Baloise sets new goals and cuts jobs
Published: Thursday, Sep 12th 2024, 07:50
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Baloise is setting itself new business goals for the future. In order to become more profitable, the insurance company wants to cut costs. For shareholders, there is a new distribution policy and possibly share buybacks.
Baloise describes the new direction as a refocusing strategy. The aim is to build on existing strengths and increase profitability, according to the press release issued on Thursday.
According to the information provided, the new financial targets include a return on equity of 12 to 15 percent, strong cash generation of over 2 billion in the years 2024 to 2027 and a higher cash payout ratio of 80 percent or more.
To this end, the company is focusing on efficiency enhancement and cost measures, continuous portfolio optimization and targeted growth.
In the secondary life business, for example, a combined ratio of 90% is still being targeted in an average interest rate and claims environment, although new accounting regulations are having a negative impact on this key figure. The more clearly the figure is below the 100 percent mark, the more profitable the operating business is.
Meanwhile, the life business should make a sustainable EBIT contribution of at least 200 million francs, the statement continued. This target was already in place.
Reduction of 250 jobs
All in all, the insurance company wants to increase cost discipline and achieve "sustainable profitable growth" in the target segments above the respective market growth. To this end, 250 jobs will also be cut. According to the information provided, however, there is no question of withdrawing from a market. Baloise wants to be one of the leading insurers in its attractive target segments in Switzerland, Belgium, Germany and Luxembourg.
According to the communiqué, all of this forms the basis for the continuation of an attractive shareholder policy. In addition to the "reliable dividend distribution", there is now a distribution logic for share buybacks. Specifically, an initial share buyback program will be examined next spring.
Investors will take a critical look at the targets and the strategy update. Voices were raised in advance that Baloise should be made more profitable, for example through the sale of the German business.
The activist investor Cevian has recently assumed an important role in the shareholder base with a stake of 9.4%. And at the Annual General Meeting at the end of April, zCapital celebrated a surprising success with its motion to lift the 2 percent voting rights restriction. This step strengthened shareholders' rights and immediately increased the pressure on Baloise's management.
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