Consolidated profi t per share not diluted in CHF 15.15 7.33 – 51.6
Headquartered in Basel, Switzerland, the Baloise Group is a European provider of insurance and pension solutions. It positions itself as an insurer with a smart prevention concept, the “Safety World”. In Switzerland, the Group operates as a focused financial services provider, offering a combination of insurance and banking services. The Group also has a market presence in Germany, Austria, Belgium, Luxembourg, Liechtenstein, Croatia and Serbia. The sales network spans the Group’s own sales organisation, plus brokers and other partners. Baloise operates its innovative pension plan products business for private customers throughout Europe with its competence centres in Luxembourg and Liechtenstein. Bâloise-Holding shares are included in the Swiss Market Index (SMI), comprising the 20 leading Swiss companies, and are listed on SWX Europe. The Baloise Group employs approximately 9,200 people.
Business volume growth of 0.7 % in local currencies to CHF 7,858.3 million. Outstanding combined ratio of 88.1 %.
S Su Su H of E of R w 3640.indd UG23640.indd UG2 17.03.2009 03:04:46
Business volume, premiums and combined ratio . . . . . . . . . . 101
Appropriation of retained earnings as proposed by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
INFORMATION ON THE BALOISE GROUP . . . . . . . . . . . . . . . . . . . . . . . . 127
KEY DATES AND CONTACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
SHAREHOLDER INFORMATION Letter to shareholders: “Safety and trust have a future” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Baloise share: Baloise share as best financial stock in the Swiss Market Index (SMI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Belgium and Luxembourg: Growth thanks to good positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Other countries: Focus on growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Ecology: Long-term protection of the environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Risk Management: Making our customers safer 3640.indd UG2 17.03.2009 03:04:46
We bring safety within the reach of everyone having contact with us, everyday, everywhere we operate: for customers, employees, partners, shareholders and also for the general public.
By providing our safety solutions, we want to make a contribution to society and thus fulfil our responsibility.
We inspire and nurture our employees, so that they can keep this promise, day after day. That’s how we make an impact on our environment. With the result that we take our place as a unique and outstanding company. And this is how we grow to be a strong brand.
Why have we set this ambitious target? Because only strong, healthy companies can invest in the future, to the benefit of their customers, employees, distribution partners and shareholders.
The core of this strategy is our Group-wide brand positioning with its focus on safety. The associated differentiation generated by effective added value provides extensive opportunities for growth. Our brand expresses our personality. We are continuously developing it and regularly measure how firmly our brand is positioned in our reference groups.
Safety is our core achievement. Safety is behind every achievement, every service and every product. As a force which liberates energy, inspires and fosters.
Baloise stands for professionalism. This allows us to produce top-quality performance. We are professional in our approach to our core business, our customers and our marketing. Because we know that professionalism brings inner peace.
Baloise is proud of its Swiss origins. Since 1863. This means we combine reliability, humanism, solidity, tradition, financial strength and independence.
Commitment to partnership is one of our biggest emotional strengths. It is based on recognising and creating added value. We work to nurture and deepen our relationships with all our stakeholders. So that we are always able to generate enthusiasm.
The brand deliverables describe our services and capabilities: The brand values describe our character: VORABDRUCK
By optimising the existing organisation, we want to utilise its full potential. Here we concentrate on enhancing our expertise in respect of operational excellence, on the effective control of the insurance business, on capital efficiency and utilising synergies.
We will continue our successful focus on valuable customers and partners. This positioning as part of “Safety World” will give us new impetus. Added to this are innovative products plus the development of new customer segments and sales channels.
In the German market, Baloise is represented by the business units “Basler Versicherungen” and “Deutscher Ring”. With its headquarters in Bad Homburg, Baloise Germany focuses on property insurance, providing insurance and pension solutions to private customers, small and mediumsized businesses and selected industrial customers. In sales, Baloise Germany works primarily with the company ’s own sales force and external brokers. Deutscher Ring in Hamburg specialises in pension solutions for private customers, focusing on retirement and health care products. Apart from its own sales force, Deutscher Ring also works with distribution partners OVB and ZEUS and external brokers.
In the Swiss home market, Baloise trades under the names “Basler Versicherungen” and “Baloise Bank SoBa”. Baloise Switzerland is the largest business unit within the Group. As a financial services provider, it focuses on comprehensive insurance and pension solutions. Customers are private individuals, small and medium-sized businesses and selected industrial enterprises. The heart of the Baloise’s sales organisation is the company’s own sales force, which works closely with selected distribution partners for individual product and customer segments, plus external brokers and on the internet. In addition, Baloise Bank SoBa offers banking products through the insurance sales force to complement the range of pension products. In northwest Switzerland, Baloise Bank SoBa is also positioned as a full-service bank.
In Austria, “Basler Versicherungen” offers insurance and pension solutions to private customers and small and medium-sized businesses. In sales, the business unit relies primarily on its own sales force, plus a number of selected brokers. Basler is one of the prime addresses in the target segment medical practitioners and other medical personnel.
Together with “Osiguranje Zagreb”, which was acquired in July 2007, “Basler Osiguranja” is the fifth largest insurer in the Croatian market. They offer a comprehensive range of insurance solutions for private and business customers through their own insurance sales force as well as through agencies and banks. Baloise is also present in Serbia since the end of 2007 and focuses there on selected target customer segments as well as on sales via bank.
Security means having a place where we feel welcome, from where we can observe the world and fashion our lives. Or simply enjoy the moment.
