Baloise has met its targets and has succeeded in consolidating its operational profitability� The challenging, exceptional economic environment had a significant impact on earnings� The Swiss National Bank’s decision, on 15 January 2015, that it would no longer support the minimum exchange rate against the euro, caused the Swiss franc to strengthen� At the same time, interest rates in Switzerland tumbled, not least because of the introduction of negative interest rates by the Swiss National Bank in an attempt to weaken the Swiss franc� Under the influence of these sharp fluctuations in exchange rates and interest rates, the cost of hedging instruments also increased significantly� These three factors – the stronger franc, lower interest rates and higher hedging costs – had a noticeable effect on Baloise’s earnings, so we are delighted that we managed to generate a healthy profit in 2015 in spite of them�
Capital strength in accordance with the Swiss solvency test remains in the green zone�
Claims and benefits paid (gross) – 5,311.5 – 5,449.4 – 5,439.7 – 5,666.4 – 5,352.4
Change in other technical reserves – 14.9 – 7.7 – 387.1 – 445.6
Profit for the period (segment result) 333.0 320.6 391.0 215.0 1 Including change in reserve for claims handling costs. 2 Including financial liabilities held for trading purposes (derivative financial instruments). 3 Of which deferred gains / losses from other operating segments (31 December 2014: CHF 0.6 million; 31 December 2015: CHF –3.3 million).
Policy loans and other loans 1,281.2 6,051.6 7,332.8 1,047.4 4,834.6 5,882.0 1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
Baloise also runs a talent development programme for high-potential employees� Its long-established talent evaluation process is carried out each year and is designed to identify talented young employees and key individuals, find potential successors and agree staff development activities� 2015 saw the start of a new focus on the introduction of a skills assessment process for talented young employees to help them decide the direction they would like their career at Baloise to follow� In 2016 the talent development programme will be supplemented by local measures that will make it easier to focus on the individual skills of the high-potential employees�
→ “Put yourself in the other’s shoes.” → “Act authentically and earn trust.” → “Develop and engage.”
As a signatory to the UNEP* declaration for the insurance industry, Baloise is committed – among other things – to continuously reducing its carbon footprint. In 2015, further major measures were put in place to achieve this goal.
100 PER CENT OF BALOISE’S ELECTRICITY WILL BE GENERATED BY HYDROPOWER FROM 2016 In 2015 an analysis was carried out of electricity consumption at Baloise’s Swiss offices� This led to a decision being made to run the larger offices using only Swiss-generated hydropower from 1 January 2016� This underlines Baloise’s commitment to sustainability and the Swiss brand value�
Electricity consumption 20,712,643 kWh 19,983,237 kWh 19,866,588 kWh 3,476 kWh / employee – 0.6
→ Appropriate reporting procedures are used to monitor market risk and financial-structure risk across all business units� In addition to upper limits on equity exposures, for example, there are clear and binding guidelines on bond ratings� The applicable ‘Basel’ approach and advanced statistical methods are used to assess credit risk� In addition, risk analysis is used to regularly monitor the overall solvency position�
→ With a net equity exposure of 8�1 per cent at 31 December 2015, Baloise’s equity investments in the reporting year lay comfortably within its risk-bearing capacity�
Dr Eveline Saupper x x x x x x x = present, 0 = absent, n / a = not applicable. All members were attending the respective committee meetings.
5.3 Remuneration system Objectives The objectives of the remuneration system are to further increase the emphasis on performance at Baloise and to strengthen employees’ and executives’ loyalty and commitment to the organisation � The aim of Baloise’s remuneration policies is to pay basic salaries in line with the going market rate� In addition, the variable components of remuneration are structured in such a way that it is possible to grant payments above the market median for years in which individual performance and the Company’s profitability have been good; equally, it is possible to offer payments below the market median for years in which performance and profitability have been poor� As a performancedriven organisation, Baloise clearly and transparently aligns individual employees’ targets with the Company’s targets, which are derived from its strategic priorities� Target agreements, performance assessments and remuneration are closely correlated� The total remuneration package – which comprises basic salary and variable remuneration – offers a sophisticated way of linking individuals’ performance to Baloise’s success and recognising both accordingly, and it is designed to reward employees for outstanding achievement without creating an incentive for them to take inappropriate risks� Personal performance provides our talented individuals with the necessary platform for their development, advancement, career planning and promotion � Baloise attaches considerable importance to retaining high performers and managing its business sustainably� In addition to paying its staff in line with market rates and according to individual achievement, the Company encourages its executives to focus on the long term and on its shareholders’ interests� Consequently, it pays a substantial proportion of variable remuneration in the form of shares that are restricted for three years� Furthermore, the three most senior management levels receive performance share units, which means that a further component of their salaries is paid out as shares; these PSUs must be held for three years before being converted into shares as a form of deferred remuneration� As managers’ strategic responsibility and influence grow, the amount of their variable remuneration is largely determined by the Company’s profitability and economic value added (allowing for the level of risk taken)� Short-term variable remuneration as a percentage of total compensation as well as the proportion of remuneration paid in the form of restricted shares (i�e� as deferred compensation ) increase accordingly�
The target figure agreed for performance-related remuneration depends on the employee’s basic salary and varies according to his or her seniority in the management hierarchy
Date Price (CHF)1 Date Multiplier Price (CHF)1 Value (CHF)2 3 1 Price = price of Baloise shares at the PSU grant date or conversion date. 2 Value = value of one PSU at the conversion date (share price at the conversion date times the multiplier). 3 Change in value = difference between the value at the conversion date (multiplier times the share price at the conversion date) and the share price at the grant date, expressed as a percentage of the share price at the grant date; example of the PSU plan in 2007: ([{1.182*86.05}–125.80] / 125.80) 100 = –19 %. 4 Interim measurement as at 31 December 2015.
