C-Level Insights

C-Level Insights

Carsten Stolz
Head of Corporate Division Finance

Carsten Stolz, Head of Corporate Division Finance

At the 2016 Investor Day, as part of our Simply Safe strategy, we set ourselves the target of upstreaming CHF 2 billion in cash to our holding company by 2021, and we have already activated a number of levers in order to achieve this. I believe that this should include, in line with the safe aspect of the strategy, a simplified reporting method, an increase in transparency in how cash is generated, and an optimisation of financial controlling processes – all within the next five years. The idea is for the Corporate Division Finance to become even more of a ‘business enabler’, but one that will at all times fulfil its mandate of carefully and conscientiously managing the capital that has been made available by shareholders.

What does this mean specifically for ongoing and upcoming projects? Simply Safe is based on three pillars: optimisation of the core business, investment in employees and expansion of the business model into markets that go beyond traditional insurance. These three pillars align with the three targets set out in Baloise’s strategy: to generate a total of CHF 2 billion in cash for the holding company by 2021, to become one of the best employers in the industry and to attract 1 million new customers. The first target, in particular, has a direct impact on how the business is managed. As a result, internal metrics will be reconfigured to target cash generation. Greater emphasis will be put on cash and less on accounting profit. Investing in initiatives that extend beyond the traditional business model means that changes will need to be made to the frameworks for decision-making and financial controlling. The processes have to be made simpler and faster so that the finance division’s staff can provide the optimum level of support to the operational business.

The idea is for the Corporate Division Finance to become even more of a ‘business enabler’, but one that will at all times fulfil its mandate of carefully and conscientiously managing the capital that has been made available by shareholders.

To increase transparency externally, we are working continuously on improving our disclosures. In this year’s half-year financial statements, we delivered on several announcements made at last year’s Investor Day. For the first time, we are including a breakdown of the sources of profits in our life business and are publishing more information on guarantees in our life business and on the performance of our balance sheet and new business mix. Regarding the Swiss Solvency Test (SST), we are reporting sensitivities. These show that our SST ratio would still be over 140 percent even in stress scenarios such as a 50 per cent fall in the value of our shares or a further fall in interest rates by 100 basis points. Across the division, we are closely pursuing the further development of the SST models, particularly the establishment of a new standard model for the Swiss group life business. An extended cash disclosure will follow with the next annual financial statements.

Our capital management is another key component in the optimisation of cash flow. Here, we are looking to pursue opportunities that will reduce our cost of equity and result in a more efficient financing structure. In doing so, we are guaranteeing the liquidity and solvency that are needed for the projects and initiatives of the Simply Safe strategy.