Baloise wants to become more profitable and pay out more money
Published: Thursday, Sep 12th 2024, 15:30
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Baloise wants to operate more profitably and distribute more money to its shareholders. The insurer has set itself new targets and presented them in detail to investors, some of whom were critical, on Thursday. Around 250 jobs will be cut.
"We have analyzed our core business and identified potential for profitable growth in all units," Group CEO Michael Müller told analysts and media representatives. He took over as CEO almost a year ago and announced in the spring that he wanted to focus on the core business of insurance.
In return, hardly any money will flow into the ecosystem structure that is currently being established. "We have defined companies from which we are divesting. We will continue to monitor other areas with a view to a possible exit," said Müller.
The ecosystems include around three dozen initiatives and start-ups, including companies such as the cleaning service provider Batmaid, the home ownership platform Houzy and the German digital insurer Friday. According to Müller, the Group has already disposed of around a quarter of these investments. In the case of Friday, it is still waiting and examining all options.
Job cuts in Switzerland too
In the new Refocusing program, Baloise aims to build on its existing strengths and become more profitable. The new target is a return on equity of 12 to 15 percent by 2027. In the years prior to the accounting adjustment to IFRS 17/9, the average figure was a lower 8.5 percent.
In the non-life segment, the aim is to achieve a combined ratio of less than 90 percent and the life business should contribute CHF 200 million to the operating result each year. Both targets were already defined in the previous "Simply Safe" program, although they were easier to achieve in the old balance sheet.
Savings will also be made as part of the new program. Baloise plans to cut around 250 of the 7300 full-time positions across the Group, half of them in Switzerland. All segments and product lines will be affected by the cuts, it said.
"Attractive" dividends
Baloise made a promise to its shareholders. The Group now intends to distribute over 80 percent of the cash flowing into the holding company from the operating business. According to CFO Carsten Stolz, this will be based on further "attractive" dividend payments, while share buybacks will be launched from time to time. The next program is planned for spring 2025.
Baloise aims to generate over CHF 2 billion in cash between 2024 and 2027, which was already planned for the years 2022 to 2025. Thanks to the sale of a legacy portfolio from the Belgian life business, over CHF 500 million in cash is expected to flow into the coffers in the current year.
It is unclear whether the dividend promise will go down well with the activist major shareholder Cevian and zCapital. Neither had yet commented on Baloise's plans when asked by AWP. In the run-up to the presentation, shareholder circles also called for the sale of the German business. Baloise did not fulfill this wish.
Higher profit in the first half of the year
In the first half of the year, Baloise's profit climbed by 7.6 percent to CHF 219 million. Favorable stock markets, model adjustments in the life business and higher premiums from Germany and Belgium provided support. On the other hand, the June storms in Switzerland had a negative impact of around CHF 80 million and led to a deterioration in the combined ratio of 3.1 points to 90.4 percent.
The volume of business fell slightly by 0.9% to CHF 5.29 billion, whereas in local currencies this would have resulted in an increase of 0.3%. The Group grew in the non-life business, which was also possible thanks to tariff increases. The volume in the life business declined.
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