For Baloise, reliability and tradition are values that still have meaning. Swiss in other words. Baloise stands for continuity, reliability, solidity and tradition. Values that communicate safety and – along with it – a feeling of security.
The instability of the financial market and the insecurity of the global economy have led to public uncertainty and loss of confidence. Terms such as profit maximisation and individualism are replaced by sustainability, stability, safety and reliability. Trust again has a future.
In the insurance industry, trust, credibility, transparency, solidity, solvency and safety are of particular importance; they are at the core of the service commitment. Baloise has dedicated itself to these values for generations. Now we want all partners of Baloise to feel safe. The Board of Directors has therefore decided on a consistent, strategic positioning: With the “Baloise Safety World” we put the integrated safety of our customers, shareholders, partners and employees at the centre of business performance. So, we consciously go further than conventional insurance companies: for the promise “Making you safer” combines classic insurance with smart prevention. We are confident that with this new image, we can make an important contribution to the happiness in the lives of people and to sustainable development.
Dr Rolf Schäuble Dr Martin Strobel Chairman of the Board of Directors CEO of Baloise Group
The looming crisis was already ref lected in performance during the first half of 2008. During this period the SMI lost 16 %, the Swiss Insurance Industry Index (SWX SP Insurance Price Index) lost 18 % and the European market declined by 25 %. At a moderate decrease of 3.5 %, the Baloise share was able to outperform the overall market appreciably.
In contrast, the performance of the Baloise share was relatively positive with a year-end price of CHF 78.50. A price decrease of 29.6 % meant that the Baloise share outperformed the overall market and ended 2008 as the best financial stock in the SMI and as the second best stock in the Swiss Insurance Industry Index.
In September 2008, a new share buy-back programme covering a maximum of 2,000,000 registered shares was launched via the primary trading line. By the end of 2008, 274,217 shares had been acquired at an average price of CHF 64.33, which equates to 14 % of the maximum buy-back volume.
Consolidated profi t per share diluted in CHF 3.90 7.30 12.90 15.15 7.32
Number of shares issued in units 55,307,150 55,307,150 55,307,150 54,000,000 50,000,000
./. Number of treasury shares in units 1,176,237 887,879 1,849,548 3,997,308 1,566,985
Number of shares in circulation in units 54,130,913 54,419,271 53,457,602 50,002,692 48,433,015
Average number of shares outstanding 1 54,001,678 54,280,154 54,086,516 51,887,469 48,852,533
Dividends per share 2 in CHF 1.10 2.20 3.80 4.50 4.50 1 Relevant for the earnings per share calculation (see Financial Report page 116). 2 2008 based on proposal to Annual General Meeting.
2008, the Barclays Group, with a stake of 4.95 % of the outstanding shares, dropped below the threshold value of 5 %. Information on the largest registered shareholders as of 31 December 2008 is detailed in the table on page 120.
INDEXED SHARE PRICE DEVELOPMENT 1 BÂLOISE-HOLDING REGISTERED SHARE 2003 – 2008
Courage means embarking on an uncertain future. It is a balancing act between success and failure. The certainty of having someone at your side spurs you on to be ambitious.
For Baloise, courage is the basis of enterprise, renewal and future viability. Our safety solutions help our customers to take the decisive step. Because being innovative is easier when we feel safe.
In order to minimise the risks, we have specifically reduced the proportion of shares and share-equivalent assets in the insurance business by means of physical sales. Furthermore, we have continuously reduced equity exposure through the use of derivatives. Therefore, the pre-hedging equity weighting fell significantly from 13.1 % in the previous year to 7.4 % by the end of the year. After factoring in hedging, it is only 5.1 %. Current income from investments increased moderately to CHF 2,053.1 million. However, the distortions on the stock, bond and currency markets resulted in a sharp increase in impairment; this could only be partially be offset by income from hedging derivatives. In a very difficult financial environment, the result from investment income declined 44.4 % to CHF 1,406.7 million. This performance of – 0.4 % reflects in particular the negative impact of stock markets and exchange rates.
In 2008, the scope of consolidation was amended as follows: The Baloise Group changed the method for consolidating participations jointly held with Deutscher Ring Krankenversicherungsverein a.G., retroactively to 1 January 2007. These companies will be fully consolidated instead of being proportionately consolidated, as previously. Wealth Assurance AG in Vaduz was sold and was excluded from the scope of consolidation as of 31 October 2008.
NONLIFE DIVISION: EXCELLENT INSURANCE BUSINESS The nonlife division (indemnity and personal insurance) performed well, thanks to a strong operating performance and to the high quality of the insurance portfolio built up during the last few years. It generated a profit before taxes and borrowing costs of CHF 423.2 million (previous year: CHF 508.6 million). Depreciation on financial assets caused this decrease. Claims performance was normal in 2008 with average major claims exposure. The combined ratio reached a first-rate level; it again improved significantly to a gross 88.1 % (previous year: 93.0 %) and to a net 90.9 % (previous year: 95.1 %). All strategic business units improved or maintained their combined ratios; Baloise Switzerland set a new record.
From 2005 onwards: excluding statutory required interest on actuarial reserves for pensions.
Business volume – including investment-type life insurance – reached CHF 4,643.5 million (previous year: CHF 4,747.0 million), a reduction of 0.7 % in local currencies and of 2.2 % in Swiss franc terms. Business performance ref lects the impact of the economy and of the financial markets on this division. Given that demand remained intact, premium income (IFRS accounting standards) from conventional life insurance rose 2.8 % in local currencies and 1.7 % in Swiss francs. Business volume in investment-type life insurance decreased by 12.6 % (15.4 % in CHF ), in particular in Luxembourg. The new product RentaSafe was successfully launched in Switzerland.
