ANNUAL REPORT 2019 Baloise Group Unterkapitel Baloise Group Annual Report 2019 Contents BALOISE FINANCIAL REPORT Baloise key figures ................................................................. 4 Consolidated balance sheet ............................................... 118 At a glance .............................................................................. 5 Consolidated income statement ........................................ 120 Letter to shareholders ............................................................ 6 Consolidated statement of comprehensive income .......... 121 Baloise shares ........................................................................ 8 Consolidated cash flow statement ..................................... 122 Core activities ...................................................................... 10 Consolidated statement of changes in equity ................... 124 Strategy ................................................................................ 11 Notes to the consolidated annual financial statements .... 126 Brand .................................................................................... 14 Notes to the consolidated balance sheet .......................... 204 Notes to the consolidated income statement .................... 245 REVIEW OF OPERATING PERFORMANCE Other disclosures ............................................................... 257 Group .................................................................................... 18 Report of the statutory auditor to the Asset management and banking .......................................... 20 Annual General Meeting of Bâloise Holding Ltd, Basel ..... 270 Switzerland .......................................................................... 22 Germany ............................................................................... 23 BÂLOISE HOLDING LTD Belgium ................................................................................ 23 Income statement of Bâloise Holding Ltd .......................... 278 Luxembourg ......................................................................... 24 Balance sheet of Bâloise Holding Ltd ................................ 279 Consolidated income statement .......................................... 26 Notes to the financial statements of Bâloise Holding Ltd .. 280 Consolidated balance sheet ................................................. 28 Appropriation of distributable profit as proposed Business volume, premiums and combined ratio ............... 29 by the Board of Directors ................................................... 290 Technical income statement ................................................ 31 Report of the statutory auditor to the Gross premiums by sector .................................................... 32 Annual General Meeting of Bâloise Holding Ltd, Basel ..... 291 Banking activities ................................................................. 33 Investment performance ...................................................... 34 GENERAL INFORMATION Alternative Performance Measures .................................... 296 SUSTAINABLE BUSINESS MANAGEMENT Glossary ............................................................................. 300 Responsibility ....................................................................... 38 Addresses ........................................................................... 304 Responsible investment ....................................................... 48 Information on the Baloise Group ...................................... 305 Human resources ................................................................. 50 Financial calendar and contacts ........................................ 306 The environment .................................................................. 56 Risk management ................................................................. 60 Commitment to art ............................................................... 63 CORPORATE GOVERNANCE Corporate Governance Report .............................................. 67 Appendix 1: Remuneration Report ....................................... 88 Appendix 2: Remuneration Report Report of the statutory auditor to the Annual General Meeting of Bâloise Holding Ltd, Basel ............................................. 