The Baloise Group is more than just a traditional insurance company. The changing security, safety and service needs of society in the digital age lie at the heart of its business activities. The 7,900 or so employees of Baloise therefore focus on the wishes of their customers. The best possible customer service, combined with innovative products and services, makes Baloise the first choice for people who want to feel ‘simply safe’. Located at the heart of Europe, with its head office in Basel, the Baloise Group is a provider of prevention, pension, assistance and insurance solutions. Its core markets are Switzerland, Germany, Belgium and Luxembourg. In Switzerland, the Group also operates as a specialised financial services provider, offering a combination of insurance and banking services. The Group offers innovative pension products to retail customers throughout Europe from its competence centre in Luxembourg. Bâloise Holding Ltd shares are listed in the main segment of the SIX Swiss Exchange.
Gert De Winter, Group CEO, is very excited to be outlining the details of the next phase of the strategy during today’s livestream:
“I am very proud of what we have achieved so far. Since the launch of our Simply Safe strategy program, Baloise has continued to meet the needs of its most important stakeholders. We have broken into the top 10 percent of the best companies to work for in the European financial services industry, gained more than 600,000 additional customers through organic growth, generated CHF 1.3 billion in cash, and achieved a strong total shareholder return of 34 percent for our investors. We have also succeeded in bringing customer focus, innovation, digitalization, and cultural change to the forefront of our internal operations and have set new standards within the European insurance industry. The next phase of the strategy, called ‘Simply Safe: Season 2’, will see us continue along this path, which has brought us so much success so far, and put even greater emphasis on the three mission-critical areas of ‘Employees’, ‘Customers’, and ‘Investors’. There will be new and ambitious targets for all three of these focal points. In Season 2, innovation will play a key role alongside the strong core business in our efforts to achieve these goals. Our innovation initiatives will join insurance and asset management & banking in becoming a key pillar that will make a substantial contribution to the business and value of Baloise. Indeed the ambition is for these initiatives to be creating CHF 1 billion of value by 2025. I am sure I speak for all the Company’s employees when I say that I am looking forward to starting Season 2 soon and making Baloise an essential and long-term partner in the lives of our stakeholders.”
Targets for the strategic phase ‘Simply Safe: Season 2’ from 2022 to 2025
To break into the top 5 percent of the best companies to work for in Europe
(previous target: top 10 percent in the European financial services industry)
Baloise’s USP lies in the strength of its workforce. The culture that our employees help to shape gives the Company a significant competitive edge. Happy and committed employees who have an entrepreneurial mindset ultimately make for more satisfied customers. In Season 1* of Simply Safe, the target was to improve employee wellbeing in order to advance from the top 30 percent of the best companies to work for in the European financial services industry to the top 10 percent. We achieved this goal in the second half of 2020. For Season 2, Baloise has set itself another, even more ambitious target: By the end of 2025 it wants to be in the top 5 percent of the best companies to work for in Europe in any industry. Baloise would then be better able to compete for the top talents in Europe. This would allow the Company not only to recruit the best candidates for its core insurance business but also to lead the way in its tech-driven ecosystems of Home and Mobility.
Progress will be measured by a performance indicator that will be published annually in Season 2.
*Current phase of the strategy from 2017 to 2021.
Customers: to gain 1.5 million new customers in the space of four years
(previous target: 1 million new customers in five years)
Baloise is well on track to achieve the growth target set in Season 1 of Simply Safe of 1 million new customers within the five-year period up to the end of 2021. Organic growth has so far brought in more than 600,000 additional customers. As well as continuing to grow the existing areas of its business, Baloise is setting its sights even higher in Season 2 through the further expansion of its Home and Mobility ecosystems. Its new target is to sign up 1.5 million new customers within four years. This equates to around 30 percent more customers, and the quality of the portfolio will remain just as high thanks to the successful approach of targeting particular types of customer. The increase in the number of customers will be achieved through new touchpoints that will be added by continuously expanding the ecosystems and through innovative, customer-centric insurance and financial products.
