“I’m delighted to be able to again present excellent annual financial results for the Baloise Group. There was a strong improvement in earnings in the life business, along with very healthy growth in investment-type premiums. The non-life business again proved robust, registering a significant increase in the volume of business and sustained high profitability. The level of cash being generated for the holding company is already on our target run-rate for 2021. And thanks to various digital initiatives in all our core markets, we occupy a leading position as we move forward rapidly into the insurance industry of the future,” says Gert De Winter, CEO of the Baloise Group. “We attracted 118,000 new customers in 2017. Our success over the past twelve months confirms that we are on course to achieve the targets of our Simply Safe strategy by 2021, which is why the Board of Directors will ask the 2018 Annual General Meeting to raise the dividend by 8 per cent to CHF 5.60,” he adds.
2017 annual financial results at a glance
- The Annual General Meeting on 27 April 2018 will be asked to raise the dividend from CHF 5.20 to CHF 5.60 (increase of 8 per cent).
- The profit for the period attributable to shareholders advanced by 2.5 per cent to CHF 548.0 million. Adjusted for negative non-recurring restructuring effects, it rose by 12.5 per cent to CHF 601.7 million. The book losses recognised were mainly attributable to the sale of the non-strategic parts of the business in Germany.
- Equity advanced by 11.0 per cent to CHF 6,409.2 million. The healthy balance sheet and level of capitalisation was reflected in the very strong SST ratio* of well above 200 per cent as at 1 January 2018.
- The business volume climbed by 3.9 per cent to CHF 9,260.8 million thanks to improvements in the target segments of non-life (increase of 2.8 per cent) and investment-type premiums (increase of 14.6 per cent). Traditional life business contracted by 1.6 per cent owing to a restrictive underwriting policy.
- EBIT in the life business rose by a very sound 35.3 per cent to CHF 306.0 million. The new business margin in the life business reached a healthy 33.4 per cent thanks to selective underwriting and an improved business mix.
- The cash generated for the holding company from the life and non-life businesses increased by a total of 43 per cent to CHF 415.0 million.
- The non-life business was again very profitable, with a combined ratio at the excellent prior-year level of 92.3 per cent.
- Asset management generated a solid net return on insurance assets of 2.9 per cent.
* The Baloise Group will disclose a specific SST ratio when it publishes its first financial condition report, as required by the regulator, at the end of April 2018.
Summary of business performance
Profit and business volume
In 2017, Baloise’s profit for the period attributable to shareholders advanced by 2.5 per cent to CHF 548.0 million. Excluding the non-recurring restructuring effects, Baloise would have earned a healthy profit attributable to shareholders of CHF 601.7 million, an increase of 12.5 per cent. This is the second-highest profit of the last ten years. The volume of business grew by a very sound 3.9 per cent to CHF 9,260.8 million. This strong growth was driven by business with investment-type premiums, which climbed by 14.6 per cent to CHF 2,519.5 million, and by the robust growth of the non-life business in all national subsidiaries.
The performance of the life business was highly encouraging. Underwriting policy in the traditional life business remained restrictive, resulting in a 1.6 per cent contraction in the volume of business to CHF 3,512.0 million. However, EBIT rose by 35.3 per cent to CHF 306.0 million. This sharp increase was due not only to the continuing optimisation of the business mix in order to focus more on less capital-intensive life insurance products but also to a slight easing of the interest rate situation, which significantly reduced the need to strengthen reserves. An improvement in interest rates, which have been challenging for some time now, will have a positive impact on earnings in the life business. Business with investment-type premiums was very successful in 2017, and Baloise again increased the volume of premium income by an impressive 14.6 per cent to CHF 2,519.5 million.