(applies to the variable remuneration granted for 2014 and to the shares subscribed by the Chairman and members of the Board of Directors in 2015)
Corporate Governance Corporate Governance Report including Remuneration Report 5.9 Rules stipulated in the Articles of Association Certain rules governing remuneration are stipulated in the Articles of Association: → Section 30 Additional amount for the remuneration paid to Corporate Executive Committee members appointed since the last Annual General Meeting
9. SIGNIFICANT AMENDMENTS TO THE ARTICLES OF ASSOCIATION SUBMITTED TO THE 2016 ANNUAL GENERAL MEETING No amendments to the Articles of Association will be submitted to the 2016 Annual General Meeting�
Balance of cash and cash equivalents as at 31 December 2,969.6 2,839.8
3.7.1 Financial assets recognised at fair value through profit or loss This category consists of two sub-categories: held-for-trading financial assets (trading portfolio) and financial assets that are designated to this category. Financial instruments are classified in this category if they have principally been acquired with the intention of selling them in the short term, or if they form part of a portfolio for which there have recently been indications that a gain could be realised in the short term, or if they have been designated to this category. Derivative financial instruments are classified as “held for trading” (trading portfolio) with the exception of derivatives that have been designated for hedge accounting purposes. Also designated to this category are structured products, i.e. equity instruments and debt instruments which, in addition to the host contract, contain embedded derivatives that are not bifurcated and measured separately. Financial assets held under investment-linked life insurance contracts are also designated as “recognised at fair value through profit or loss”.
The fair value of listed financial assets is based on prices in active markets as at the balance sheet date. If no such prices are available, fair value is estimated using generally accepted methods (such as the present-value method), independent assessments based on comparisons with the market prices of similar instruments or the prevailing market situation.
3.18 Life insurance contracts and financial contracts with discretionary participation features IFRS 4 gives users the option of accounting for insurance contracts and financial contracts with discretionary participation features by continuing to apply the existing accounting policies described in section 1 below both to liabilities and to the assets resulting directly from the pertinent contracts (deferred acquisition costs and present value of future profits from acquired business).
At the highest level, internal and external risk bands restrict and manage the overall risks incurred by the Group and the individual business units.
Net claims reserves 51.1 1 The increase in the total estimated claims incurred is primarily due to the addition of Bâloise Assurances Luxembourg S.A. 2 The increase in the total estimated claims incurred is primarily due to the addition of P & V Assurances. 3 The increase in the total estimated claims incurred is primarily due to the addition of HDI Gerling Assurances S.A.
The Group-wide Risk Management Standards require currency risk and the effectiveness of the currency derivatives transacted to be monitored on a continuous basis. The currency risk incurred must be proportionate to the potential superior return generated by the diversification effect achieved in the portfolio.
Recognised at fair value through profit or loss 244.3 244.3 – 244.3 –
Total assets measured on a recurring basis 61,328.2 63,804.1 36,321.0 2,900.1 24,583.0
Realised gains and losses on investments 470.1 104.3 437.6 320.8 116.0 78.8 317.8 – 104.2 7.9 – 1,349.4 399.7 13.1 – 13.5 – – 1,362.5 386.2
Reinsurers’ share of technical reserves as at 31 December 421.5 410.8 17. RECEIVABLES FROM REINSURERS
Actuarial gains / losses on defined benefit obligations arising from changes in financial assumptions – 188.2 63.7 changes in demographic assumptions – 2.4 – 0.4 experience adjustments – 3.4 – 1.4
Fixed-interest assets publicly listed 99.1 98.3 not publicly listed – –
Number of active PSUs as at 31 December 2013 70,741 – –
The bond of Baloise Bank SoBa amounting to CHF 100 million (3.00 per cent, 2007 – 2015, ISIN CH0030870445) was repaid on 12 June 2015.
No new bonds were issued in the year under review and no bonds were redeemed. The fair value of financial liabilities at the balance sheet date totalled CHF 1,864.2 million (2014: CHF 1,875.8 million).
Gross premiums written and policy fees 3,358.8 3,816.8 7,175.6 3,050.0 3,783.4 6,833.4
Total gains or losses on financial contracts – 462.6 – 0.9
Current income taxes – 173.2 – 168.2 1 “Other impacts” essentially comprise the offsetting of profits against loss carryforwards for which no deferred tax assets were recognised, the non-capitalisation of losses from the reporting period and the recognition of losses carried forward from previous years. This item also includes the differences between the Baloise Group’s tax rate and the tax rates applied to each individual company (and, in the year 2013, the effect arising from the application of IFRS 5 [Non-current Assets Held for Sale and Discontinued Operations]).
Cash and cash equivalents acquired / disposed of 16.2 0.5 – 1.1 –
Other financial assets Marketable securities are recognised at the lower of cost and fair value� Items recognised at fair value are reported separately�
DISTRIBUTABLE PROFIT AND APPROPRIATION OF PROFIT The profit for the period amounted to CHF 434,861,183�39