Investors: 25 percent higher cash generation
(new target: cash remittance of CHF 2 billion to Baloise Holding in four years. Previous target: CHF 2 billion in five years)
Over the past few decades, Baloise has shown itself to be a stable and shareholder-friendly investment. The Company is well on track to achieve its current target for cash generation. It has also consistently delivered on its ‘up only’ dividend promise. Since the launch of Simply Safe, Baloise has increased its dividend by 23 percent, bought back 3 million shares, and, despite the recent market gyrations caused by the coronavirus pandemic, achieved a total shareholder return of 34 percent over the last four years. And it has done so while always maintaining a high level of capitalization and investing in the core insurance business and in a multitude of digital and transformation-related initiatives. Baloise’s ambitions for capital management are also being raised for the next phase of the strategy. The new target is to achieve a cash remittance to Bâloise Holding of CHF 2 billion within four years – a 25 percent increase on the target for Season 1 of Simply Safe. New ambitions have also been set for the deployment of cash.
The intention is for Baloise to use between 60 and 80 percent of the cash remittance that it receives to pay dividends. Between 10 and 30 percent of this cash will be earmarked for investments in innovation. Any remaining funds will be made available for capital management measures such as share buy-backs.
Strategy areas and ambitions
In order to reach the ambitious targets of Simply Safe: Season 2, the following four strategy areas have been defined based on the insights gained from Season 1:
- Focus: focusing on the core insurance business
- Reimagine: improving the customer experience
- Diversify: moving into new business areas
- Transform: foster the corporate culture and agility as key drivers of the transformation
The topic of sustainability will also be at the forefront of Baloise’s activities in all areas. The Company has created a new value creation model that identifies and defines how sustainable value can be created for employees, customers, shareholders, partners, the environment, and society as a whole.
Focus on the core insurance business
The Focus strategy area encompasses all life and non-life initiatives in the core insurance business, as well as matters relating to cash and capital, and builds on the successes achieved in Season 1. These successes include the turnaround of the business in Germany, the improved combined ratio in the non-life business, the greater resilience in the life business, and the growth achieved in our core markets.
The key dimensions and the resulting financial ambitions for Season 2 of Simply Safe are as follows:
- To achieve profitable growth in our target segments of retail customers and SMEs
- To achieve cost synergies of around CHF 200 million** through simplification measures such as making operations less complex and improving how we work together within the Group
- To improve profitability, leading to a combined ratio of around 90 percent (previous target: 90 to 95 percent)
**Across all Baloise Group entities, adjusted for growth.
- To be a reliable partner in the life business thanks to a broad range of insurance solutions that cover any financial or asset management need that customers might have
- To have a resilient interest rate margin that is expected to be above 75 basis points even three decades from now, as well as a consistently strong risk result
- Annual EBIT contribution in excess of CHF 200 million and further substantial cash remittances to the holding company
Capital and cash
- To generate CHF 2 billion in four years and achieve a 25 percent increase in cash remittance to the holding company compared with Season 1
- To use 60 to 80 percent of the cash remittance for dividend payments. To use a further 10 to 30 percent for investments in innovation and for capital management
Improving the customer experience
The omni-channel approach launched in Season 1 showed that Baloise had already recognized how important it is to take a service-focused approach in customer interactions across all touchpoints and products. It is now taking this a step further with a specific strategic focus on improving the customer experience. The ambition is to make collaboration even easier for customers and partners. Baloise is looking to provide a simpler and more enjoyable experience for customers by systematically harnessing their feedback and doing more to understand their needs. Cutting-edge data analysis and further significant investment in digital technologies will help it to do this. A further ambition is to enhance the quality of the relationship not only with customers but also with partners.
