,000 (subject to the
proviso that no severance packages may be granted to
▸
▸
▸
▸
90
members of the Board of Directors or the Corporate Exec-
utive Committee).
The Remuneration Committee consists of at least three members
of the Board of Directors, who are elected every year by the Annual
General Meeting. Thomas Pleines (Chairman), Prof. Dr Marie-
Noëlle Venturi - Zen-Ruffinen (Deputy Chairwoman), Christoph
Mäder and Prof. Dr Hans-Jörg Schmidt-Trenz were elected to the
Remuneration Committee by the Annual General Meeting on
26 April 2019. The Remuneration Committee maintains a regular
dialogue with senior management throughout the year and
generally meets at least twice annually. In addition to the com-
mittee 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 POLICY AND REMUNERATION SYSTEM
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.
Responding to a request from the Remuneration Committee, in
2017 the Board of Directors formally adopted a new Remuner-
ation 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 is based on the following principles: competitiveness in the
marketplace; individual performance and the Company’s suc-
cess; fairness and transparency; and sustainability.
Competitiveness in the marketplace
Baloise aims to pay basic salaries that are broadly in line with
the market – i.e. around the market median – and to offer vari-
able remuneration packages in excess of the going market rate
to reward outstanding performance by the Company and indi-
viduals. It therefore regularly compares the salaries paid to its
employees with those paid in the wider market. This involves
Baloise Group Annual Report 2019
Corporate Governance
Remuneration Report
taking part in benchmarking surveys conducted by Willis Towers
Watson, SwissICT and Kienbaum, and carrying out detailed
analysis of the remuneration packages of the most senior
executives. These surveys and analyses consider which com-
panies 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 findings are fed
into the Company’s regular review of its salary structures and
presented to the Remuneration Committee.
Individual performance and the Company’s success
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 individ-
ually specified variable remuneration is influenced by 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 individuals and of the team to Baloise’s
success and recognising both accordingly, and it is designed to
reward employees for outstanding achievement without creat-
ing an incentive for them to take inappropriate risks. Personal
performance provides our talented individuals with the neces-
sary platform for their development, advancement, career
planning and promotion.
Since 1 January 2018, the variable remuneration of the
Corporate Executive Committee, the most senior level of man-
agement and most other members of the management team
throughout the Baloise Group has been closely linked to
achievement of the Company’s goals and is calculated solely
on the basis of the performance pool. Together with a perfor-
mance management system based on continuous dialogue
regarding the contributions of teams and individuals, this will
support the implementation of Baloise’s ‘Simply Safe’ strategy
as the focus will be on achieving the three strategic pillars: ‘cash
upstream’, ‘customer growth’ and ‘employees’ in addition to
the other earnings-related KPIs.
Fairness and transparency
In addition to the regular benchmarking of overall remuneration
against the market, Baloise also aims to ensure that pay within
the Company is fair when setting salary levels. Baloise applies
the fair-pay principle that people who do the same job and have
the same qualifications should be paid the same amount.
Sustainability
Baloise attaches considerable importance to managing its
business sustainably and retaining high performers. 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 the interests of its stakehold-
ers, particularly its shareholders. 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 or as deferred compensation increase accordingly.
The clearly defined caps approved by the Annual General
Meeting for the pay awarded to members of the Board of Direc-
tors and Corporate Executive Committee ensure that remuner-
ation is not excessive.
REMUNERATION STRUCTURE OF THE THREE MOST SENIOR LEVELS OF
MANAGEMENT
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
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Remuneration Report
4. COMPONENTS OF REMUNERATION
Baloise views its compensation packages in the round and
therefore factors in not only the basic salary plus short- and
long-term variable remuneration but also other benefits such
as pension contributions, additional benefits, and staff devel-
opment.
as a whole. However, these payments (for bringing in new
business and for providing service and support for existing
customers) constitute selling expenses rather than being
regarded as variable remuneration in the strict sense of the
term. Consequently, they are not discussed in this remuneration
report.
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 compliance
with its code of conduct when determining the level of basic
salaries, Baloise applies the internal fair-pay principle that
people who do the same job and have the same qualifications
should be paid the same amount. The Company’s clearly defined
and market-based salary structures (e.g. grade-based salary
bands) help ensure fair pay both inside and outside the organ-
isation.
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 Remu-
neration Committee reviews the remuneration paid to the heads
of the control functions on an annual basis.
The remuneration paid to the insurance sales force is, by
its very nature, strongly performance-related in line with the
compensation system commonly used in the insurance industry
92
Short-term variable remuneration is paid together with the
salary for March of the following year. A substantial proportion
of variable remuneration is paid 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, including prospective entitlements, account
for at least 70 per cent (at the time of allocation) 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
remuneration. This system also raises employees’ risk awareness
and encourages them to maintain sustainable business
practices.
Two plans are available to individuals who wish to subscribe
for shares: the Share Subscription Plan and the Share Partici-
pation Plan (see ‘5. Share Subscription Plan and Share Partici-
pation Plan’).
The short-term variable remuneration is allocated as part
of the performance pool described below.
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 cus-
Baloise Group Annual Report 2019
Corporate Governance
Remuneration Report
▸
▸
▸
tomers, 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 per-
formance of Baloise’s share price including dividends
paid compared with the 35 European insurance compa-
nies represented in the STOXX Europe 600 Insurance
Index (the composition of this index is shown in the table
on page 96).
The Remuneration Committee deliberately avoids giving a pre-
defined weighting to the four main indicators. Weighting the
main indicators and potentially also the qualitative and quan-
titative sub-criteria in advance would allow the performance
pool factor to be determined more accurately, but then the actual
performance of the senior managers in the year concerned would
potentially not be adequately reflected. The Remuneration
Committee therefore determines the factor retrospectively at
its own discretion. In the interests of transparency, this decision
is explained on page 95. The assessments by the Chief Risk
Officer and the Head of Group Compliance of the risks taken and
the evaluations by the Head of Group Human Resources and
others of strategy requirements that cannot be precisely meas-
ured are also based on qualitative criteria and non-financial
indicators such as senior managers’ risk behaviour, compliance
with procedures and regulations and the practising of a genuine
compliance culture, the effectiveness of the internal control
system, and the efforts made in respect of talent management
and staff engagement.
Performance pool payments are awarded to individuals at
the discretion of the line manager concerned. The amount of
these payments is mainly determined by a holistic assessment
of the performance, conduct and individual development of the
employees. The individual performance pool payment proposed
by the respective line manager is discussed by the relevant
management team, compared with other departments and
divisions, and adjusted where necessary. This process ensures
that risk-relevant behavioural attributes are factored into the
performance pool payments awarded to individuals, along with
achievement-based measures.
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 Cor-
porate Executive Committee. The arithmetical 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 Group CEO) and by the Group 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 2019 financial year the Remuneration Committee
decided, on the basis of a positive overall assessment, on
a factor of 120 per cent of the normally expected value of per-
formance pool payments. The same factor was agreed for the
members of the Corporate Executive Committee and the Group.
The decision and the indicators are explained in more detail on
the following pages.
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Remuneration Report
Main indicator
Key question
Sub-criteria
Appraisal
Rating
Strategy implementation
How successfully were the strategic targets implemented?
Cash upstream
Customer growth
Employees
Baloise is on track to achieve its strategic Simply Safe targets. The Simply Safe targets are ambitious,
but achievable through the measures already implemented. The holding company again received sub-
stantially more than CHF 400 million in cash in 2019 (target by 2021: CHF 2 billion). In December 2019,
the proportion of employees who said in the employee survey that they would recommend Baloise as an
employer was within the top 15 per cent of the peer group (target by 2021: top 10 per cent of employers
in the industry). Net growth of around 200,000 new customers was achieved for 2019 (target by 2021:
one million additional customers).
Positive
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 profit for 2019 exceeded expectations and can therefore be assessed as positive. The combined
ratio of 90.4 per cent confirms the high quality of the underwriting and the profitability of the non-life
business. The combined ratio in Germany is also continuing to improve. The life business continues to
be held back by the low-interest-rate environment.
Neutral / Positive
Risks taken
How should the operating performance be assessed from a risk perspective?
SST
Economic Profit
S&P rating
Internal perspective
Compliance
With a high SST ratio for the Group and an S&P rating of ‘A+’ with a stable outlook, Baloise remains
strongly capitalised. The persistently low interest rates required certain internal measures to strengthen
economic capitalisation. Compliance received a positive assessment.
Neutral
Main indicator
Key question
Sub-criteria
Appraisal
Rating
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Baloise Group Annual Report 2019
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Remuneration Report
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
At the end of the year, Bâloise Holding AG shares had outperformed the STOXX Europe 600 Insurance
Index. Bâloise Holding AG’s shares were ranked tenth out of 35 stocks, with a total shareholder return of
33.85 per cent.
Positive
Determination of the performance pool factor
Appraisal
Overall, the four main indicators received a very positive total rating for 2019. Following an in-depth examina-
tion and assessment of all main indicators and sub-criteria, the Remuneration Committee therefore decided
to set the performance pool factor at 120 per cent. While the 2018 assessments for ‘Strategy implementation’
and ‘Business performance’ were maintained or improved in 2019, the assessment for ‘Risks taken’ was slightly
worse than in 2018. In a very positive market, the relative assessment of ‘Capital markets’ perspective’ improved
significantly from 2018.
120 per cent
Factor
As the table 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:
2012
2013
2014
2015
2016
2017
2018
2019
Performance pool
(as a percentage of
the normal
expected value)
Consolidated profit
for the period
(CHF million)
100 %
120 %
137 %
100 %
107 %
120 %
100 %
120 %
485.2
455.4
711.9
511.1
533.9
531.9
522.9
689.5
95
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Remuneration Report
Long-term variable remuneration: performance share units
In addition, Baloise grants performance share units (PSUs) to
the most senior managers as a form of long-term variable
remuneration. The PSU programme enables the top management
level to benefit even more from the Company’s performance and
helps Baloise to retain high performers in the long run.
At the beginning of each vesting period the participating
employees are granted rights in the form of PSUs, which entitle
them to receive a certain number of shares free of charge after
the vesting period has elapsed. The Remuneration Committee
specifies the grant date and applies its own discretion in decid-
ing which of the most senior management team members are
eligible to participate. It determines the total number of PSUs
available and decides how many are to be awarded to each
member of the Corporate Executive Committee. PSUs are granted
to the other participating employees on the basis of the relevant
line manager’s proposal, which must be approved by the line
manager’s manager.
The number of shares that can be subscribed after three
years – i.e. at the end of the vesting period – depends on the
performance of Baloise Holding Ltd. shares (total shareholder
return or TSR) relative to a peer group. This comparative perfor-
mance 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 lead-
ing 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 TSR of the peer group. The multiplier reaches the maximum
of 2.0 if Baloise has the highest TSR of all companies in the peer
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 March 2019 they receive their shares on 1 March
2022. 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 retire-
ment, 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 last 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.
Companies in the STOXX Europe 600 Insurance Index (as at 31 December 2019)
ADMIRAL GRP
CNP ASSURANCES
OLD MUTUAL
SWISS LIFE HLDG
AEGON
AGEAS
ALLIANZ
ASR NEDERLAND NV
DIRECT LINE INSURANCE GROUP
PHOENIX GROUP HDG.
SWISS REINSURANCE COMPANY
GJENSIDIGE FORSIKRING
POSTE ITALIANE
HANNOVER RUECK
HELVETIA HLDG
PRUDENTIAL
PZU GROUP
TOPDANMARK
TRYG
ZURICH INSURANCE GROUP
ASSICURAZIONI GENERALI
HISCOX
RSA INSURANCE GRP
AVIVA
AXA
BALOISE
BEAZLEY
LEGAL & GENERAL GRP
MAPFRE
SAMPO
SCOR
MUENCHENER RUECK
ST. JAMES’S PLACE CAPITAL
NN GROUP
STOREBRAND
Source: https: // www.stoxx.com/index-details?symbol=SXIP
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Measurement of the PSUs at their issue date is based on a Monte
Carlo simulation, which calculates a present value for the
payout expected at the end of the vesting period. This meas-
urement incorporates the following parameters:
▸
▸
interest rate of 1 per cent
the volatilities of all shares in the peer group and their
correlations with each other (measured over a three-year
track record).
The 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.
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 discretionary benefits in the form of
retirement pensions, subsidies, concessions, and staff training
and professional development, Baloise demonstrates the close
partnership that it maintains with its employees and the extent
to which it values their contribution. Fringe benefits are granted
on a country-by-country basis in line with prevailing local laws.
5. 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
Applicable closing
quotation
Subscription
price
from
CHF
CHF
Share Subscription Plan for 2020
10.01.2020
176.00
158.40
(applies to variable
remuneration awarded for
the 2019 reporting period)
Share Subscription Plan for 2019
10.01.2019
143.80
129.42
(applies to the variable remunera-
tion granted for 2018 and to the
shares subscribed by the Chairman
and members of the Board of
Directors in 2019)
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
PERFORMANCE SHARE UNIT
(PSU) PLAN
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
PSUs granted
PSUs converted
Change in value
Date
Price (CHF) 1
Date
Multiplier
Price (CHF) 1
Value (CHF) 2
01.01.2008
109.50
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
01.03.2019
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
130.70
149.20
162.50
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
01.03.2022
1.24
0.64
0.58
0.77
1.21
1.50
1.05
1.34
1.32
1.39 4
1.28 4
1.00 4
91.00
64.40
78.50
113.60
124.00
126.00
130.70
149.20
162.50
175.00 4
175.00 4
175.00 4
112.84
41.22
45.53
87.47
150.04
189.00
137.24
199.93
214.50
244.08 4
224.00 4
175.00 4
3
3 %
– 50 %
– 47 %
– 4 %
111 %
125 %
21 %
61 %
70 %
86 % 4
50 % 4
8 % 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 2008: ([{1.24*91.00} –109.50] / 109.50) * 100 = 3 %.
4 Interim measurement as at 31 December 2019.
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Remuneration Report
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 above 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.
Share Participation Plan
Applicable closing
quotation
Subscription
price
from
CHF
CHF
Share Participation Plan for 2020
10.01.2020
176.00
156.46
(applies to variable remuneration
awarded for the 2019 reporting
period)
Share Participation Plan for 2019
10.01.2019
143.80
125.44
(applies to the variable remunera-
tion granted for 2018 and to the
shares subscribed by the Chairman
of the Board of Directors in 2019)
Since May 2001, it has been possible for most management
team members working in Switzerland to receive part of their
short-term variable remuneration in the form of shares from the
Share Participation Plan instead of receiving cash. Within certain
limits they are free to choose what proportion of their short-term
variable remuneration they receive in the form of such shares.
The most senior management team members are subject to upper
limits; members of the Corporate Executive Committee – who
are obliged to receive at least half of their short-term variable
remuneration in the form of shares – are not allowed to receive
more than 40 per cent of their entitlement in the form of shares
from the Share Participation Plan. The subscription date is
1 March of each year (the same as for the Share Subscription
Plan); although title to the shares passes to the relevant employ-
ees 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 sub-
scription price is based on the closing price before the first day
of the subscription period, from which discounted dividend rights
are deducted over a period of three years (please refer to the
above 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.
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 divi-
dend rights over a period of three years. Repayment of these
loans after the three-year closed period has elapsed is hedged
by put options, which are financed by the sale of offsetting call
options. If the price of the shares is below the put options’ strike
price when the closed period expires, programme participants
can sell all their shares at this strike price, which ensures that
they can repay their loans plus interest. In this event, however,
they lose all the capital that they have invested. If, on the other
hand, the price of the shares is above the call options’ strike
price, programme participants must pay the commercial value
of these options. Their upside profit potential for the programme
participant is thus limited by the call options. If, when the three-
year closed period elapses, the price of the shares is between
the put options’ strike price and the call options’ strike price,
once the loans plus accrued interest have been repaid the
employees concerned receive the remaining shares to do with
as they wish.
6. 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
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EMPLOYEE INCENTIVE PLAN
Number of shares subscribed
Restricted until
Subscription price per share (CHF)
Value of shares subscribed (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
Subscribed shares per participant (average)
2018
2019
186,489
192,501
31.08.2021
31.08.2022
76.00
14.2
27.8
3,254
2,130
87.6
88.50
17.0
32.5
3,301
2,218
86.8
Foundation at the beginning of the subscription period and is
then published on the intranet. It equals half of the volume-
weighted average share price calculated for the month of August
in each subscription year. In 2019, the subscription price
amounted to CHF 88.50 (2018: CHF 76.00) and a total of
192,501 shares were subscribed (2018: 186,489). Title to the
subscribed shares passes to the relevant employees with effect
from 1 September each year, and the shares are subject to a
three-year closed period.
The Foundation acquired the underlying stock of shares
used in this plan from previous capital increases carried out by
Bâloise Holding. It supplements these shareholdings by pur-
chasing shares in the market. The existing shareholdings will
enable the Foundation to continue the Employee Incentive Plan
over the coming years. The Foundation is run by a Board of
Foundation that is predominantly independent of the Corporate
Executive Committee. The independent Board of Foundation
members are Martin Wenk (Chairman) and Prof. Heinrich Koller
(lawyer); the third member of the Board of Foundation is Andreas
Burki (Head of Legal & Tax).
7. PENSION SCHEMES
Baloise provides a range of pension solutions, which vary from
country to country in line with local circumstances. In Switzerland
it offers different pension schemes for its insurance and banking
employees. They enable an employee or the employee’s depend-
ants to maintain a reasonable standard of living following the
occurrence of an insured event (old age, disability or death).
The members of the Corporate Executive Committee are insured
under the pension scheme run by Baloise Insurance Ltd. They
are subject to the same terms and conditions as all other insured
office-based members of staff. 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.
8. 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 Commit-
tee 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-
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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.
ings when necessary in order to maintain a regular dialogue
between himself and the Corporate Executive Committee and
whenever matters of strategic or long-term importance are being
discussed, and maintains close contact with the Group CEO.
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 varia-
ble remuneration and, consequently, he receives no performance
pool payments and no allocation of PSUs. He is paid roughly
a quarter of his remuneration in the form of shares, although
he is free to choose each year how many shares he receives
under the Share Subscription Plan and 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.
All members of the Board of Directors are required to lodge
1,000 shares with the Company for the duration of their term of
appointment (article 20 of the Articles of Association). Since
2006 the members of the Board of Directors have received
a proportion 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. From 2020, this discount will also be reported as
part of the overall remuneration, as it reflects Baloise’s effective
costs. In 2019 it amounted to CHF 62,495.
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.
9. RULES STIPULATED IN THE ARTICLES OF ASSOCIATION
Certain rules governing remuneration are stipulated in the
Articles of Association:
▸
Article 30 Additional amount for the remuneration paid
to Corporate Executive Committee members appointed
since the last Annual General Meeting
Article 31 Annual General Meeting votes on remuneration
Article 32 Principles of profit-related remuneration and
the granting of equity instruments
Article 34 Loans and advances granted to members
of the Board of Directors and the Corporate Executive
Committee
▸
▸
▸
www.baloise.com/rules-regulations
10. 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. Specifically, he represents Baloise in
economiesuisse, the umbrella organisation representing Swiss
business, and in the employers’ association. 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 dis-
cussed and approved by the Board of Directors as a whole. He
works closely with the Corporate Executive Committee to ensure
that the Board of Directors is provided with timely information
on all matters of material importance to the decision-making
and monitoring process at Baloise. The Chairman of the Board
of Directors is entitled to attend meetings of the Corporate
Executive Committee at any time. He takes part in these meet-
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11. 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 out-
standing 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
Corporate 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.
In addition, each member of the Corporate Executive Committee
is required to hold at least 200 per cent of their basic salary in
free float or restricted shares or PSUs within a period of three
years from the start of their term of office. This mandatory
purchase of shares ensures that, compared with the market as
a whole, a significant proportion of their compensation is paid
in the form of deferred remuneration.
The Corporate Executive Committee members’ remuneration
is disclosed on pages 106 to 109 in accordance with the accrual
principle. The table includes all forms of remuneration awarded
for performance in 2019 even if individual components are not
paid until a later date.
The total remuneration paid to the Corporate Executive
Committee for 2019 was higher overall than in the previous year
(sum total of basic salary plus variable remuneration up by 23.0
per cent). The change can be explained as follows:
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
Last year
101
12. LOANS AND CREDIT FACILITIES
Please refer to the table on page 110.
13. SHARES AND OPTIONS HELD
Please refer to the tables on pages 111 and 112.
14. 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
2019 even if individual components are not paid until a later
date.
Baloise Group Annual Report 2019
Corporate Governance
Remuneration Report
▸
▸
Since Dr Alexander Bockelmann joined, the Corporate
Executive Committee has comprised six members instead
of the previous five.
The performance pool factor, which is relevant for the
short-term variable remuneration, is higher than in the
prior year (120 per cent compared to 100 per cent), which
means the total allocated variable remuneration is
higher.
The shares in the Share Subscription Plan (see pages 97 to 98)
are issued to managers at a 10 per cent discount in order to
encourage share ownership. From 2020, the discount on shares
purchased by the Corporate Executive Committee under this
plan will also be shown as part of the overall remuneration, as
it reflects Baloise’s effective costs. In 2019, the discount
amounted to CHF 0.166 million.
The Annual General Meeting held on 27 April 2018 approved
a maximum amount of CHF 4.043 million for the fixed remuner-
ation (including pension contributions) payable to the Corporate
Executive Committee for 2019. The amount paid out was
CHF 4.668 million. The difference of CHF 0.625 million (including
pension contributions) can be explained by the increase in the
size of the Corporate Executive Committee. The new member of
the Corporate Executive Committee has been paid his fixed
remuneration since the start of February. The amount exceeding
the total amount originally requested is covered by article 30
of the Articles of Association of Bâloise Holding Ltd. Under this
provision, the amount approved by the Annual General Meeting
is increased if a new member of the Corporate Executive Com-
mittee is appointed.
The Annual General Meeting held on 26 April 2019 approved
a maximum amount of CHF 5.233 million for the variable remu-
neration (including pension contributions) payable for 2019.
The total amount paid out was CHF 4.492 million.
On 1 March 2019, the performance share units allocated in
2016 were converted into shares. These PSUs had a value of
CHF 1.434 million at the time of allocation. The actual value of
the shares granted was CHF 2.378 million.
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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
Chairman of the Board of Directors
1,320,000
1,320,000
–
Werner Kummer (until 27 April 2018)
62,500
139,167
–
–
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
–
271,667
56,232
400
Dr Georges-Antoine de Boccard
125,000
225,000
–
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
–
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
–
116,667
–
–
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 companies or individuals who are related to members of the Board of
Directors. Related parties are spouses or life partners; children under 18 years or dependent family members; companies owned or controlled by directors; individuals who act as trustees
for them; children, relatives, companies and trustees of the spouse or life partner. No amounts receivable from these persons were waived.
Shares A proportion of the 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). Shares received by the Chairman of the Board of Directors amounted to 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 in connection with 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 BOARD OF DIRECTORS
2019
CHF
Dr Andreas Burckhardt
Chairman of the Board of Directors
Dr Andreas Beerli
Vice-Chairman of the Board of Directors
Chairman’s Committee
Chair of the Audit and Risk Committee
Dr Georges-Antoine de Boccard (until 26 April 2019)
62,500
Investment Committee
Remuneration Committee
Christoph B. Gloor
Investment Committee
Audit and Risk Committee
Hugo Lasat
Investment Committee
Christoph Mäder (since 26 April 2019)
Remuneration Committee
Dr Markus R. Neuhaus (since 26 April 2019)
Audit and Risk Committee
Dr Thomas von Planta
Chairman’s Committee
Audit and Risk Committee (until 26 April 2019)
Investment Committee (since 26 April 2019)
Thomas Pleines
Chair of the Remuneration Committee
Chairman’s Committee
Prof. Dr Hans-Jörg Schmidt-Trenz
Remuneration Committee
125,000
125,000
83,333
83,333
125,000
125,000
125,000
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen
125,000
Audit and Risk Committee
Remuneration Committee (since 26 April 2019)
Basic
remuneration
Remuneration
for additional
functions
Total
remuneration
Pension
benefits
Total
Of which:
in shares
Number
of shares
1,320,000
1,320,000
–
125,000
295,000
–
–
1,320,000
311,940
2,449
295,000
73,640
569
50,000
50,000
70,000
25,000
25,000
50,000
50,000
50,000
33,333
33,333
50,000
16,667
33,333
70,000
50,000
50,000
50,000
33,333
112,500
–
112,500
28,084
217
225,000
6,003
231,003
56,168
434
175,000
–
175,000
43,744
338
116,667
5,656
122,323
116,667
5,656
122,323
–
–
–
–
225,000
6,003
231,003
56,168
434
245,000
9,480
254,480
61,216
473
175,000
–
175,000
43,744
208,333
6,003
214,336
43,744
338
338
Total for the Board of Directors
2,424,167
790,000
3,214,167
38,800
3,252,967
718,448
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 de Boccard was elected before this change and therefore on the payment date in March 2019 received the additional two months’ remuneration from the year of his election on top of the
four months’ remuneration he was due for 2019.
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 Board of
Directors. Related parties are spouses or life partners; children under 18 years or dependent family members; companies owned or controlled by directors; individuals who act as trustees
for them; children, relatives, companies and trustees of the spouse or life partner. No amounts receivable from these persons were waived.
Shares A proportion of the 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 129.42, in line with the Share Subscription Plan). From 2020, this discount will also be recognised in the overall remuneration. In 2019 it amounted to CHF 62,495. The Chairman of the
Board of Directors received 1,205 shares in connection with the Share Subscription Plan (CHF 155,951, with a closed period of five years instead of the usual three years) and 1,244 shares
under the Share Participation Plan (CHF 155,989).
Pension contributions The information disclosed for 2019 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 Variable remuneration
Cash payment
(fixed)
Cash payment
(variable)
Share Subscription Plan
Share Participation Plan
Performance share units (PSU)
Total variable remuneration
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
–
–
CHF
–
–
Total basic salary
Variable remunera-
plus variable
tion as percentage
remuneration
of basic salary Non-cash benefits
contributions
tion
Pension
Total remunera-
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
–
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 or life partners; children under 18 years or dependent family members; companies owned or controlled by directors; individuals who act
as trustees for them; children, relatives, companies and trustees of the spouse or life partner. 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 loan-financed 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.
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REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary Variable remuneration
Cash payment
Cash payment
(fixed)
(variable)
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
Share Subscription Plan
Share Participation Plan
Performance share units (PSU)
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
–
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
–
–
CHF
–
–
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
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 (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 or life partners; children under 18 years or dependent family members; companies owned or controlled by directors; individuals who act
as trustees for them; children, relatives, companies and trustees of the spouse or life partner. 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 loan-financed shares), which are measured at market value less dividend rights discounted over
Performance share units (PSUs) These have been disclosed at their value of CHF 149.70 at the grant date and measured using a Monte Carlo simulation, which calculates a present value for
three years. Subscription price = CHF 125.44.
the payout expected at the end of the vesting period.
107
Baloise Group Annual Report 2019
Corporate Governance
Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary Variable remuneration
Cash payment
(fixed)
Cash payment
(variable)
Share Subscription Plan
Share Participation Plan
Performance share units (PSU)
Total variable remuneration
Variable
Total basic salary
remuneration as
plus variable
remuneration
percentage of
basic salary
Non-cash
benefits
Pension
Total remunera-
contributions
tion
2019
Gert De Winter
Group CEO
Michael Müller
Head of Corporate Division Switzerland
CHF
CHF
Number of shares
CHF
Number of shares
950,000
342,014
2,159
341,986
700,000
50,501
2,863
453,499
–
–
CHF
–
–
Granted in 2019
Number of PSUs
CHF
Number of shares
CHF
CHF
2,267
380,063
2,159
1,064,063
2,014,062
112 %
CHF
–
CHF
CHF
196,515
2,210,578
1,671
280,143
2,863
784,143
1,484,143
112 %
5,314
177,878
1,667,336
Dr Thomas Sieber
621,000
178,998
846
134,006
857
134,116
1,482
248,457
1,703
695,577
1,316,577
112 %
5,314
196,515
1,518,407
Head of Corporate Division Corporate Centre
Dr Carsten Stolz
500,000
135,043
852
134,957
–
–
1,193
200,006
852
470,006
970,007
94 %
5,314
183,103
1,158,424
Head of Corporate Division Finance
Dr Matthias Henny
500,000
105
1,363
215,899
920
143,996
1,193
200,006
2,283
560,006
1,060,007
112 %
5,314
177,878
1,243,199
Head of Corporate Division Asset Management
Dr Alexander Bockelmann (since 1 February 2019)
550,000
87,121
1,375
217,800
835
130,679
1,313
220,124
2,210
655,724
1,205,724
119 %
–
177,878
1,383,603
Head of Corporate Division IT
Total for the Corporate Executive Committee
3,821,001
793,782
9,458
1,498,147
2,612
408,791
9,119
1,528,800
12,070
4,229,520
8,050,521
111 %
21,256
1,109,768
9,181,545
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 2019 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 or life partners; children under 18 years or dependent family members; companies owned or controlled by directors; individuals who act
as trustees for them; children, relatives, companies and trustees of the spouse or life partner. 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 158.40.
