A successful duo: Chairman of the Board Rolf Schäuble (left) and
R o L f S C H ä u B L e : Our shareholders’ equity has grown by 26%, meaning that we were able to significantly add to our capital base. Although we see solid financial resources as important for our company’s lasting prosperity, we will always be looking for new ways to best leverage our capital in order to deliver added value — just as our shareholders
Our business depends on recurring investment income, so we generally hold bonds to maturity. That is why we have classified roughly 32% of our fixed-interest securities as
“ We are striving for a return on equity of 15% by 2008.”
Life insurance The life segment achieved a profit before tax and borrowing costs of CHF 150.7 million (2004: CHF 67.5 million). In the year-on-year comparison it is important to take into account the CHF 30 million impact on the prior year’s result of the introduction of the “legal quote” in the Swiss group life business. The adjustment of surpluses (policyholder bonuses) for individual life policies in line with low interest rates and strong investment income contributed to the improved performance. In this business segment as well, we only accept new insurance business that meets our ROI
2,654.0 million, the associated investment performance in accordance with IFRS thereby coming to 5.0% (2004: 4.3%).
The Swiss Performance Index shot up by 35% year on year while the European equity index (MSCI EMU Index) gained over 26%. The Standard & Poor’s 500 index only managed to generate a return of 3%. Owing to the USD’s almost 16%
In the United States, however, yields on 10-year US treasuries rose only marginally, edging up to 4.37%.
due to weak demand for single-premium policies in the individual life business as a result of low interest rates.
General Agency in Fribourg with a pension scheme contract concluded at an engineering firm in his hands. After
In 2005 Baloise Switzerland introduced the Customer Value Model (CVM) for the first time in the form of a pilot project. CVM classifies customer relationships by value-adding criteria and generates corresponding overviews.
Basler Securitas Basler Securitas successfully completed its integration in 2005 resulting in more efficient business processes and an income-oriented customer portfolio. Beginning in 2006 we will implement additional improvements in the sales organization, in claims processing and in operating procedures. The business unit increased its contribution to profits significantly compared to 2004, primarily thanks to the impressive result in the property insurance business and excellent returns on investments. Business volume came to CHF 1,058 million (2004: CHF 1,094 million), a decline of 3.4% due particularly to adjustments in the business portfolio and the unfavourable economic environment in the life insurance segment.
CHF 250 million. We continued to improve our market position in the group life sector.
This makes the question of whether the car to be insured runs on diesel or petrol one of our objective pricing criteria.
A Leader among primary insurers The 2005/2006 Sustainability Report reflects the broad scope of our commitment to sustainability and its influence on our core business, and also the Baloise’s social responsibility and the corresponding initiatives and activities it undertakes. We have already met around 70% of the promises made in our initial, 2003/2004 report. But this does not mean we are resting on our laurels. We aim to remain a leader among Swiss primary insurers in matters of sustainability. This ensures that our commitment will not subside. The Baloise’s dedication to sustainability has not gone unrecognized. We have been included in the globally significant Dow Jones Sustainability Index and the
As a value-oriented company, the Baloise is committed to good corporate governance. Compliance is an important aspect in this context. Compliance for us means strategies to ensure ethical conduct in conformity with applicable laws and regulations. The Baloise has given systematic attention to this issue since 2002, says Peter kalberer, Group Compliance officer.
The Group’s operating management structure is presented on page 49 of the Annual Report – Business Review.
Conditional capital Bâloise-Holding has conditional capital of no more than 10%, whereby the share capital may be increased by a maximum of 5,530,715 registered shares with a par value of
Rules and Regulations other financing instruments There are no participation certificates, bonus certificates or bonds convertible to Company participation rights or options issued by the Company.
Board of Directors since 1999. He studied law at the Universities of Basel and Geneva and holds a Dr. iur. degree. He worked at Fides Treuhandgesellschaft from 1982 to 1987 and was General Secretary of the Baloise Group from 1988 to 1994. He has been Director of the Basel Chamber of Commerce since 1994. Andreas Burckhardt is Vice President of the Swiss Association of Chambers of Commerce and President of the Great Council of the Canton of Basel-Stadt for 2006/2007. He is an independent non-executive director.
internal organization functions of the Board of Directors Subject to the decision-making authority of the shareholders at the General Meeting, the Board of Directors is the
The corporate goals are developed in a multi-stage process and approved by the Compensation Committee at the end of each year for the following year. The individual goals are closely related to the accountabilities of each member of the
9. information policy information principles The Baloise Group provides comprehensive, open and regular information to shareholders, potential investors, employees, clients and the general public.
information on Baloise shares Information on Baloise shares can be found from page 10 of the Annual Report – Business Review.
External review: Deloitte and Touche LLP have reviewed the choice of methodology together with the assumptions and calculations made by Baloise Group in the calculation of the embedded value results of its Life Business at December 31, 2005. Deloitte have reported to the Baloise Group that they consider that the methodology is appropriate, Baloise’s assumptions are altogether reasonable and that the embedded value results as published above have been properly compiled on the basis of methodology and assumptions chosen. For the purpose of this report, Deloitte have performed certain checks on data provided by the Baloise Group, but have relied on financial information underlying the Group’s financial statements.