114 3 Baloise Group Annual Report 2019 Baloise Baloise key figures Baloise key figures 2018 2019 Change (%) CHF million Business volume Gross non-life premiums written 3,405.9 3,542.1 4.0 Gross life premiums written 3,360.3 4,060.3 20.8 Sub-total of IFRS gross premiums written 1 6,766.2 7,602.4 12.4 Investment-type premiums 1,912.1 1,907.5 – 0.2 Total business volume 8,678.2 9,509.9 9.6 Operating profit (loss) Profit / loss for the period before borrowing costs and taxes Non-life 371.7 398.9 7.3 Life 2 333.2 274.8 – 17.5 Asset Management & Banking 92.1 91.1 – 1.1 Other activities – 59.4 – 41.0 – 31.0 Consolidated profit for the period 522.9 689.5 31.9 Balance sheet Technical provisions 46,575.2 48,333.3 3.8 Equity 6,008.2 6,715.6 11.8 Ratios (per cent) Return on equity (RoE) 8.6 11.1 – Gross non-life combined ratio 89.2 88.3 – Net non-life combined ratio 91.7 90.4 – New business margin (life) 48.5 37.3 – Investment performance (insurance) 3 0.7 4.7 – New life insurance business Annual premium equivalent (APE) 293.9 413.5 40.7 Value of new business 142.4 154.0 8.1 Key figures on the Company’s shares Shares issued (units) 48,800,000 48,800,000 0.0 Basic earnings per share 4 (CHF) 11.14 15.02 34.8 Diluted earnings per share 4 (CHF) 11.12 14.99 34.8 Equity per share 4 (CHF) 127.1 145.3 14.3 Closing price (CHF) 135.40 175.00 29.2 Market capitalisation (CHF million) 6,607.5 8,540.0 29.2 Dividend per share 5 (CHF) 6.00 6.40 6.7 1 Premiums written and policy fees (gross). 2 Of which deferred gains / losses from other operating segments (31 December 2018: CHF 10.2 million; 31 December 2019: CHF –1.8 million). 3 Excluding investments for the account and at the risk of life insurance policyholders. 4 Calculation is based on the profit for the period attributable to shareholders and the equity attributable to shareholders. 5 2019 based on the proposal submitted to the Annual General Meeting. 4 Baloise Group Annual Report 2019 Baloise At a glance At a glance Profit (attributable Equity of to the shareholders) of CHF 6,715.6 CHF 694.2 million million Dividend of CHF 6.40 per share Return on equity (RoE) of (to be proposed to the Annual General Meeting 11.1 % on 24 April 2020) – 0.2 % Net combined ratio of decline in volume of business with 90.4 % investment-type premiums New business margin Net investment yield on in the life business of insurance assets of 37.3 % 2.3 % 83 % of employees recommend Baloise – 7.1 % as an employer CO2 reduction BBB +209,000 improved sustainability additional customers rating from MSCI 5 Baloise Group Annual Report 2019 Baloise Letter to shareholders Dr Andreas Burckhardt, Chairman of the Board of Directors (right), and Gert De Winter, Group CEO (left), with a view from the 23rd floor of Baloise Park. DEAR SHAREHOLDERS, Baloise achieved very good results in 2019, reporting a profit the portfolio of services for its customers. Baloise also made attributable to shareholders of around CHF 694 million. This huge progress with strengthening, optimising and diversifying equates to a year-on-year increase of 32.7 per cent that was its core business. In the life business, it is continuing to improve thanks to non-recurring positive effects (including tax-related) the business mix by focusing on risk and unit-linked products. of CHF 148.6 million. The non-life business proved very profit- The Company also capitalised on the opportunities for growth able, improving its combined ratio yet again to 90.4 per cent. in Switzerland presented by the withdrawal of a competitor. The Margins in the life business remain adequate, despite the low strategic reallocation of the non-life portfolio in Germany is interest rates. We are on track to achieve the targets defined for having a positive impact. The German business’s turnaround is our Simply Safe strategic phase, which will continue until the reflected in a considerable increase in new customers. The 2019 end of 2021. In three years, Baloise has signed up 514,000 new results for the Luxembourg business unit were also robust. customers and transferred CHF 1.3 billion in cash to the holding Baloise unlocked opportunities and possibilities in Belgium’s company, and we have now moved into the top 15 per cent of attractive non-life insurance market when it acquired insurance the most attractive employers in the European financial sector. company Fidea NV in the first half of the year. The announced Last year, Baloise also sharpened its strategic focus. It used acquisition of Athora’s non-life insurance portfolio will also its insights from the first three years of the Simply Safe strategic markedly strengthen the market position of the Belgian business. phase to set priorities for its digital initiatives. Baloise had These two acquisitions will underpin Belgium’s role as a second initially experimented in various different areas, gaining inval- key pillar within the Baloise Group alongside the Swiss business. uable experience, but is now concentrating on the ‘Home’ and They will also help to diversify the business. The Athora port- ‘Mobility’ ecosystems. This is where it sees the greatest oppor- folio will significantly strengthen Baloise’s position in the tunities for building