From 2020, the discount will also be reported as part of the overall remuneration. In 2019, the discount amounted to CHF 166,461.
Share Participation Plan Proportion of variable remuneration received as shares (excluding loan-financed shares), which are measured at market value less dividend rights discounted over
three years. Subscription price = CHF 156.46.
Performance share units (PSUs) These have been disclosed at their value of CHF 167.65 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 2019
Corporate Governance
Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary Variable remuneration
Cash payment
Cash payment
2019
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
Head of Corporate Division IT
Explanatory notes to the table
Total basic salary
plus variable
remuneration
Variable
remuneration as
percentage of
basic salary
Non-cash
benefits
Pension
contributions
Total remunera-
tion
(fixed)
(variable)
Share Subscription Plan
Share Participation Plan
Performance share units (PSU)
Total variable remuneration
Granted in 2019
CHF
CHF
Number of shares
CHF
Number of shares
CHF
Number of PSUs
CHF
Number of shares
CHF
CHF
950,000
342,014
2,159
341,986
2,267
380,063
2,159
1,064,063
2,014,062
112 %
CHF
–
CHF
CHF
196,515
2,210,578
700,000
50,501
2,863
453,499
1,671
280,143
2,863
784,143
1,484,143
112 %
5,314
177,878
1,667,336
Dr Thomas Sieber
621,000
178,998
846
134,006
857
134,116
1,482
248,457
1,703
695,577
1,316,577
112 %
5,314
196,515
1,518,407
Dr Carsten Stolz
500,000
135,043
852
134,957
1,193
200,006
852
470,006
970,007
94 %
5,314
183,103
1,158,424
Dr Matthias Henny
500,000
105
1,363
215,899
920
143,996
1,193
200,006
2,283
560,006
1,060,007
112 %
5,314
177,878
1,243,199
Dr Alexander Bockelmann (since 1 February 2019)
550,000
87,121
1,375
217,800
835
130,679
1,313
220,124
2,210
655,724
1,205,724
119 %
–
177,878
1,383,603
Total for the Corporate Executive Committee
3,821,001
793,782
9,458
1,498,147
2,612
408,791
9,119
1,528,800
12,070
4,229,520
8,050,521
111 %
21,256
1,109,768
9,181,545
Non-cash benefits Based on all remuneration elements required to be declared on the Swiss salary certificate, including long-service awards, taxable benefits relating to shares received in
connection with the Employee Incentive Plan (maximum of 100 shares per annum).
Pension benefits These comprise the estimated employer contributions to the state-run social security schemes (up to the pensionable or insurable threshold in each case).
Remuneration is disclosed in accordance with the accrual principle. The table includes all forms of remuneration awarded for performance in 2019 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 or life partners; children under 18 years or dependent family members; companies owned or controlled by directors; individuals who act
as trustees for them; children, relatives, companies and trustees of the spouse or life partner. 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 158.40.
From 2020, the discount will also be reported as part of the overall remuneration. In 2019, the discount amounted to CHF 166,461.
Share Participation Plan Proportion of variable remuneration received as shares (excluding loan-financed shares), which are measured at market value less dividend rights discounted over
Performance share units (PSUs) These have been disclosed at their value of CHF 167.65 at the grant date and measured using a Monte Carlo simulation, which calculates a present value for
three years. Subscription price = CHF 156.46.
the payout expected at the end of the vesting period.
–
–
–
–
–
–
109
Baloise Group Annual Report 2019
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
2018
2019
2018
2019
2018
2019
2018
Total
2019
CHF
Dr Andreas Burckhardt
Chairman
Dr Andreas Beerli
Vice-Chairman
Dr Georges-Antoine
de Boccard
(until 26 April 2019)
Member
Christoph B. Gloor
Member
Karin Keller-Sutter
(until 31 December 2018)
Member
Hugo Lasat
Member
Christoph Mäder
(since 26 April 2019)
Member
Dr Markus R. Neuhaus
(since 26 April 2019)
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,623,451
2,623,431
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,623,451
2,623,431
660,000
660,000
1,793,515
2,212,534
1,500,000
1,500,000
1,826,741
2,274,910
2,160,000
2,160,000
3,620,256
4,487,444
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,623,451
2,623,431
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,623,451
2,623,431
2,453,515
2,872,534
3,326,741
3,774,910
5,780,256
6,647,444
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 companies or individuals who are related to members of the Board of Directors and the Corporate Executive Committee. Related parties are spouses or life partners; children under 18 years or
dependent family members; companies owned or controlled by directors; individuals who act as trustees for them; children, relatives, companies and trustees of the spouse or life partner.
Mortgages Mortgages of up to CHF 1 million are granted to staff at the following terms and conditions: 1 per cent below the customer interest rate for variable-rate mortgages and at a preferential
interest rate for fixed-rate mortgages.
Loans associated with the Share Participation Plan Loans to increase the effect of the Share Participation Plan (see 5. ‘Share Subscription Plan and Share Participation Plan’). Interest is charged on
loans at a market rate (2019: 1 per cent), and they have a term of three years.
Other loans There are no policy loans.
110
Baloise Group Annual Report 2019
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
2018
2019
2018
2019
2018
2019
2018
2019
Quantity
Dr Andreas Burckhardt
Chairman
Dr Andreas Beerli
Member
Dr Georges-Antoine
de Boccard
(until 26 April 2019)
Member
Christoph B. Gloor
Member
Karin Keller-Sutter
(until 31 December 2018)
Member
Hugo Lasat
Member
Christoph Mäder
(since 26 April 2019)
Member
Dr Markus R. Neuhaus
(since 26 April 2019)
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
24,452
28,566
33,542
31,788
57,994
60,354
0.119 %
0.124 %
2,298
2,812
2,397
2,452
4,695
5,264
0.010 %
0.011 %
3,176
–
2,397
–
5,573
–
0.011 %
–
7,693
8,093
2,283
2,317
9,976
10,410
0.020 %
0.021 %
806
–
–
–
–
–
733
–
2,086
–
2,892
–
0.006 %
–
1,686
2,024
1,686
2,024
0.003 %
0.004 %
–
–
1,000
1,000
–
–
1,733
1,000
–
–
0.004 %
0.002 %
439
555
1,311
1,745
1,750
2,300
0.004 %
0.005 %
1,631
2,145
2,475
2,434
4,106
4,579
0.008 %
0.009 %
–
–
–
–
40,495
42,904
1,000
1,338
1,000
1,338
0.002 %
0.003 %
1,686
50,863
2,024
48,122
1,686
91,358
2,024
91,026
0.003 %
0.187 %
0.004 %
0.187 %
0.083 %
0.088 %
0.104 %
0.099 %
0.187 %
0.187 %
Explanatory notes to the table
Shareholdings Includes shares held by related parties (spouses or life partners; children under 18 years or dependent family members; companies owned or controlled by directors;
individuals who act as trustees for them; children, relatives, companies and trustees of the spouse or life partner).
Restricted shares Shares received in connection with share-based remuneration programmes are subject to a restriction period of three years. The closed period for shares received by the
Chairman of the Board of Directors in connection with the Share Subscription Plan is five years. Article 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 2019
Corporate Governance
Remuneration Report
SHARES HELD BY MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE (AS AT 31 DECEMBER)
Discretionary shares
Restricted shares
Total share ownership
Percentage of issued
share capital
Prospective
entitlements (PSUs)
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
Quantity
Gert De Winter
Group CEO
Michael Müller
19,206
22,875
5,735
7,125
24,941
30,000
0.051 % 0.061 %
8,471
7,809
Head of Corporate Division Switzerland
18,863
21,662
8,154
8,125
27,017
29,787
0.055 % 0.061 %
5,630
5,351
Dr Thomas Sieber
Head of Corporate Division Corporate
Centre
Dr Carsten Stolz
8,167
9,058
20,601
24,511
28,768
33,569
0.059 % 0.069 %
5,351
4,918
Head of Corporate Division Finance
3,293
1,453
2,314
5,654
5,607
7,107
0.011 % 0.015 %
2,862
3,245
Dr Matthias Henny
Head of Corporate Division Asset
Management
Dr Alexander Bockelmann
(since 1 February 2019)
7,247
6,338
21,236
21,867
28,483
28,205
0.058 % 0.058 %
3,417
3,531
Head of Corporate Division IT
–
–
–
–
–
–
–
–
–
1,313
Total for the members
of the Corporate Executive Committee
Percentage of issued
share capital
56,776
61,386
58,040
67,282 114,816 128,668
0.235 % 0.264 % 25,731
26,167
0.116 % 0.126 % 0.119 % 0.138 % 0.235 % 0.264 %
Explanatory notes to the table
Shareholdings Includes shares held by related parties (spouses or life partners; children under 18 years or dependent family members; companies owned or controlled by directors;
individuals who act as trustees for them; children, relatives, companies and trustees of the spouse or life partner).
Restricted shares Includes loan-financed shares connected with the Share Participation Plan. Shares received in connection with share-based remuneration programmes are subject to a
closed period of three years.
Options Options held in connection with the Share Participation Plan are not reported here because they were written to hedge loans and do not originate from a separate option plan. Each
put option is also offset by a countervailing call option.
Prospective entitlements (PSUs) Number of allocated performance share units (granted as at 1 March 2017, 1 March 2018 and 1 March 2019).
112
Baloise Group Annual Report 2019
Corporate Governance
Remuneration Report
TOTAL AND VARIABLE REMUNERATION IN THE BALOISE GROUP
2018
In cash
In shares
Prospective
entitlements
Total
In cash
In shares
Prospective
entitlements
2019
Total
Total remuneration
CHF million
Total variable remunera-
tion (total pool)
CHF million
Number of beneficiaries
Of which commission paid
to insurance sales force
726.9
5.2
5.0
737.1
734.2
5.7
5.5
745.4
146.8
4,931
5.2
184
5.0
67
157.0
145.5
4,966
5.7
196
5.5
67
156.7
CHF million
104.8
–
–
104.8
96.5
–
–
96.5
Of which other forms of
variable
remuneration
CHF million
40.0
5.2
5.0
50.3
49.0
5.7
5.5
60.2
Total outstanding
deferred remuneration
CHF million
Debits / credits for
remuneration for previous
reporting periods
recognised in profit or loss
–
92.7
14.7
107.4
–
119.7
15.2
134.9
CHF million
– 0.2
Total inducement
payments made
CHF million
Number of beneficiaries
Total severance payments
made
CHF million
Number of beneficiaries
0.0
6
5.4
44
–
–
–
–
–
–
–
–
–
–
– 0.2
– 0.3
0.0
5.4
0.0
4
6.3
67
–
–
–
–
–
–
–
–
–
–
– 0.3
0.0
6.3
Explanatory notes to the table
The table includes all forms of remuneration awarded for each year even if individual components are not paid until a later date.
Total remuneration All taxable benefits that the financial institution provides to persons directly or indirectly for the work they have performed for it in connection with their employment or
directorship. They include cash payments, non-cash benefits, expenditure that creates or increases entitlements to pension benefits, pensions, allotment of shareholdings, conversion
rights and warrants, and debt waivers.
Variable remuneration Part of total remuneration, the amount or payment of which is at the discretion of the financial institution or which depends on the occurrence of agreed conditions.
It includes performance-related and profit-based remuneration such as fees and commissions. Inducement and severance payments also fall under the definition of variable remuneration.
Total pool All the variable remuneration that a financial institution allocates for a year regardless of its form, any contractual undertaking in respect of grant dates or payout dates and any
terms and conditions attached. Inducement and severance payments made in the relevant year should be included in the total pool.
Inducement payment One-off payment agreed when an employment contract is signed. Payments to compensate for lost entitlement to remuneration from a former employer also count as
inducement pay.
Severance payment Remuneration agreed in connection with the termination of an employment contract. Severance packages are paid only in individual justified cases and are granted
only to management team members and to employees, but not to members of either the Board of Directors or the Corporate Executive Committee.
113
Baloise Group Annual Report 2019
Corporate Governance
Report of the statutory auditor
Ernst & Young Ltd
Ernst & Young Ltd
Aeschengraben 9
Aeschengraben 9
P.O. Box
P.O. Box
CH-4002 Basel
CH-4002 Basle
Phone
Phone
Fax
Fax
www.ey.com/ch
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
+41 58 286 86 86
+41 58 286 86 00
To the General Meeting of
To the Annual General Meeting of
Bâloise Holding AG, Basel
Bâloise Holding Ltd, Basel
Basel, 20 March 2020
Basel, 22 March 2019
Report of the statutory auditor on the remuneration report
Report of the statutory auditor on the financial statements
We have audited the accompanying remuneration report of Bâloise Holding AG for the year
ended 31 December 2019.
As statutory auditor, we have audited the financial statements (pages 278 - 289) of Bâloise
Board of Directors’ responsibility
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
The Board of Directors is responsible for the preparation and overall fair presentation of the
ended 31 December 2019.
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.
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.
Auditor’s responsibility
This responsibility includes designing, implementing and maintaining an internal control
Our responsibility is to express an opinion on the accompanying remuneration report. We
system relevant to the preparation of financial statements that are free from material
conducted our audit in accordance with Swiss Auditing Standards. Those standards require
misstatement, whether due to fraud or error. The Board of Directors is further responsible for
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
selecting and applying appropriate accounting policies and making accounting estimates that
assurance about whether the remuneration report complies with Swiss law and articles 14–16
are reasonable in the circumstances.
of the Ordinance.
Auditor’s responsibility
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
Our responsibility is to express an opinion on these financial statements based on our audit.
articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment,
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those
including the assessment of the risks of material misstatements in the remuneration report,
standards require that we plan and perform the audit to obtain reasonable assurance whether
whether due to fraud or error. This audit also includes evaluating the reasonableness of the
the financial statements are free from material misstatement.
methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
judgement, including the assessment of the risks of material misstatement of the financial
a basis for our opinion.
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 2019 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
114114
Baloise Group Annual Report 2019
Corporate Governance
Report of the statutory auditor
Opinion
In our opinion, the remuneration report for the year ended 31 December 2019 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
2
115115
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
66 corporate Governance
116 Financial Report
276 Bâloise Holding ltd
294 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 ..... 131
4. Key accounting judgements,
estimates and assumptions ...................................... 152
5. Management of insurance risk and financial risk ....... 155
6. Basis of consolidation .............................................. 198
7. Segment reporting ................................................... 199
NOTES TO THE CONSOLIDATED BALANCE SHEET ....... 204
8. property, plant and equipment ................................. 204
9. intangible assets ..................................................... 206
10. investment property ................................................ 209
11. Financial assets ....................................................... 209
12. Mortgages and loans ................................................ 214
13. Derivative financial instruments ............................... 215
14. Receivables .............................................................. 217
15. Reinsurance assets ................................................... 217
16. Receivables from reinsurers ..................................... 218
17. employee benefits ................................................... 219
18. Deferred income taxes ............................................. 228
19. other assets ............................................................ 230
20. non-current assets and disposal groups
classified as held for sale ......................................... 231
21. Share capital ........................................................... 231
22. technical reserves (gross) ....................................... 232
23. liabilities arising from banking business
and financial contracts .............................................. 241
24. Financial liabilities ................................................... 242
25. non-technical provisions ......................................... 244
26. insurance liabilities ................................................. 244
NOTES TO THE CONSOLIDATED
INCOME STATEMENT .................................................. 245
27. premiums earned and policy fees .............................. 245
28. income from investments for
own account and at own risk ..................................... 245
29. Realised gains and losses on investments ............... 246
30. income from services rendered ................................ 249
31. other operating income ........................................... 249
32. classification of expenses ....................................... 250
33. personnel expenses ................................................. 250
34. Gains or losses on financial contracts ....................... 251
35. income taxes ............................................................ 252
36. earnings per share ................................................... 253
37. other comprehensive income ................................... 254
OTHER DISCLOSURES ................................................ 257
38. long-term equity investments and structure of the
Baloise Group ............................................................ 257
39. Related party transactions ....................................... 262
40. contingent and future liabilities ............................... 262
41. leases ..................................................................... 266
42. claim payments received from
non-Group insurers .................................................. 269
43. events after the balance sheet date .......................... 269
REPORT OF THE STATUTORY AUDITOR
TO THE ANNUAL GENERAL MEETING OF
BÂLOISE HOLDING LTD, BASEL ................................... 270
t
R
o
p
e
R
l
a
i
c
n
a
n
i
F
Unterkapitel
Baloise Group annual Report 2019
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
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
31.12.2018
31.12.2019
8
9
38
10
11
11
12
13
15
16
17
14
14
18
19
318.3
1,041.2
221.1
7,904.0
362.8
1,034.7
387.4
8,120.1
3,657.0
4,351.1
10,481.0
11,881.8
8,002.5
7,475.5
23,771.4
27,101.5
2,001.2
2,172.0
15,470.5
15,773.9
925.8
914.8
457.2
41.9
433.3
7.3
325.7
406.9
73.5
61.1
248.9
54.1
1,039.1
1,048.1
577.1
51.3
498.9
6.3
279.9
375.7
97.4
74.5
250.4
70.3
4,036.1
3,988.0
20
–
–
80,854.8
87,017.8
Baloise Group annual Report 2019
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
31.12.2018
31.12.2019
21
22
23
24
25
13
26
17
18
20
4.9
352.3
– 291.8
– 515.4
6,420.5
5,970.6
37.6
4.9
354.7
– 481.8
– 3.2
6,839.4
6,714.0
1.6
6,008.2
6,715.6
46,575.2
48,333.3
2,924.7
6,997.5
3,940.1
7,593.8
11,616.9
13,006.5
1,744.5
2,368.0
63.7
117.3
1,829.8
1,220.7
675.9
907.8
67.4
105.1
–
52.9
117.5
1,807.5
1,294.1
668.0
938.5
75.7
106.5
–
74,846.6
80,302.2
80,854.8
87,017.8
119
Baloise Group annual Report 2019
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
2018
2019
27
27
27
28
29
30
31
32
32
32
34
32
24
35
36
6,737.0
– 209.0
6,528.0
7,571.3
– 241.5
7,329.8
1,376.0
1,257.0
96.1
– 1,087.8
130.4
6.2
227.6
336.1
1,709.5
126.0
10.8
227.7
7,276.6
10,996.9
– 5,904.4
– 6,090.4
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 956.7
117.0
– 554.6
– 816.0
– 91.4
– 17.2
– 1,388.0
– 483.6
– 475.7
– 6,539.1
– 10,273.0
737.5
723.9
– 39.9
697.6
– 174.7
522.9
523.2
– 0.3
11.14
11.12
– 37.7
686.2
3.3
689.5
694.2
– 4.7
15.02
14.99
Baloise Group annual Report 2019
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
2018
2019
522.9
689.5
4.6
9.6
–
–
118.5
– 106.5
– 7.7
– 26.7
98.3
33.9
5.5
– 67.1
change in unrealised gains and losses on available-for-sale financial assets
– 909.1
1,311.4
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
– 3.8
– 7.7
– 0.7
271.0
– 52.5
116.2
– 586.6
3.1
16.4
– 0.8
– 503.3
– 78.4
– 165.1
583.2
– 488.3
516.1
34.7
1,205.6
21.8
12.9
1,210.3
– 4.7
121
Baloise Group annual Report 2019
Financial Report
consolidated cash flow statement
Consolidated cash flow statement
Note
2018
2019
cHF million
Cash flow from operating activities
profit before taxes
Adjustments for
Depreciation, amortisation and impairment of property, plant and equipment and of intangible assets
8 / 9
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
697.6
686.2
67.1
– 0.9
– 6.2
981.0
6.4
– 35.4
– 501.4
– 5.0
– 744.7
26.5
140.4
591.5
90.8
– 5.3
– 8.7
– 1,989.5
17.8
– 69.1
839.5
– 27.5
2,391.1
33.4
– 131.4
100.1
10
10
– 407.5
69.6
– 452.3
423.3
– 3,720.8
– 4,561.0
3,883.7
4,995.4
– 6,160.9
– 6,821.6
6,541.7
5,658.1
– 2,446.7
– 23,807.5
2,499.2
– 376.5
130.6
39.9
– 136.5
1,132.6
23,359.2
– 486.8
288.7
37.7
– 121.0
439.7
24
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 2019
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
Repayments of principal in connection with leases
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
2018
2019
8
9
38
38
24
24
24
24
– 32.3
5.8
– 51.1
1.9
– 0.5
15.0
– 87.8
–
6.5
– 31.1
19.5
– 50.9
0.2
– 246.3
– 6.6
– 175.9
10.2
8.3
– 142.4
– 472.6
–
–
– 35.9
–
754.5
– 175.0
– 38.1
– 16.7
– 196.7
– 266.7
63.3
– 8.3
– 264.0
– 441.7
79.1
– 0.5
– 278.6
58.0
548.4
25.1
3,551.6
548.4
–
– 63.9
4,036.1
4,036.1
25.1
–
– 73.2
3,988.0
2,543.5
2,412.6
0.0
0.0
1,492.6
1,575.4
4,036.1
184.8
3,988.0
123.7
705.2
93.2
– 27.5
638.3
59.0
– 23.8
123
Baloise Group annual Report 2019
Financial Report
consolidated statement of changes in equity
Consolidated statement of changes in equity
Note Share capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
Equity
before non-
controlling
interests
Non-
controlling
interests
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
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
37
21
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 14.1
– 182.7
20.1
43.2
–
–
–
–
–
–
–
–
–
–
–
–
–
– 264.0
– 264.0
– 8.3
– 272.4
–
–
–
–
–
–
–
– 196.7
63.3
–
–
–
–
–
–
–
–
– 196.7
63.3
–
– 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
124
Baloise Group annual Report 2019
Financial Report
consolidated statement of changes in equity
2019
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
Reclassification from revaluation reserve
other
Note Share capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
Equity
before non-
controlling
interests
Non-
controlling
interests
Total
equity
4.9
352.3
– 291.8
– 515.4
6,420.5
5,970.6
37
21
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 31.7
– 235.0
34.1
45.0
–
–
–
–
–
–
–
–
–
–
516.1
516.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 3.9
–
3.9
– 0.7
–
694.2
694.2
516.1
37.6
– 4.7
0.1
6,008.2
689.5
516.1
694.2
1,210.3
– 4.7
1,205.6
– 278.6
– 278.6
– 0.5
– 279.1
–
– 266.7
79.1
–
–
–
–
– 0.7
–
–
–
–
– 0.3
–
– 266.7
79.1
–
– 0.3
– 30.4
– 30.4
–
–
–
– 0.7
Balance as at 31 December
4.9
354.7
– 481.8
– 3.2
6,839.4
6,714.0
1.6
6,715.6
125
Baloise Group annual Report 2019
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 operating 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 and, until 30 December 2019, 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 20 March 2020 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 16 Leases
iFRS 16 leases has had to be applied since 1 January 2019. it governs the recognition, measurement, reporting and disclosure
requirements in respect of leases. as a result of the first-time adoption of iFRS 16, the Baloise Group will have to recognise on its
balance sheet leases previously classified as operating leases under iaS 17 in which it is the lessee. the new financial reporting
standard resulted in the recognition of right-of-use assets in respect of property, plant and equipment in an amount of cHF 52.9 mil-
lion and lease liabilities of cHF 52.9 million. the modified retrospective method pursuant to iFRS 16.c5 b was used for transition
purposes, so the comparative figures for the prior year were not restated. in accordance with iFRS 16.c8 b ii, Baloise recognised
the right-of-use assets as at 1 January 2019 in the same amount as the lease liabilities. consequently, the first-time adoption of
iFRS 16 did not require the recognition of any adjustments in other comprehensive income. Furthermore, the Baloise Group used
the practical expedients pursuant to iFRS 16.c3 and iFRS 16.c10 a, b, d and e for first-time adoption. the Baloise Group also
decided to exercise the option pursuant to iFRS 16.6 to not recognise short-term leases with a remaining term of less than twelve
months and to not recognise leases where the underlying asset is of low value.
the first-time adoption of iFRS 16 did not necessitate any changes to the accounting treatment of investment properties
covered by operating leases in which the Baloise Group is the lessor.
application of iFRS 16 had no material impact on profit for the period.
126
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
IFRS 16 TRANSITION USING THE MODIFIED RETROSPECTIVE APPROACH (IFRS 16.C5 B)
cHF million
Balance sheet items
property, plant and equipment
Total assets
Financial liabilities
Total liabilities
Consolidated
balance sheet as at
1 January 2019
Consolidated
balance sheet as at
31 December 2019
prior to application
IFRS 16
after application
318.3
80,854.8
1,744.5
80,854.8
52.9
52.9
52.9
52.9
371.2
362.8
80,907.7
87,017.8
1,797.4
80,907.7
2,368.0
87,017.8
RECONCILIATION LEASE AGREEMENTS FROM IAS 17 TO IFRS 16
cHF million
Operating lease liabilities as at 31.12.2018
Minimum lease payments (nominal) from financial leasing as at 31.12.2018
Recognition exemption leases with an underlying asset of low value and short-term leases
adjustments due to different maturity estimates
Gross lease liability as at 1 January 2019
Discounting
Additional lease liabilities from first-time application of IFRS 16 as at 1 January 2019
present value of liabilities from financial leasing as at 31.12.2018
Lease liabilities as at 1 January 2019
the weighted average incremental borrowing rate for lease liabilities as of January 1, 2019 is 1.3 %.
55.1
–
– 8.2
7.3
54.3
– 1.4
52.9
–
52.9
IFRS 9 Financial Instruments (deferral approach selected latest until 31 December 2022)
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 2023. Until these standards are adopted, there will be no effect on
profit for the period or on balance sheet line items.
127
Baloise Group annual Report 2019
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
2019
2019
2018
2019
2019
2018
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,590.5
21,150.2
6,947.9
7,757.7
10.0
6,948.0
7,842.3
10.8
11,069.3
11,522.8
4,297.8
4,704.1
1,053.5
1,053.7
27.8
–
200.8
28.3
–
207.2
–
–
–
–
–
–
–
1,450.2
398.6
1,133.3
0.0
395.0
59.2
101.6
– 0.4
–
– 19.4
2,095.1
2,095.1
84.3
536.3
188.9
672.0
910.0
192.8
10.9
133.3
137.4
–
–
84.3
536.3
188.9
672.0
910.0
192.8
10.9
133.3
137.4
–
–
10.1
10.1
–
–
–
–
–
–
395.0
– 19.7
212.7
93.5
60.6
127.0
– 177.8
– 4.1
27.0
77.8
–
–
5.5
–
–
–
16.5
15.8
– 0.9
54.6
54.6
54.6
–
–
–
–
–
–
–
–
–
279.9
375.7
281.9
375.7
– 46.0
– 31.3
2,412.6
2,412.6
– 130.9
266.5
32.8
115.8
–
–
–
–
266.5
32.8
115.8
–
–
–
–
– 18.3
– 28.9
8.4
–
–
–
–
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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 31.12.2019
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
BBB
or no rating Carrying amount
Impairment
Lower than BBB
Fair Value lower
than BBB
or no rating
6,714.2
170.6
5,135.8
–
102.6
1,928.4
–
–
–
4.2
–
1.7
115.8
9,328.1
719.0
573.7
10.0
918.0
2,076.9
58.8
–
–
1,910.6
2,603.1
1,219.6
–
9,093.3
43.4
–
–
–
1,359.8
1,749.6
518.9
–
867.7
90.8
–
–
–
277.8
19,590.5
1,705.5
309.7
–
87.6
158.2
994.7
27.8
–
6,947.9
7,757.7
10.0
11,069.3
4,297.8
1,053.5
27.8
–
–
– 9.8
– 5.6
–
– 18.6
10.0
–
0.0
–
277.8
1,705.5
309.7
–
94.8
166.2
994.9
28.3
–
21.9
109.3
20.7
44.8
200.8
– 0.9
46.5
–
16.3
91.6
–
83.0
36.8
–
14.2
26.3
38.4
–
–
164.7
105.1
279.9
375.7
–
– 1.5
– 1.3
–
164.7
105.1
201.9
2,412.6
–
201.9
cash and cash equivalents
1,055.5
281.8
835.0
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.