Baloise has set itself the following ambitions for 2022 to 2025 that will play into these strengths:
- To attract 1.5 million new customers (up 30 percent) and establish them as loyal, long-term, and profitable sources of revenue by engaging in cross-selling and up-selling activities
- To increase third-party business in the asset management & banking segment by a minimum of CHF 10 billion in net new assets
- To establish sustainability as a key feature of all assets managed by Baloise
Diversify into new business areas
Diversification of the business will be key to competing long-term in the insurance market. In Season 1 of Simply Safe, Baloise set itself the target of becoming more than a traditional insurance company in order to drive this diversification. It has invested approximately CHF 200 million in establishing and expanding its innovation portfolio during this phase of the strategy, placing particular emphasis on the Home and Mobility ecosystems. In doing so, Baloise has met a growing customer need. Indeed these initiatives are already expected to generate around CHF 50 million in revenue in 2020. In Season 2 of Simply Safe, the activities will be stepped up again with the aim of transforming Baloise into a tech-based company that will no longer serve just one sector, but will provide a network of services that make the lives of its customers easier. This new-look Baloise will be a technology-driven financial services provider and a key player within ecosystems that are an essential part of its customers’ lives.
Baloise has set itself the following ambitions for the diversification of its business from 2022 to 2025:
- To continue the successful collaboration with Anthemis Strategic Ventures and commit an additional CHF 65 million to the fund to bring the total sum invested in startups to around CHF 115 million (Season 1: CHF 50 million)
- To significantly expand the Home and Mobility ecosystems, with revenue in excess of CHF 200 million targeted for 2025 plus an additional 650,000 customers
- To further exploit the significant growth potential of the digital insurer FRIDAY, achieving a fivefold increase in revenue to around CHF 150 million and profitability in Germany
- To reach a total value creation figure of approximately CHF 1 billion*** for all Baloise innovations by 2025, making this a third key pillar alongside the insurance and asset management & banking businesses
***Based either on market values, the value of transactions or the multiple/discounted cash flow method.
Culture and agility as key drivers of the transformation of the business
Baloise’s unique corporate culture has been both a resource and a driver for the ambitious strategic realignment that began with the launch of Season 1 of Simply Safe. The Company is now using various tools and approaches to bring Season 1 to a successful close and get off to a flying start with Season 2. Agile working is one of these tools. The underlying principles, which are to be established across the entire business, are aimed at making information and work more transparent, at empowering people who have expertise, and at creating value more quickly. Agile methods will help Baloise to deliver results in shorter cycles going forward and to integrate customer and user feedback more efficiently. And it is not starting from scratch. Baloise can already draw on a wealth of experience in this area. It has now accumulated more than 1,000 person years of experience with agile working, a figure that few companies can match. Key to the success of this modern style of working is an IT infrastructure that facilitates agile and collaborative practices. A great deal has been invested in digital working in recent years. More than 11,000 mobile workplaces have already been set up, for example. This particularly benefited Baloise during the coronavirus lockdown, as 98 percent of employees were able to switch to home working securely and without any restrictions within the space of just one week.
The ambitions for the transformation of the business are as follows:
- To use agile working methods to be a consistently innovative and effective business that offers its broad range of services within a network structure
- To permanently reduce IT infrastructure costs by CHF 20 million a year through automation and greater standardization and by optimizing the system landscape using cloud-based solutions
- To be an employer that fulfils the needs of its employees and provides opportunities for continuous personal and professional development. The objective is to improve employee wellbeing and to be in the top 5 percent of the best companies to work for in Europe by 2025
Don’t miss out! The new and innovative online streaming format for Baloise’s Investor Day
Make sure you hear all the rest of the details on the targets and ambitions of Simply Safe: Season 2 during today’s Baloise Group Investor Day. They will be presented by Baloise’s own speakers and by the external experts Ruth Foxe-Blader, venture capital investor of the Anthemis Group, Professor Hato Schmeiser of the University of St. Gallen, and Peter Gloor of the Massachusetts Institute of Technology (MIT).
From 2pm (CET) today, October 29, 2020, the event will be streamed live on YouTube via the website www.baloise.com/investorday. The Q&A session is expected to start at about 4.45pm (CET). A recording will then be made available from 6pm (CET).