The embedded value of the life insurance business dropped from CHF 3,230.6 million to CHF 2,446.2 million in the reporting period. This corresponds to a return on embedded value of – 20.1 %. A figure of CHF – 696.3 million stems – after considering surplus effects – from worse than expected developments in the business environment in 2008. The conservatively modeled economic conditions for the future contributed CHF – 242.7 million to embedded value. The value of new business amounted to CHF 19.4 million. The new business margin was 7.9 % (previous year: 9.5 %).
BANKING DIVISION: EARNING POWER REMAINS INTACT In comparison to the excellent result of the previous year, the banking division generated a lower profit before taxes and borrowing costs of CHF 52.9 million (previous year: CHF 69.0 million). Using local accounting standards Baloise Bank SoBa achieved a profit of CHF 24.9 million (previous year: CHF 30.4 million). Commission income and lower interest margins caused this decrease. Due to market conditions, Baloise Asset Management generated a lower profit of CHF 11.4 million (previous year: CHF 18.5 million). Baloise Fund Invest was able to improve its result by 7.4 % to CHF 8.7 million.
and exchange rate volatility increased. With average price falls of 40 % in established financial centres and of 53 % in emerging markets, 2008 is the second worst stock market year in the last 175 years. Since January we have continuously reduced our exposure to stock market and currency risks. Shares and equity-related investments as a proportion of total investments amount to 5.1 % (previous year: 13.1 %) after hedging. This radical collapse in prices resulted in impairments of CHF 827.2 million on financial assets of an equity nature. These losses or impairments could only be partially compensated with hedging derivatives.
Even the bond portfolio was not able to avoid the massive increase in credit risk premiums, despite the high quality of the investments. Our conservative investment strategy very much proved its worth in a very difficult interest rate market environment. We had to create impairments of CHF 97.9 million on financial instruments of a debt nature.
BALOISE ASSETS AS OF 31.12.2007 Nonlife Life Bank Total Group in CHF million
BALOISE ASSETS AS OF 31.12.2008 Nonlife Life Bank Total Group in CHF million
The nonlife division achieved a business volume of CHF 1,299.5 million (previous year: CHF 1,285.9 million), which equates to an increase of 1.1 %. This is a good figure, given permanent price competition. General liability, property and marine insurance recorded remarkable growth, whilst the motor insurance volume declined. The division stood out on account of its excellent technical performance: The combined ratio improved, thanks to a continuing decline in claims frequency and an average exposure to major claims as well as to further optimisation measures, to the record level of 81.4 % gross (previous year: 88.6 %).
Business volume in the life insurance division came in at CHF 2,567.7 million (previous year: CHF 2,456.8 million). This equates to growth of a gratifying 4.5 %. Group life business demand was cyclically high, increasing by 5.8 %, with non-recurrent deposits even increasing by 9.4 %. The increase of 14.8 % in non-recurrent deposits in the individual life business generated growth of 2.0 %.
BASLER VERSICHERUNGEN Thanks to its operational earning power, Baloise Germany was able to make a substantial contribution to consolidated profit, despite the difficult economic climate. The unit achieved a business volume of CHF 1,063.7 million (previous year: CHF 1,083.9 million). This represents an increase in local currency, i.e. not factoring in negative currency effects, of 1.5 %. This is appreciably above the market average. The core division, property insurance, generated a premium volume of CHF 855.1 million, which equates to an increase of 2.1 % in euro terms. Baloise Germany was again able to put up a convincing technical performance. The combined ratio was 94.2 % gross, a significant improvement on the previous year’s level of 97.3 %, thanks primarily to a lower claims ratio, which in the previous year was encumbered by the winter storm “Kyrill”. Life insurance business volume amounted to CHF 208.6 million, a decrease in domestic currencies of 0.9 %. Despite the contraction of the overall market, new life insurance business performed well, particularly pension insurance.
Together Baloise’s German business units generated a profit before taxes and borrowing costs of CHF 93.4 million (previous year: CHF 194.7 million) in a competitive market. Property insurance was the main contributor.
LUXEMBOURG Baloise Luxembourg achieved remarkable growth in the conventional insurance business. By contrast, investment-type life insurance declined substantially because of the financial crisis. Overall, the business unit was able to maintain its high profitability. IFRS premium volume rose in euro terms by a remarkable 9.7 % (6.0 % in CHF terms) to CHF 101.8 million (previous year: CHF 96.1 million). In contrast to this, the business volume fell by 23.1 % in original currency because of the sharp decline in investment-type life insurance. The nonlife division performed extremely well – at CHF 55.8 million, business volume rose in euro terms by 8.0 %. Targeted expansion of the sales organisation and products with scoring were responsible for this growth, which was well above the market average. The combined ratio (gross) improved to 88.4 % (previous year: 91.6 %). Life insurance business volume fell by 25.5 % to CHF 516.6 million, due to the market-induced collapse of the investment-type product market. Nevertheless, in this sector the Luxembourg unit remains a veritable pillar of strength of the Baloise Group. Meanwhile, Baloise achieved substantial growth in classic life insurance. IFRS premiums rose 11.7 % in euro terms to CHF 46.0 million.