IFRIC 23 Uncertainty over Income Tax Treatments
iFRic 23 clarifies the treatment of deferred and current income taxes where there is uncertainty about whether a tax authority will
accept the chosen income tax treatment. First-time adoption of iFRic 23 had no impact on profit for the period.
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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 . on 17 March 2020,
the iaSB decided to defer the effective date of the two new standards iFRS 17 and iFRS 9 by a further year until 1 January 2023.
early application of the standards with effect from 1 January 2022 is permitted. the Baloise Group has not yet decided whether
to make use of this option.
Standard /
Interpretation
iFRS 9
iFRS 17
Content
Financial instruments
insurance contracts
Applicable to annual periods
beginning on or after
1.1.2023
1.1.2023
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).
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.
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 2023.
iFRS 17 affects the way in which insurance contracts are reported. 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 particularly affected.
the Baloise Group has started a Group-wide project for the implementation of 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 criteria for control pursuant to iFRS 10 are met. if control over a structured entity
is lost, it is removed from the basis of consolidation. the consolidation of investment funds depends on the fund’s control
arrangements and on the characteristics of the fund units. investment fund units held by third parties, where these units are
puttable instruments that include a contractual obligation for the issuer to take back the units, are included in the basis of con-
solidation in accordance with the criteria in iaS 32. if there is no such obligation for the issuer to take back the units, the units
held by third parties are recognised as non-controlling interests in consolidated equity in accordance with the criteria in iFRS 10.
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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 profit or loss for the period and other comprehensive income). 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 in foreign currency are measured using the rates applicable on the transaction date. non-monetary items
measured at historical cost are measured using historical rates. Monetary and non-monetary balance sheet line items measured
at fair value that arise in Group companies’ foreign-currency transactions are measured using closing rates.
exchange differences are generally recognised in profit or loss. the exceptions are exchange differences relating to availa-
ble-for-sale non-monetary financial instruments, cash flow hedges and hedges of net investments in foreign operations, which
are recognised in other comprehensive income.
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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 subsidiaries are sold, any 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
31.12.2018
31.12.2019
Ø 2018
Ø 2019
1.13
0.98
1.09
0.97
1.16
0.98
1.11
0.99
3.3 Property, plant and equipment
items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment
losses. the acquisition cost of property, plant and equipment includes all directly attributable costs. Subsequent acquisition
costs are only capitalised if future economic benefits associated with the property, plant and equipment will flow to the entity
concerned and these costs can be measured reliably. all other repairs and maintenance costs are expensed as incurred.
land is not depreciated. other items of property, plant and equipment are depreciated on a 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
the Baloise Group leases real estate for office space and warehousing that it recognises on its balance sheet. initial measurement
of the corresponding lease liability is at the present value of the lease payments made during the term of the lease, discounted
at the weighted average incremental borrowing rate of interest. the lease liability is subsequently measured at amortised cost
using the effective interest method; it consists of an interest component and a principal component. the right-of-use asset is
initially measured in the same amount as the initial lease liability, adjusted for any initial direct costs or incentives granted by the
lessor. the right-of-use asset is depreciated over the shorter of the term of the lease and the useful life of the underlying asset.
Right-of-use assets are recognised under the line item ‘property, plant and equipment’ and the lease liabilities under ‘Financial
liabilities’ on the balance sheet.
Short-term leases with a remaining term of less than twelve months and leases where the underlying asset is of low value are
not recognised because the option pursuant to iFRS 16.6 is exercised. the payments for these leases are expensed in the income
statement on a straight-line basis over the term of the lease. Short-term assets and low-value assets relate to operating equipment,
parking spaces and other property, plant and equipment.
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).
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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).
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.
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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
characteristics 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.
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”.
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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.
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.
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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
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.
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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.
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.
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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 financial instruments whose repayment value depends on the performance of one or more underlying
instruments (such as equities, interest rates or currencies). Structured products contain embedded derivatives in addition to the
underlying instruments. 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 20.
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 with multiple ownership) 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 and
gains and losses on the sale of treasury shares.
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. Furthermore, cumulative actuarial gains and losses under defined
benefit pension plans are included in this line item.
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 mar-
ket 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 cer-
tain 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.
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▸
▸ 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 com-
ponent in addition to the usual cargo insurance.
▸ Miscellaneous
this category generally comprises small segments such as credit protection insurance and legal expenses insurance. provided
that financial guarantees qualify as insurance contracts, they are treated as credit protection insurance policies.
3.18.1 Premiums
the gross premiums written are the premiums that have fallen due during the reporting period. they include the amount needed
to cover the insurance risk plus all surcharges. premium contributions that are attributable to future reporting periods are deferred
by contract and – together with health insurance reserves for old age and any deferred unearned premiums – constitute the
unearned premium reserves shown on the balance sheet. owing to the specific nature of marine insurance, premiums are deferred
not by contract but on the basis of estimates. premiums that are actually attributable to the reporting period are recognised as
premiums earned. their calculation is based on the premiums written and the change in unearned premium reserves.
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3.18.2 Claims reserves
at the end of each financial year the Baloise Group attaches great importance to setting aside sufficient reserves for all claims
that have occurred by this date.
in addition to the reserves that it recognises in respect of the payments to be made for claims that have occurred, it also sets
aside reserves to cover the costs incurred during the claims settlement process. in order to calculate these reserves as realistically
as possible, the Baloise Group uses the claims history of recent years, generally accepted mathematical-statistical methods and all
the information available to it at the time – especially knowledge about the expertise of those entrusted with the handling of claims.
the total claims reserve consists of three components. Reserves calculated using actuarial methods form the basis of the total
claims reserve. the second component comprises reserves for those complex special cases and events that do not lend themselves
to purely statistical evaluation. these are generally rare claims that are fairly atypical of the sector concerned – usually sizeable
claims whose costs have to be estimated by experts on a case-by-case basis. neither of these components is subject to discount-
ing. the third component consists of reserves for annuities that are discounted using basic actuarial principles such as mortality
and the technical interest rate and are largely derived from claims in the motor, liability and accident insurance businesses.
actuarial methods are used to calculate by far the largest proportion of claims reserves. to this end, the Baloise Group selects
actuarial forecasting methods that are appropriate for each sector, insurance product and existing claims history. additional
market data and assumptions obtained from insurance rates are used if the claims history available on a customer is inadequate.
the Baloise Group mainly applies the chain-ladder method, which is the most widely used, tried-and-tested procedure. this method
involves estimating the number and amounts of claims incurred over time and the proportion of claims that are reported to the
insurer either with a time lag or after the balance sheet date. the proportion of these so-called incurred-but-not-reported (iBnR)
claims is exceptionally important, especially in operating segments involving third-party liability insurance. these estimates
naturally factor in emerging claims trends as well as recoveries. the mean ratio of costs incurred to claims actually paid is
essentially used to calculate reserves for claims handling costs.
the forecasting methods used cannot eliminate all the uncertainties inherent in making predictions about future developments
and trends. nonetheless, systematic monitoring of the reserves recognised in a given financial year enables the Baloise Group to
spot discrepancies as soon as possible and, consequently, to adjust the level of reserves and modify the forecasting method
where necessary. this analysis is based on the so-called “run-off triangles” presented in aggregated form in section 5.4.5. the
relevant calculations for typical property policies such as storm and tempest insurance or home contents insurance are usually
based on the payments made over the past ten years. larger amounts of data and, consequently, claims triangles that go further
back in time and are based on both payments and expenses (payments plus reserves) are 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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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 22). 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 (chapter 22). 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 financial statements prepared in accordance with local
accounting standards 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. certain losses incurred are borne by the company.
policyholders are entitled to 90 per cent of investment income (minus the technical interest rate), 90 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 (chapter 15). 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 payment obligations 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
Financial liabilities include not only bonds issued in the capital markets but also lease liabilities.
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.
lease liabilities are initially measured at the present value of the lease payments, discounted at the weighted average
incremental borrowing rate of interest. lease liabilities are subsequently measured at amortised cost using the effective interest
method, including both an interest component and a principal component.
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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 the chance to participate in various plans under which shares are granted as part of their
overall remuneration packages: employee incentive plan, Share Subscription plan, Share participation plan and performance
Share Units (pSUs). these plans are equity-settled remuneration programmes. in addition, FRiDaY insurance S.a. offers its
employees a phantom Stock option programme (pSop), which is a cash-settled remuneration programme. equity-settled and
cash-settled plans are measured and disclosed in compliance with iFRS 2 Share-based payment.
plans that are settled with shares in Bâloise Holding ltd are measured at fair value on the grant date and are charged as
personnel expenses during the vesting period and recognised under equity. Until the vesting period, outstanding pSops are
measured at fair value through profit or loss on every balance sheet date.
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 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 5.7.
the following asset classes are measured at fair value:
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▸
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. present-value models 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 11 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 17.2.7.
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.
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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 Baloise 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 Baloise 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, or eliminate them completely.
Within the Baloise 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 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.
every business unit in the Baloise Group issues regulations regarding underwriting and risk review. they include clear
authorisation levels and underwriting limits for each sector. Underwriting limits are approved by a business unit’s highest
decision- making body. 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 350 million and cover for earthquakes amounting to cHF 550 million.
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RISK MAP
Business Risks
Investment Risks
Financial Structure Risks
Business Environment Risks
Operational Risks
Leadership and Information Risks
actuarial Risks life
▸ parameter Risks
▸ catastrophe Risks
actuarial Risks non-life
▸ premiums
▸ claims
Market Risks
▸ interest rates
▸ equities
▸ currencies
▸ Real estate
▸ Market liquidity
▸ Derivatives
▸ catastrophe Risks
▸ alternative investments
▸ Reserving
Reinsurance
▸ premiums / pricing
▸ Reinsurance Default
▸ active Reinsurance
credit Risks
asset-liability Risks
▸ interest Rate change Risk
▸ (Re)Financing, liquidity
Risk concentration
▸ accumulation Risks
▸ cluster Risks
Balance Sheet Structure and
capital Requirements
▸ Solvency
▸ other Regulatory Requirements
158
change in Standards
it Risks
organizational Structure
competition Risks
external events
investors
corporate culture
Business Strategy
▸ Business portfolio
▸ Risk Steering
▸ Sustainability
external communication
▸ external Reporting
▸ incentive System
Merger and acquisitions
▸ liability and litigations
▸ Reputation Management
▸ it Governance
▸ it architecture
▸ it operations
▸ cyber Security
HR Risks
▸ Skills / capacities
▸ availability of Knowledge
legal Risks
▸ contracts
▸ tax
compliance
Business processes
▸ process Risks
▸ project Risks
▸ in- / outsourcing
Financial Statements, Forecast, planning
project portfolio
internal Misinformation
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 2019
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
▸ availability of Knowledge
corporate culture
Business Strategy
▸ Business portfolio
▸ Risk Steering
▸ Sustainability
▸ incentive System
Merger and acquisitions
legal Risks
▸ contracts
external communication
▸ external Reporting
▸ liability and litigations
▸ Reputation Management
Financial Statements, Forecast, planning
project portfolio
internal Misinformation
▸ tax
compliance
Business processes
▸ process Risks
▸ project Risks
▸ in- / outsourcing
Risk analysis and Risk Reporting
▸ Risk analysis and Risk assessment
▸ Risk Reporting
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Life and non-life reinsurance strategies
5.3
the Baloise Group’s non-life treaty reinsurance for all business units in the Group is structured and placed in the market by Group
Reinsurance, part of corporate Division Finance. When structuring the programme, Group Reinsurance focuses on the risk-bearing
capacity of the Group as a whole. to date, the Group has only placed non-proportional reinsurance programmes. the Group’s
maximum retention for cumulative claims is cHF 20 million. the retentions for individual claims are cHF 16 million for property
claims, cHF 15 million for marine claims and cHF 13.7 million on a non-indexed basis for third-party liability claims. the local
Baloise Group business units also use additional facultative reinsurance cover on a case-by-case basis. this type of reinsurance
is extremely dependent on the individual risk in each case and it is therefore placed by the business units themselves.
Reinsurance contracts may only be entered into with counterparties that have been authorised in advance by corporate
Division Finance. Reinsurers must generally have a minimum rating of a – from Standard & poor’s, but in exceptional cases – and
in specific circumstances – a BBB + rating or a comparable rating from another recognised rating agency is permitted. However,
these reinsurance contracts are only used for property insurance business that can be settled quickly. this rule does not apply
to captives and pools that are active reinsurance companies because they do not generally have ratings.
Reinsurer credit risk is reviewed on a regular basis. a watch list is kept of reinsurers that are bankrupt or in financial difficulties.
the list contains details of all relationships the Group has with these reinsurers, receivables due to the Group that are outstanding
or have been written off and provisions the Group has recognised. the watch list is updated periodically.
the same requirements for reinsurers apply to life insurance as to non-life insurance, although reinsurance is a less important
instrument for ceding risk in life insurance business.
5.4 Non-Life
5.4.1 Actuarial risk
the Baloise Group primarily underwrites insurance risk for private individuals and small and medium-sized enterprises in selected
countries in mainland europe. Business with industrial clients is also conducted in Switzerland and Germany. Underwriting risk
is limited by monitoring and adjusting rates and maintaining underwriting policies and limits appropriate to the size of each
portfolio and the country in which it is located.
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5.4.2 Assumptions
▸
claims reserves and claims settlement
the portfolios on the Group’s books must be structured in such a way that the data available is sufficiently homogeneous to
enable the use of certain analytical actuarial processes to determine the claims reserves required. one of the assumptions
made is that extrapolation of the typical claims settlement pattern of recent years is meaningful. only cases such as extreme
anomalies in settlement behaviour require additional assumptions to be made on a case-by-case basis.
claims handling costs
the ratio of the average claims handling costs incurred in recent years to the payouts made in the same period is used to
calculate the level of claims handling reserves to be recognised based on current claims reserves.
annuities
the factors on which annuity calculations are based (mortality tables, interest rates, etc.) are normally specified or approved
by the authorities in each country. However, because certain parameters can change relatively quickly, the adequacy of these
annuity reserves is reviewed every year (by conducting a liability adequacy test or lat) and, if there is a shortfall, the reserves
are strengthened accordingly.
▸
▸
5.4.3 Changes to assumptions
the assumptions on which claims reserves are based generally remain constant, but the factors on which annuity calculations
are based are adjusted from time to time over the years, particularly with regard to the latest longevity data.
5.4.4 Sensitivity analysis
as well as the natural volatility inherent in insurance business, there are parameters for determining technical reserves that can
significantly impact on the annual earnings and equity of an insurance company. in the non-life sector, sensitivity analysis has
been used to investigate the effect on consolidated annual earnings and consolidated equity exerted by errors in estimating claims
reserves – including claims incurred but not reported (iBnR) – and reserves for run-off business.
at the end of 2019, 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 4,392.4 million (2018:
cHF 4,164.1 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 341.8 million (2018: cHF 317.5 million) in claims payments (after taxes) before reinsurance.
in 2019, 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 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 3.0 million after taxes
and before reinsurance (2018: cHF 5.9 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 280.3 million (2018: 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 19.4 million after taxes and before reinsurance (2018: cHF 20.9 million).
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
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Year in which the claims occurred
723.1
777.9
732.2
768.5
733.6
707.8
704.8
729.5
759.4
761.7
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
685.4
675.1
666.9
659.6
653.0
650.4
641.8
629.5
619.6
619.6
736.5
731.0
729.1
722.7
717.3
701.6
701.2
692.0
–
751.1
736.9
726.3
717.0
710.5
705.9
698.2
–
–
768.2
764.1
764.7
756.3
752.1
752.3
–
–
–
715.7
701.2
695.9
688.5
681.2
–
–
–
–
667.8
657.6
650.9
646.0
–
–
–
–
–
689.5
675.0
673.0
–
–
–
–
–
–
728.9
707.4
–
–
–
–
–
–
–
762.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
692.0
698.2
752.3
681.2
646.0
673.0
707.4
762.6
761.7
6,994.0
–
–
–
–
–
–
–
–
–
–
claims paid
– 583.0
– 629.0
– 643.5
– 684.8
– 620.2
– 583.9
– 609.0
– 627.0
– 623.8
– 411.0 – 6,015.3
Gross claims reserves
36.6
63.0
54.7
67.5
61.0
62.1
64.0
80.4
138.8
350.7
Gross claims reserves
prior to 2010 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
iBnR)
Reinsurers’ share
Net claims reserves
162
978.7
387.8
727.2
– 50.4
2,043.3
Baloise Group annual Report 2019
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notes to the consolidated annual financial statements
to provide greater clarity (no currency effects), the following analysis of claims trends is shown in euros.
ESTIMATED CUMULATIVE CLAIMS INCURRED IN GERMANY
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Year in which the claims occurred
302.5
290.8
297.4
367.7
306.0
303.2
318.6
340.5
345.5
325.1
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
299.7
305.6
305.8
306.0
307.9
305.2
304.9
304.7
303.7
303.7
297.6
300.9
306.6
309.8
311.7
311.3
310.1
309.8
–
298.4
302.5
304.3
302.6
303.2
302.9
302.6
–
–
370.3
371.0
379.3
379.8
380.8
377.9
–
–
–
316.1
319.9
320.4
314.5
313.3
–
–
–
–
304.9
304.5
301.4
301.8
–
–
–
–
–
314.3
313.6
307.4
–
–
–
–
–
–
331.2
327.8
–
–
–
–
–
–
–
335.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
309.8
302.6
377.9
313.3
301.8
307.4
327.8
335.7
325.1
3,205.3
–
–
–
–
–
–
–
–
–
–
claims paid
– 297.6
– 301.8
– 294.5
– 367.0
– 297.9
– 284.2
– 284.3
– 285.8
– 263.7
– 147.4 – 2,824.2
Gross claims reserves
6.1
8.0
8.1
10.9
15.4
17.6
23.1
42.0
72.0
177.7
Gross claims reserves
prior to 2010 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
iBnR)
Reinsurers’ share
Net claims reserves
381.1
221.6
143.9
– 158.5
588.1
163
–
–
–
–
–
–
–
–
–
–
eUR million
at the end of the year
in which the claims
occurred
one year later
two years later
Baloise Group annual Report 2019
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notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN BELGIUM
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Year in which the claims occurred
235.1
308.7
1 412.4
2 403.6
483.7
459.9
470.3
446.8
495.0
3 643.8
287.1
1 395.1
2 426.5
1 308.0
2 392.2
three years later
2 304.0
Four years later
Five years later
Six years later
Seven years later
eight years later
308.1
306.0
306.0
306.6
300.5
387.9
392.5
388.6
387.1
374.4
3 384.7
nine years later
3 309.9
–
402.5
398.0
396.7
394.4
388.2
3 395.2
–
–
–
494.3
488.7
483.4
479.1
3 486.4
–
–
–
–
476.0
480.7
478.9
3 491.9
–
–
–
–
–
478.9
470.5
3 493.3
–
–
–
–
–
–
483.9
3 580.8
3 527.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
421.9
412.9
410.7
416.9
417.5
3 431.5
–
–
estimated claims
incurred
309.9
384.7
431.5
395.2
486.4
491.9
493.3
527.2
580.8
643.8
4,744.6
claims paid
– 268.1
– 336.6
– 370.2
– 354.3
– 432.6
– 389.6
– 403.2
– 386.7
– 392.0
– 302.0 – 3,635.3
Gross claims reserves
41.8
48.1
61.3
40.9
53.8
102.3
90.1
140.5
188.8
341.8
1,109.3
Gross claims reserves
prior to 2010 (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.
3 the increase in the total estimated claims incurred is primarily due to the addition of Fidea nV.
436.6
224.8
– 407.4
1,363.3
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notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN LUXEMBOURG
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
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
1 25.0
1 23.6
24.0
23.6
2 36.8
3 43.8
49.8
49.6
50.3
50.3
1 22.0
21.8
21.7
2 37.0
3 41.9
41.6
42.5
42.4
42.0
42.0
22.7
22.6
2 35.3
3 39.7
39.2
39.8
39.7
39.7
–
39.7
24.5
2 36.5
3 39.9
39.3
39.9
40.1
40.1
–
–
2 37.8
3 41.2
40.5
40.7
40.6
40.4
–
–
–
3 40.8
40.5
40.8
40.5
40.2
–
–
–
–
44.0
44.3
43.9
43.4
–
–
–
–
–
47.2
46.3
45.8
–
–
–
–
–
–
46.3
46.0
–
–
–
–
–
–
–
50.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40.1
40.4
40.2
43.4
45.8
46.0
50.6
50.3
438.5
–
–
–
–
–
–
–
–
–
–
– 41.8
– 39.4
– 39.6
– 39.7
– 39.3
– 42.2
– 44.0
– 43.3
– 45.8
– 33.1
– 408.1
Gross claims reserves
0.2
0.3
0.5
0.7
0.9
1.2
1.8
2.7
4.8
17.2
Gross claims reserves
prior to 2010 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life,
including iBnR)
Reinsurers’ share
Net claims reserves
30.4
58.7
–
– 46.8
42.3
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.
Analysis of claims settlement for the “Group business” 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. in 2019, the part of the run-off that predominantly consisted of business in the london
market was temporarily transferred under a 100 per cent reinsurance arrangement until economic finality takes effect. However,
the transaction is structured in such a way that it will lead to full finality of the portfolio for Baloise.
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 58.4 years (2018: 97.6 years). the
decrease is attributable to the new 100 per cent reinsurance rearrangement.
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notes to the consolidated annual financial statements
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
31.12.2018
cHF million
Switzerland
individual life
Switzerland
group life
Germany
Belgium
Luxembourg 1
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 %
196.7
19.6
509.9
2.3 %
31.12.2019
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
827.4
492.5
2,726.6
598.2
6,392.8
16,157.4
2.4 %
1.3 %
3,812.8
122.1
6,143.5
3.0 %
195.5
138.6
3,319.3
3.1 %
323.0
17.4
523.3
2.2 %
1 change of chief operating decision maker for variable annuities products, which are being run off in liechtenstein.
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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notes to the consolidated annual financial statements
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
2018
2019
2018
2019
2018
2019
2018 1
2019
671.0
791.3
1,916.4
2,160.4
21.8
29.8
186.0
315.9
1 change of chief operating decision maker for variable annuities products, which are being run off in liechtenstein.
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. occasionally, 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,
disability risk represents around 5 per cent of our business.
traditional insurance
longevity risk
Mortality risk
Disability risk
BVG retirement assets
Sub-total
Unit-linked
longevity risk
Mortality risk
Sub-total
Total
Actuarial reserves
31.12.2018
Actuarial reserves
31.12.2019
CHF
million
Share (%)
CHF
million
Share (%)
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
11,911.5
9,137.6
1,706.7
11,497.8
34,253.7
1,839.1
1,495.1
3,334.1
31.7
24.3
4.5
30.6
91.1
4.9
4.0
8.9
36,206.4
100.0
37,587.9
100.0
actuarial reserves were allocated to the categories above by product, i. e. each product was assigned a risk category and actuarial
reserves were not split into different risks within one product. allocation to a category was generally determined by the mortality
table used in each case.
5.5.2 Assumptions
actuarial reserves are calculated in accordance with the factors that applied on the date a policy was signed. When setting rates
for life insurance products, safety margins are built into these factors to anticipate any adverse trends in the future, principally
with regard to technical interest rates and mortality tables. these built-in safety margins, combined with counter-selection effects,
explain why annuity tables differ from mortality tables. cancellations are not factored in when recognising reserves.
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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notes to the consolidated annual financial statements
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. 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 40 million (2018:
cHF 34 million). the effect on equity in Switzerland was minor. at Baloise life (liechtenstein) aG, the increase in mortality
also led to a reduction, recognised in the income statement, in annuity reserves of around cHF 2 million (2018: cHF 1 million).
the effect on equity was also small.
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. 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 88 million (2018: cHF 80 million) on the income statement. the effect on equity
is minor. at Baloise life (liechtenstein) aG, the fall in mortality led to the further strengthening of annuity reserves by around
cHF 2 million (2018: cHF 1 million). the effect on equity was negligible.
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. in Germany, this scenario resulted in changes in Dac write-downs, changes in the financing of final policyholders’
dividends and the reduction of the provision for impending losses. overall, there was a positive effect of cHF 5 million on the
income statement in Germany (2018: cHF 0 million). the negative effect recognised directly in equity amounted to approximately
cHF 5 million (2018: cHF 5 million). in Belgium, this scenario resulted in an increase in Dacs, which had a positive effect of
roughly cHF 1 million on the income statement (2018: cHF 1 million). the negative effect on unrealised gains amounted to
cHF 134 million (2018: cHF 117 million). in luxembourg, this scenario produced a marginally positive effect on the income
statement and a negative effect of roughly cHF 18 million on the unrealised gains and losses recognised in equity (2018:
cHF 14 million). the resultant effect on the profitability and equity of Baloise life (liechtenstein) aG was negligible. in Swit-
zerland, this scenario resulted in a reversal of Dac write-downs and a reduction in technical provisions, which had an overall
positive effect of cHF 24 million on the income statement (2018: cHF 16 million). the negative effect recognised directly in
equity amounted to approximately cHF 214 million (2018: cHF 165 million).
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notes to the consolidated annual financial statements
▸
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. in Germany, 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. as a result of the elimination of swaptions, the offsetting
effect of interest-rate hedges was not repeated in 2019. the overall impact was mitigated by the prevailing legal requirements
governing the distribution of surpluses. overall, there was a negative effect of around cHF 6 million on the income statement
in Germany (2018: cHF 1 million). the positive effect recognised directly in equity amounted to cHF 5 million (2018: cHF 4 million).
in Belgium, this scenario resulted in additional Dac write-downs and a larger provision for impending losses for the portfolio
acquired in 2019. the negative effect on the income statement therefore rose to cHF 27 million (2018: cHF 1 million). the positive
effect on unrealised gains amounted to cHF 155 million (2018: cHF 131 million). in luxembourg, this scenario produced a
marginally negative effect on the income statement (2018: marginally negative effect) and a positive effect of roughly
cHF 20 million on the unrealised gains and losses recognised in equity (2018: cHF 16 million). at Baloise life (liechtenstein)
aG, the increase in provisions had a negative effect of around cHF 3 million on the income statement (2018: cHF 0 million). the
resulting effect on equity was negligible. in Switzerland, this scenario resulted in higher Dac write-downs and an increase in
technical provisions. the overall negative effect was cHF 34 million (2018: cHF 25 million). the positive effect recognised directly
in equity amounted to approximately cHF 220 million (2018: cHF 171 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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notes to the consolidated annual financial statements
5.6 Management of market risk
Market risk is reflected by losses that arise from changes or fluctuations in market prices that may result in impairment of the
value of assets held. the degree of risk depends on the extent to which market prices fluctuate and on the level of exposure.
as part of their life insurance business, the companies in the Baloise Group also provide investment-linked life insurance
contracts for the account of and at the risk of policyholders. the financial liabilities generated in this connection are backed by
assets – generally investment fund units – arising from these policies. Because the market risk attaching to the assets underlying
these contracts is borne by the policyholder, they are shown separately in the notes to the consolidated annual financial statements.
the following sections specifically address the interest rate risk, currency risk, credit risk, liquidity risk and equity price risk
that are relevant to assets held by the Group.
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 the structure of the obligations.
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 strategic asset allocation with each business unit twice a year and
when the need arises.
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.
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notes to the consolidated annual financial statements
if all interest rates had fallen by 50 basis points on the balance sheet date but all other variables had remained constant, the profit
for the period (after deferred gains / losses and deferred taxes) would have been lower by cHF 70 million (2018: cHF 27 million).
including the impact on profit for the period, equity (after shadow accounting, deferred gains / losses and deferred taxes) would
have risen by cHF 238 million (2018: cHF 224 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 32 million (2018: cHF 16 million). including the impact on profit for the period, equity (after shadow
accounting, deferred gains / losses and deferred taxes) would have fallen by cHF 271 million (2018: 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 3.0 million (2018: + / – cHF 2.9 million) in the profit for the period; a positive (+) change of
cHF 0.01 would have generated a currency gain and a negative (–) change of cHF 0.01 would have generated a currency loss.
