Combined insurance and banking model proves successful under challenging conditions in 2020

Basel, March 30, 2021. 2020 was an eventful year for Basler Insurance and Baloise Bank SoBa. Many sectors have been feeling the macroeconomic impact of the COVID-19 pandemic very keenly. Consequently, the financial services industry, which permeates all areas of the economy, has also been hit hard. Against the backdrop of this global crisis, Baloise can nevertheless look back on a successful 2020 in Switzerland. The Swiss business unit generated a contribution of CHF 386.3 million to the Group’s earnings before tax. Growth across Switzerland and the strengthening of the joint market presence of the bank and insurance businesses reinforce our commitment to the full-range financial service offering.

Highlights of the 2020 annual financial results for Basler Insurance and Baloise Bank SoBa

Insurance*

“It is thanks to the incredible efforts of our employees that we were able to continue to operate and provide our customers with the support they needed throughout the year despite the challenging circumstances,” says Michael Müller, CEO of Basler Versicherungen Switzerland.

  • Strong non-life business with a solid combined ratio despite difficult conditions
    The (net) combined ratio for 2020 has been affected primarily by the COVID-19 pandemic and consequently rose by 0.6 percentage points year on year to a still very solid level of 88.5 per cent. The premium volume in the non-life business recorded a healthy year-on-year increase of 1.8 per cent to CHF 1,368.4 million.
  • Normalisation of the premium volume in the group life business
    Following a positive non-recurring effect in the prior-year period caused by the withdrawal of a competitor from business involving comprehensive insurance solutions for occupational pensions, the premium volume normalised in line with expectations, coming to CHF 2,648.2 million in the reporting year (down by 22.6 per cent compared with 2019). The partially autonomous collective foundation Perspectiva continued to generate strong growth in spite of the tough environment.
  • Further expansion of the Home and Mobility ecosystems and new areas of business
    In 2020, the Home ecosystem was expanded systematically through investments in the cleaning service provider Batmaid and the technology platform Houzy for property owners and through a partnership with the platform ‘quitt.ch’.
    In Switzerland, Baloise also entered into a partnership with TWIICE, a start-up specialising in exoskeletons. This project expands the ecosystem conceptually by including the aspect of personal mobility.

Banking**

“In a year characterised by great challenges, the bank has demonstrated its operational resilience and has invested in the further strategic development of the bank-and-insurance business model,” says Jürg Ritz, CEO of Baloise Bank SoBa.

  • The strategic model of banking and insurance under one roof has proven successful:
    In 2020, the number of asset management mandates continued to grow, with a substantial increase of 21 per cent.
  • Solid growth in the mortgage business 
    The mortgage business grew by 4.0 per cent year on year while maintaining a low-risk approach.
  • Fall in profit for the period due to investment in the integrated bank-and-insurance business model
    The profit for the period declined in line with expectations to CHF 18.5 million. Adjusted for several non-recurring effects, the result is on a par with the previous year.
  • Sustainable growth in income from securities and investment business
    Income from securities and investment business increased once again, at a similar rate to the strong growth recorded in recent years.

* All figures in accordance with IFRS accounting.
** All figures in accordance with local accounting standards. 

Contact

Portrait Nicole Hess

Nicole Hess

Media spokeswoman

Phone

+41 58 285 76 09

Email

media.relations@baloise.com

Summary of business performance for the Swiss market

Business performance of Basler Insurance and Baloise Bank SoBa

Key figures (CHF million) 2019 2020 +-%
Business volume of Baloise Switzerland* 4,921 4,131 -16.0
Of which: life 3,423 2,762.4 -22.8
Of which: non-life 1,344 1,368 1.8
Profit before borrowing costs and taxes of
Baloise Switzerland*
500 386 -22.8
Total assets of Baloise Bank SoBa** 7,996 8,569 7.2
Net profit of Baloise Bank SoBa** 24.5 18.5 -24.5
Net new assets 841 1,244 48


* All figures in accordance with IFRS accounting.
** All figures in accordance with local accounting standards.

Review of operating performance

In 2020, Basler Versicherungen Switzerland was the strongest source of earnings, adding a contribution of CHF 386.3 million (2019: CHF 500.2 million) to the Group’s earnings before tax. The COVID-19 pandemic had an impact on earnings both in the underwriting business and also, crucially, with regard to investments. The combined business model with Baloise Bank SoBa was expanded significantly across Switzerland in 2020. In addition, the Home and Mobility ecosystems are providing input for the innovation pipeline on an ongoing basis. The volume of business was down by 16 per cent year on year at CHF 4,130.8 million (2019: CHF 4,920.5 million). This decline in the life business was attributable to a positive non-recurring effect in the prior-year period caused by the withdrawal of a competitor from business involving comprehensive insurance solutions. The main reasons for the decline are lower income from investments due to the disruption in the capital markets caused by the COVID-19 pandemic and a slightly higher combined ratio.

The volume of premiums in the non-life division went up by 1.8 per cent year on year to CHF 1,368.4 million (2019: CHF 1,344.2 million). This rise was primarily driven by household, industry and SME business in the property insurance sector. The EBIT attributable to the Swiss non-life business fell to CHF 195.5 million (2019: CHF 230.7 million) owing to the aforementioned effects. Due to the impact of the pandemic, the net combined ratio rose by 0.6 percentage points to 88.5 per cent (2019: 87.9 per cent). However, this is still a good level.