AUSTRIA Baloise continues to gain ground in Austria and has exceeded its growth targets. This can be attributed principally to targeted expansion of its sales organisation, cooperation with efficient sales partners and “Safety World” positioning, which combines classic insurance with smart prevention. Business volume rose by 11.7 % in euro terms (8.0 % in CHF terms) to CHF 158.5 million (previous year: CHF 146.7 million ). Particularly encouraging was the increase in investment -type life insurance. The business volume of the nonlife division increased by 10.7 % in euro terms to CHF 117.3 million, which is substantially above the market average. The combined ratio (gross) remained at the previous year’s level of 99.8 %. Local storms adversely affected the claims result. Life insurance caused the business volume to rise 14.7 % to CHF 41.2 million, whilst investment-type insurance almost doubled, despite the financial crisis. Growth in classic life insurance declined slightly, coming in at – 1.6 % in original currency. In the future, the focus will be on accelerating growth and increasing the organisation’s efficiency.
REINSURANCE, FINANCING AND HOLDING COMPANIES Here we aggregate companies dealing with internal reinsurance, alternative forms of investment, financing and participations and other corporate business. The profit contribution before taxes was CHF 154.7 million (previous year: CHF 261.7 million). The result can be attributed to a very good technical result at the reinsurance unit and in corporate business. The companies dealing with alternative financial investments also contributed to the result.
The FloodStop system is convincing. A Baloise customer seizes the initiative himself and demonstrates the advantages of the air bags to a married couple: they can be space-savingly stored, are easily installed without requiring any structural alterations. FloodStop is likely to herald the end of an era, in which sandbags were hauled into place using heavy machinery during f loods. “We have just arranged an appointment to go and measure up a house here in Ticino tomorrow,” the CEO is delighted to report. However, FloodStop also has other applications, he grins: he used this material to make a “powernap mattress” for a friend to use in his office.
Flooding is a permanent issue in mountainous Switzerland. In collaboration with HOWASU, Baloise is generating awareness amongst its customers and showing them how they can be proactive in protecting their properties. The innovative inflatable safety bags provide extensive protection and replace heavy sandbags.
03 Not a drop is spilt: the demonstration tank is filled with water. 04 Prevention begins with good advice.
On a grey Saturday in September, people are busy quietly preparing the square for the regional Safety Day in front of the Fair & Sicher – an independent insurance agency that sells Basler products. Employees from the Fair & Sicher agency, Basler’s head office in Vienna and the regional head office in Linz have planned an actionpacked afternoon. The Vestenthal Volunteer Fire Brigade has pitched up with two large fire engines and employees from CRESU Brandschutztechnik (fire protection engineering) line up firefighting equipment of every size and make. A bouncy castle in the form of a giant football is inf lated, whilst the Frankfurters are put on the boil. Gradually, the first customers start arriving to share an afternoon packed with raff les, cake, music and enjoyment.
Reinhard Wimmer, a fireman from Linz, has come specially to raise awareness amongst those attending. “In Austria there are around 2500 fires every year, in which hundreds of people lose their lives”, he said explaining the urgency of his mission. “Many of them can be prevented.” Ernst Mayrhofer from Fair & Sicher sums up Basler’s prevention strategy: “Damage is always associated with pain. If your house burns down, we will compensate you for the damage, but if it was your parental home nobody can make up for that loss.”
Following the introduction, the volunteer fire brigade demonstrates what happens if you try to extinguish burning fat with water. The four-metre-high jet f lame shows impressively just how dangerous such an error of judgement can be. Then it’s the children’s turn. Reinhard Wimmer lets them extinguish a gas blaze using various fire extinguishers. A blond kid grins like a Cheshire cat not uttering a word as he extinguishes the fire. While another is more relaxed about his fire-fighting performance: “Mum, let’s go and get a sausage now!”
Ernst Mayrhofer invited two guardian angels to the raff le: His daughter Jennifer and her friend Elke Menzl have slipped into angels’ costumes, draw the raff le tickets and have their photographs taken with the winners of cycle helmets and first-aid kits. Half the village has won a prize. The unofficial highlight is presumably that Günther Flach from the volunteer fire brigade has won a fire extinguisher, of all things.
Baloise Austria has launched its “Safety Days”, on which the issue of fire protection in towns and villages is addressed in cooperation with local insurance agencies and fire brigades. We visited the Safety Days event in the Upper Austrian village of Haidershofen, a typical Central European community.
* The following statements are taken from the presentation given by Dr Rolf Schäuble, Chairman of the Board of Directors, at the Bâloise-Holding Annual General Meeting on 27 April 2007.
We provide reliable support to our customers in all life situations.
We create and preserve value-adding jobs. We treat natural resources responsibly and sparingly. In the interests of our shareholders, and therefore the economy, we apply capital resources efficiently.
We generate profits in order to help fund the public sector by paying taxes.
This added value is a tangible feature of our Safety World: we assist with intelligent prevention solutions, so that damage does not occur in the first place and so that our customers feel safe. And should something nevertheless happen, we are on hand. Everything we do is geared towards safety. “Making you safer”. Now and in the future.
You can find more information about the issue of sustainability at www.baloise.com/sustainability
SUSTAINABILITY RATINGS 2008 Our efforts and successes regarding sustainability are reviewed annually by impartial panels and presented in ratings. Safe and enthusiastic customers are the reward we get for our work; ratings are accolades, which endorse the approach we take.
In 2008, Baloise was listed in the following sustainability ratings: VORABDRUCK
We invest in the most important resource – in our employees and in people, who want for work for us. We encourage and support our employees so that they inspire those around us.
As of 31.12.2008, the Baloise Group had 9,233 (2007: 8,643) employees (8,126 FTE in 2008).
As of 31.12.2008 staff turnover was 9.3 % (2007: 7.4 %). 58.1 % (2007: 65.0 %) of those who left the company did so of their own accord.