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notes to the consolidated annual financial statements
Derivative financial instruments used as currency hedges of a net investment in a foreign operation
the Group’s own companies, Baloise alternative investment Strategies ltd., 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
2018
2019
2018
2019
14.5
31.7
0.5
5.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14.5
31.7
0.5
5.3
2018
2019
– 7.7
–
35.3
–
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 2019 the Group’s Swiss companies did hold a net position in euros equivalent to cHF 1,160.5 million
(2018: 1,096.7 million) and a net position in US dollars equivalent to cHF 120.0 million (2018: cHF 277.0 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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notes to the consolidated annual financial statements
5.6.3 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.
Baloise Group tracks counterparty exposure at all times and monitors credit risk on a Group-wide basis.
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.
please refer to the table of secured financial instruments with characteristics of liabilities in chapter 11.
174
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS EXCEEDING 10 % OF CONSOLIDATED EQUIT Y
cHF million
Swiss confederation
Kingdom of Belgium
Federal Republic of Germany
pfandbriefbank schweizerischer Hypothekarinstitute aG
Republic of France
pfandbriefzentrale der schweizerischen Kantonalbanken aG
Kingdom of the netherlands
european investment Bank, luxembourg
canton of Zurich
FINANCIAL ASSETS EXCEEDING 10 % OF CONSOLIDATED EQUIT Y
cHF million
Swiss confederation
Kingdom of Belgium
Republic of France
Federal Republic of Germany
pfandbriefbank schweizerischer Hypothekarinstitute aG
pfandbriefzentrale der schweizerischen Kantonalbanken aG
Kingdom of the netherlands
canton of Zurich
Kingdom of Spain
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
31.12.2019
4,078.2
2,902.9
1,981.7
1,980.6
1,642.9
1,065.8
965.7
714.9
695.5
175
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
MA XIMUM DEFAULT RISK OF FINANCIAL ASSETS
cHF million
Financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
other
Mortgages and loans
Mortgages
policy loans
promissory notes and registered bonds
time deposits
employee loans
Reverse repurchase agreements
other loans
Derivative financial instruments
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
insurance receivables
other receivables
Receivables from investments
cash and cash equivalents
Guarantees and collateral for the benefit of third parties totalled cHF 535.4 million (2018: cHF 524.7 million).
31.12.2018
31.12.2019
18,438.0
19,601.4
6,655.4
6,695.2
10.0
7,081.1
7,895.1
10.0
10,982.3
11,069.3
132.3
4,322.5
952.0
28.2
–
236.3
453.9
–
457.2
41.9
433.3
347.0
406.9
137.1
4,307.8
1,053.5
27.8
–
217.4
469.7
–
577.1
51.3
498.9
279.9
375.7
2,543.5
2,412.6
176
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
the management and control of credit risk arising from mortgage business are set out in instructions and written procedures in
which mandatory lending regulations are specified. these lending regulations lay down strict procedures for the immediate
identification, accurate assessment, proper authorisation and continuous monitoring of credit risk. Standard credit documentation
is used to record and review loan applications, which are all logged and managed centrally. the relevant credit documentation
reflects or incorporates all evaluation criteria and policies.
Because a running total of mortgage transactions is kept, it is possible to monitor compliance with credit policy, and corrective
action can be taken if necessary. all mortgages are also managed by periodically auditing exposure, including records of overdue
interest. procedures and audit intervals are set out in a separate directive. Senior management regularly receive detailed risk
reports on the composition of the mortgage portfolio and risk trends.
policies, directives and authorisation levels set out the terms and conditions for granting mortgages, which consist of the
amount, the credit quality of the counterparty, collateral and the term of the transaction as well as the specialist qualifications of
the mortgage expert.
there are special instructions for valuing collateral and calculating loan-to-value ratios. the purpose of these provisions is to
ensure that a standard procedure is used to determine the applicable value of collateral when assessing mortgages. the calculation
of fair value and the loan-to-value ratio of real estate is of key importance, particularly with regard to mortgage business. one of the
objectives of the active management of mortgages is the early identification of potential downside risk.
the mortgage portfolio comprises loans to individuals and to legal entities. the type and degree of risk that may be incurred,
together with collateralisation and quality requirements, are set out in directives and authorisation levels. to mitigate risk,
the portfolio is as geographically diverse as possible.
177
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED
promissory notes and registered bonds
1,951.8
2,079.8
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
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
178
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED
promissory notes and registered bonds
1,928.4
2,076.9
as at 31.12.2019
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
6,725.1
170.6
5,140.7
–
102.6
–
9,328.1
719.0
574.3
10.0
1,910.6
2,614.3
1,254.1
–
918.0
8,961.6
–
–
–
–
4.2
117.2
–
–
–
–
1.7
115.8
58.8
–
–
21.9
53.0
–
270.1
7.9
3.5
16.3
91.6
–
43.4
–
–
–
109.3
115.5
–
202.6
15.1
3.3
83.0
36.8
1,359.8
1,766.5
589.8
–
867.7
–
100.8
–
–
–
20.7
41.1
–
13.6
0.0
0.3
14.2
26.3
38.4
277.8
19,601.4
1,810.8
336.2
–
87.5
137.1
158.2
994.7
27.8
–
59.5
142.8
–
75.2
27.0
321.2
163.0
89.0
201.9
7,081.1
7,895.1
10.0
10,937.5
137.1
4,307.8
1,053.5
27.8
–
215.6
469.7
–
561.5
50.1
328.3
278.2
359.6
2,412.6
1,055.5
281.8
835.0
15,361.8
14,431.4
16,184.6
4,839.3
4,909.9
55,726.9
Standard & poor’s and Moody’s ratings are generally used to assess the credit quality of securities. the lower of the two is used
for disclosure.
Because the two agencies do not cover the entire Swiss financial market, the SBi composite rating is applied as and when
necessary.
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 2019, financial assets amounting to cHF 1.7 million (2018: cHF 1.8 million) and cash and cash equivalents of 0.1 million
(2018: 0.1 million) from collateral received were used.
179
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS IMPAIRED
as at 31.12.
cHF million
Financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
other
Mortgages and loans
Mortgages
policy loans
promissory notes and registered bonds
time deposits
employee loans
Reverse repurchase agreements
other loans
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
insurance receivables
other receivables
Receivables from investments
Total
Gross amount
Impairment
Carrying amount
Gross amount
Impairment Carrying amount
2018
2019
–
1.2
0.7
–
–
– 1.2
– 0.7
–
–
–
–
–
–
9.8
10.0
–
–
– 9.8
– 10.0
–
–
–
–
–
128.3
– 18.8
109.5
136.0
– 18.6
117.4
–
–
–
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
–
–
–
0.0
–
10.1
–
–
1.1
139.9
3.2
17.3
327.5
–
–
–
0.0
–
– 8.4
–
–
0.0
– 41.6
– 1.5
– 1.3
– 91.1
–
–
–
–
–
1.7
–
–
1.1
98.3
1.7
16.1
236.4
180
Baloise Group annual Report 2019
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
181
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS OVERDUE BUT NOT IMPAIRED
as at 31.12.2019
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25.6
0.0
–
25.6
18.0
0.0
–
18.0
–
–
–
–
14.4
–
–
–
–
–
–
–
8.5
–
17.0
0.0
–
39.9
–
–
–
–
–
–
–
–
–
–
–
–
7.1
–
11.7
0.0
–
18.8
–
–
–
–
14.4
–
–
–
–
–
–
–
15.6
–
72.3
0.0
–
102.3
Liquidity risk
5.6.4
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.
182
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
liquidity management must take account of the maturity structure of liabilities as follows:
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31.12.2018
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
Derivative financial instruments (net cash flows)
insurance liabilities
other liabilities
Total
Guarantees and future liabilities
Guarantees
Future liabilities
Total
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31.12.2019
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
Derivative financial instruments (net cash flows)
insurance liabilities
other liabilities
Total
Guarantees and future liabilities
Guarantees
future liabilities
Total
1 Based on undiscounted contractual cash flows.
2 all demand deposits are included in the first maturity band.
‹ 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
70.8
1,137.3
640.7
1.6
91.2
–
610.2
5.5
691.9
22.9
1.8
683.1
7,518.7
708.6
20.5
0.1
3.8
101.8
671.2
483.3
373.7
20.5
0.4
17.7
2,924.7
6,997.5
2,924.7
6,997.5
11,616.9
11,616.9
1,905.8
117.3
1,829.8
685.1
1,744.5
117.3
1,829.8
686.7
14,048.5
1,423.3
8,936.6
1,668.6
26,077.1
25,917.5
37.3
522.6
559.9
2.2
713.2
715.4
0.9
15.0
15.9
11.5
6.1
17.6
51.9
1,256.9
1,308.8
–
–
–
‹ 1 year 2
1–3 years
4–5 years
> 5 years
Total Carrying amount
3,836.9
5,943.1
1,205.2
352.9
34.0
1,215.1
638.1
1.9
325.4
2,782.0
791.1
59.1
582.3
24.2
1.8
549.4
8,449.3
704.3
5.9
0.1
3.5
99.5
775.9
570.1
644.2
18.4
10.0
19.6
3,940.1
7,593.8
3,940.1
7,593.8
13,006.5
13,006.5
2,492.4
117.5
1,807.5
685.5
2,368.0
117.5
1,807.5
684.8
13,225.3
4,566.0
9,714.2
2,137.8
29,643.3
29,518.2
36.7
417.4
454.0
13.0
591.6
604.6
0.8
3.0
3.9
12.8
4.9
17.7
63.3
1,016.8
1,080.2
–
–
–
183
please refer to the tables in chapter 22 for the maturities of technical reserves.
Baloise Group annual Report 2019
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. 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.
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.
private-equity investments have to be considered illiquid in this context, and it is not possible to sell investment property to
generate immediate liquidity.
5.6.5 Equity price risk
the Baloise Group is exposed to equity price risk because it holds financial instruments with characteristics of equity classed as
“recognised at fair value through profit or loss” and “available for sale”. equity price risk is significantly reduced by means of
international diversification, i. e. by spreading risk across sectors, countries and currencies. active overlay management using
derivatives also mitigates equity price risk. 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 3.10.3:
cHF million
Market price plus 10 %
Market price minus 10 %
Impact on profit for the period
Impact on equity
(including profit for the period)
2018
2019
2018
2019
25.3
– 51.2
28.5
– 42.0
200.0
– 192.9
252.5
– 257.5
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.
184
Fair value measurement
5.7
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.
185
Baloise Group annual Report 2019
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.
–
n.a.
Derivative financial instruments
investment property
Multiples-based
method
DcF method
1 the lower these key input factors are, the higher the fair value of the investment property is.
2 the higher these key input factors are, the lower the fair value of the investment property is.
3 the input factor ranges shown essentially relate to the real estate portfolios held by the Baloise Group’s Swiss entities.
186
n.a.
Discount rate 1
2.61 % – 5.59 % 3
Rental income 2
280 – 300 cHF million 3
Vacancy costs 1
13 – 19 cHF million 3
Running costs 1
22 – 28 cHF million 3
Maintenance costs 1
26 – 32 cHF million 3
capital expenditure 2
30 – 50 cHF million 3
inflation rate 2
0 % – 2 % 3
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
Determining the fair value of assets and liabilities classified as level 3
the Baloise Group organises its operating activities into strategic business units, which are generally combined under a single
management team for each region. the financial and management information needed for all relevant executive decisions is
held by these strategic business units. this organisational structure is also used to delegate authority and responsibility for
proper implementation of, and compliance with, financial reporting standards within the Baloise Group to the individual strategic
business units.
the organisation of these individual units varies in terms of how they determine the fair value of financial instruments classified
as level 3. this process essentially involves the regular discussion of measurement methods, measurement inconsistencies and
classification issues by formal or informal committees at each reporting date. appropriate adjustments are made where necessary.
Financial instruments with characteristics of equity classed as “available for sale” or “recognised at fair value through profit
or loss” and classified as level 3 are primarily private-equity investments and alternative investments held by the Baloise Group
as well as non-controlling interests in real estate companies. the fair value of such 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.
187
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Financial Report
notes to the consolidated annual financial statements
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
–
–
–
–
188
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES
FOR OWN ACCOUNT AND AT OWN RISK
31.12.2019
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
4,351.1
4,351.1
328.3
328.3
2,493.9
283.3
388.9
45.0
7,475.5
9,120.7
9,120.7
–
27,101.5
27,101.5
25,483.1
1,618.4
1,468.4
–
–
–
–
Recognised at fair value through profit or loss
10.6
10.6
10.6
–
Mortgages and loans
carried at cost
Recognised at fair value through profit or loss
Derivative financial instruments
Receivables from financial contracts
carried at cost
other receivables
carried at cost
Receivables from investments
carried at cost
investment property
Liabilities measured on a recurring basis
liabilities arising from banking business and financial contracts
Measured at amortised cost
Recognised at fair value through profit or loss
Derivative financial instruments
Financial liabilities 1
1 excluding leasing liabilities.
15,773.9
16,649.9
1,039.1
1,039.1
469.7
469.7
–
–
279.9
281.9
–
–
6.9
–
–
375.7
375.7
8,120.1
8,120.1
280.0
–
7,593.8
7,723.4
570.1
117.5
570.1
117.5
–
–
9.2
2,325.0
2,400.4
2,400.4
10,483.8
6,166.1
1,039.1
462.7
–
–
16.4
–
7,646.6
570.1
99.9
–
–
–
–
281.9
79.2
8,120.1
76.8
–
8.4
–
189
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES
FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES
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
–
–
–
–
–
190
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES
FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES
31.12.2019
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
11,553.5
11,553.5
11,279.5
–
274.0
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
2,161.4
2,161.4
1,885.5
153.2
122.7
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
other assets
–
578.4
–
578.4
–
224.5
–
353.9
Recognised at fair value through profit or loss
70.3
70.3
70.3
–
Liabilities measured on a recurring basis
liabilities arising from banking business and financial contracts
Recognised at fair value through profit or loss
12,436.4
12,436.4
12,283.2
Derivative financial instruments
–
–
–
153.2
–
–
–
–
–
–
191
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
FOR OWN ACCOUNT AND AT OWN RISK AND CLASSIFIED AS LEVEL 3
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
Disposals
Disposals arising from change in the scope of consolidation
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 loss 1
changes in fair value not recognised in profit or loss
exchange differences
Balance as at 31 December
Financial
instruments with
characteristics
of equity
Available for
sale
Investment
property
Recognised at
fair value
through
profit or loss
Derivative
financial
instruments
(liabilities)
Total
1,206.5
225.0
–
7,480.3
407.5
–
– 144.8
– 69.6
–
–
–
–
– 1.9
64.4
– 26.6
1,322.7
–
23.3
–
–
106.5
5.2
– 49.3
7,904.0
–
–
–
–
–
–
–
–
–
–
–
–
–
8,686.8
632.5
–
– 214.4
–
23.3
–
–
104.6
69.6
– 75.8
9,226.7
95.1
Changes in fair value of financial instruments held at the balance sheet date and
recognised in profit or loss
1.0
94.2
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
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
FOR OWN ACCOUNT AND AT OWN RISK AND CLASSIFIED AS LEVEL 3
2019
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
Disposals
Disposals arising from change in the scope of consolidation
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 loss 1
changes in fair value not recognised in profit or loss
exchange differences
Balance as at 31 December
Financial
instruments
with
characteristics
of equity
Available
for sale
Investment
property
Recognised at
fair value
through
profit or loss
Derivative
financial
instruments
(liabilities)
Total
1,322.7
251.0
–
7,904.0
452.3
19.8
– 124.1
– 423.3
–
–
–
–
–
–
–
–
38.9
4.9
– 25.0
1,468.4
216.9
–
– 49.5
8,120.1
–
–
–
–
–
–
–
–
–
– 8.4
–
– 8.4
9,226.7
703.3
19.8
– 547.4
–
–
–
–
255.8
– 3.5
– 74.5
9,580.2
Changes in fair value of financial instruments held at the balance sheet date and
recognised in profit or loss
– 8.5
199.9
–
191.5
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.
193
Baloise Group annual Report 2019
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
Disposals
Disposals arising from change in the scope of consolidation
Reclassified to level 3
Reclassified from level 3
changes in fair value recognised in profit or loss 1
exchange differences
Balance as at 31 December
Financial
instruments with
characteristics
of equity
Financial
instruments with
characteristics
of liabilities
Recognised at
fair value
through
profit or loss
Recognised at
fair value
through
profit or loss
220.1
15.8
–
– 29.4
–
0.1
–
28.4
– 8.7
226.3
72.6
63.5
–
– 16.8
–
1.8
– 7.5
3.2
– 3.9
112.8
Total
292.7
79.3
–
– 46.2
–
1.8
– 7.5
31.6
– 12.5
339.1
Changes in fair value of financial instruments
held at the balance sheet date and recognised in profit or loss
28.3
3.1
31.5
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.
194
Baloise Group annual Report 2019
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
2019
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
Disposals
Disposals arising from change in the scope of consolidation
Reclassified to level 3
Reclassified from level 3
changes in fair value recognised in profit or loss 1
exchange differences
Balance as at 31 December
Financial
instruments
with
characteristics
of equity
Financial
instruments
with
characteristics
of liabilities
Recognised at
fair value
through
profit or loss
Recognised at
fair value
through
profit or loss
226.3
29.9
–
– 31.7
–
–
–
58.9
– 9.4
274.0
112.8
40.1
–
– 25.7
–
–
–
– 0.2
– 4.3
122.7
Total
339.1
70.0
–
– 57.4
–
–
–
58.7
– 13.7
396.7
Changes in fair value of financial instruments
held at the balance sheet date and recognised in profit or loss
58.9
– 0.2
58.7
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.
195
Baloise Group annual Report 2019
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 2018.
Reclassification of assets and liabilities to and from level 3
no assets or liabilities measured at fair value were reclassified either to or from level 3 during the reporting period.
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.
5.8 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.
5.8.1 Swiss Solvency Test
For the purposes of the Swiss Solvency test (SSt), the Baloise Group defines its risk-bearing capital and target capital (capital
requirement) 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. Diversification effects are taken into account when defining the Group’s target capital.
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.
196
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
5.8.2 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.
5.8.3 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.
197
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
6. BASIS OF CONSOLIDATION
6.1 2018 financial year
6.1.1 Acquisitions and foundations
no companies were acquired or founded in 2018.
6.1.2 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.
6.1.3 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) in 2018 caused non-controlling interests to fall
by cHF 0.5 million.
no companies were merged or liquidated in 2018.
6.2 2019 financial year
6.2.1 Acquisitions
in Switzerland, 66.7 per cent of the shares in start-up Bubble Box aG, which operates an online platform for laundry and dry
cleaning services, were acquired on 29 april 2019. Baloise has an option to buy the remaining shares, which is why the company
has been fully consolidated.
on 16 July 2019, the Baloise Group acquired all of the voting rights in Belgian multi-sector insurer Fidea nV, thereby strength-
ening its position in the non-life and life insurance market.
in Switzerland, 60 per cent of the shares in devis.ch Sa, a digital marketplace for the services of tradespeople and cleaners,
were acquired on 23 July 2019. the company is fully consolidated, because Baloise has an option to buy the remaining shares.
6.2.2 Disposals
on 30 December 2019, the branches of Basler Sachversicherungs-aG and Basler lebensversicherungs-aG in the czech Republic
and Slovakia were sold.
6.2.3 Other changes in the group of consolidated companies
external investors SevenVentures and German Media pool have acquired a stake in the subsidiary FRi:DaY insurance S.a. and now
hold 18.2 per cent of the share capital. Beneficial ownership of the shares has passed to the external investors. there are call and
put options in place that can be exercised by Baloise and the external investors after a certain point in time.
in the first half of 2019, the Baloise Group acquired a further 13.9 per cent of the shares in artires aG, taking Baloise’s stake
to 98.9 per cent.
in the second half of 2019, Baloise Belgium nV acquired 10.5 per cent of the shares in Drivolution nV, taking the percentage
of shareholding to 89.5 per cent.
198
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
7. SEGMENT REPORTING
the Baloise Group organises its operating activities into strategic business units, which are generally combined under a single
management team for each region. the financial and management information needed for all relevant executive decisions is held
by these strategic business units. this is also the organisational level at which the chief operating decision-makers are situated.
Regardless of where they are headquartered, all Baloise Group entities are therefore assigned to one of the reportable segments
▸
▸
▸
▸
Switzerland
Germany
Belgium
luxembourg
the “Germany” segment includes, until 30 December 2019, 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 liech-
tenstein 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, the German hospital liability business and the liechtenstein variable
annuities products.
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 “Bank” segment has been renamed “asset Management & Banking”. this was done simply to give the segment
a more accurate name, as it encompasses banking-related areas of asset management as well as the actual banking area.
the “other activities” operating segment includes equity investment companies, real estate firms and financing companies.
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.
in the reporting period, there was a change of chief operating decision maker for variable annuities products, which are being
run off in liechtenstein. as a result, this business is no longer reported within the luxembourg segment (which also covers
liechtenstein) and is instead included in the Group business segment. the figures for the prior year have been restated accordingly.
in the Group business segment, 100 per cent of the london market run-off portfolio was reinsured. this portfolio mainly
consists of liability claims relating to asbestos and environmental damage. the transaction is structured in such a way that it will
lead to the full finality of the affected portfolio for Baloise.
the accounting policies applied to the presentation of the 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.
199
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
7.1 Segment reporting by strategic business unit
cHF million
Income
premiums earned and policy fees (gross)
Reinsurance premiums ceded
premiums earned and policy fees (net)
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2018
2019
2018
2019
2018
2019
2018
(restated)
2019
2018
(restated)
2019
2018
(restated)
2019
2018
2019
2018
4,073.9
– 89.9
3,984.1
4,758.5
– 80.9
4,677.6
1,191.7
– 105.2
1,086.5
1,167.2
– 88.4
1,078.8
1,250.8
– 114.7
1,136.0
1,421.8
– 137.6
1,284.3
213.6
– 18.7
194.9
213.1
– 18.4
194.8
6,730.0
– 328.6
6,401.5
7,560.6
– 325.3
7,235.3
126.9
– 0.4
126.5
118.3
– 23.9
94.5
– 119.9
– 107.7
119.9
0.0
107.7
0.0
6,737.0
– 209.0
6,528.0
7,571.3
– 241.5
7,329.8
investment income
871.0
816.8
246.5
197.7
240.5
226.8
22.8
21.2
1,380.7
1,262.5
3.8
3.4
– 8.5
– 8.8
1,376.0
1,257.0
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
– 10.4
– 43.9
60.4
0.0
144.9
5,005.9
– 43.0
0.0
128.4
73.3
75.4
3.5
115.3
5,890.2
– 44.0
1.3
138.1
– 167.7
22.9
6.2
46.8
136.1
359.1
13.0
7.3
38.2
– 17.1
– 38.4
3.5
–
41.0
95.7
85.8
3.8
–
47.4
1,379.2
1,830.1
1,365.5
1,743.8
– 527.4
1,414.1
7,223.3
10,878.1
7,276.6
10,996.9
45.7
6.2
32.3
7.3
37.8
–
39.1
–
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
– 3,876.6
– 4,142.3
– 1,062.9
227.5
33.6
– 47.3
– 353.5
21.8
– 55.7
– 457.1
– 456.3
– 52.9
– 0.3
– 0.4
– 59.4
– 0.3
– 66.7
179.2
52.3
– 201.6
– 173.3
– 26.4
– 19.0
– 14.9
– 278.3
– 277.7
– 106.5
– 904.4
– 484.6
25.2
– 169.4
– 170.4
– 26.3
– 16.6
– 2.3
– 61.0
– 804.0
– 905.2
– 143.6
– 119.0
– 5,887.1
– 6,070.8
– 5,904.4
– 6,090.4
41.9
54.1
– 263.6
– 119.8
– 15.5
– 0.1
– 11.1
– 48.4
– 93.3
99.3
– 305.5
– 122.2
– 15.6
– 0.4
– 142.9
– 62.8
– 4,451.7
– 5,390.0
– 1,373.2
– 1,809.9
– 1,166.5
– 1,548.5
Profit / loss before borrowing costs and taxes
554.2
500.2
Borrowing costs
Profit / loss before taxes
income taxes
Profit / loss for the period (segment result)
– 10.1
544.1
– 88.4
455.6
– 10.6
489.6
65.3
554.9
6.0
–
6.0
– 17.9
– 11.9
20.2
199.0
195.2
30.7
22.7
790.0
738.3
– 52.5
– 14.4
737.5
723.9
– 0.1
20.1
– 21.3
– 1.1
–
199.0
– 49.5
149.5
0.0
195.2
– 43.2
152.0
Segment assets as at 31.12.
