Letter to shareholders on the 2019 Half-Year Results.
Dr Andreas Burckhardt, Chairman of the Board of Directors (right), and Gert De Winter, Group CEO (left), in front of the construction site for Baloise Park, which will open in summer 2020.
Baloise’s business proved to be in good shape in the first half of the year, generating a profit of CHF 395.0 million (H1 2018: CHF 269.7 million) that was boosted by accounting effects arising from Switzerland’s cantonal tax reform. Reversals of tax provisions as a result of this reform had a one-off positive impact of CHF 128 million on profit for the period. In the non-life business, the net combined ratio for the first half of the year was an excellent 87.4 per cent (H1 2018: 94.1 per cent). Due to the strengthening of reserves, EBIT in the life business, at CHF 106.3 million, fell short of the figure for the first half of 2018, which had been positively influenced by the release of reserves. Changes in the Swiss market for providers of comprehensive insurance meant that the life business recorded exceptionally high growth in IFRS premiums, which rose by 30.4 per cent year on year to CHF 2,869.8 million.
The acquisition of Belgian insurer Fidea NV in the first half of 2019 was primarily intended to strengthen Baloise’s position in the attractive non-life business in Belgium. The company now has a market share of 8.5 per cent and has thus closed the gap to the top four non-life insurance companies in Belgium. This expansion of Baloise’s activities in the attractive Belgian market now means that it has two strong pillars (Belgium and Switzerland) in the non-life insurance sector. In Germany, Baloise launched a round of investment in order to build on its commitment to digital insurer FRIDAY. SevenVentures and the German Media Pool became additional shareholders in FRIDAY as part of a media for equity deal. FRIDAY recently began to offer contents insurance alongside its existing car insurance offering.
«We are continually expanding our portfolio of services along the traditional insurance value chain.»
As well as strengthening its core business, Baloise is continually expanding its portfolio of services along the traditional insurance value chain. Under its Simply Safe strategy, Baloise is focusing its investment and development efforts on building up what are known as service ecosystems. These platforms present an efficient means of providing our customers a set of related services. The offerings are positioned upstream or downstream of the insurance product itself and so allow us to cover all our customers’ requirements in a particular area from a single source. As a group, Baloise is focusing mainly on the ‘Home’ and ‘Mobility’ ecosystems.
Switzerland is the main focus of our activities for the ‘Home’ ecosystem. Going forward, however, we will be able to use the experience that we gain there across the Group, even if the individual initiatives will have to be tailored to the relevant market and anchored at local level. Two years ago, we laid the foundation for this ecosystem by acquiring the digital home-moving service MOVU in Switzerland, and have been refining and expanding its offering ever since. Thanks to equity investments in Bubble Box and Devis.ch, MOVU is now evolving into a platform for ‘home services’. The German-Swiss start-up Bubble Box offers a laundry and textile-care service via its online platform. The start-up Devis.ch, based in western Switzerland, is a marketplace where consumers can solicit bids for trade and cleaning services for inside and outside the home.
In Belgium, the ‘Mobility’ ecosystem was launched when the Mobly platform was founded. Pan-European breakdown cover that can be taken out on a day-by-day basis was one of the services added to Mobly’s portfolio in the first half of 2019. The services are available via the Mobly Go app, which already has more than 30,000 users. The medium-term goal is to develop a groupwide platform providing ‘mobility as a service’. Last year, Baloise acquired a stake in Carhelper, a Swiss platform for car workshop services. This is a prime example of how related service offerings can be brought together on a single platform. Other possibilities include fleet management services, collaboration with car manufacturers, and the integration of public transport.
All this means that Baloise is still on track to successfully implement its Simply Safe strategy and continue driving forward its digital projects.
Basel, August 2019