In our main market, Switzerland, 53.0 % (2007: 64.0 %) of employees took advantage of our Employee Share Ownership Programmes. In our business units abroad, all executives at function levels 1–3 participate in share ownership programmes.
Overall Baloise invested CHF 18.1 million (2007: CHF 20.8 million) in employee training in 2008.
The average number of training days per employee was 3.7 in 2008 (2007: 2.5 days).
The focus of our Human Resources strategy is on enabling existing employees to obtain qualifications over the long term and to develop their careers within Baloise, as well as on finding the best talents on the labour market and recruiting them to work for Baloise.
The elements of our Human Resources strategy are: To be the preferred employer in our sector To be performance- and results-driven To be a highly qualified, learning organisation To have excellent leadership and management skills To be highly adaptable and f lexible To have a strong employee-focused corporate culture, based on fairness, openness and esprit de corps amongst colleagues.
In 2008, Baloise identified result-related key figures relevant to these four guiding principles and formulated appropriate targets and action. For example, a contribution to operating income of up to CHF 6 million per annum can be achieved by reducing unintentional staff turnover by 1 percent.
Overall, more than 60 % of all employees throughout the Group participate every year in a standardised objectives agreement and performance review process. For executives at function levels 1–5, individual performance and the consolidated result have a direct bearing on the variable remuneration component. In our main market, Switzerland, a variable salary component was introduced for all employees, in order to encourage and reward exceptional performance accordingly.
In 2008, more than 53 % of employees of our Swiss operations subscribed shares, thus acquiring a direct stake in the company’s long-term success.
HIGHLY QUALIFIED, LEARNING ORGANISATION The ideas, motivation and skills of our employees are our competitive advantage, which we use to inspire our customers. We therefore invest specifically in the skills of our employees and, in doing so, lay the foundations for our longterm corporate success.
Our Belgian business unit Mercator has already introduced a similar development tool. A distinction is made between soft and technical skills, which are summarised in a skills profile and linked to the respective job description. This tool enables the line manager and the employee to jointly define and institute individualised development measures in a face-to-face meeting.
He appreciates Baloise because the working climate and environment are motivating, his remit constantly throws up exciting challenges, he has the opportunity to inf luence and monitor issues outside his immediate field and his work is not overburdened with too many rules.
STRONG EMPLOYEE-FOCUSED CORPORATE CULTURE For the third time, Baloise Austria has been rated as Austria ’s most attractive insurance company in the external “Great Place to Work 2008” survey. In the overall ranking of Austria’s best employers Baloise Austria again achieved a
He likes working at Baloise because people are at the focus of the company, the company values every employee to the same degree – irrespective of function, being able to meet colleagues from other international subsidiaries and to compare notes is particularly valuable, we inspire our customers and our sales partners with excellent service and innovative product solutions.
top 10 position in 2008. Credibility and integrity, respect, fairness, equality and team spirit are the key criteria in this survey. Our employees confirm the superb corporate culture in a workplace where people trust those they work for, are proud of what they do and enjoy working together with colleagues and managers.
In 2008, Basler in Croatia and Osiguranje Zagreb were the first companies in Croatia to participate in the “Great Place to Work” survey. The response rate of over 80 % shows how important it is to employees to be able to actively shape their working environment. The results confirm the strength of interest in the company’s success. Furthermore, areas could be identified where action needs to be taken for the remainder of the integration process.
An important element of employee satisfaction is a good “worklife balance”. In various countries, we offer flexible ways of working, including part-time, sabbaticals and working from home, to enable people to combine career and family. We have run a crèche at our largest location in Basel since 2001, which looks after more than 80 of our employees’ children.
In September 2006, Katharina Büeler took over as Managing Director of the “Trigona” collective foundation. She has also headed the PVU Advisory division since January 2008. She is the mother of an eleven-year-old son and is delighted to be able to help shape Baloise’s management culture as a woman.
She would like to motivate women to have the courage to take on management positions with plenty of responsibi lity.
BALOISE IN TOUCH WITH EMPLOYEE REPRESENTATIVES Baloise respects the right of every employee to be or to become a member of an employee representation body. We maintain an open and constructive dialogue with all employee representatives and committees. All employees from every international subsidiary are represented in the Baloise Europe-Forum. In May 2008, the Europe-Forum and employer’s representatives met for 2 days in Bad Homburg. This way we provide employee representatives with direct access to the Corporate Executive Committee, as well as promoting communication locally.
STRATEGIC PRIORITIES 2009 In October 2008, Corporate Human Resources was commissioned by the Corporate Executive Committee to develop a performance-driven, market-compatible performance management system for the entire Baloise Group in 2009. This constitutes an important strategic focus in 2009 to enhance our Human Resources policy.
The “Employer Branding” project will be launched in 2009 to reinforce our new brand positioning. The objective here is to position Baloise as one of our sector’s most attractive employers.
In 2009, the Strategic Leadership Program (SLP) will be completely relaunched. Approximately 150 experienced executives and corporate talents from across the entire Baloise Group will participate in the new modular programme.
Baloise signed the UNEP* Insurance Industry Declaration in 1995. In the Baloise Group’s environmental mission statement, we commit ourselves, amongst other things, to reduce our direct impact on the environment continuously by planning, building and managing corporate real estate with a resourcesaving approach. The same principles and criteria apply to the procurement of equipment and materials.