45,409.1
46,789.2
12,792.3
12,884.6
10,591.9
14,302.8
11,650.5
12,765.1
80,443.9
86,741.7
2,342.7
2,863.0
– 1,931.8
– 2,586.9
80,854.8
87,017.8
200
2.8
8.3
113.3
– 786.0
1,125.9
– 1,036.1
368.4
1,644.2
– 17.2
– 51.7
– 32.3
65.3
96.1
– 1,087.8
336.1
1,709.5
170.4
170.2
– 151.5
– 157.5
– 267.9
– 257.2
– 63.6
– 223.6
223.6
– 56.6
– 223.0
223.0
24.7
–
13.4
3.9
–
10.7
9.3
– 21.8
– 55.2
– 1.7
– 0.2
778.8
– 18.2
558.1
–
30.7
– 4.3
26.4
21.2
–
42.7
6.8
–
– 52.8
17.5
– 22.8
– 59.6
– 2.0
– 0.2
– 1,112.6
111.5
6.2
246.2
44.3
6.2
459.2
149.4
– 534.4
– 805.3
– 96.5
– 19.6
752.4
113.3
10.8
243.6
34.2
8.7
– 984.2
163.9
– 553.5
– 808.5
– 103.3
– 17.5
– 1,324.6
– 0.1
22.6
– 4.4
18.2
– 10.1
779.8
– 160.2
619.7
– 10.8
727.5
– 3.5
724.0
45.1
276.9
–
–
– 84.9
– 47.4
2.1
– 2.8
– 4.1
– 7.4
0.2
40.2
– 225.3
– 329.4
– 29.7
– 82.2
– 14.5
– 96.7
40.7
341.8
–
–
– 93.2
30.6
23.6
– 2.5
– 6.2
– 6.7
0.0
– 72.4
– 229.5
– 356.2
– 26.9
– 41.4
6.9
– 34.5
–
–
–
–
–
–
–
–
–
67.6
0.6
– 68.2
1.4
– 1.4
21.7
0.2
8.6
193.1
223.6
–
–
–
–
–
–
–
–
–
73.7
– 3.1
– 70.6
1.3
– 1.3
18.6
0.3
9.0
195.2
223.0
130.4
6.2
227.6
–
6.2
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 39.9
697.6
– 174.7
522.9
– 39.9
– 451.3
– 441.4
– 1,391.4
– 6,433.3
– 10,139.8
– 483.6
– 475.7
– 6,539.1
– 10,273.0
Total
2019
126.0
10.8
227.7
–
8.7
– 956.7
117.0
– 554.6
– 816.0
– 91.4
– 17.2
– 1,388.0
– 37.7
686.2
3.3
689.5
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2018
2019
2018
2019
2018
2019
2018
(restated)
2019
2018
(restated)
2019
2018
(restated)
2019
2018
2019
2018
Total
2019
4,073.9
– 89.9
3,984.1
4,758.5
– 80.9
4,677.6
1,191.7
– 105.2
1,086.5
1,167.2
– 88.4
1,078.8
1,250.8
– 114.7
1,136.0
1,421.8
– 137.6
1,284.3
213.6
– 18.7
194.9
213.1
– 18.4
194.8
6,730.0
– 328.6
6,401.5
7,560.6
– 325.3
7,235.3
126.9
– 0.4
126.5
118.3
– 23.9
94.5
– 119.9
– 107.7
119.9
0.0
107.7
0.0
6,737.0
– 209.0
6,528.0
7,571.3
– 241.5
7,329.8
investment income
871.0
816.8
246.5
197.7
240.5
226.8
22.8
21.2
1,380.7
1,262.5
3.8
3.4
– 8.5
– 8.8
1,376.0
1,257.0
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
– 457.1
– 456.3
– 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
128.4
73.3
75.4
3.5
115.3
5,890.2
– 44.0
1.3
– 353.5
21.8
– 55.7
– 59.4
– 0.3
– 66.7
– 10.6
489.6
65.3
554.9
138.1
– 167.7
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
136.1
359.1
13.0
7.3
38.2
32.3
7.3
– 904.4
– 484.6
25.2
– 169.4
– 170.4
– 26.3
– 16.6
– 2.3
– 61.0
– 0.1
20.1
– 21.3
– 1.1
– 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
95.7
85.8
3.8
–
47.4
39.1
–
– 93.3
99.3
– 305.5
– 122.2
– 15.6
– 0.4
– 142.9
– 62.8
0.0
195.2
– 43.2
152.0
– 278.3
– 277.7
– 106.5
– 4,451.7
– 5,390.0
– 1,373.2
– 1,809.9
– 1,166.5
– 1,548.5
3.9
–
6.8
–
44.3
6.2
34.2
8.7
– 267.9
– 257.2
–
–
– 3,876.6
– 4,142.3
– 1,062.9
– 804.0
– 905.2
– 143.6
– 119.0
– 5,887.1
– 6,070.8
10.7
9.3
– 21.8
– 55.2
– 1.7
– 0.2
778.8
– 18.2
558.1
– 52.8
17.5
– 22.8
– 59.6
– 2.0
– 0.2
– 1,112.6
459.2
149.4
– 534.4
– 805.3
– 96.5
– 19.6
752.4
– 984.2
163.9
– 553.5
– 808.5
– 103.3
– 17.5
– 1,324.6
– 39.9
– 451.3
– 441.4
– 1,391.4
– 6,433.3
– 10,139.8
– 84.9
– 47.4
2.1
– 2.8
– 4.1
– 7.4
0.2
40.2
– 225.3
– 329.4
– 93.2
30.6
23.6
– 2.5
– 6.2
– 6.7
0.0
– 72.4
– 229.5
– 356.2
Profit / loss before borrowing costs and taxes
554.2
500.2
20.2
199.0
195.2
30.7
22.7
790.0
738.3
– 52.5
– 14.4
–
30.7
– 4.3
26.4
– 0.1
22.6
– 4.4
18.2
– 10.1
779.8
– 160.2
619.7
– 10.8
727.5
– 3.5
724.0
– 29.7
– 82.2
– 14.5
– 96.7
– 26.9
– 41.4
6.9
– 34.5
1,379.2
1,830.1
1,365.5
1,743.8
– 527.4
1,414.1
7,223.3
10,878.1
2.8
8.3
113.3
– 786.0
1,125.9
– 1,036.1
24.7
–
13.4
21.2
–
42.7
111.5
6.2
246.2
368.4
1,644.2
113.3
10.8
243.6
– 17.2
– 51.7
170.4
–
45.1
276.9
130.4
6.2
227.6
126.0
10.8
227.7
7,276.6
10,996.9
–
6.2
–
8.7
– 5,904.4
– 6,090.4
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 956.7
117.0
– 554.6
– 816.0
– 91.4
– 17.2
– 1,388.0
– 483.6
– 475.7
– 6,539.1
– 10,273.0
737.5
723.9
– 39.9
697.6
– 174.7
522.9
– 37.7
686.2
3.3
689.5
–
– 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
–
–
–
–
–
–
– 56.6
– 223.0
223.0
–
73.7
– 3.1
– 70.6
1.3
– 1.3
18.6
0.3
9.0
195.2
223.0
–
–
–
–
–
– 32.3
65.3
–
–
–
–
96.1
– 1,087.8
336.1
1,709.5
170.2
– 151.5
– 157.5
–
40.7
341.8
Segment assets as at 31.12.
45,409.1
46,789.2
12,792.3
12,884.6
10,591.9
14,302.8
11,650.5
12,765.1
80,443.9
86,741.7
2,342.7
2,863.0
– 1,931.8
– 2,586.9
80,854.8
87,017.8
201
Baloise Group annual Report 2019
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
2018
3,376.7
– 184.5
3,192.2
Non-Life
2019
3,511.0
– 214.9
3,296.1
2018
3,360.3
– 24.6
3,335.7
Life
2019
4,060.3
– 26.6
4,033.7
198.7
176.6
1,083.9
999.9
– 10.9
– 9.5
1,376.0
1,257.0
35.3
–
31.1
–
81.9
3,539.3
– 48.6
–
50.8
–
35.3
5.5
59.4
3,623.8
– 34.6
3.3
64.3
– 1,051.2
27.6
1.9
185.2
3,647.5
– 43.0
1.9
– 2,018.2
– 2,184.4
– 3,886.2
29.6
66.6
– 481.6
– 530.6
– 30.1
– 0.2
0.1
163.5
99.3
– 523.0
– 535.6
– 30.6
– 0.7
– 1.2
– 203.2
– 3,167.7
– 212.2
– 3,224.8
382.8
16.7
– 54.2
– 280.2
– 102.9
– 19.0
795.0
– 166.4
– 3,314.3
263.0
1,662.6
23.7
1.3
182.4
7,166.5
– 37.5
1.3
– 3,906.0
– 1,120.2
17.7
– 31.6
– 280.4
– 105.7
– 16.5
– 1,304.1
– 144.8
– 6,891.7
Profit / loss before borrowing costs and taxes
371.7
398.9
333.2
274.8
– 59.4
– 41.0
737.5
723.9
Borrowing costs
Profit / loss before taxes
income taxes
Profit / loss for the period (segment result)
–
371.7
– 70.4
301.3
– 0.4
398.5
– 34.2
364.3
– 10.1
323.0
– 61.1
261.9
– 10.3
264.5
51.8
316.3
202
Asset Management & Banking
Other activities
Eliminated
2018
2019
2018
2019
2018
2019
2018
101.2
– 2.0
–
164.7
–
5.3
269.2
– 87.0
–
–
–
–
–
–
–
–
–
–
– 31.5
– 113.5
– 177.2
92.1
–
92.1
– 18.3
73.8
86.6
17.4
163.8
13.7
281.5
– 88.3
–
–
–
–
–
–
–
–
–
–
–
–
– 35.9
– 116.4
– 190.4
91.1
0.0
91.1
– 13.5
77.6
–
–
–
3.1
– 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
–
–
–
3.3
5.0
46.9
163.8
4.0
16.4
239.4
– 153.9
4.0
–
–
–
–
–
0.0
– 0.7
– 56.4
– 223.3
– 280.4
– 26.9
– 67.9
– 0.9
– 68.8
– 261.0
– 260.6
– 62.3
– 334.2
334.2
– 44.2
– 314.3
314.3
96.1
– 1,087.8
336.1
1,709.5
7,276.6
10,996.9
– 5,904.4
– 6,090.4
Total
2019
7,571.3
– 241.5
7,329.8
126.0
10.8
227.7
–
8.7
– 956.7
117.0
– 554.6
– 816.0
– 91.4
– 17.2
– 1,388.0
– 475.7
– 37.7
686.2
3.3
689.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,737.0
– 209.0
6,528.0
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 32.2
– 38.0
– 1.4
84.3
83.5
11.1
238.8
334.2
9.7
221.1
314.3
– 6,539.1
– 10,273.0
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
198.7
176.6
1,083.9
999.9
Non-Life
2019
3,511.0
– 214.9
3,296.1
50.8
–
35.3
5.5
59.4
3,623.8
– 34.6
3.3
163.5
99.3
– 523.0
– 535.6
– 30.6
– 0.7
– 1.2
– 0.4
398.5
– 34.2
364.3
Life
2019
4,060.3
– 26.6
4,033.7
263.0
1,662.6
23.7
1.3
182.4
7,166.5
– 37.5
1.3
– 3,906.0
– 1,120.2
17.7
– 31.6
– 280.4
– 105.7
– 16.5
– 1,304.1
– 144.8
– 6,891.7
– 10.3
264.5
51.8
316.3
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
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
– 2,018.2
– 2,184.4
– 3,886.2
– 203.2
– 3,167.7
– 212.2
– 3,224.8
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
Profit / loss before borrowing costs and taxes
371.7
398.9
333.2
274.8
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
2018
2018
2018
2019
2018
2019
2018
2019
2018
Asset Management & Banking
Other activities
Eliminated
–
–
–
–
–
–
6,737.0
– 209.0
6,528.0
– 10.9
– 9.5
1,376.0
1,257.0
–
–
96.1
– 1,087.8
130.4
6.2
227.6
Total
2019
7,571.3
– 241.5
7,329.8
336.1
1,709.5
126.0
10.8
227.7
–
–
–
101.2
– 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
–
–
–
86.6
17.4
–
163.8
–
13.7
281.5
– 88.3
–
–
–
–
–
–
– 38.0
–
– 35.9
– 116.4
– 190.4
91.1
0.0
91.1
– 13.5
77.6
–
–
–
3.1
– 1.5
– 36.7
168.1
4.3
17.4
154.8
– 155.6
4.3
–
–
–
–
–
– 1.4
–
26.6
– 239.3
– 214.2
–
–
–
3.3
5.0
46.9
163.8
4.0
16.4
239.4
– 153.9
4.0
–
–
–
–
0.0
– 0.7
–
– 56.4
– 223.3
– 280.4
– 59.4
– 41.0
– 29.7
– 89.1
– 24.9
– 114.0
– 26.9
– 67.9
– 0.9
– 68.8
–
–
– 261.0
–
– 62.3
– 334.2
334.2
–
–
–
–
–
–
84.3
–
11.1
238.8
334.2
–
–
–
–
–
– 260.6
–
– 44.2
– 314.3
314.3
–
–
–
–
–
–
83.5
–
9.7
221.1
314.3
–
–
–
–
–
7,276.6
10,996.9
–
6.2
–
8.7
– 5,904.4
– 6,090.4
412.4
83.3
– 535.8
– 810.8
– 82.2
– 19.2
801.2
– 483.6
– 956.7
117.0
– 554.6
– 816.0
– 91.4
– 17.2
– 1,388.0
– 475.7
– 6,539.1
– 10,273.0
737.5
723.9
– 39.9
697.6
– 174.7
522.9
– 37.7
686.2
3.3
689.5
203
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
Notes to the consolidated balance sheet
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
–
– 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
8. PROPERTY, PLANT AND EQUIPMENT
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
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
Depreciation and impairment form part of other operating expenses.
–
–
– 0.1
–
– 0.6
56.0
57.4
– 1.5
56.0
204
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
Disposals
– 2.5
– 10.1
– 0.4
Land
Buildings
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Right-of-use
assets
56.0
–
2.3
187.6
4.1
5.4
32.1
8.1
12.8
–
–
–
–
–
–
21.2
2.3
1.0
– 0.8
–
– 0.4
–
21.5
16.4
0.4
– 0.4
–
0.4
–
52.9
7.5
0.4
– 0.8
– 0.4
–
–
Total
371.2
38.6
22.4
– 15.0
– 0.4
–
–
2019
cHF million
Balance as at 1 January (restated) 1
additions
additions arising from change
in the scope of consolidation
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
–
–
–
–
–
–
– 0.5
55.3
56.7
– 1.4
55.3
Depreciation and impairment form part of other operating expenses.
1 the reconciliation to the balance as at 1 January is shown in note 2.1.
– 7.6
– 7.2
– 5.8
– 10.1
– 16.3
– 47.1
–
–
– 4.6
174.7
456.6
– 281.9
174.7
–
–
– 0.5
45.0
111.9
– 66.9
45.0
–
–
– 0.4
17.0
68.9
– 51.9
17.0
–
–
– 0.3
28.1
86.6
– 58.6
28.1
–
–
– 0.5
42.8
58.9
– 16.1
42.8
–
–
– 6.8
362.8
839.6
– 476.8
362.8
205
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
9.
INTANGIBLE ASSETS
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
accumulated amortisation
and impairment
Balance as at 31 December 1
Segment as at 31 December 2018
Switzerland
Germany
Belgium
luxembourg
Group business
Total for geographic regions
Present value
of gains on
insurance
contracts
acquired
Goodwill
Deferred
acquisition
cost
(life)
Deferred
acquisition
cost
(non-life)
Other
intangible
assets
Internally
developed
intangible
assets
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
–
–
–
–
–
0.0
–
–
–
–
–
–
–
–
– 2.3
78.9
244.0
– 165.1
–
–
–
–
–
–
–
– 0.9
–
–
–
–
–
– 0.2
5.6
–
–
–
–
–
–
– 52.6
1.9
–
–
–
21.5
– 21.4
661.1
–
–
– 253.9
– 33.9
– 0.1
– 341.3
–
–
–
– 1.7
–
– 4.1
147.8
–
–
–
–
–
–
–
– 4.1
147.8
542.2
–
–
–
–
–
–
0.1
1.1
– 394.4
– 1.0
1.9
–
–
– 1.7
21.5
– 32.1
1,041.2
–
–
78.9
5.6
661.1
147.8
147.8
0.1
1,041.2
21.8
16.3
16.9
23.9
0.0
78.9
–
5.6
–
–
–
110.0
523.7
19.9
7.5
–
44.2
38.3
60.5
4.4
0.3
33.2
0.4
76.6
17.6
20.0
5.6
661.1
147.8
147.8
–
–
–
–
0.1
0.1
209.2
584.4
173.9
53.4
20.4
1,041.2
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
206
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
2019
cHF million
Balance as at 1 January
additions arising from change
in the scope of consolidation
additions
capitalisation of acquisition costs
Disposals
Disposals arising from change
in the scope of consolidation
Reclassification
Reclassification to non-current assets
classified as held for sale
amortisation and impairment
amortisation
Write-ups
impairment losses recognised
in profit or loss
Reversal of impairment losses
recognised in profit or loss
changes due to impending losses
change due to unrealised gains
and losses on financial instruments
(shadow accounting)
exchange differences
Balance as at 31 December
acquisition costs
accumulated amortisation
and impairment
Balance as at 31 December 1
Segment as at 31 December 2019
Switzerland
Germany
Belgium
luxembourg
Group business
Total for geographic regions
Present value
of gains on
insurance
contracts
acquired
Deferred
acquisition
cost
(life)
Deferred
acquisition
cost
(non-life)
Other
intangible
assets
Internally
developed
intangible
assets
5.6
661.1
147.8
–
–
258.3
–
– 0.7
–
–
147.8
42.4
47.1
–
– 0.2
–
–
–
0.1
–
0.0
–
–
–
–
–
Total
1,041.2
42.4
50.9
354.8
– 0.2
– 25.0
–
–
– 261.0
– 42.8
– 0.1
– 322.2
–
–
–
0.8
–
– 3.8
141.4
–
–
–
–
–
–
–
– 4.9
189.5
598.4
–
–
–
–
–
–
0.1
1.1
– 409.0
– 1.0
2.1
–
–
– 9.1
– 69.2
– 30.9
1,034.7
–
–
–
–
–
–
–
–
–
– 0.8
–
–
–
–
–
– 0.2
4.6
–
–
–
–
96.5
–
– 24.3
–
–
– 17.5
2.1
–
–
– 10.0
– 69.2
– 20.1
618.5
–
–
Goodwill
78.9
–
3.8
–
–
–
–
–
–
–
–
–
–
–
– 2.0
80.6
245.8
– 165.1
80.6
4.6
618.5
141.4
189.5
0.1
1,034.7
25.6
15.8
16.3
23.0
–
80.6
–
4.6
–
–
–
68.2
538.6
9.2
2.4
–
37.9
41.2
57.9
4.4
0.0
4.6
618.5
141.4
34.1
0.5
105.0
15.0
34.9
189.5
–
–
–
–
0.1
0.1
165.8
600.6
188.4
44.8
35.0
1,034.7
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
207
Baloise Group annual Report 2019
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).
Basler Versicherung 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
2018
21.8
14.3
7.1
16.2
15.6
2019
25.6
13.8
6.9
15.6
15.1
2018
2019
2018
2019
7.8
7.1
7.0
7.0
7.0
7.8
6.8
7.0
7.0
7.0
1.5
1.0
2.5
2.5
2.6
1.5
1.0
2.5
2.5
2.6
the impairment test in 2019 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 2019 or in 2018, to the carrying amount of an entity being significantly higher than its recoverable value.
208
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
10. 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
11. FINANCIAL ASSETS
cHF million
Financial assets of an equity nature
available for sale
Recognised at fair value through profit or loss
Financial assets of a debt nature
Held to maturity
available for sale
Recognised at fair value through profit or loss
Financial assets for own account and at own risk
Financial assets for the account and at the risk of life insurance policyholders and third parties
Recognised at fair value through profit or loss 1
Financial assets as reported on the balance sheet
2018
2019
7,480.3
407.5
–
7,904.0
452.3
19.8
– 69.6
– 423.3
–
23.3
–
111.7
– 49.3
–
–
–
216.9
– 49.5
7,904.0
8,120.1
95.8
–
84.6
–
31.12.2018
31.12.2019
3,657.0
331.3
4,351.1
328.3
8,002.5
7,475.5
23,771.4
27,101.5
24.8
10.6
35,786.9
39,267.0
12,126.1
47,913.0
13,714.9
52,982.0
1 of which financial assets totalling cHF 168.6 million (2018: cHF 207.1 million) involved insurance policies that had not been fully reviewed by the balance sheet date.
209
Baloise Group annual Report 2019
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
Trading portfolio
Designated
Recognised at fair value
through profit or loss
Total
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
–
–
–
–
–
–
8,002.5
7,475.5
–
–
–
–
–
–
8,002.5
7,475.5
23,771.4
27,101.5
10.6
31,798.7
34,587.6
1,861.1
1,795.9
3,657.0
22,356.3
15.1
1,400.0
–
2,493.9
1,857.3
4,351.1
25,344.5
138.6
1,618.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
298.8
32.5
331.3
0.1
24.7
–
–
24.8
283.3
45.0
328.3
0.1
10.5
–
–
2,159.9
1,828.4
3,988.2
30,358.9
39.8
1,400.0
–
2,777.2
1,902.3
4,679.4
32,820.1
149.1
1,618.4
–
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 2019
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
Trading portfolio
Designated
Recognised at fair value
through profit or loss
Total
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
–
–
–
–
–
–
–
–
–
–
–
–
8,002.5
7,475.5
1,861.1
1,795.9
3,657.0
22,356.3
15.1
1,400.0
–
2,493.9
1,857.3
4,351.1
25,344.5
138.6
1,618.4
–
8,002.5
7,475.5
23,771.4
27,101.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
298.8
32.5
331.3
0.1
24.7
–
–
24.8
283.3
45.0
328.3
0.1
10.5
–
–
2,159.9
1,828.4
3,988.2
30,358.9
39.8
1,400.0
–
2,777.2
1,902.3
4,679.4
32,820.1
149.1
1,618.4
–
10.6
31,798.7
34,587.6
211
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
as at 31.12.
cHF million
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
Trading portfolio
Designated
Recognised at fair value
through profit or loss
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,079.9
6,637.3
8.0
904.6
10.0
1.6
826.6
10.0
Financial assets of a debt nature
8,002.5
7,475.5
23,771.4
27,101.5
10.6
31,798.7
34,587.6
Total
8,002.5
7,475.5
27,428.4
31,452.6
356.0
338.9
35,786.9
39,267.0
Secured financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
other
Total
11.3
–
857.0
–
868.2
10.9
–
779.0
–
789.8
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or a government
bond has been securitised as collateral.
3,657.0
4,351.1
331.3
328.3
3,988.2
4,679.4
1,700.2
2,095.1
1,700.2
2,095.1
75.0
27.8
88.9
611.4
783.0
370.6
61.7
246.3
173.2
672.0
910.0
192.8
11,343.1
6,647.4
5,780.9
–
12,964.0
7,079.5
7,058.0
–
354.7
1,311.3
4,162.3
–
212.7
2,058.3
4,608.5
–
5,828.4
6,879.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29.0
295.8
6.5
0.0
–
–
15.0
9.7
–
–
24.8
–
–
–
–
–
Total
84.3
536.3
188.9
672.0
910.0
192.8
104.0
323.6
95.4
611.4
783.0
370.6
0.1
18,438.0
19,601.4
6,655.4
6,695.2
10.0
7,081.1
7,895.1
10.0
366.0
1,311.3
5,019.3
–
223.5
2,058.3
5,387.5
–
6,696.6
7,669.4
–
22.7
290.0
15.7
0.0
10.5
–
–
–
–
–
–
–
–
–
212
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
Held to maturity
Available for sale
Trading portfolio
Designated
Recognised at fair value
through profit or loss
Total
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
1,700.2
2,095.1
75.0
27.8
88.9
611.4
783.0
370.6
61.7
246.3
173.2
672.0
910.0
192.8
3,657.0
4,351.1
11,343.1
6,647.4
5,780.9
–
12,964.0
7,079.5
7,058.0
–
Financial assets of a debt nature
8,002.5
7,475.5
23,771.4
27,101.5
8,002.5
7,475.5
27,428.4
31,452.6
868.2
789.8
5,828.4
6,879.6
354.7
1,311.3
4,162.3
–
212.7
2,058.3
4,608.5
–
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or a government
bond has been securitised as collateral.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29.0
295.8
6.5
0.0
–
–
–
22.7
290.0
15.7
0.0
–
–
1,700.2
2,095.1
104.0
323.6
95.4
611.4
783.0
370.6
84.3
536.3
188.9
672.0
910.0
192.8
331.3
328.3
3,988.2
4,679.4
15.0
–
9.7
–
24.8
0.1
–
10.5
–
10.6
18,438.0
19,601.4
6,655.4
6,695.2
10.0
7,081.1
7,895.1
10.0
31,798.7
34,587.6
356.0
338.9
35,786.9
39,267.0
–
–
–
–
–
–
–
–
–
–
366.0
1,311.3
5,019.3
–
223.5
2,058.3
5,387.5
–
6,696.6
7,669.4
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
as at 31.12.
cHF million
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
Total
other
Total
Secured financial assets of a debt nature
public corporations
industrial enterprises
Financial institutions
–
–
–
–
–
–
–
–
–
–
7,079.9
6,637.3
8.0
904.6
10.0
1.6
826.6
10.0
11.3
10.9
857.0
779.0
–
–
–
–
–
–
–
–
–
–
FAIR VALUE OF FINANCIAL ASSETS CLASSIFIED AS HELD TO MATURIT Y
as at 31.12.
cHF million
public corporations
industrial enterprises
Financial institutions
other
Total
Carrying amount
Fair value
2018
2019
2018
2019
7,079.9
6,637.3
8,356.9
8,197.0
8.0
904.6
10.0
1.6
826.6
10.0
8.2
978.0
10.8
1.8
911.2
10.8
8,002.5
7,475.5
9,353.8
9,120.7
213
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
12. 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
2018
2019
2018
2019
2018
2019
2018
2019
9,818.1
10,048.9
– 18.8
– 18.6
9,799.3
10,030.3
10,202.2
10,483.8
132.2
4,322.5
952.0
28.2
–
137.0
4,307.8
1,053.5
27.8
–
–
–
–
0.0
–
–
–
–
0.0
–
132.2
4,322.5
952.0
28.2
–
137.0
4,307.8
1,053.5
27.8
–
140.5
4,649.4
952.0
28.7
–
147.0
4,714.2
1,053.7
28.3
–
245.0
225.7
15,498.0
15,800.9
– 8.7
– 27.5
– 8.4
– 27.0
236.3
217.4
243.4
223.0
15,470.5
15,773.9
16,216.3
16,649.9
925.7
0.1
925.8
1,039.0
0.1
1,039.1
–
–
–
–
–
–
925.7
0.1
925.8
1,039.0
0.1
1,039.1
925.7
0.1
925.8
1,039.0
0.1
1,039.1
Mortgages and loans
16,423.8
16,840.0
– 27.5
– 27.0
16,396.2
16,812.9
17,142.1
17,689.0
214
Baloise Group annual Report 2019
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
13. 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
2018
2019
– 32.9
– 27.5
5.4
2.9
– 3.3
–
–
–
0.4
– 27.5
0.6
1.2
– 1.6
–
–
–
0.3
– 27.0
Fair value assets
Fair value liabilities
2018
2019
2018
2019
453.9
460.9
469.7
578.4
116.7
0.7
117.5
–
Derivative financial instruments as reported on the balance sheet
914.8
1,048.1
117.3
117.5
215
Baloise Group annual Report 2019
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
2018
2019
2018
2019
2018
2019
–
–
1,254.8
1,273.8
56.3
1.6
–
–
–
2.6
–
–
–
58.8
20.4
–
57.4
–
205.5
263.6
–
–
–
–
–
71.2
–
29.7
–
–
–
72.1
–
25.3
–
–
1,312.7
1,276.5
284.7
321.1
100.9
97.4
–
1,518.1
521.7
–
–
1,692.3
619.4
–
2,039.8
2,311.7
–
50.7
11.1
–
61.8
–
28.1
4.7
–
32.8
8,197.4
7,837.9
105.1
115.4
–
–
871.4
1,040.3
–
–
–
–
–
2.3
–
–
–
0.4
–
–
9,068.8
8,878.1
107.4
115.8
–
–
7.7
–
7.7
5.7
–
2.3
–
–
8.1
–
8.4
4.1
–
12.5
7.3
–
0.3
–
–
7.6
12,421.3
12,466.3
453.9
469.7
116.7
117.5
–
–
–
–
–
–
–
–
1,764.3
1,609.7
14.5
31.7
–
–
0.5
–
–
5.3
the contract value or notional amount is used for derivative financial instruments whose principal may be swapped at maturity
(options, futures and currency swaps) and for instruments whose principal is only nominally lent or borrowed (interest rate swaps).
the contract value or notional amount is disclosed in order to express the aggregate amount of derivative transactions in which
the Baloise Group is involved.
216
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
14. RECEIVABLES
as at 31.12.
cHF million
Receivables carried
at cost
Receivables from financial
contracts
Receivables from
investments
other receivables
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
15. 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
Gross amount
Impairment
Carrying amount
Fair value
2018
2019
2018
2019
2018
2019
2018
2019
–
–
408.2
376.9
327.0
735.2
281.4
658.3
–
– 1.2
– 1.3
– 2.5
–
–
–
–
–
– 1.3
406.9
375.7
406.9
375.7
– 1.5
– 2.7
325.7
732.7
279.9
655.6
327.9
734.8
281.9
657.6
2018
2019
– 2.2
0.2
1.0
– 1.5
–
–
0.0
– 2.5
– 2.5
0.2
1.0
– 1.5
–
–
0.0
– 2.7
2018
2019
468.3
1.4
– 74.7
78.5
–
–
–
– 16.2
457.2
457.2
– 2.1
– 84.2
114.2
109.4
–
–
– 17.4
577.1
217
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
16. 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
2018
2019
11.3
1.0
– 0.3
–
–
– 0.5
11.6
27.0
151.3
– 147.5
–
–
– 0.4
30.5
– 0.1
–
0.1
– 0.1
–
–
0.0
– 0.1
11.6
1.0
– 0.2
–
–
– 0.4
11.9
30.5
82.2
– 83.1
10.2
–
– 0.5
39.3
– 0.1
–
0.1
0.0
–
–
0.0
0.0
Receivables from reinsurers as at 31 December
41.9
51.3
218
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17. EMPLOYEE BENEFITS
17.1 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
2018
2019
2018
2019
7.3
6.3
–
–
–
–
–
–
–
–
87.9
–
79.8
–
1,099.7
1,183.6
27.8
5.3
27.1
3.5
7.3
6.3
1,220.7
1,294.1
17.2 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 2019
Financial Report
notes to the consolidated annual financial statements
17.2.1 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
17.2.2 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
2018
2019
2,538.4
2,514.3
12.7
– 4.6
33.1
– 0.5
62.9
39.5
19.5
148.2
47.7
– 1.2
64.6
39.2
– 167.4
– 147.7
–
–
–
–
–
27.1
–
–
2,514.3
2,711.7
2018
2019
– 2,929.0
– 2,821.6
– 89.9
– 14.5
– 33.1
113.6
–
– 36.8
0.7
–
167.4
–
–
–
– 91.2
– 22.0
– 47.7
– 166.0
15.8
– 22.5
1.6
1.7
147.7
– 42.4
–
–
– 2,821.6
– 3,046.7
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17.2.3 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
17.2.4 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
2018
2019
– 852.1
– 792.4
– 16.4
– 11.6
–
15.5
– 5.2
15.2
30.3
– 0.1
32.4
– 0.4
–
–
– 14.2
– 12.0
–
– 90.7
– 2.1
– 1.2
29.1
– 1.1
35.9
–
–
–
– 792.4
– 848.6
31.12.2018
31.12.2019
2,514.3
2,711.7
– 2,821.6
– 3,046.7
– 792.4
– 848.6
–
–
– 1,099.7
– 1,183.6
221
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17.2.5 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)
of which: real estate leased to the Baloise Group
the line item ‘equities and investment funds’ predominantly consists of fixed-income funds.
