Basel, The outstanding financial results that Baloise is reporting for the first six months of 2014 once again underscore the Company's strength. It expanded its total volume of business by 6.9 per cent to CHF 5,831 million by focusing on target segments. It improved the quality of its client portfolio and achieved an impressive combined ratio of 93.2 per cent. Baloise's life insurance operations benefited from the strong demand for attractive solutions in group life business. The Company's substantial equity of CHF 5,296 million and its excellent solvency ratio of 316 per cent reflect its reliability and strong capital base.
The key performance indicators for the first half of 2014* are as follows:
- Business volume: CHF 5,831 million
(30 June 2013: CHF 5,455 million; up 6.9 per cent)
- Profit for the period (attributable to the shareholders): CHF 350 million
(30 June 2013: CHF 245 million; up 42.9 per cent)
- Equity: CHF 5,296 million
(31 December 2013: CHF 4,906 million; up 7.9 per cent)
- Solvency ratio of: 316 per cent
(31 December 2013: 267 per cent)
- Combined ratio (net): 93.2 per cent
(30 June 2013: 94.5 per cent)
- New business margin (life): 11.3 per cent
(30 June 2013: 17.3 per cent)
*Key figures can be found at the end of this page, and further information is contained in the half-year report.
Martin Strobel, Baloise Group CEO, commented: "I am delighted to report that we are growing encouragingly, our profit has risen sharply and we are focusing on attractive business segments. This helps to explain why we are one of the most profitable insurance companies in Europe. We offer our customers genuine added value in the form of our Safety World. We are therefore ideally placed to write the next chapter in the success story of Baloise."
Summary: The Baloise Group raised its profit for the period by approximately 43 per cent year on year to an exceptional CHF 350 million. All business divisions and all regional units contributed to this result. Further improvements in portfolio quality and the robust operational profitability of the non-life insurance business translated into a net combined ratio of 93.2 per cent (H1 2013: 94.5 per cent). This strong operating performance and the low level of claims incurred formed the basis for this impressive combined ratio. Baloise achieved above-average growth in life insurance. Life insurance earnings were boosted by the optimisation of the business mix that has taken place in recent years. In addition, the value of interest-rate hedging instruments rose sharply as a result of lower interest rates, which in turn increased the gains on investments. The margin on new life insurance business fell to 11.3 per cent (H1 2012: 17.3 per cent) as a result of lower interest rates. The banking business compensated for its lower net interest income by increasing its business volumes and cutting its costs, and it consolidated its earnings before interest and tax (EBIT) for the first half of 2014 at CHF 41 million (down 0.2 per cent year on year). The total volume of business showed solid growth in the target segments, advancing by 7.2 per cent in local-currency terms to CHF 5,831 million.
Balance sheet: Baloise has a very strong balance sheet. Its consolidated equity grew by 7.9 per cent to CHF 5,206 million, primarily on the back of the outstanding profit for the period and the lower level of interest rates, which had a positive impact on the valuation reserves of fixed-income securities. The solvency ratio reached an excellent 316 per cent compared with 267 per cent at the end of 2013. The Swiss Solvency Test (SST) is still well within the 'green zone'.
Investments: Baloise achieved highly impressive gains on its investments. Net income came to CHF 1,172.0 million, which was well above the CHF 955.6 million reported for the first half of 2013. As well as enhancing this performance, our strong business growth increased the size of our investment portfolios, on which Baloise achieved an impressive net return of 2.0 per cent compared with 1.7 per cent in the prior-year period. We invested further in equities that meet our quality criteria and offer the prospect of consistently high dividend payments. The higher income we earned from equities and other alternative investments largely compensated for the lower income received from fixed-income investments.
Business units: The Swiss unit continued to generate robust growth in its attractive target segments and reaffirmed its strong market position by delivering an outstanding operating performance in its life insurance business, as well as in its non-life and personal insurance businesses. Nonetheless, persistently low interest rates continued to pose a serious challenge for pension schemes. Improvements in portfolio quality and the lower level of storm-related claims reduced the gross combined ratio by 3.4 percentage points to 83.3 per cent. All business divisions and national Baloise companies contributed to the profit for the period. Belgium and Luxembourg achieved excellent growth and raised their EBIT substantially (by 45.4 per cent in Belgium and by 82.3 per cent in Luxembourg). EBIT in Germany fell by 26.7 per cent owing to the cost of social compensation plans.
Outlook: These outstanding half-year financial results reaffirm the strategic approach that Baloise has adopted. By focusing on attractive core markets, rigorously implementing its target-customer management policies and offering innovative supplementary services around safety and security, Baloise is excellently placed to meet its targets of a combined ratio of between 93 per cent and 96 per cent, a new business margin in excess of 10 per cent and a return on equity of between 8 per cent and 12 per cent. This operational strength will facilitate our practice of paying reliable, attractive dividends.