COMMITMENT TO OUR OWN ENVIRONMENTAL EFFICIENCY The material and energy f lows mentioned in this Annual Report refer to large properties used for operational purposes, where approx. 60 % of our total workforce is based. We aim to reduce energy and water consumption by 2 – 3 percent per annum during the 2004 – 2013 period. As a responsible company, environmental changes and the anticipated rise in the cost of energy oblige and motivate us to make our contribution by using resources effectively.
REDUCING CO2 EMISSIONS USING SOLAR ENERGY AND MODERN ENERGY MANAGEMENT A solar thermal system harnesses the power of the sun to produce the hot water for the kitchen in Baloise Germany’s head office in Bremen. The solar collector area of 31 m2 allows us to reduce CO2 emissions by approx. 25 tonnes per annum. At Deutscher Ring’s head office in Hamburg, new, innovative energy management software provides optimum electricity, heating and water f lows.
EMBEDDING ENERGY SAVING IN OUR CONSCIOUSNESS “Save Energy Weeks” will be held in 2009 at the head offices in Belgium and Switzerland to demonstrate how employees can inf luence energy consumption at their places of work.
Copy paper consumption 81.6 million A4 sheets 83.3 million A4 sheets 93.6 million A4 sheets 17,293 A4 sheets / employee 12.4
SAVING WATER EVERY DAY Every time a urinal is f lushed, 4.5 litres of potable water are used. In 2008 and 2009, such urinals in Baloise Switzerland’s head office are being replaced by non-f lush models. Thanks to this, 1.9 million litres of water will be saved per year and this will also reduce the costs of water treatment accordingly.
www.baloise.com/sustainability Ecology → Environmental mission statement Ecology → Ecological balance sheet Risk Management Interview with Rolf Schäuble
As an integral component in Baloise’s strategic management, Risk Management makes a major contribution to Baloise’s new positioning. In the 2008 fiscal year, it was able to demonstrate its effectiveness. As a European insurance company with Swiss roots, we boast a strong balance sheet and operational earning power, which have been optimised in relation to risks taken on the one hand, and earnings opportunities on the other.
A detailed description can be found on page 38 of the Financial Report.
RISK GOVERNANCE AND RISK CULTURE Continuous development of risk governance and risk culture has a long tradition at Baloise: we established a Risk Management division within the Group as early as 1998. Since then we have continuously improved this culture throughout the entire organisation. The appointment of risk owners and risk controllers of specific risk issues is as much a part of this as the membership of committees that meet regularly to deal with risk issues. This development is accompanied by continuous development of risk models and risk processes. In 2008, this risk process development included a project to upgrade the internal control system (ICS).
Risk Management is increasingly developing into risk and value management. Our risk model is based on innovative standards, so that “Making you safer” is a promise we can always keep.
In 2008 Baloise’s Enterprise Risk Management System was again rated “Adequate with Potential to Become Strong” by Standard & Poor’s.
Special panels also prepare decision documents regarding specific risk areas, such as asset / liability management, compliance, IT risks and advance booking, for these committees. This is rounded off by close cooperation between the Group’s Risk Management team and local risk experts. This comprehensive risk organisation is our platform for exchanging ideas and continuously improving “best practice”.
The business units are responsible for implementing the Group’s specifications locally. Overall responsibility lies with the Group’s Chief Financial Officer followed by the Head of Financial Management. Ultimate responsibility in respect of risk tolerance, business objectives, Risk Management strategy and standards is in the hands of the Board of Directors of Bâloise-Holding.
RISK MEASUREMENT Our risk model standardises quantification of all business and financial market risks in all strategic business units. We have continuously developed this model since 1998. In this respect, we have been guided by the principles and calculation methods of the Swiss Solvency Test and the European Union’s Solvency II guidelines. This makes our model a pioneering Risk Management tool. As a Group standard it provides a firm foundation enabling management to take strategic and operational decisions.
We consciously and consistently base our model on the most up-to-date standards, which enables us to be a reliable partner both internally and externally. Today our model already complies with future regulatory benchmarks in Switzerland and the European Union. The Group model was submitted to the Swiss Federal Office of Private Insurance (FOPI) in 2008.
We produce extensive semi-annual risk reports, which we discuss in detail with decision-makers. The resulting measures constitute an important element of the risk process. We review our overall risk position using our monthly IBISS (Intermediate Baloise Internal Solvency System) risk report. This describes the full Solvency II risk situation, with emphasis on capital investment risks. Reports to regulatory authorities complete the picture.
Thanks to our investment policy, the negative impact on results was moderate in comparison to the rest of the market.
The Baloise Group’s investment strategy focuses on diversification and the principle of only investing in instruments that can be fully assessed. Given the market distortions, Baloise has further reduced its financial exposure since the middle of the year. The direct impact of CDOs (Collateral Debt Obligations ) and similarly structured instruments was negligible.
Baloise has invested in blue-chip fixed-interest securities. In 2008 impairment was at less than 0.5 % of the portfolio in this investment category. Our stable property portfolio with its high-quality recurring revenues from capital employed proved to be an important earnings pillar. Currency risks on fixed-interest and alternative financial investments were hedged to a considerable extent during the year. Baloise did not avail itself of the reclassification option, backdated to 1 July 2008, which the International Accounting Standards Board announced on 13 October 2008.
Our excellent positioning in actuarial practice is proven in the nonlife sector, e. g. by the Group’s combined ratio of 90.9 %. Here the reinsurance division and the Group’s Risk Management team continue to engineer Baloise’s excess and reinsurance structures to be risk-optimised.
Risk Management will continue to make rapid advances in the next few years and turn Baloise into a company with a superior risk strategy and positioning.