17.2.6 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
31.12.2018
31.12.2019
36.7
529.1
39.7
554.5
1,309.3
187.7
1,393.6
228.7
95.5
–
358.3
0.0
– 2.7
0.3
96.5
–
371.3
–
– 4.2
31.5
2,514.3
2,711.7
34.5
–
35.0
–
2018
2019
– 106.2
– 105.4
40.2
– 13.4
– 0.1
–
–
39.2
– 14.6
0.6
–
–
Total expenses for defined benefit plans recognised in the income statement
– 79.5
– 80.1
222
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17.2.7 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
2018
2019
0.9
1.4
0.3
77.0
24.4
21.9
0.5
1.4
0.3
70.7
24.6
22.1
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.
17.2.8 Sensitivity analysis for liabilities under defined benefit plans
cHF million
total defined benefit obligation
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
31.12.2018
31.12.2019
3,614.0
3,895.3
– 261.0
– 284.0
283.3
28.3
– 36.7
188.0
– 38.6
– 93.0
91.5
10.4
308.6
31.0
– 38.9
206.5
– 49.1
– 101.8
101.7
16.3
the Baloise Group determines the sensitivities of liabilities under defined benefit plans by recalculating them using the same
models as used for the calculation of the effective value. in this calculation, only one parameter of the base scenario is changed.
possible interaction between individual parameters is not taken into consideration. the effect resulting from various parameters
occurring simultaneously may vary from the sum total of individually determined differences.
the sensitivity is only calculated for the liability. a possible simultaneous impact on plan assets is not investigated.
223
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17.2.9 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.
17.2.10 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 71.1 million for the 2020 financial year.
17.2.11 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 16.2 years.
17.3 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 2019 totalled
cHF 27.1 million (2018: cHF 27.8 million). there were no disposals of plan assets for long-term employee benefits. Benefits paid
out amounted to cHF 2.1 million (2018: cHF 3.1 million).
224
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17.4 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). these plans are equity-settled
remuneration programmes. the textual explanations of these individual compensation programs are contained in chapters 4,5
and 6 of the compensation Report.
there is also a phantom Stock option programme (pSop) at FRiDaY insurance S.a., which is a cash-settled remuneration
programme. it is explained in note 17.4.5.
in 2019, a sum of cHF 27.0 million (2018: cHF 24.0 million) was recognised as an expense in profit or loss in connection with
the following share-based payment plans. the most important quantitative information is listed in tabular form below.
17.4.1 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)
17.4.2 Share Subscription Plan
SHARE SUBSCRIPTION PLAN (SSP)
number of shares subscribed
Restricted until1
Subscription price per share (cHF)
Value of shares subscribed (cHF million)
Fair value of subscribed shares on subscription date (cHF million)
employees entitled to participate
participating employees
SSp portion of variable remuneration
2018
2019
186,489
192,501
31.08.2021
31.08.2022
76.00
14.2
27.8
3,254
2,130
87.6
88.50
17.0
32.5
3,301
2,218
86.8
2018
27,886
2019
28,082
28.02.2021
28.02.2022
140.58
129.42
3.9
4.2
960
109
16 %
3.6
4.6
961
121
17 %
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
2023 and 29 February 2024 respectively.
225
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
17.4.3 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.
2018
76,442
2019
84,328
28.02.2021
28.02.2022
140.80
125.44
10.8
11.4
931
93
7 %
10.6
13.7
933
111
7 %
17.4.4 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
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
PSUs granted
PSUs converted
Change in value
Date
Price (CHF) 1
Date
Multiplier
Price (CHF) 1
Value (CHF) 2
01.01.2008
109.50
01.01.2011
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
01.03.2019
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
130.70
149.20
162.50
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
01.03.2022
1.24
0.64
0.58
0.77
1.21
1.50
1.05
1.34
1.32
1.39 4
1.28 4
1.00 4
91.00
64.40
78.50
113.60
124.00
126.00
130.70
149.20
162.50
175.00 4
175.00 4
175.00 4
112.84
41.22
45.53
87.47
150.04
189.00
137.24
199.93
214.50
244.08 4
224.00 4
175.00 4
3
3 %
– 50 %
– 47 %
– 4 %
111 %
125 %
21 %
61 %
70 %
86 % 4
50 % 4
8 % 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 2008: ([{1.24*91.00} – 109.50] / 109.50) * 100 = 3 %.
4 interim measurement as at 31 December 2019.
226
Baloise Group annual Report 2019
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 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
of which: expired (departures in 2019)
number of active pSUs as at 31 December 2019
Value of allocated pSUs on issue date (cHF million)
pSU expense incurred by the Baloise Group for 2017 (cHF million)
pSU expense incurred by the Baloise Group for 2018 (cHF million)
pSU expense incurred by the Baloise Group for 2019 (cHF million)
Plan 2017
Plan 2018
Plan 2019
65
67
67
33,698
33,237
32,711
– 263
33,435
– 303
–
–
–
33,132
33,237
– 272
– 375
32,860
32,862
4.7
1.1
1.6
1.6
5.0
–
1.2
1.7
–
–
–
–
– 252
32,459
5.5
–
–
1.4
17.4.5 Phantom Stock Option Program
FRiDaY insurance S.a., a subsidiary of Bâloise luxembourg Holding S.a., offers its employees a phantom Stock option programme
(pSop). it was introduced in 2017. the phantom equity instruments allocated up to the end of March 2019 become vested over a
period of five years from the allocation date. the vesting period was shortened with effect from april 2019 and now runs from the
allocation date until 1 January 2023. the first cash payment will not be made until after 31 December 2021 and after the net value
of FRiDaY has been determined on a binding basis. the net cash payment of vested phantom equity instruments will be settled
in cash.
the fair value of the outstanding pSops is determined on every balance sheet date using a Black-Scholes model and recognised
in profit or loss during the vesting period. at the time of vesting, the pSops are measured at the net value of FRiDaY. the programme
does not have an upper cap. there was no cash settlement in 2019.
PHANTOM STOCK OPTION PROGRAM
participating employees
total liabilities arising from the allocated pSops (cHF million)
total liabilities arising from the vested pSops (cHF million)
pSop expense (cHF million)
2018
20
0.1
–
0.1
2019
40
0.5
0.1
0.4
227
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
18. DEFERRED INCOME TAXES
18.1 Deferred tax assets and liabilities
DEFERRED TA X ASSETS
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
2019
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
Reclassifica-
tion
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
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifica-
tion
in accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
34.7
25.2
94.1
68.4
6.6
568.0
726.0
132.9
55.9
37.3
1,749.1
3.0
– 2.4
–
– 7.2
– 1.8
– 94.4
281.5
71.6
– 5.3
– 0.7
244.3
–
–
6.2
–
–
–
–
–
–
–
6.2
0.0
–
–
0.0
–
– 1.1
–
–
–
24.0
22.9
–
–
–
–
–
–
–
–
–
–
–
– 1.3
0.0
– 1.6
– 1.0
– 0.1
– 12.4
– 32.2
– 4.8
– 1.7
– 1.0
36.4
22.8
98.7
60.2
4.7
460.1
975.3
199.7
49.0
59.6
– 56.1
1,966.4
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
DEFERRED TA X LIABILITIES
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
2019
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
3.8
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
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
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
5.2
– 0.7
13.4
– 8.9
– 35.2
– 57.4
– 15.4
–
–
–
–
–
–
–
–
169.5
– 0.4
233.4
– 15.1
119.0
–
–
1.1
170.6
0.0
0.4
– 1.1
–
–
–
–
0.0
–
–
0.0
– 0.7
–
–
–
–
–
–
–
–
–
–
–
–
– 0.1
– 0.2
– 7.5
– 0.4
– 2.7
– 0.1
– 1.4
– 6.4
0.0
– 45.9
– 0.2
– 64.8
7.8
5.5
235.1
49.9
329.1
23.9
51.9
327.3
0.9
1,728.9
47.2
2,807.5
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 2019
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notes to the consolidated annual financial statements
the Baloise Group had recognised deferred tax assets on tax loss carryforwards totalling cHF 215.4 million as at 31 December
2019 (31 December 2018: cHF 228.6 million) that will expire after five years or more.
the Baloise Group had a tax credit of cHF 126.1 million as at 31 December 2019 (31 December 2018: cHF 69.6 million) on which
no deferred tax assets had been recognised because the offsetting criteria were not met. in 2019, an amount of cHF 56.5 million was
reversed from the tax credit (2018: cHF 69.6 million) and cHF 13.1 million was offset.
no deferred tax assets had been recognised on tax loss carryforwards amounting to cHF 269.5 million as at 31 December 2019
(2018: cHF 170.3 million) because the relevant offsetting criteria had not been met. of this total, cHF 9.5 million will expire after
two to four years and cHF 260.0 million will expire after five years or more.
18.2 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
19. OTHER ASSETS
cHF million
Other assets carried at cost
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
230
31.12.2018
31.12.2019
1,749.1
1,966.4
– 2,583.5
– 2,807.5
– 834.4
73.5
– 907.8
– 841.1
97.4
– 938.5
31.12.2018
31.12.2019
34.0
27.7
52.8
97.0
43.9
– 6.5
248.9
54.1
54.1
46.8
51.2
52.0
68.0
39.4
– 7.0
250.4
70.3
70.3
303.0
320.7
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
20. NON-CURRENT ASSETS AND DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
in the first half of 2019, it was announced that investment properties held by Baloise life ltd and Basler insurance ltd would be
transferred to the Swiss property Fund. the transfer was executed in September 2019.
in the year under review, no other material events took place that satisfy the criteria for iFRS 5.
21. SHARE CAPITAL
2018
Balance as at 1 January
purchase / sale of treasury shares
capital increases
Share buy-back and cancellation
Balance as at 31 December
2019
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)
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
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
2,218,134
46,581,866
48,800,000
1,020,473
– 1,020,473
–
–
–
–
–
–
–
3,238,607
45,561,393
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 (2018: 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 for employee share ownership programmes.
the annual General Meeting held on 26 april 2019 voted to pay a gross dividend of cHF 6.00 per share for the 2018
financial year. this amounted to a total dividend distribution of cHF 292.8 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 278.6 million.
as at the balance sheet date (31 December 2019), a cumulative total of 2,434,075 shares in Bâloise Holding ltd had been
repurchased for a total amount of cHF 388.5 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.
231
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22. 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)
31.12.2018
31.12.2019
657.0
5,426.0
74.5
743.2
5,658.6
75.9
6,157.5
6,477.7
36,740.2
38,107.8
3,677.5
3,747.8
40,417.7
41,855.6
46,575.2
48,333.3
Technical reserves (life)
Technical reserves (gross)
22.1 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
31.12.2018
657.0
4,955.0
471.0
– 1.2
655.9
–
–
–
–
743.2
5,190.1
468.4
0.9
–
–
Net
31.12.2019
744.1
–
–
5,426.0
– 423.6
5,002.4
5,658.6
– 538.0
5,120.5
74.5
–
74.5
75.9
–
75.9
Total technical reserves (non-life)
6,157.5
– 424.8
5,732.7
6,477.7
– 537.1
5,940.6
232
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.1.1 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
31.12.2018
622.5
8.5
26.0
657.0
– 1.5
0.3
–
– 1.2
621.0
8.8
26.0
655.9
692.3
7.4
43.6
743.2
0.7
0.2
–
0.9
849.7
3,422.4
1,153.9
5,426.0
– 51.0
– 106.0
– 266.6
– 423.6
798.7
3,316.3
887.3
5,002.4
883.1
3,692.6
1,082.9
5,658.6
– 56.1
– 90.9
– 391.0
– 538.0
Net
31.12.2019
692.9
7.6
43.6
744.1
827.0
3,601.7
691.9
5,120.5
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.
22.1.2 Unearned premium reserves
cHF million
Balance as at 1 January
netted premiums
less: premiums earned
during the reporting period
additions arising from acquisition
of policy portfolios
and insurance companies
Disposals arising from sale of policy
portfolios and insurance companies
Reclassification to non-current assets
classified as held for sale
exchange differences
Balance as at 31 December
Gross
Reinsurance
assets
Gross
Reinsurance
assets
Net
2018
649.1
0.1
649.3
657.0
– 1.2
3,405.9
– 185.8
3,220.1
3,542.1
– 212.8
Net
2019
655.9
3,329.4
– 3,376.7
184.5
– 3,192.2
– 3,511.0
214.9
– 3,296.1
–
–
–
–
–
–
–
–
–
– 21.3
657.0
0.0
– 1.2
– 21.2
655.9
77.0
0.0
77.0
– 0.7
–
– 21.2
743.2
–
–
0.0
0.9
– 0.7
–
– 21.2
744.1
apart from the actual unearned premium reserves, this item includes health insurance reserves for old age and deferred unearned
premiums.
233
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.1.3 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
74.7
– 20.5
21.0
–
–
–
– 0.8
74.5
–
0.0
0.0
–
–
–
–
–
Net
2018
74.7
– 20.5
Gross
Reinsurance
assets
74.5
– 25.6
–
0.1
Net
2019
74.5
– 25.5
21.0
20.1
– 0.1
20.0
–
–
–
– 0.8
74.5
8.3
– 0.4
–
– 1.0
75.9
–
–
–
–
–
8.3
– 0.4
–
– 1.0
75.9
234
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.1.4 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)
2018
2019
5,595.0
– 438.3
5,156.7
5,426.0
– 423.6
5,002.4
2,036.9
– 135.8
1,901.1
2,081.7
– 180.1
1,901.6
– 991.8
– 960.3
– 1,060.4
– 1,046.1
– 1,952.0
– 2,106.5
–
–
– 103.3
– 103.3
425.4
–
– 102.4
323.0
5,002.4
5,120.5
423.6
538.0
5,426.0
5,658.6
the Baloise Group pays particular attention to cases of environmental pollution involving landfill sites, refuse, asbestos or any
other materials harmful to human beings or the environment.
the relevant net reserves included in the total amounted to cHF 9.4 million at the end of 2019 (2018: cHF 70.7 million).
the net reserves for the hospital liability business in Germany amount to cHF 258.7 million and are also included in the total.
235
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.2 Technical reserves (life)
cHF million
actuarial reserves from non-unit-linked life insurance contracts1
actuarial reserves from unit-linked life insurance contracts
Reserves for final policyholders’ dividends
Unearned revenue reserve
Structure of actuarial reserves (life)
policyholders’ dividends credited and provisions for future policyholders’ dividends
Total technical reserves (life)
1 the actuarial reserves include unearned premium reserves and claims reserves.
31.12.2018
31.12.2019
33,372.9
34,253.7
2,833.5
3,334.1
164.5
369.3
159.2
360.7
36,740.2
38,107.8
3,677.5
3,747.8
40,417.7
41,855.6
236
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.2.1 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
31.12.2018
31.12.2019
1,119.7
3,072.2
3,253.7
5,813.0
8,910.5
1,073.0
3,114.8
3,284.4
5,707.4
9,576.4
11,203.8
11,497.8
33,372.9
34,253.7
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
159.4
362.7
330.8
420.0
2,061.3
3,334.1
65.7
196.9
183.4
226.7
142.7
815.5
102.2
2,661.7
2,764.0
111.7
2,820.6
2,932.3
1 the Swiss pensions business is disclosed separately owing to its specific features. it comprises group contracts which may be cancelled annually by either party, whereas the coverage
period for the individuals enrolled is significantly longer.
all figures relating to maturities are based on the residual terms of contracts. the line item “no determinable residual term” mainly
comprises deferred and current annuities.
237
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.2.2 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
of which: for DpF business
of which: for non-DpF business
the actuarial reserves include unearned premium reserves and claims reserves.
the actuarial reserves for assumed business (inward reinsurance) as at 31 December 2019 came to cHF 11.4 million (31 December 2018: cHF 10.9 million).
22.2.3 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
Reclassification1
Reclassification to non-current assets classified as held for sale
exchange differences
Balance as at 31 December
2018
2019
34,328.1
33,372.9
– 576.7
–
–
–
726.5
511.9
– 2.3
–
– 378.5
– 355.2
33,372.9
34,253.7
33,092.1
33,759.7
280.9
494.0
2018
2019
3,108.1
276.3
– 200.3
– 6.3
– 257.8
–
–
–
–
2,833.5
274.5
– 228.9
– 6.1
477.9
1.1
– 47.1
113.1
–
– 86.4
– 84.0
2,833.5
3,334.1
1 insurance contracts previously recognised as unit-linked iaS 39 policies are now recognised as unit-linked iFRS 4 policies due to changes to the contractual provisions.
238
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.2.4 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
2018
2019
181.3
– 6.8
10.7
– 19.6
–
–
–
3.4
– 4.6
164.5
164.5
– 3.4
13.8
– 15.1
–
– 2.9
–
6.0
– 3.8
159.2
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.
22.2.5 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
2018
2019
390.7
18.6
– 25.9
0.4
–
–
–
– 14.5
369.3
369.3
16.8
8.8
– 1.6
–
– 19.6
–
– 12.9
360.7
239
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
22.2.6 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
Policyholders’ dividends credited and provisions for future policyholders’ dividends
as at 31 December
2018
2019
1,032.9
40.1
913.5
37.8
– 132.9
– 114.1
–
–
–
– 26.7
913.5
2,648.6
– 663.0
164.3
– 106.3
336.8
426.1
–
–
–
– 42.7
–
–
–
– 21.7
815.5
2,764.0
– 426.1
149.9
– 122.2
– 219.6
827.8
0.4
– 2.7
–
– 39.1
2,764.0
2,932.3
3,677.5
3,747.8
240
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
23. 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
other financial contracts
Sub-total
Carrying amount
Fair value
2018
2019
2018
2019
2,924.7
2,924.7
3,940.1
3,940.1
135.2
–
–
8.3
34.5
395.7
300.0
–
7.8
33.7
–
–
135.2
–
–
8.3
34.5
–
–
395.8
300.0
–
7.8
33.7
5,324.5
5,215.0
5,354.2
5,264.1
90.4
87.4
93.1
90.0
1,372.9
1,518.9
1,425.8
1,596.6
31.6
35.3
31.6
35.3
6,997.5
7,593.8
7,082.6
7,723.4
Recognised at fair value through profit or loss (designated)
other financial contracts
Sub-total
11,616.9
13,006.5
11,616.9
11,616.9
13,006.5
11,616.9
13,006.5
13,006.5
Total liabilities arising from banking business and financial contracts
21,539.0
24,540.4
–
–
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.
241
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
24. FINANCIAL LIABILITIES
cHF million
Senior debt
leasing liabilities
Total
24.1 Senior dept
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
2018
2019
1,744.5
2,325.0
–
43.0
1,744.5
2,368.0
2018
2019
1,742.9
–
–
–
–
39.9
– 35.9
– 2.4
1.5
1,744.5
754.5
–
754.5
– 175.0
37.0
– 38.1
2.1
1.0
1,744.5
2,325.0
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. on 25 September 2019, Bâloise Holding ltd issued four bonds (tranches a, B, c and D) totalling cHF 550 million
for the purpose of the general funding of liabilities, including the acquisition of Fidea nV.
242
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
TERMS & CONDITIONS GOVERNING DEBT OUTSTANDING
(BONDS BÂLOISE HOLDING LTD AND BALOISE LIFE LTD)
Issuer
Face value
(cHF million)
interest rate
Redemption value
Year of issue
Repayment date
iSin
Issuer
Face value
(cHF million)
interest rate
Redemption value
Year of issue
Repayment date
iSin
24.2 Leasing liabilities
cHF million
Balance as at 1 January 1
additions
additions arising from change in scope of consolidation
Disposals
Disposals arising from change in scope of consolidation
interests expenses
cash outflow due to redemption
exchange differences
Balance as at 31 December
Bâloise
Holding Ltd
Bâloise
Holding Ltd
Bâloise
Holding Ltd
Bâloise
Holding Ltd
Bâloise
Holding Ltd
300
250
150
225
150
Baloise
Life Ltd
300
2.875 %
3.000 %
2.000 %
1.750 %
1.125 %
1.750 %
100 %
2010
100 %
2011
100 %
2012
100 %
2013
100 %
2014
100 %
2017
14.10.2020
07.07.2021
12.10.2022
26.04.2023
19.12.2024
perpetual
cH0117683794
cH0131804616
cH0194695083
cH0200044821
cH0261399064
cH0379610998
Baloise
Life Ltd
200
Bâloise
Holding Ltd
Bâloise
Holding Ltd
Bâloise
Holding Ltd
Bâloise
Holding Ltd
Bâloise
Holding Ltd
200
200
100
125
125
2.200 %
0.500 %
0.000 %
0.000 %
0.000 %
variable
100 %
2017
100 %
2019
100 %
2019
100 %
2019
100 %
2019
100 %
2019
19.06.2048
28.11.2025
23.09.2022
25.09.2026
25.09.2029
25.03.2021
cH0379611004
cH0458097976
cH0496692960
cH0496692978
cH0496692986
cH0496692994
2019
52.9
7.5
0.4
– 0.9
– 0.4
0.7
– 16.7
– 0.5
43.0
243
the modified retrospective method was chosen for the first-time adoption of iFRS 16 leases, which is why the prior-year figures were not restated.
1 the reconciliation to the balance as at 1 January is shown in note 2.1.
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
25. 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
2018
5.8
43.2
49.0
23.4
–
–
–
–
–
–
–
–
–
–
–
–
40.3
0.7
–
–
Total
2019
63.7
0.7
–
–
21.5
12.5
34.0
7.3
15.1
22.4
– 0.7
– 2.6
–
– 0.7
23.4
– 11.0
– 4.1
–
– 0.3
40.3
– 11.7
– 6.7
–
– 1.0
63.7
– 0.2
– 11.3
–
– 0.7
18.5
– 18.8
– 2.6
–
– 0.2
34.4
– 19.0
– 13.9
–
– 0.9
52.9
the balance shown for other non-technical provisions includes typical amounts for legal advice and litigation risks. the restructuring
provisions largely relate to the German entities. the other non-technical provisions largely relate to the Swiss entities.
31.12.2018
31.12.2019
1,486.1
1,371.8
134.5
189.0
20.2
159.5
251.8
24.4
1,829.8
1,807.5
26. 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 2019
Financial Report
notes to the consolidated annual financial statements
Notes to the consolidated income statement
27. PREMIUMS EARNED AND POLICY FEES
cHF million
Gross premiums written and policy fees
change in unearned premium reserves
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Reinsurers’ share of change
in unearned premium reserves
Total premiums earned
and policy fees (net)
Non-Life
Life
3,405.9
– 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
Non-Life
Life
3,542.1
– 31.2
3,511.0
– 212.8
– 2.1
4,060.3
–
4,060.3
– 26.6
–
Total
2019
7,602.4
– 31.2
7,571.3
– 239.4
– 2.1
3,192.2
3,335.7
6,528.0
3,296.1
4,033.7
7,329.8
28. 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
2018
2019
276.6
282.6
145.6
1.4
206.9
477.7
1.8
254.9
12.0
– 0.9
112.3
1.9
192.5
428.4
1.1
225.5
13.7
– 0.9
1,376.0
1,257.0
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 (2018: cHF 2.4 million).
245
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
29. REALISED GAINS AND LOSSES ON INVESTMENTS
29.1 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.
246
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
2019
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
395.5
–
–
–
–
395.5
– 178.6
–
–
–
–
–
–
357.4
27.7
–
385.1
–
–
– 84.5
– 1.8
–
–
0.0
202.0
1.2
–
203.2
–
– 53.8
– 209.6
– 0.9
–
– 178.6
– 86.3
– 264.3
–
–
–
–
–
–
–
–
–
– 63.2
– 18.4
–
–
–
–
–
–
–
–
– 63.2
– 18.4
–
–
–
19.6
77.5
97.2
–
–
–
– 11.9
– 2.3
– 14.2
–
–
– 1.6
–
–
1.2
– 0.4
Total
395.5
0.0
559.4
489.8
77.5
–
–
–
441.3
–
441.3
1,522.2
–
–
–
– 560.7
–
– 178.6
– 53.8
– 294.1
– 575.3
– 2.3
– 560.7
– 1,104.2
–
–
–
–
–
–
–
–
– 81.6
– 1.6
–
–
1.2
– 82.0
Total realised gains and losses on investments
216.9
235.6
– 79.5
82.6
– 119.4
336.1
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 2019
Financial Report
notes to the consolidated annual financial statements
29.2 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
2018
2019
– 80.0
– 52.7
–
0.0
0.0
–
– 10.3
– 3.6
– 93.8
–
–
–
–
–
–
– 0.1
–
0.0
– 9.7
– 0.6
– 63.2
–
– 8.9
– 9.6
–
– 18.4
– 2.8
– 1.5
–
–
–
–
–
–
–
–
–
–
– 0.6
– 3.3
0.0
– 1.6
Total impairment losses on financial assets recognised in profit or loss
– 97.2
– 83.2
29.3 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 221.8 million was reported for 2019 (2018: loss of cHF 129.5 million).
a gross currency loss of cHF 78.4 million was recognised directly in equity for the reporting year (2018: loss of cHF 65.1 million).
allowing for hedges of a net investment in a foreign operation (hedge accounting), a net loss of cHF 62.1 million was recognised
for 2019 (2018: net loss of cHF 72.8 million).
248
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
30. INCOME FROM SERVICES RENDERED
cHF million
asset management
Services
Banking services
investment management
Income from services rendered
31. OTHER OPERATING INCOME
cHF million
interest income from insurance and reinsurance receivables
other interest income
Gains on the sale of property, plant and equipment
negative Goodwill
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
2018
2019
52.1
25.0
41.2
12.2
47.6
25.0
37.7
15.7
130.4
126.0
2018
2019
14.6
0.5
1.4
0.0
50.0
4.1
6.4
65.3
85.3
227.6
11.2
0.3
6.0
25.5
13.4
5.9
5.9
42.8
116.6
227.7
249
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
32. 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 maintenance, repairs and rent for short-term and low value leases 1
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 2
Total
1 incl. rent for operating leases pursuant to iaS 17 for 2018.
2 this includes changes in deferred acquisition costs recognised in profit or loss, as shown in table 9.
33. PERSONNEL EXPENSES
total personnel expenses for 2019 came to cHF 936.1 million (2018: cHF 890.3 million).
