Letter to shareholders on the 2020 Half-Year Results.
Business life may have changed in the wake of the coronavirus pandemic, but Baloise remains a strong and solid partner for all of its stakeholders in these unusual times. We have fulfilled our obligations, especially towards our customers, shareholders and employees, in spite of huge challenges. Despite the difficult environment and uncertainty in the capital markets, we generated a profit of CHF 177.7 million for our shareholders (H1 2019: CHF 395.0 million), proving the stability and resilience of Baloise even in the current climate. Alongside extraordinary non-recurring effects in the previous year – provisions for taxes of around CHF 128 million were reversed and taken to income in the wake of a tax reform – the coronavirus pandemic was a key factor that influenced the half-year financial results. Compared with the prior-year period, the gross combined ratio in the non-life business rose by 8.8 percentage points to 96.5 per cent due to large claims in connection with COVID-19. The net combined ratio after reinsurance was 91.1 per cent. EBIT in the life business improved by 23.5 per cent to CHF 131.3 million (H1 2019: CHF 106.3 million, adversely affected by the strengthening of reserves).
Although the current highly exceptional circumstances are affecting Baloise, we are confident that our company is very well positioned thanks to its strong balance sheet, reliable business policies, sustainable business model and proactive risk management. In addition, Baloise is now benefiting from the fact that it prepared the ground early with a variety of digital initiatives. At a time where working from home has become widespread, this helped to ensure that we were able to serve our customers without constraints, and we were even able to build on this earlier work to develop new business models.
The business strategy of Baloise is focused on the long term and on sustainable value creation – challenging conditions do not change this. We are pursuing our goal undeterred by the current conditions and are confident that we will be able to achieve it. On our journey, we will frequently need to make operational adjustments and to optimise and refine processes in order to maintain the flexibility we need.
In Belgium, we completed the acquisition of the non-life portfolio of Athora Belgium at the end of May. This transaction, which brings 360,000 new insurance customers to Baloise, will particularly strengthen our position in the region of Wallonia. In the spring, the rating agency Standard & Poor’s confirmed its rating of ‘A+’ with a stable outlook for the Group. This also reflects the positive outlook for the German property insurance business and our strong overall competitive position in Belgium, Luxembourg and Switzerland.
«The business strategy of Baloise is focused on the long term and on sustainable value creation – challenging conditions do not change this.»
In Belgium and Switzerland, further investments were made in the ‘Home’ ecosystem. This ecosystem brings together a variety of services linked to the home. Equity investments in the Walloon start-up ImmoPass and in Keypoint, also a start-up, open up new opportunities to expand the service portfolio for all parties involved in property management. We also added a new element to the ‘Home’ ecosystem in Switzerland. Baloise is cooperating with and investing in Batmaid, a digital platform that makes it easy for users to hire properly insured and qualified cleaning staff. Batmaid supplements other services such as the dry-cleaning platform Bubble Box, the moving platform MOVU and devis.ch, a marketplace for tradespeople. Our goal for the future is to increase the potential for synergies across these platforms.
As of the end of the first half-year of 2020, the changes in the Corporate Executive Committee of Baloise that had been announced a year ago have come into effect. Following the departure of Thomas Sieber, the responsibilities of the Corporate Center function are being reallocated to the Group CEO function and the Corporate Division Finance. These adjustments form part of our ongoing strategic journey that is aimed at sharpening our strategic profile. At our Investor Day at the end of October, we are going to present a look ahead to the next strategic phase.
Baloise is confident that the goals of the Simply Safe strategic phase will be achieved by 2021. Uncertainty surrounding the further course of the coronavirus pandemic is going to persist in the second half of 2020. But thanks to its circumspect business policy, Baloise considers itself wellpositioned to respond to this uncertainty appropriately and to create added value in a sustainable and lasting way.
Basel, August 2020