From an investment perspective, 2022 was a very turbulent year. The war in Ukraine, the energy crisis in Europe and rising inflation all affected occupational pension provision, particularly with regard to investments. Exceptional circumstances in 2022 also included the poor performance of the equity markets and the losses suffered by bonds against the backdrop of rising interest rates. This makes the positive results in Baloise’s group life report all the more encouraging.
Baloise’s comprehensive insurance model has proven to be an attractive and resilient solution in a very challenging market environment. Even though the investment return was negative, comprehensive insurance customers benefited from full protection because the investment risk is borne by the insurer. In a year characterised by volatility, this was a strong selling point for the comprehensive insurance model.
Baloise was able to offer customers an interest rate premium of 0.50 per cent on retirement savings above the income threshold, bringing the total interest paid to a minimum of 0.75 per cent. Although net investment income was slightly down at CHF 315.5 million and substantial provisions of more than CHF 64 million had to be set aside, a little over CHF 7 million was allocated to the surplus fund.
The partially autonomous foundation Perspectiva continued to grow robustly, adding more than 750 new customers. Counting more than 4,400 participating companies and total assets of around CHF 1.5 billion, the collective foundation has reached a considerable size. This will help Baloise to take an even stronger position in the market going forward and to offer customers attractive pension solutions that are tailored to their needs.
Nonetheless, the downtrend in the wider market in 2022 did have an impact on partially autonomous foundations. Perspectiva generated a negative return of around 10 per cent. It thus fared better than the reference market index but the performance still had an adverse impact on the foundation’s financial position. However, a high proportion of active policyholders and a clear investment strategy allow Baloise to look ahead with optimism even in a very uncertain market environment.
Baloise believes that the comprehensive insurance model is a solution that meets a wide range of customer needs. But occupational pension provision is facing significant challenges that need to be addressed urgently. As the baby boomer generation approaches retirement, insurers are incurring losses even though conversion rates are being lowered. There is now no way of avoiding the pension reforms that have long been the subject of intense debate and which now need to be tackled as a matter of priority. The reform proposal recently approved by the Swiss parliament is a step in the right direction. For Baloise, the lowering of the statutory minimum conversion rate to 6.0 per cent is a crucial element of this reform package.