2018
2019
– 776.7
– 813.9
– 45.7
– 32.4
– 34.9
– 66.6
– 43.4
– 6.8
– 59.9
– 47.1
– 43.7
– 72.7
– 19.5
– 6.3
– 606.9
– 642.4
– 12.0
– 1.2
–
– 66.9
– 218.9
– 11.7
– 7.8
–
– 43.4
– 169.4
– 1,912.4
– 1,937.7
250
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
34. GAINS OR LOSSES ON FINANCIAL CONTRACTS
cHF million
With discretionary participation features (DPFs)
Financial contracts with discretionary participation features (DpFs)
Sub-total
Measured at amortised cost
interest on loans
interest due
interest arising from banking business
interest expenses on repurchase agreements
acquisition costs in banking business
expenses arising from financial contracts
Sub-total
Recognised at fair value through profit or loss (designated)
change in fair value of other financial contracts
Sub-total
Total gains or losses on financial contracts
Of which: gains on interest rate hedging instruments
interest rate swaps: cash flow hedges, balance carried forward from cash flow hedge reserves
interest rate swaps: fair value hedges
Total gains on interest rate hedging instruments
2018
2019
– 49.0
– 49.0
0.0
– 9.6
– 5.3
6.6
– 15.1
– 10.6
– 34.1
– 60.2
– 60.2
0.0
– 11.6
0.2
3.1
– 7.6
– 8.9
– 24.8
884.3
884.3
– 1,303.0
– 1,303.0
801.2
– 1,388.0
–
–
–
–
–
–
251
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notes to the consolidated annual financial statements
35. INCOME TAXES
35.1 Current and deferred income taxes
in 2019, the positive non-recurring effect of changes to tax rates had a significant impact on deferred income taxes. the changes
to the tax rates for companies in Switzerland and luxembourg led to non-recurring deferred tax income totalling cHF 148.6 million.
in Switzerland, the cantonal lowering of income tax rates resulted in non-recurring deferred tax income totalling cHF 148.5 million,
of which cHF 142.6 million was attributable to the Switzerland segment and cHF 5.9 million to the Group business segment.
in luxembourg, the reduction in corporation tax in 2019 led to non-recurring deferred tax income of cHF 0.1 million.
cHF million
current income taxes
Deferred income taxes
Total current and deferred income taxes
2018
2019
– 104.0
– 70.7
– 174.7
– 122.0
125.3
3.3
35.2 Expected and current income taxes
the expected average tax rate for the Baloise Group was 20.7 per cent in 2018 and 15.8 per cent in 2019. these rates correspond
to the weighted average tax rates in those countries where the Baloise Group operates. the reasons for the change in the expected
average tax rate are, firstly, the segment-specific allocation of profit and, secondly, the changed tax rates.
cHF million
profit before taxes
expected average tax rate (per cent)
Expected income taxes
Increase / reduction owing to
tax-exempt profits and losses
non-tax-effective negative goodwill
non-deductible expenses
withholding taxes on dividends
change in tax rate on recognized deferred tax items
application of different tax rates
change in unrecognised tax losses
tax items related to other reporting periods
non-taxable measurement differences
intercompany effects
other impacts
Current income taxes
2018
2019
697.6
20.65 %
– 144.1
686.2
15.78 %
– 108.3
18.3
–
– 6.7
– 0.9
–
– 1.7
– 20.1
3.2
– 9.4
– 16.4
3.0
– 174.7
20.5
6.4
– 11.8
– 0.7
148.6
– 13.6
– 11.2
11.6
– 12.3
– 16.7
– 9.1
3.3
in 2018 and 2019, the ‘other impacts’ item was heavily affected by the impairment of a tax credit and furthermore in 2018 by countervailing tax effects resulting from a real-estate portfolio
transaction.
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notes to the consolidated annual financial statements
36. 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)
average number of shares outstanding
adjustment due to theoretical exercise of share-based payment plans
Adjusted average number of shares outstanding
Diluted earnings per share (CHF)
2018
523.2
2019
694.2
46,979,421
46,219,774
11.14
15.02
2018
523.2
2019
694.2
46,979,421
46,219,774
61,603
76,832
47,041,024
46,296,606
11.12
14.99
the dilution of earnings was attributable to the performance Share Units (pSU) share-based payment plan.
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notes to the consolidated annual financial statements
37. OTHER COMPREHENSIVE INCOME
37.1 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
2018
2019
4.6
9.6
118.5
– 7.7
– 26.7
98.3
–
–
– 106.5
33.9
5.5
– 67.1
– 726.3
– 182.9
– 909.1
1,668.9
– 357.5
1,311.4
– 0.9
– 2.8
– 3.8
– 7.7
0.0
– 7.7
–
– 0.7
– 0.7
271.0
– 52.5
116.2
– 586.6
3.1
–
3.1
35.3
– 18.9
16.4
–
– 0.8
– 0.8
– 503.3
– 78.4
– 165.1
583.2
Total other comprehensive income
– 488.3
516.1
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notes to the consolidated annual financial statements
37.2 Income taxes on other comprehensive income
cHF million
Other comprehensive income before deferred income taxes
Deferred income taxes of Items not to be reclassified to the income statement
change in reserves arising from reclassification of investment property
change in reserves arising from assets and liabilities of post-employment benefits (defined benefit plans)
change arising from shadow accounting
change arising from exchange differences
additions and disposals arising from change in the scope of consolidation
Total deferred income taxes of items not to be reclassified to the income statement
Deferred income taxes on items to be reclassified to the income statement
available-for-sale financial assets
investments in associates
Hedging reserves for derivative financial instruments held as hedges of a net investment
in a foreign operation
Reserves arising from reclassification of held-to-maturity financial assets
change arising from shadow accounting
change arising from exchange differences
additions and disposals arising from change in the scope of consolidation
Total deferred income taxes of items to be reclassified
to the income statement
2018
2019
– 577.8
675.7
– 1.3
– 19.7
0.5
– 1.5
– 4.6
– 26.7
171.3
– 0.2
1.5
0.1
– 66.5
5.3
4.6
0.2
19.7
– 12.9
– 1.5
–
5.5
– 266.1
– 1.4
– 0.7
0.3
96.4
6.3
0.0
116.2
– 165.1
Other comprehensive income after deferred income taxes
– 488.3
516.1
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this page has been left empty on purpose.
256
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notes to the consolidated annual financial statements
Other disclosures
38. LONG-TERM EQUITY INVESTMENTS AND STRUCTURE OF THE BALOISE GROUP
38.1 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.
in 2018, no companies were acquired.
Cumulative
acquisitions
Cumulative
disposals
2018
2019
2018
2019
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,300.7
65.7
196.4
333.4
– 1,130.8
– 1,200.7
–
564.8
541.9
1.2
–
–
–
–
543.1
– 564.8
–
– 21.7
– 543.1
333.4
– 209.7
653.5
42.0
8.8
–
–
– 688.4
–
15.8
15.0
–
–
–
–
–
15.0
– 15.8
– 0.6
– 1.4
15.0
–
15.0
44.2
25.0
0.7
8.1
– 70.5
– 6.1
–
1.4
1.5
0.2
–
–
–
–
1.7
– 1.4
–
0.3
1.5
– 8.1
– 6.6
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.
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notes to the consolidated annual financial statements
in the year under review, the Baloise Group acquired the voting rights in Belgian multi-sector insurer Fidea nV, thereby consider-
ably strengthening its position in the Belgian market. the purchase price amounted to cHF 535.8 million. this acquisition resulted
in negative goodwill of cHF 25.5 million, which was recognised under other operating income.
the Baloise Group also expanded its ‘Home’ ecosystem in Switzerland by acquiring a number of companies.
the purchase price for the start-up Bubble Box aG, which offers an online platform for laundry and dry cleaning services,
amounted to cHF 2.3 million. of this amount, cHF 2.0 million was paid in cash and cHF 0.4 million was paid in other forms of
consideration. Goodwill of cHF 0.6 million was recognised in connection with the acquisition.
the purchase price for devis.ch Sa amounted to cHF 5.0 million, of which cHF 4.2 million was paid in cash and cHF 0.8 million
was paid in other forms of consideration. this transaction resulted in goodwill of cHF 3.2 million. devis.ch Sa operates a digital
marketplace for the services of tradespeople and cleaners.
in the year under review, the branches of Basler Sachversicherungs-aG and Basler lebensversicherungs-aG in the czech
Republic and Slovakia were sold. this disposal had no material impact on earnings in the consolidated financial statements.
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.
38.2 Changes to shareholdings
in 2019, there had been no transactions resulting in a change of control over a subsidiary.
258
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notes to the consolidated annual financial statements
38.3 Investments in associates
the Baloise Group holds investments in a number of non-significant associates.
2018 (restated)
cHF million
Total
2019
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
221.1
5.6
–
– 0.9
4.7
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
387.4
10.8
–
3.1
13.9
oVB is no longer reported separately as a significant associate, because the relevant criteria are no longer met. the figures for the prior year have been restated accordingly.
in Switzerland, a 20 per cent stake in infracore Sa, which operates in the healthcare property market, was purchased in 2018.
in the first half of 2019, Baloise Belgium acquired a further 12 per cent of the shares in infracore Sa, which temporarily took the
shareholding in this associate to 32 per cent. as a result of acquisitions that have partly been purchased using infracore Sa shares,
the shareholding had fallen to around 26 per cent as at the end of 2019.
in mid-May 2019, 28.2 per cent of the shares were acquired in central Real estate Holding aG, which invests in development
projects located in the central business districts of Swiss cities. this holding company’s first project is the acquisition by its
subsidiary central Real estate Basel aG of the roughly 160,000 square metre Klybeck site in Basel’s district of the same name.
in october 2019, the Baloise Group acquired 30 per cent of the shares in Swiss start-up Gowago aG, representing a further
investment in Baloise’s ‘Mobility’ ecosystem. the start-up’s online platform provides an easy way of comparing car leasing quotes.
as at 31 December 2019, 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.
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 2019 or 31 December 2018.
259
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notes to the consolidated annual financial statements
38.4 Significant subsidiaries
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
F
–
–
–
–
–
–
–
cHF
cHF
cHF
cHF
cHF
cHF
cHF
cHF
4.9
3,064.0
–
75.0
5,779.8
1,455.1
50.0 33,641.9
3,422.9
18.0
1.0
177.8
255.9
50.0
8,013.4
0.2
1.5
68.9
46.8
cHF
1.5
23.5
eUR
94.7
408.8
eUR
22.0
9,867.8
338.1
eUR
15.1
1,809.1
708.3
eUR
eUR
eUR
12.8
232.1
1.5
–
7.1
21.5
–
–
14.9
eUR
0.5
13.80
–
Baloise asset Management Schweiz aG, Basel
investment
31.12.2019
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
Baloise asset Management international aG,
Basel
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
Holding
non-life
life
Holding
other
Banking
other
manage-
ment
investment
consulting
o
nl
l
l
l
B
o
B
Holding
Holding
100.00
100.00
100.00
100.00
98.93
98.93
98.93
100.00
100.00
100.00
74.75
74.75
100.00
100.00
B
100.00
100.00
Holding
life
o
l
100.00
100.00
100.00
100.00
non-life
nl
100.00
100.00
Holding
other
non-life
o
o
100.00
100.00
100.00
100.00
nl
81.775
100.00
ZeUS Vermittlungsgesellschaft mbH, Hamburg
other
o
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.
5 no non-controlling interests are shown in equity in this context.
260
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notes to the consolidated annual financial statements
31.12.2019
Belgium
Baloise Belgium nV, antwerp
Fidea 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
segment 1
life and
non-life
life and
non-life
non-life
other
l / nl
100.00
100.00
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-
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
eUR
215.2 10,282.1
1,108.9
eUR
220.9
2,570.9
113.2
eUR
eUR
2.7
17.1
206.5
32.0
cHF
250.0
1,872.8
69.6
–
–
eUR
15.8
353.1
122.9
eUR
32.7
8,824.0
69.0
eUR
0.1
12.2
eUR
224.3
275.5
USD
0.0
704.7
USD
–
1,872.7
eUR
10.9
0.8
cHF
USD
7.5
0.0
2,807.0
35.3
–
–
–
–
–
0.0
–
261
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notes to the consolidated annual financial statements
39. RELATED PARTY TRANSACTIONS
in the course of its ordinary operating activities, the Baloise Group conducts transactions with associates, key management
personnel and related parties. 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
2018
2019
2018
2019
2018
2019
31.12.2018
31.12.2019
31.12.2018
31.12.2019
cHF million
associates
Key management personnel
–
0.1
–
0.1
1.6
0.0
0.1
0.0
– 26.8
– 10.8
– 3.1
– 12.5
–
8.4
–
9.3
– 2.8
–
–
–
EXECUTIVE MANAGEMENT TEAM REMUNERATION
cHF million
Short-term employee benefits
post-employment benefits
payments under share-based payment plans
Total
2018
2019
– 6.3
– 1.0
– 3.5
– 7.1
– 1.1
– 4.2
– 10.8
– 12.4
14,805 shares worth cHF 2.4 million were repurchased from members of the corporate executive committee in 2019 (2018:
cHF 2.3 million) under the Share participation plan (section 17.4.3).
40. CONTINGENT AND FUTURE LIABILITIES
40.1 Contingent liabilities
40.1.1 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 facts that materialised after the balance sheet date of 31 December 2019
and that could have a significant impact on the 2019 consolidated annual financial statements.
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notes to the consolidated annual financial statements
40.1.2 Guarantees and collateral for the benefit of third parties
the Baloise Group has issued guarantees and provided collateral to third parties. these include obligations – in contractually
specified cases – to make capital contributions or payments to increase the amount of equity, provide funds to cover principal
and interest payments when they fall due, and issue guarantees as part of its operating activities. the Baloise Group is not aware
of any cases of default that could trigger such guarantee payments.
in the normal course of its insurance business, the Baloise Group provided contractually binding collateral, mainly joint
collateral relating to insurance-backed construction guarantees, and professional and commercial surety bonds.
cHF million
Guarantees
collateral
Total guarantees and collateral for the benefit of third parties
CREDIT RATINGS OF GUARANTEES AND COLLATERAL
31.12.2018
31.12.2019
51.9
472.8
524.7
63.3
472.1
535.4
31.12.2018
cHF million
Guarantees
collateral
31.12.2019
cHF million
Guarantees
collateral
AAA
–
–
AAA
–
–
AA
–
–
AA
–
–
A
30.5
–
A
30.7
–
Lower than BBB
or no rating
BBB
–
0.1
21.4
472.7
Lower than BBB
or no rating
BBB
–
0.4
32.6
471.7
Total
51.9
472.8
Total
63.3
472.1
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notes to the consolidated annual financial statements
40.1.3 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
31.12.2018
31.12.2019
–
4,476.4
2,176.1
260.1
4,166.8
2,288.2
–
–
–
–
–
–
6,652.5
6,715.0
31.12.2018
31.12.2019
–
–
6,002.2
5,865.6
–
–
6,002.2
5,865.6
–
–
–
–
the Baloise Group engages in securities-lending transactions that may give rise to credit risk. collateral is required in order to
hedge these credit risks by more than covering the underlying value of the securities that are being lent (mainly bonds). the value
of the counterparty’s lending securities is regularly measured in order to minimise the credit risk involved. additional collateral
is immediately required if this value falls below the value of cover provided.
the Baloise Group retains control over the loaned securities throughout the term of its lending transactions. the income
received from securities lending is recognised in profit or loss.
264
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notes to the consolidated annual financial statements
40.2 Future liabilities
40.2.1 Capital commitments
cHF million
Commitments undertaken for future acquisition of
investment property
financial assets
property, plant and equipment
intangible assets
Total commitments undertaken
CREDIT RATINGS OF CAPITAL COMMITMENTS
31.12.2018
cHF million
capital commitments
31.12.2019
cHF million
capital commitments
31.12.2018
31.12.2019
490.1
766.8
–
–
350.2
666.6
–
–
1,256.9
1,016.8
AAA
117.4
AAA
61.5
AA
–
AA
–
A
Lower than BBB
or no rating
BBB
Total
110.9
–
1,028.6
1,256.9
A
86.4
Lower than BBB
or no rating
BBB
Total
–
868.9
1,016.8
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.
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notes to the consolidated annual financial statements
41. LEASES
41.1 The Baloise Group as a lessee
Generally, leases are entered into only if a purchase would be economically disadvantageous or is not possible. the Baloise Group
leases real estate for office space and warehousing that it recognises on its balance sheet. Right-of-use assets are recognised under
the line item ‘property, plant and equipment’ and the lease liabilities under ‘Financial liabilities’ on the balance sheet. the leases are
negotiated individually and contain a variety of different conditions to give the Baloise Group the maximum operational flexibility with
regard to the overall lease portfolio. as a rule, the leases are entered into for a term of two to five years. possible extension options
are factored into the measurement of lease liabilities, provided that it is sufficiently certain that the options will be exercised. any
non-leasing components within a lease are not treated separately. instead, they are also taken into account in the measurement of
the relevant lease liability.
low-value and short-term leases for operating equipment, parking spaces and other property, plant and equipment are expensed
in the income statement on a straight-line basis over the term of the lease. they are not recognised on the balance sheet.
DUE DATES OF UNDISCOUNTED LEASE LIABILITIES (IFRS 16)
cHF million
Due within one year
Due after one to three years
Due after three to five years
Due after five years or more
Total contractual cash flows
Book value lease liabilities
LEASING IN THE INCOME STATEMENT (IFRS 16)
cHF million
income relating to sublease contracts
expenses relating to leases of low-value and short-term leases
interests expenses on leasing liabilities
Depreciation and impairment of right-of-use assets
2019
17.6
20.3
5.9
0.6
44.4
43.0
2019
0.7
– 6.0
– 0.7
– 16.3
Leases that have not yet started
Bâloise assurances luxembourg S. a. has signed a binding lease with a third party for the rental of an office building in luxembourg.
according to the leasing arrangement, the office building is likely to be made available from June 2022 until 2037. the right-of-use
asset and lease liability for this lease are estimated to be cHF 44.3 million.
266
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
DUE DATES OF LEASE PAYMENTS (IAS 17)
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
the modified retrospective method was chosen for the first-time adoption of iFRS 16 leases, which is why the prior-year figures were not restated.
2018
– 18.3
– 33.2
– 3.5
– 55.1
– 19.5
0.0
– 19.5
0.5
0.5
267
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
41.2 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 LEASING INCOME (IFRS 16)
cHF million
Due within one year
Due after one to three years
Due after three to five years
Due after five years or more
Total
LEASING IN THE INCOME STATEMENT (IFRS 16)
cHF million
Fixed lease income
Variable lease income
Leasing income
DUE DATES OF CONTRACTUALLY STIPULATED LEASING INCOME (IAS 17)
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
2019
347.7
662.5
721.0
258.8
1,990.0
2019
364.5
–
364.5
2018
48.0
121.2
187.9
357.1
60.3
0.1
60.4
the modified retrospective method was chosen for the first-time adoption of iFRS 16 leases, which is why the prior-year figures were not restated. the prior-year figures consist of the
contractually stipulated leasing income from non-cancellable leases pursuant to iaS 17.56.
268
Baloise Group annual Report 2019
Financial Report
notes to the consolidated annual financial statements
42. CLAIM PAYMENTS RECEIVED FROM NON-GROUP INSURERS
the companies in the Baloise Group received claim payments totalling cHF 0.0 million in 2019 (2018: cHF 0.0 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.
43. EVENTS AFTER THE BALANCE SHEET DATE
We consider the developments in connection with the coronavirus pandemic to be a non-adjusting event as defined by iaS 10.
it is not possible to fully assess the pandemic’s financial impact on the Baloise Group at the present time. a general estimate of
the sensitivities can be found in note 5.6 “Management of market risk”.
By the time that these consolidated annual financial statements had been completed on 20 March 2020, we had not become
aware of any further events that would have a material impact on the consolidated annual financial statements as a whole.
269
Baloise Group annual Report 2019
Financial Report
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
Ernst & Young Ltd
Ernst & Young Ltd
P.O. Box
Aeschengraben 9
Aeschengraben 9
CH-4002 Basel
P.O. Box
P.O. Box
CH-4002 Basel
CH-4002 Basel
Phone:
Fax:
Phone:
Phone
www.ey.com/ch
Fax:
Fax
www.ey.com/ch
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
+41 58 286 86 86
+41 58 286 86 00
+41 58 286 86 86
+41 58 286 86 00
To the Annual General Meeting of
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Bâloise Holding Ltd, Basel
Basel, 20 March 2020
Basel, 20 March 2020
Basel, 22 March 2019
Report of the statutory auditor on the consolidated financial statements
Report of the statutory auditor on the consolidated financial statements
Report of the statutory auditor on the financial statements
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.
Opinion
Opinion
We have audited the consolidated financial statements (pages 118 - 269) of Bâloise Holding
We have audited the consolidated financial statements (pages 118 - 269) of Bâloise Holding
Ltd and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as at
As statutory auditor, we have audited the financial statements (pages 278 - 289) of Bâloise
Ltd and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as at
31 December 2019, the consolidated income statement, the consolidated statement of
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
31 December 2019, the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated cash flow statement, the consolidated statement of
ended 31 December 2019.
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
changes in equity for the year then ended, and the notes to the consolidated financial
statements, including a summary of significant accounting policies.
Board of Directors’ responsibility
statements, including a summary of significant accounting policies.
The Board of Directors is responsible for the preparation of the financial statements in
In our opinion the consolidated financial statements give a true and fair view of the
accordance with the requirements of Swiss law and the company’s articles of incorporation.
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 2019, and its consolidated
This responsibility includes designing, implementing and maintaining an internal control
consolidated financial position of the Group as at 31 December 2019, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance
system relevant to the preparation of financial statements that are free from material
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.
misstatement, whether due to fraud or error. The Board of Directors is further responsible for
with International Financial Reporting Standards (IFRS) and comply with Swiss law.
selecting and applying appropriate accounting policies and making accounting estimates that
Basis for opinion
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing
are reasonable in the circumstances.
We conducted our audit in accordance with Swiss law, International Standards on Auditing
(ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and
(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
standards are further described in the section Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements of our report.
Consolidated Financial Statements of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the
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
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
Professional Accountants, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
An audit involves performing procedures to obtain audit evidence about the amounts and
accordance with these requirements.
disclosures in the financial statements. The procedures selected depend on the auditor’s
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
judgement, including the assessment of the risks of material misstatement of the financial
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
statements, whether due to fraud or error. In making those risk assessments, the auditor
a basis for our opinion.
considers the internal control system relevant to the entity’s preparation of the financial
Key audit matters
statements in order to design audit procedures that are appropriate in the circumstances, but
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
Key audit matters are those matters that, in our professional judgement, were of most
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
significance in our audit of the consolidated financial statements of the current period. These
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
control system. An audit also includes evaluating the appropriateness of the accounting
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
policies used and the reasonableness of accounting estimates made, as well as evaluating
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
the overall presentation of the financial statements. We believe that the audit evidence we
these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
is provided in that context.
We have fulfilled the responsibilities described in the section Auditor’s responsibilities for the
Opinion
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
In our opinion, the financial statements for the year ended 31 December 2019 comply with
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
Swiss law and the company’s articles of incorporation.
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
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
Report on key audit matters based on the circular 1/2015 of the Federal Audit
procedures performed to address the matters below, provide the basis for our audit opinion
on the consolidated financial statements.
Oversight Authority
on the consolidated financial statements.
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
270
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basel
Phone:
+41 58 286 86 86
Fax:
+41 58 286 86 00
www.ey.com/ch
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Basel, 20 March 2020
Report of the statutory auditor on the consolidated financial statements
Opinion
We have audited the consolidated financial statements (pages 118 - 269) of Bâloise Holding
Ltd and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as at
31 December 2019, 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 2019, 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.
Baloise Group annual Report 2019
Financial Report
Report of the statutory auditor
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.
Valuation of claims reserves - non-life
Area of focus Claims reserves non-life include Management’s estimate of notified but
not yet paid claims at the balance sheet date, reserves for incurred but
not reported losses (IBNR) and the provision for claims handling costs.
Inappropriate valuation of the claims reserves non-life could result in a
misstatement to the financial statements of the Group and its overall
financial position. The valuation of claims reserves non-life involves a
significant amount of Management’s judgement. The selection of
methodology, underlying assumptions and input parameters may
significantly affect the annual result and the Group’s equity position.
Management discloses the valuation principles used in the recognition
of the claims reserves in notes 3.18 “Non-life insurance contracts” and
5.4.2 “Assumptions”. The impact of various scenarios is described in
note 5.4.4 “Sensitivity analysis”, in particular what the impact of
estimation errors would be on the claims reserves. We also refer to 22.1
in the notes 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.
Our audit
response
Valuation of actuarial reserves from non-unit-linked life insurance contracts
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).
271
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 3.19 “Life
insurance contracts and financial contracts with discretionary
Valuation of claims reserves - non-life
Area of focus Claims reserves non-life include Management’s estimate of notified but
not yet paid claims at the balance sheet date, reserves for incurred but
not reported losses (IBNR) and the provision for claims handling costs.
Baloise Group annual Report 2019
Financial Report
Report of the statutory auditor
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 notes 3.18 “Non-life insurance contracts” and
5.4.2 “Assumptions”. The impact of various scenarios is described in
note 5.4.4 “Sensitivity analysis”, in particular what the impact of
estimation errors would be on the claims reserves. We also refer to 22.1
in the notes 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.
Valuation of actuarial reserves from non-unit-linked life insurance contracts
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 3.19 “Life
insurance contracts and financial contracts with discretionary
participation features” and 5.5.2 “Assumptions” in the financial report.
The impact of various scenarios on actuarial reserves is described in
note 5.4.3 “Sensitivity analysis”. We also refer to note 22.2 of the
Group’s financial statements, providing the financials of the technical
provisions.
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 actuarial 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 The group financial statements contain investments valued at market
values without publically available market values (“level 3”). These
investments include investment properties as well as parts of the
financial assets of an equity nature. Market values for these
investments are determined 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 (e.g.
discount rates), any deficiencies or inaccurate input data could lead to a
material misstatement within the Group’s financial statements.
Due to the inherent judgment applied by management and the related
risks for erroneous presentation of the consolidation financial
statements, the valuation of investment without publically available
market values is considered to represent a key audit matter.
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 5.7 “Fair value measurement”. We also refer to notes
3.7 and 11 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.
272
participation features” and 5.5.2 “Assumptions” in the financial report.
The impact of various scenarios on actuarial reserves is described in
note 5.4.3 “Sensitivity analysis”. We also refer to note 22.2 of the
Group’s financial statements, providing the financials of the technical
provisions.
Baloise Group annual Report 2019
Financial Report
Report of the statutory auditor
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 actuarial 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 The group financial statements contain investments valued at market
values without publically available market values (“level 3”). These
investments include investment properties as well as parts of the
financial assets of an equity nature. Market values for these
investments are determined 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 (e.g.
discount rates), any deficiencies or inaccurate input data could lead to a
material misstatement within the Group’s financial statements.
Due to the inherent judgment applied by management and the related
risks for erroneous presentation of the consolidation financial
statements, the valuation of investment without publically available
market values is considered to represent a key audit matter.
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 5.7 “Fair value measurement”. We also refer to notes
3.7 and 11 of the Group’s financial statements.
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.
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
Based on our audit procedures we did not identify exceptions with
available market values.
regard to the valuation and disclosure of investments without publically
available market values.
Our audit
response
273
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.
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.
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
In connection with our audit of the consolidated financial statements, our responsibility is to
other information is materially inconsistent with the consolidated financial statements or our
read the other information in the annual report and, in doing so, consider whether the
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
other information is materially inconsistent with the consolidated financial statements or our
the work performed, we conclude that there is a material misstatement of the other
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
information, we are required to report it. We have nothing to report in this regard.
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
Responsibility of the Board of Directors for the consolidated financial statements
statements that give a true and fair view in accordance with IFRS and the provisions of Swiss
The Board of Directors is responsible for the preparation of the consolidated financial
law. This responsibility includes designing, implementing and maintaining an internal control
statements that give a true and fair view in accordance with IFRS and the provisions of Swiss
system relevant to the preparation of financial statements that are free from material
law. This responsibility includes designing, implementing and maintaining an internal control
misstatement, whether due to fraud or error. The Board of Directors is further responsible for
system relevant to the preparation of financial statements that are free from material
selecting and applying appropriate accounting policies and making accounting estimates that
misstatement, whether due to fraud or error. The Board of Directors is further responsible for
are reasonable in the circumstances.
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,
In preparing the consolidated financial statements, the Board of Directors is responsible
matters related to going concern and using the going concern basis of accounting unless the
for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
Board of Directors either intends to liquidate the Group or to cease operations, or has no
matters related to going concern and using the going concern basis of accounting unless the
realistic alternative but to do so.
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
Auditor’s responsibilities for the audit of the consolidated financial statements
statements as a whole are free from material misstatement, whether due to fraud or error,
Our objectives are to obtain reasonable assurance about whether the consolidated financial
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
statements as a whole are free from material misstatement, whether due to fraud or error,
level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it
level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss
exists. Misstatements can arise from fraud or error and are considered material if, individually
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
Baloise Group annual Report 2019
Financial Report
Report of the statutory auditor
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.
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.
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.
274
Ernst & Young Ltd
Christian Fleig
Licensed audit expert
(Auditor in charge)
Patrick Schwaller
Licensed audit expert
Baloise Group annual Report 2019
Financial Report
Report of the statutory auditor
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.