Achievement drives us onward. It creates movement and keeps us going. At best when we are sure that we will land again safely on solid ground.
At Baloise, safety becomes something you experience day after day. It is the supporting element that underpins each service and every product. As a force that releases energy, that motivates and inspires.
This chapter follows the structure of the SIX Corporate Governance Guidelines, 1 January 2007 version, in order to provide more transparency and thus better comparability with previous years as well as with other companies. The Swiss Code of Best Practice has also been taken into account, in particular Appendix 1, published in 2007, with its recommendations on compensation. Baloise publishes a separate compensation report as chapter 5 of its Corporate Governance Report.
Information on the Baloise share can be found in the Annual Report from page 14 onwards. More details on major subsidiaries and participations as of 31 December 2008 can be found in the notes to the consolidated Annual Financial Statement in the Financial Report, from page 134 onwards. Segment reporting by geographic regions and by business segments can be found in the notes to the conso lidated Annual Financial Statement in the Financial Report, from page 65 onwards. The operational corporate governance structure is presented on page 95 of the Annual Report.
As a value-focused business Baloise has always attached great importance to responsible corporate governance and continues to uphold this tradition.
Share buy-back programme The Baloise Board of Directors decided on 10 March 2006 to buy back up to 10 % of the issued share capital within the next three years, which equates to a maximum of 5,530,715 registered shares each with a face value of CHF 0.10. The shares to be acquired shall be bought back via a separate trading line, less withholding tax. At the Bâloise-Holding Annual General Meeting on 27 April 2007, the shareholders passed a resolution to reduce the share capital of CHF 5,530,715 by CHF 130,715 (equals 2.4 %) to CHF 5,400,000, by cancelling 1,307,150 repurchased registered shares each with a face value of CHF 0.10. At the Bâloise-Holding Annual General Meeting on 29 April 2008, the share holders passed a resolution to reduce the share capital of CHF 5,400,000 by
At the Annual Results Media Conference on 26 March 2008, Baloise announced another share buy-back programme. A maximum of 2,000,000 registered shares will be bought back. This corresponds to a maximum of 4 % of the shares issued. The buy-back of shares started in September 2008. The shares will be acquired via the primary trading line on SWX Europe. 274,217 shares had been acquired via the primary trading line by 31 December 2008, which equates to 0.6 % of the outstanding shares. Buy-back volumes and prices are published weekly on the Internet.
Outstanding bonds Bâloise-Holding and other Group companies have issued bonds on the open market. At the end of 2008, a total of 4 bonds issued by Bâloise-Holding and other Group companies were outstanding on the open market. Details about outstanding bonds can be found in the notes to the Annual Financial Statement on page 118 of the Financial Report and on the Internet.
Rating Standard & Poor’s Ratings Services has given the financial strength of Basler Versicherungs-Gesellschaft an “A–” rating with a stable outlook. This ref lects the Baloise Group’s strong competitive position, excellent earning power and high degree of financing f lexibility.
www.baloise.com → Investor Relations → Rating 3. BOARD OF DIRECTORS Only the Chairman of the Board of Directors, Dr Rolf Schäuble, holds an executive post. From 6 December 2007 until 31 December 2008, he simultaneously held the post of Chief Executive Officer. With effect from 1 January 2009, he holds only the post of Chairman of the Board of Directors. In line with the Swiss Code of Best Practice and to ensure adequate control mechanisms, Vice-Chairman Dr Georg F. Krayer has acted as Lead Director since 6 December 2007, in his capacity as an experienced non-executive member of the Board of Directors. The Lead Director basically ensures that the Board of Directors is able to operate independently of management. The Lead Director is authorised, if required, to independently call and chair a meeting of the Board of Directors. Dr Georg F. Krayer stepped down as Lead Director on 31 December 2008. Except for the Chairman, all other members of the Board of Directors are non-executive and independent. In the three fiscal years preceding the reporting period, they were not appointed to an executive post within any Group company and do not maintain any substantial business relationships with the Baloise Group.
During the reporting period the following members were reappointed for a three-year term: Dr Rolf Schäuble Dr Eveline Saupper
Rolf Schäuble (1944, CH, Dr. oec. HSG) obtained his doctorate (Dr. oec. HSG) after reading Economics at the University of St. Gallen. Between 1975 and 1993 he held various posts in the Zurich Insurance Group in Zurich, most recently as a member of the Group Executive Board. In 1993 Dr Rolf Schäuble joined the Board of Directors of BâloiseHolding and was appointed Chairman in 1994. From 1996 until 2002 he was also Managing Director and Chief Executive Officer of the Baloise Group. Between 2002 and December 2007 he served only as Chairman of the Board of Directors.
Georg F. Krayer (1943, CH, Dr. iur.) has been a member of the Board of Directors since 1995 and its Vice-Chairman since 2004. He was also appointed Lead Director on 6 December 2007. He studied law, obtaining a doctorate (Dr. iur.). Dr Georg F. Krayer was Chairman of the Board of Directors at Bank Sarasin & Cie AG, Basel until 2008 and Chairman of the Swiss Bankers Association from 1992 until 2003. He is an independent, non-executive director.
4 Andreas Burckhardt (1951, CH, Dr. iur.) has been a member of the Board of Directors since 1999. He studied law at the Universities of Basel and Geneva and obtained his doctorate (Dr. iur.). He worked for Fides Treuhandgesellschaft from 1982 until 1987 and served as General Secretary of the Baloise Group from 1988 until 1994. Since 1994 he has been Director of the Basel Area Chamber of Commerce. Dr Andreas Burckhardt is Vice-President of the Swiss Association of Chambers of Commerce and has been a member of the Great Council of the Canton of Basel-City since 1997 (President in 2006 / 2007). He is an independent, non-executive director.