In the life division, the premium volume contracted year on year in line with expectations. All in all, gross premiums written in the life business fell by 22.6 per cent in 2020 to CHF 2,648.2 million (2019: CHF 3,422.9 million). This was primarily due to the fact that the prior-year figure had been boosted by the non-recurring effect of single premiums earned in connection with the withdrawal of a competitor from business involving comprehensive insurance solutions in the group life business. Of the total gross premium volume, CHF 2,244.5 million was attributable to group life business (2019: CHF 3,019.8 million). In individual life insurance, premium income advanced slightly, by 0.2 per cent, to CHF 403.8 million (2019: CHF 403.1 million). The partially autonomous collective foundation Perspectiva continued to generate strong growth despite the tough conditions in 2020. All in all, 3,007 companies with 12,659 employees have now signed up to Perspectiva (2019: 2,133 companies). Its assets increased by CHF 155 million to CHF 859 million. EBIT in the life business was down by 37.4 per cent year on year at CHF 130.5 million (2019: CHF 208.4 million). This decline was partly attributable to the fact that reserves were strengthened in connection with model-related adjustments to longevity parameters.

As announced in the half-year financial statements, Baloise Bank SoBa recorded a decline in its profit for the period to CHF 18.5 million due to investment in the integrated bank-and-insurance business model. Adjusted for one-off effects of CHF 4.3 million in connection with capital expenditure on the business model and an extraordinary contribution of CHF 1.7 million to the pension fund to offset a reduction in the conversion rate, the result was on a par with the prior-year figure (2019: CHF 24.5 million). In a year of volatile capital markets, the bank generated further strong growth in the asset management business. The number of asset management mandates increased to 3,212 (up by 21.4 per cent), highlighting the benefits of the combined bank-and-insurance model and the integration of pension and wealth management services. Commission income from securities and investment business fell by 16.3 per cent year on year to CHF 16.6 million. This was entirely attributable to the fact that the prior-year figure included a CHF 4.8 million participation in profits on client portfolios in what was a much more favourable capital market environment. Adjusted for this market effect, income from securities and investment business grew sustainably. Going forward, the aim is to make the benefits of a holistic overview of their personal financial circumstances even more tangible for customers. The bank is therefore investing substantial amounts in strengthening the banking know-how of the general agents of Baloise Switzerland across the country.

In line with the goals of the Simply Safe strategic phase, business with external customers in the asset management division was once again expanded considerably in 2020. Net new assets amounted to CHF 1,244.4 million, a year-on-year increase of 48 per cent. The volume of business with external customers was thus increased significantly and further skills and expertise were accumulated. The aforementioned growth in asset management mandates at Baloise Bank SoBa also made a substantial contribution to the rise in net new assets. The real estate segment generally saw strong growth. At the start of 2020, Baloise acquired two plots of land that form part of the Giessen development in Dübendorf. Plans for the approximately 35,000 square metre site include the construction of around 500 new homes, as well as commercial units and green spaces, by 2026. In August 2020, the Group’s new headquarters at Baloise Park was officially opened. The complex, which comprises three buildings, is a striking new landmark in Basel right by the central train station. In addition to the Group headquarters, two investment properties were constructed that have already been almost fully let. Baloise also entered into a partnership with Pensionskasse Basel-Stadt. Baloise – itself one of the largest institutional real estate portfolio holders in western Switzerland – advised the pension fund during the contract negotiations for the purchase of seven properties in prime locations in Geneva. Under the new partnership between the two companies, Baloise will continue to support Pensionskasse Basel-Stadt as an asset and property manager for these properties.

Baloise during the coronavirus pandemic

Under the exceptional circumstances that arose all over the world as a result of the pandemic, Baloise focused its activities from the outset on protecting its employees, suppliers and partners and supporting its customers at all times. Options such as alternative advisory channels were used to maintain the usual high level of customer support in spite of restrictions on the provision of personal customer service. During this period, retail and corporate customers were able to rely on Baloise, and they can continue to do so. With gross payouts of around CHF 178 million, Baloise protected thousands of customers against even greater financial damage and helped to ensure the flow of important liquidity into affected sectors of the economy. Above and beyond claim payments, Baloise provided support for its customers and society in general during the pandemic with various special initiatives and financial assistance programmes, such as extended payment terms for rents and insurance premiums. In addition, Baloise Bank SoBa offered emergency assistance for business customers in the form of COVID-19 bridging loans. Baloise Bank SoBa also offers cash@home as a convenient solution that allows customers to order cash to their home amid lockdowns. Together with the Swiss Insurance Association (SIA), Baloise is advocating a private-public solution intended to ensure broad insurance cover for economic operators in future in the event of a pandemic. Moreover, Baloise attaches great importance to its responsibilities as an employer in supporting its employees during the ongoing difficulties. Thanks to the availability of digital communication tools, employees are able to maintain regular contact both with their team and with colleagues from other areas while working from home. Employees also have access to a range of programmes that have been made available to support their physical and mental well-being while they are working remotely. In addition, all employees can seek advice from the inhouse corporate health management service if they wish.

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 7,700 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, with Baloise Bank SoBa, 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.

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