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
275
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
66 corporate Governance
116 Financial Report
276 Bâloise Holding Ltd
294 General information
Bâloise Holding Ltd
income statement of Bâloise Holding ltd ........................ 278
Balance sheet of Bâloise Holding ltd .............................. 279
notes to the financial statements of Bâloise Holding ltd ... 280
appropriation of distributable profit as proposed
by the Board of Directors ................................................ 290
Report of the statutory auditor to the
annual General Meeting of Bâloise Holding ltd, Basel ..... 291
D
t
l
G
n
i
D
l
o
H
e
S
i
o
l
â
B
Unterkapitel
Baloise Group annual Report 2019
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
2018
2019
2
3
4
5
6
432.2
21.6
37.3
491.1
– 37.6
– 1.8
– 35.2
– 2.6
– 77.2
646.6
38.5
17.4
702.5
– 51.7
– 62.5
– 32.7
– 3.7
– 150.6
– 2.0
– 0.2
411.9
551.7
278
Baloise Group annual Report 2019
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
31.12.2018
31.12.2019
7
8
9
10
11
12
13
36.5
341.7
7.5
385.7
46.2
361.0
4.0
411.2
529.7
1,786.1
2,315.8
1,063.2
1,836.4
2,899.6
2,701.5
3,310.8
7.4
3.5
175.0
21.2
620.0
1,075.0
4.4
6.8
12.6
300.0
23.2
580.0
1,525.0
0.3
1,906.5
2,447.9
4.9
11.7
6.4
4.9
11.7
8.3
566.1
683.2
0.7
411.9
– 206.7
795.0
0.8
551.7
– 397.7
862.9
2,701.5
3,310.8
279
Baloise Group annual Report 2019
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.
280
Notes to the financial statements of Bâloise Holding Ltd
Baloise Group annual Report 2019
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.
281
Baloise Group annual Report 2019
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
capital Market transaction income
Sundry other income
Total other income
2018
2019
4.5
17.1
–
0.0
21.6
9.4
28.3
0.8
0.0
38.5
2018
2019
30.0
–
7.3
37.3
–
4.3
13.1
17.4
in 2018, the investment in Baloise Bank SoBa aG, Solothurn, was written-up by cHF 30 million to its acquisition cost.
282
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
4. ADMINISTRATIVE EXPENSES
cHF million
personnel expenses 1
other administrative expenses
Total administrative expenses
1 Bâloise Holding ltd has no direct employees. all staff members are employed by Baloise insurance ltd, Basel.
5. DEPRECIATION, AMORTISATION AND IMPAIRMENT
cHF million
impairment losses on long-term equity investments
impairment losses on loans
others
Total depreciation, amortisation and impairment
2018
2019
– 22.1
– 15.5
– 37.6
– 35.9
– 15.8
– 51.7
2018
2019
–
–
– 1.8
– 1.8
– 43.0
– 16.0
– 3.5
– 62.5
in view of restructuring planned for 2020, the long-term equity investment in Baloise life (liechtenstein) aG and the subordinated
loan from Bâloise Holding aG to Baloise life (liechtenstein) aG were written down by their remaining carrying amounts at the
year-end in accordance with Swiss recognised accounting principles (GoR).
6.
INTEREST EXPENSES
cHF million
interest on bonds
other interest expenses
Total interest expenses
2018
2019
– 28.7
– 6.5
– 35.2
– 26.3
– 6.3
– 32.7
283
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
NOTES TO THE BALANCE SHEET
7. RECEIVABLES FROM GROUP COMPANIES
cHF million
Dividends
other receivables
Total receivables from Group companies
31.12.2018
31.12.2019
341.3
0.4
341.7
344.7
16.3
361.0
the annual general meeting of the following aGMs voted to recognise the dividends receivable for the 2019 financial year as
accrued income:
▸
▸
▸
▸
21 February 2020: Baloise Bank SoBa aG, Solothurn
16 March 2020: Baloise asset Management Schweiz aG, Basel and Baloise asset Management international aG, Basel
17 March 2020: Haakon aG, Basel
20 March 2020: Basler Versicherung aG, Basel and Basler leben aG, Basel
8. LOANS TO GROUP COMPANIES
cHF million
Subordinated loans to Baloise Bank SoBa
Subordinated loans to Bâloise (luxembourg) Holding S.a.
Subordinated loans to Baloise Belgium nV
loans to Bâloise (luxembourg) Holding S.a.
loans to Basler Versicherung Beteiligungen B.V. & co. KG
Total loans to Group companies
31.12.2018
31.12.2019
40.0
162.0
–
283.7
44.0
529.7
40.0
284.6
412.5
283.7
42.4
1,063.2
284
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
9. LONG-TERM EQUITY INVESTMENTS
Total
shareholding
as at
31.12.2018
(with voting
rights)
Total
shareholding
as at
31.12.2019
(with voting
rights)
Share capital
as at
31.12.2019
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.
10. CURRENT INTEREST-BEARING LIABILITIES TO THIRD PARTIES
31.12.2019
Securities with security number
Bond 11 768 379
Total current interest-bearing liabilities
Interest rate
Issued
Maturity date
Amount CHF million
2.875 %
14.10.2010
14.10.2020
300.0
300.0
285
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
11. LONG-TERM INTEREST-BEARING LIABILITIES TO THIRD PARTIES
31.12.2019
Securities with security number
Bond 13 180 461
Bond 19 469 508
Bond 20 004 482
Bond 26 139 906
Bond 45 809 797
Bond 49 669 296
Bond 49 669 297
Bond 49 669 298
Bond 49 669 299
Total long-term interest-bearing liabilities
12. TREASURY SHARES
2018
Balance as at 1 January
purchases
Sales
Disposals in connection with share participation programmes
Balance as at 31 December
2019
Balance as at 1 January
purchases
Sales
Disposals in connection with share participation programmes
Balance as at 31 December
286
Interest rate
Issued
Maturity date
Amount CHF million
3.000 %
2.000 %
1.750 %
1.125 %
0.500 %
0.000 %
0.000 %
0.000 %
07.07.2011
07.07.2021
12.10.2012
12.10.2022
26.04.2013
26.04.2023
19.12.2014
19.12.2024
28.01.2019
28.11.2025
25.09.2019
23.09.2022
25.09.2019
25.09.2026
25.09.2019
25.09.2029
var.
25.09.2019
25.03.2021
250.0
150.0
225.0
150.0
200.0
200.0
100.0
125.0
125.0
1,525.0
Low
in CHF
High
in CHF
Average
share price
(CHF)
Number of
registered shares
136.40
159.80
147.89
496,403
965,475
0
– 56,586
1,405,292
Low
in CHF
High
in CHF
Average
share price
(CHF)
Number of
registered shares
1,405,292
133.80
187.00
172.86
1,154,590
0
– 56,789
2,503,093
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
Share capital
Statutory retained earnings
Voluntary retained earnings
Treasury shares
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
4.9
11.7
6.1
–
–
–
–
–
–
–
–
–
–
–
–
472.4
94.0
–
–
–
– 0.3
–
566.1
367.9
– 94.0
– 273.3
–
–
–
411.9
412.6
– 71.8
–
–
–
–
–
– 206.7
– 134.8
– 134.8
Total
equity
791.2
–
– 273.3
–
–
411.9
795.0
Total
equity
Share capital
Statutory retained earnings
Voluntary retained earnings
Treasury shares
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
13. CHANGES IN EQUITY
2018
cHF million
Balance as at 1 January
allocation 2018
Dividend
additions
change in treasury shares
Recognition / reversal
profit for the period
2019
cHF million
Balance as at 1 January
allocation 2019
Dividend
additions
change in treasury shares
Recognition / reversal
profit for the period
Balance as at 31 December
4.9
11.7
4.9
11.7
6.4
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 31 December
4.9
11.7
–
–
–
–
0.3
–
6.4
–
–
–
–
1.9
–
8.3
566.1
119.0
–
–
–
– 1.9
–
683.2
412.6
– 119.0
– 292.8
–
–
–
551.7
552.5
– 206.7
–
–
–
795.0
–
– 292.8
–
– 191.0
– 191.0
–
–
– 397.7
–
551.7
862.9
287
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
14. SIGNIFICANT SHAREHOLDERS
the information available to the company reveals that the following significant shareholders and shareholder groups linked by
voting rights held long-term equity investments in the company within the meaning of section 663c of the Swiss code of obligations
(oR) as at 31 December 2019:
per cent
Shareholders
chase nominees ltd. 3
BlackRock inc.
UBS Fund Management aG
lSV asset Management
nortrust nominees ltd. 3
Bank of new York Mellon n.V. 3
credit Suisse Funds aG
Total
shareholding
as at
31.12.2018 1
Share of
voting rights
as at
31.12.2018 2
Total
shareholding
as at
31.12.2019 1
Share of
voting rights
as at
31.12.2019 2
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
8.4
>5.0
3.3
>3.0
3.2
4.2
3.1
2.0
<2.0
0.0
0.0
0.0
0.0
0.0
1 according to SiX Swiss exchange (https:// www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html).
2 according to the share register.
3 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.
15. CONTINGENT LIABILITIES
cHF million
collateral, guarantee commitments
31.12.2018
31.12.2019
533.5
502.5
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 2019.
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.
288
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
Until at least 31 December 2022, Bâloise Holding ltd will endeavour to ensure that FRiDaY has the resources needed to operate its
business and that FRiDaY operates its business in such a way that it remains solvent. Until 31 December 2022, Bâloise Holding ltd
will also endeavour to ensure that FRiDaY is able to fulfil the obligations vis-à-vis 7Ventures that are set out in the investment agreement.
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.
16. 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.
17. NET REVERSAL OF HIDDEN RESERVES
in 2019, no hidden reserves were reversed.
18. 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.
19. EVENTS AFTER THE BALANCE SHEET DATE
it is not possible to fully assess the coronavirus pandemic’s financial impact on Bâloise Holding ltd at the present time.
By the time that these annual financial statements had been completed on 20 March 2020, we had not become aware of any
further events that would have a material impact on the annual financial statements as a whole.
289
Baloise Group annual Report 2019
Bâloise Holding ltd
notes to the financial statements of Bâloise Holding ltd
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 551,688,704.77.
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
2018
2019
411,909,124.75
551,688,704.77
661,197.69
770,322.44
412,570,322.44
552,459,027.21
– 292,800,000.00
– 312,320,000.00
– 119,000,000.00
– 240,000,000.00
–
–
770,322.44
139,027.21
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 6.40 gross or cHF 4.16 net of withholding tax.
290
Baloise Group annual Report 2019
Bâloise Holding ltd
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
Ernst & Young Ltd
P.O. Box
Aeschengraben 9
Ernst & Young Ltd
CH-4002 Basel
P.O. Box
Aeschengraben 9
CH-4002 Basel
P.O. Box
CH-4002 Basel
+41 58 286 86 86
+41 58 286 86 00
Phone
Fax
Phone
www.ey.com/ch
Fax
Phone
www.ey.com/ch
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
+41 58 286 86 86
+41 58 286 86 00
To the Annual General Meeting of
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Bâloise Holding Ltd, Basel
To the Annual General Meeting of
Bâloise Holding Ltd, Basel
Basel, 22 March 2019
Basel, 22 March 2019
Basel, 22 March 2019
Report of the statutory auditor on the financial statements
Report of the statutory auditor on the financial statements
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements (pages 278 - 289) of Bâloise
As statutory auditor, we have audited the financial statements (pages 278 - 289) of Bâloise
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
As statutory auditor, we have audited the financial statements (pages 278 - 289) of Bâloise
ended 31 December 2019.
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
ended 31 December 2019.
ended 31 December 2019.
Board of Directors’ responsibility
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in
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.
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
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
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
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
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.
selecting and applying appropriate accounting policies and making accounting estimates that
are reasonable in the circumstances.
are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
Auditor’s responsibility
Auditor’s responsibility
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those
Our responsibility is to express an opinion on these financial statements based on our audit.
Our responsibility is to express an opinion on these financial statements based on our audit.
standards require that we plan and perform the audit to obtain reasonable assurance whether
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those
the financial statements are free from material misstatement.
standards require that we plan and perform the audit to obtain reasonable assurance whether
standards require that we plan and perform the audit to obtain reasonable assurance whether
the financial statements are free from material misstatement.
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
An audit involves performing procedures to obtain audit evidence about the amounts and
An audit involves performing procedures to obtain audit evidence about the amounts and
judgement, including the assessment of the risks of material misstatement of the financial
disclosures in the financial statements. The procedures selected depend on the auditor’s
disclosures in the financial statements. The procedures selected depend on the auditor’s
statements, whether due to fraud or error. In making those risk assessments, the auditor
judgement, including the assessment of the risks of material misstatement of the financial
judgement, including the assessment of the risks of material misstatement of the financial
considers the internal control system relevant to the entity’s preparation of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
statements, whether due to fraud or error. In making those risk assessments, the auditor
statements in order to design audit procedures that are appropriate in the circumstances, but
considers the internal control system relevant to the entity’s preparation of the financial
considers the internal control system relevant to the entity’s preparation of the financial
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
statements in order to design audit procedures that are appropriate in the circumstances, but
statements in order to design audit procedures that are appropriate in the circumstances, but
control system. An audit also includes evaluating the appropriateness of the accounting
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
policies used and the reasonableness of accounting estimates made, as well as evaluating
control system. An audit also includes evaluating the appropriateness of the accounting
the overall presentation of the financial statements. We believe that the audit evidence we
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
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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
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
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements for the year ended 31 December 2019 comply with
Opinion
Swiss law and the company’s articles of incorporation.
In our opinion, the financial statements for the year ended 31 December 2019 comply with
Opinion
Swiss law and the company’s articles of incorporation.
In our opinion, the financial statements for the year ended 31 December 2019 comply with
Report on key audit matters based on the circular 1/2015 of the Federal Audit
Swiss law and the company’s articles of incorporation.
Oversight Authority
Report on key audit matters based on the circular 1/2015 of the Federal Audit
Key audit matters are those matters that, in our professional judgement, were of most
Oversight Authority
Report on key audit matters based on the circular 1/2015 of the Federal Audit
significance in our audit of the financial statements of the current period. These matters were
Key audit matters are those matters that, in our professional judgement, were of most
Oversight Authority
addressed in the context of our audit of the financial statements as a whole, and in forming
significance in our audit of the financial statements of the current period. These matters were
Key audit matters are those matters that, in our professional judgement, were of most
our opinion thereon, and we do not provide a separate opinion on these matters. For each
addressed in the context of our audit of the financial statements as a whole, and in forming
significance in our audit of the financial statements of the current period. These matters were
our opinion thereon, and we do not provide a separate opinion on these matters. For each
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
291
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basel
Phone
Fax
+41 58 286 86 86
+41 58 286 86 00
www.ey.com/ch
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 278 - 289) of Bâloise
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year
ended 31 December 2019.
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.
Baloise Group annual Report 2019
Bâloise Holding ltd
Report of the statutory auditor
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 2019 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
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. Long-term
equity investments amount to CHF 1.8 bn as of 31 December 2019 and
represent the most important balance of a total balance sheet of CHF
3.3 bn.
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.
.
Our audit
response
In relation to the key audit matter set out above, we assessed the
appropriateness of the company’s impairment testing methodology. We
audited management’s impairment test on the carrying value of each
investment, including the assessment of management’s assumptions.
We have audited the required disclosures in the notes to the financial
statements as at 31 December 2019.
Based on our audit procedures we did not identify exceptions with
regard to the valuation of long-term equity investments.
292
Baloise Group annual Report 2019
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
293
Unterkapitel 4 Baloise
16 Review of operating performance
36 Sustainable business management
66 corporate Governance
116 Financial Report
276 Bâloise Holding ltd
294 General information
General
information
ALTERNATIVE PERFORMANCE MEASURES ................. 296
GLOSSARY ................................................................ 300
ADDRESSES .............................................................. 304
INFORMATION ON THE BALOISE GROUP ..................... 305
FINANCIAL CALENDAR AND CONTACTS ...................... 306
Unterkapitel Baloise Group annual Report 2019
General information
alternative performance Measures
Alternative Performance Measures
in its financial publications, Baloise uses not only the figures
produced in accordance with international Financial Reporting
Standards (iFRS) but also alternative performance measures
(apMs). We believe that these apMs provide useful information
for investors and give a better understanding of our results.
Moreover, apMs help to measure performance, growth, profit-
ability and capital efficiency.
However, they should be viewed as supplementary information
and not as a substitute for the figures calculated in accordance
with iFRS.
Baloise uses the following alternative performance meas-
ures (apMs):
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Return on equity (Roe)
combined ratio (cR)
annual premium equivalent (ape)
Value of new business (VnB)
new business margin (nBM)
total assets under management (auM)
investors should note that similarly named apMs published by
other companies may have been calculated in a different way.
the comparability of apMs between companies may therefore
be limited.
Definitions and information about the use and limitations
of the aforementioned alternative performance measures can
be found below.
the Baloise Group’s latest financial publications can be
accessed online at any time at https://www.baloise.com/en/
home/investors/publications.html
DEFINITIONS, USAGE AND LIMITATIONS
Return on equity (RoE)
Definition and benefits
at Baloise, return on equity represents the profit attributable
to shareholders divided by average equity adjusted for the
dividend payment (the average of equity at the start of the period
[less the dividend paid] and at the end of the period). equity is
not adjusted for unrealised gains and losses relating to changes
in the price of fixed-income securities.
one of the reasons why the Baloise Group uses Roe as a performance
measure is that it looks at both the company’s profitability and its
capital efficiency.
Limitations
Roe includes line items that provide no or very little indication of
the management’s performance. Moreover, Roe is not available
at division or product level.
this performance measure’s usefulness is limited because
it is a relative measure and thus does not provide information
about the absolute level of profit for the period or the absolute
level of equity.
Combined ratio (CR)
Definition and benefits
the Baloise Group uses the combined ratio to gauge the
profitability of underwriting in the non-life insurance business.
it is the sum of acquisition costs and administrative expenses
(net*) and claim payments and insurance benefits (net), divided
by premiums earned (net). to provide an even better picture
of operating performance, Baloise makes adjustments for
interest-rate effects and provisions for impending losses. the
combined ratio is also adjusted for non-operating costs. these
interest-rate effects result from annuities in the non-life
business, while the provisions for impending losses relate to
future reporting periods. the level of adjustments is regularly
disclosed in Baloise’s presentation for investors and analysts.
the combined ratio is typically expressed as a percentage.
a ratio of less than 100 per cent means that the business is
profitable from an underwriting perspective, while a ratio of more
than 100 per cent indicates an underwriting loss. the combined
ratio can be broken down into the claims ratio including profit
sharing (loss ratio) and the expense ratio.
the claims ratio represents claims and insurance benefits (net),
divided by premiums earned (net). again, the aforementioned
adjustments are made for interest-rate effects (resulting from
annuities in the non-life business) and provisions for impending
losses. the claims ratio therefore gives the percentage of net
premiums earned that are used for the settlement of claims.
*i.e. after deduction of the reinsurers’ share.
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Baloise Group annual Report 2019
General information
alternative performance Measures
the expense ratio represents acquisition costs and administrative
expenses (net), adjusted for costs not attributable to the combined
ratio, relative to premiums earned (net). it gives the percentage
of net premiums earned that are needed to cover the underwrit-
ing expenses for the acquisition of new and renewal business
and to cover the administrative expenses.
Limitations
the combined ratio is used to measure underwriting profitability,
but does not indicate profitability in terms of investment perfor-
mance or non-operating performance. even if the combined ratio
is above 100 per cent, the non-life segment may have still generated
a profit overall because it achieved a gain on investments or a
non-operating contribution to profit.
By its very nature, the usefulness of the combined ratio is
limited because it is a ratio and therefore does not provide any
information about the absolute level of the underwriting profit.
Annual premium equivalent (APE)
Definition and benefits
the annual premium equivalent is a performance measure used
in the life segment that shows all premium income from new
business, both from single premiums and from regular premiums.
the Baloise Group calculates ape as the sum of the annual
premiums earned from new business plus 10 per cent of the
single premiums received during the reporting period.
Limitations
comparability with the ape of other companies is limited because
they define new business differently.
Value of new business (VNB)
Definition and benefits
VnB is a performance measure used in the life segment and
indicates the increase in value generated by underwriting new
business in the current period. it is defined as the present value
of future profits after acquisition costs, less the fair value of
options and guarantees. this involves forecasting lapses,
mortality, disability and expenses up to the due date of insurance
contracts, using the latest capital market data and best estimates.
VnB relates to the time at which the individual contract is formed.
Limitations
Future profits are estimates based on assumptions and may
therefore differ from the profits actually generated in the
future. they are calculated using risk-free interest rates that
are based on the latest market data. the actual future interest
rates and market data may differ. there may also be variation
in, for example, the assumptions about customers’ future
behaviour. Moreover, the long forecast period may result in
uncertainties as future changes to regulatory requirements
or in the market environment, for example, may not have been
factored into the forecast.
New business margin (NBM)
Definition and benefits
the new business margin is used to measure the profitability
of new business in the life segment. it is the value of new
business (VnB) divided by the annual premium equivalent (ape).
Limitations
as the new business margin is calculated from the value of new
business and annual premium equivalent, its usefulness is
subject to the same limitations as those measures.
Total assets under management (AuM)
Definition and benefits
the assets under management are the assets or security port-
folios measured at fair value, in respect of which Baloise asset
Management makes investment decisions or bears responsibil-
ity for portfolio management. they are managed on behalf of
third parties and on behalf of the Baloise Group. as a rule, the
level of auM is reflected in the level of fee income, making it an
important measure of the performance of our asset management
activities over time and in comparison with other companies.
297
Baloise Group annual Report 2019
General information
alternative performance Measures
changes in assets under management are essentially driven by
net new assets, market factors, the effects of consolidation and
deconsolidation, and exchange-rate effects.
net new assets equates to the sum of assets of new customers
and additional contributions from existing customers, less with-
drawals from customer accounts, closures of such accounts and
distributions to investors.
Limitations
the level of assets under management is subject to volatility
resulting from movements in the capital markets. For example,
assets under management may continue to increase when
interest rates fall, even if the figure for net new assets is negative.
this limits the usefulness of this performance measure.
298
Baloise Group annual Report 2019
General information
alternative performance Measures
this page has been left empty on purpose.
299
Baloise Group annual Report 2019
General information
Glossary
Glossary
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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 financial
statements and the corresponding amounts reported for tax
purposes. the pertinent calculations are based on coun-
try-specific tax rates.
expense ratio
non-life insurance business expenses as a percentage of
total premiums.
Fixed-income securities
Securities (primarily bonds) that yield a fixed rate of interest
throughout their term to maturity.
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 particular
insurance companies when selling insurance products. they
are paid commission for the insurance policies that they sell.
Business volume
the total volume of business comprises the premium income
earned from 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.
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300
Baloise Group annual Report 2019
General information
Glossary
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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.
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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.
insurance benefit
the benefits provided by the insurer in connection with the
occurrence of an insured event.
▸ Minimum interest rate
the minimum guaranteed interest rate paid to savers under
occupational pension plans.
international Financial Reporting Standards
Since 2000 the Baloise Group has been preparing its 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’.
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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.
301
Baloise Group annual Report 2019
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 investments 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
calculation of their premiums was based.
premium
the amount paid by the policyholder to cover the cost of
insurance.
premium earned
the proportion of the policy premium available to cover the
risk insured during the financial year, i. e. the premium minus
changes in unearned premium reserves.
profit after taxes
profit after taxes is the consolidated net result of all income
and expenses, minus all borrowing costs as well as current
and deferred income taxes. profit after taxes includes
non-controlling interests.
profit-sharing ratio
total profit sharing as a percentage of total premiums; profit
sharing is defined as the reimbursement of amounts to non-life
policyholders to reflect the profitability of insurance policies.
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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.
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302
Baloise Group annual Report 2019
General information
Glossary
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Share buy-back programme
procedure approved by the Board of Directors under which
Baloise can repurchase its own outstanding shares. companies
in Switzerland open a separate trading line in order to carry
out such 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.
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Solvency
Minimum capital requirements that the regulatory authori-
ties impose on insurance companies in order to cover their
business risks (investments and claims). these requirements
are usually specified at a national level and may vary from
country to country.
technical reserve
insurers disclose on their balance sheets the value of the
benefits that they expect to have to provide in future under
their existing insurance contracts. this value is 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 technical
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’ dividends
(life insurance) and deferred taxes. these gains or losses are
only taken to income if the underlying asset is sold or if
impairment losses are recognised.
Value of new business
the value added by new business transacted during the
reporting period; this figure is measured at the time the
policy is issued.
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General information
addresses
Addresses
SWITZERLAND
Basler Versicherungen
aeschengraben 21
postfach
cH-4002 Basel
tel. + 41 58 285 85 85
kundenservice@baloise.ch
www.baloise.ch
Baloise Bank SoBa
amthausplatz 4
cH-4502 Solothurn
tel. + 41 58 285 33 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
304
GERMANY
Basler Versicherungen
Basler Strasse 4
postfach 1145
D-61345 Bad Homburg
tel. + 49 61 72 130
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
info@baloise.lu
www.baloise.lu
BELGIUM
Baloise Insurance
posthofbrug 16
B-2600 antwerp
tel. + 32 3 247 21 11
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 2019
General information
information on the Baloise Group
Information on the Baloise Group
the 2019 annual Report is also available in German. only the
German text is legally binding. the Financial Report contains
the audited 2019 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. this
publication was produced by the Baloise Group and may not
be copied, amended, offered, sold or made available to third
parties without the express authorisation of the Baloise Group.
amounts and ratios shown in this annual report are generally
stated in millions of Swiss francs (cHF million) and rounded
to one decimal place. consequently, the sum total of amounts
that have been rounded may in some cases differ from the
rounded total shown in this report.
the companies of the Baloise Group and its decision-making
bodies, employees, agents and other persons do not accept any
liability for the accuracy, completeness or appropriateness of the
information contained in this publication. Specifically, no liability
is accepted for any loss or damage resulting from the direct or
indirect use of this information. this publication constitutes
neither an offer nor a request to exchange, purchase or subscribe
to securities; nor does it constitute an issue or listing prospectus.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
the sole purpose of this publication is to provide a review in
summarised form of the operating performance of Baloise for
the period indicated. to this end, the publication also draws on
external sources of information (including data). Baloise neither
guarantees nor does it recognise the accuracy of such informa-
tion. Furthermore, this publication may contain forward-looking
statements that include forecasts or predictions of future events,
plans, goals, business developments and results and are based
on Baloise’s current expectations and assumptions. these
forward-looking statements should be noted with due caution
because they inherently contain both known and unknown risks,
are subject to uncertainty and may be adversely affected by
other factors. consequently, business performance, results,
plans and goals could differ substantially from those presented
explicitly or implicitly in these forward-looking statements.
Factors that could influence actual outcomes include, for example,
(i) changes in the overall state of the economy, especially in key
markets; (ii) financial market performance; (iii) competitive factors;
(iv) changes in interest rates; (v) exchange rate movements; (vi)
changes in the statutory and regulatory framework, including
accounting standards; (vii) frequency and magnitude of claims as
well as trends in claims history; (viii) mortality and morbidity rates;
(ix) renewal and expiry of insurance policies; (x) legal disputes
and administrative proceedings; (xi) departure of key employees;
and (xii) negative publicity and media reports. this list is not
considered exhaustive. Baloise accepts no obligation to update
or revise forward-looking statements in order to take into consid-
eration new information, future events, etc. past performance is
not indicative of future results.
AVAILABILITY AND ORDERING
the 2019 annual Report and the Summary of the 2019 annual
Report will be available from 26 March 2020 on the internet at:
www.baloise.com/annual-report
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
© 2020 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)
305
Baloise Group annual Report 2019
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
Media Relations
Roberto Brunazzi
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 82 14
media.relations@baloise.com
Public Affairs & Sustainability
Dominik Marbet
aeschengraben 21
4002 Basel, Switzerland
tel. + 41 58 285 84 67
dominik.marbet@baloise.com
12 MARCH 2020
Preliminary annual financial results
Media conference
conference call for analysts
26 MARCH 2020
Annual Report
publication of the 2019 annual report
24 APRIL 2020
Annual General Meeting
Bâloise Holding ltd
27 AUGUST 2020
Half-year financial results
conference call for analysts and the media
publication of the 2020 half-year report
29 OCTOBER 2020
Investor Day
12 NOVEMBER 2020
Q3 interim statement
9 MARCH 2021
Preliminary annual financial results
Media conference
conference call for analysts
30 MARCH 2021
Annual Report
publication of the 2020 annual report
30 APRIL 2021
Annual General Meeting
Bâloise Holding ltd
www.baloise.com
306
Bâloise Holding Ltd
aeschengraben 21
cH-4002 Basel, Switzerland
www.baloise.com