Internet at www.baloise.com/annualreport. They can be ordered through the Internet or at Bâloise-
Financial RepoRt 2005 Financial RepoRt 2005 6 Bâloise-Holding Financial Report 2005 7
3.2.3. Translation of functional currency into reporting currency the annual financial statements of all business units which were not prepared using cHF are translated as follows when preparing the consolidated financial statements: n assets and liabilities at year-end rates n income and expenses at average annual rates n the resulting currency translation adjustments are accumulated and recognized directly to equity
Financial assets are derecognized if the rights to the cash flows from the financial instrument have expired or the financial instrument has been sold and substantially all of the associated risks and opportunities have been transferred. the cash outflows arising with reverse repurchase transactions are recognized as receivables.
3.10.3 Impairment losses on non-financial assets Up to December 31, 2004, goodwill was amortized on a regular basis and if necessary subject to impairment. as of January 1, 2005, goodwill and any assets with indefinite useful lives are not amortized/
depreciated on a regular basis, but rather undergo impairment testing annually at the same time or if there are objective indications of an impairment. For purposes of impairment testing, goodwill is allocated to cash-generating units (“cGUs”). the carrying value of the cGU, including the goodwill, is compared with the recoverable amount. the recoverable amount is the higher of the net proceeds from disposal (estimated sales proceeds less all costs incurred directly in connection with the sale) and the present value of the estimated future cash inflows and outflows from the utilization and later sale of an asset. the estimate of the future cash inflows and outflows is based on realistic assumptions regarding the future development of the asset as well as on approved extrapolations and financial planning. an impairment exists if the carrying value is higher than the recoverable amount. an impairment is recognized in the income statement under the item “other operating expenses”.
3.16 Insurance contracts an insurance contract is defined as “a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder”. Here, an insurance risk is any direct or reinsured risk that is not a financial risk. the significance of insurance risk is assessed according to the amount of additional benefits to be paid by the insurer if the insured event occurs.
a convertible bond issued by Baloise Finance Jersey, which confers the right to subscribe to shares of UBS aG, includes a liability as well as an embedded option. the fair value of the embedded option is determined as of the balance sheet date and is disclosed separately as a derivative financial instrument. the cost of the liability component corresponds to the present value of the future cash flow, which was calculated at the issue date. the market interest rate of similar bonds without conversion or option rights is used as the discount factor.
Group’s most senior risk owner is the chief executive officer of the
Claim reserves – net in eUR million 1 the increase in the overall estimated amount of claims paid is primarily due to the inclusion of the Securitas Group.
in case of death, the beneficiary receives the amount insured or the policyholder’s balance in the fund if it exceeds the amount insured. if there is capital at risk, the fund is charged a risk premium monthly to finance the mortality coverage (corresponding to the positive difference between the amount insured and the policyholder ’s fund balance).
the mortality table concerned is, as a rule, used for the allocation within a category.
the effect of a stress test on financial performance figures is measured monthly. the underlying stress scenario (potential loss from a risk) is regularly reviewed and adjusted as necessary. the magnitude of a stress test is normally based on the simple annual volatility of the financial risk under consideration, on a 100-year occurrence of a business risk or on international standard practice.
(2004: cHF 470.0 million) and a net JpY position of cHF 43.1 million
Roland Rechtschutz Versicherungs -aG, Köln other in cHF million investments in associated companies do not include listed companies.
�,�0�.� �,579.� ���.7 �.� ��.7 �56.5 13. Derivative financial instruments contract value Fair market values - assets Fair market values - liabilities
�005 current service cost interest expense expected return on plan assets
Redemption of actuarial gains or losses effects from plan curtailments/settlements effects from amendments and limitations on use employee contribution
19. Share capital number of treasury shares number of shares outstanding number of shares issued
the item “no determinable residual term” includes in particular deferred as well as current annuity.
Face value in cHF million interest rate effective interest yield early redemption date
29.3 Exchange rate gains the net income from transactions in foreign currencies recognized in the consolidated income statement shows a loss of cHF 105.6 million in the 2005 fiscal year (2004: loss of cHF 70.9 million).
Recognized in income at fair value interest expense from operating bonds adjustments to bonds interest expense on loans from central mortgage bond institutions change in value in loans from central mortgage bond institutions interest from banking business expenses from financial contracts for the account and at the risk of third parties
the average number of outstanding shares was changed in the restatement owing to the inclusion of the Baloise employee Share ownership trust among the consolidated entities as of January 1, 2004.
Financial RepoRt 2005 Financial RepoRt 2005 66 Bâloise-Holding Financial Report 2005 67
Outflow of liquid assets for the acquisition in cHF million cumulative acquisitions for 2005 essentially consist of amounts for MoneYMaXX lebensversicherung-aG, Düsseldorf, Germany, included in the consolidated accounts for the first time as of July
39. Business disposals 39.1 Business disposals in 2004 Banque Mercator S.a. was disposed of on august 11, 2004. this transaction resulted in a one-off charge against earnings of cHF
42.1.2 Guarantees and payment guarantees for the benefit of third parties the Baloise Group has provided guarantees and obligations to third parties, associated companies, partnerships and joint ventures.
St. Helier / Jersey / channel islands other o 100.00 F
Baloise Finance (Jersey) ltd. the securities needed for hedging are recognized as “Securities”.
the above distribution is in accordance with the provisions of article 30 of the articles of incorporation and results in a distribution of cHF
our audit was conducted in accordance with Swiss auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
in our opinion, the accounting records and financial statements and the proposed appropriation of the accumulated profit comply with