6 Gertrud Höhler (1941, D, Prof. Dr. phil.) joined the Board of Directors in 1998. She is a business and political consultant and was Professor of Literature and German at the University of Paderborn from 1976 to 1993. She studied literature and art history in Bonn, Berlin, Zurich and Mannheim. From 1987 to 1990 Prof Dr Gertrud Höhler was PR consultant to the Chairman of Deutsche Bank AG, Alfred Herrhausen, and between 1992 and 1995 was a non-executive director at Grand Metropolitan PLC, London. She is a member of the Board of Directors of Ciba AG, Basel, and of Georg Fischer AG, Schaffhausen. Prof Dr Gertrud Höhler is an independent, non-executive director.
7 Klaus Jenny (1942, CH, Dr. oec. HSG) has been a member of the Board of Directors since 2003. He studied economics at the University of St. Gallen, obtaining his doctorate (Dr. oec.). In 1987 Dr Klaus Jenny became a member of the General Directorate of the Schweizerische Kreditanstalt and a member of the Executive Board of Credit Suisse Group and his last post was CEO of the “Credit Suisse Private Banking” business unit. He has been an independent financial advisor to businesses and private individuals since 1999. He is a member of the Board of Directors of Clariant AG, of Maus Frères SA and of various other non-listed companies. Dr Klaus Jenny is an independent, non-executive director.
8 Werner Kummer (1947, CH, Dipl.-Ing. ETH, MBA Insead) has been a member of the Board of Directors since 2000. From 1990 to 1994, he was Chairman of the Executive Board of Schindler Aufzüge AG and subsequently was a member of the Schindler Group Management Committee, with responsibility for the Asia Pacific region, until 1998. He was CEO of Forbo Holding AG from 1998 until March 2004. Werner Kummer is an independent business consultant, a member of the Board of Directors of Walter Meier AG, Chairman of the Board of Directors of Gebrüder Meier AG, member of the Supervisory Board of Schindler Deutschland Holding GmbH (committee member) and a member of the Board of the Zurich Chamber of Commerce. He is an independent, non-executive director.
10 Eveline Saupper (1958, CH, Dr. iur.) has been a member of the Board of Directors since 1999. She studied law at the University of St. Gallen and obtained her doctorate. Today, she is an attorney-at-law and a certified tax expert. From 1983 to 1985, she was with Peat Marwick Mitchell (now KPMG Fides) in Zurich and from 1985 to 1992 with Baker & McKenzie in Zurich and Chicago. Since 1992 she has been a partner at Homburger AG, Zurich. Dr Eveline Saupper is a member of the Board of Directors of Intershop Holding
As per Article 716a of the Swiss Code of Obligations and section 1 II of the organisational regulations, the principal duties of the Board of Directors are general management, overall and financial supervision of the company and specifying the organisational structure.
Duties of the committees The Chairman’s Committee provides advice on key business transactions, in particular on important strategic and personnel decisions. In this respect the Chairman’s Committee also acts as the Nomination Committee. Furthermore, it acts as the Investment Committee, approving the Group’s investment policy and property investments for the Group’s own use at Head Office.
The Compensation Committee specifies the structure and the amount of compensation paid to members of the Board of Directors and of the salaries of the members of the Corporate Executive Committee. As part of the incentive plan it specifies higher-ranking corporate objectives and their attainment. It approves compensation policies for Corporate Executive Committee members and monitors their correct application. The Chairman of the Board of Directors is not a member of this committee.
The Audit Committee supports the Board of Directors in those supervisory and financial duties that cannot be delegated (Article 716a Swiss Code of Obligations), by evaluating the organisational structure and the functioning of internal
Meetings of the Audit Committee are primarily attended by the Chief Executive Officer, the Chief Financial Officer, the Head of Corporate Audit, the Secretary of the Board of Directors and by representatives of the external auditors. In 2008, the Chief Executive Officer did not attend Audit Committee meetings, since he simultaneously held the post of Chairman of the Board of Directors. Meetings of the Compensation Committee are primarily attended by the Head of Corporate Human Resources and the Secretary of the Board of Directors and, when corporate objectives are discussed, by the Chief Financial Officer. In 2008, the Chairman of the Board of Directors did not attend meetings of the Compensation Committee, since he simultaneously held the post of Chief Executive Officer.
and external auditing systems and the annual and consolidated financial statements. The Audit Committee also evaluates the effectiveness of internal control systems, including risk management and the status of compliance. The Audit Committee has discussed the consolidated financial statement for the 2008 fiscal year both with management and with the external auditors. Based on these discussions, the Audit Committee has recommended that the audited Annual Financial Statement be incorporated in the Group’s Annual Report for the fiscal year ended on 31 December 2008 and submitted to the Annual General Meeting. The Board of Directors has endorsed this proposal.
Board of Directors and committee meetings The full Board of Directors meets as often as business requires, but no less than four times a year, in compliance with organisational regulations.
In 2008, the full Board of Directors convened ordinarily on five occasions. The following table shows the directors’ attendance at these full Board meetings. With one exception, all members of each relevant committee attended all the additional 15 committee meetings. Board attendance by members of the Baloise Board of Directors was thus a very respectable 97.25 %. In addition to these, the full Board of Directors held an extraordinary meeting on 24 October 2008.
BOARD ATTENDANCE 2008: ORDINARY MEETINGS OF THE FULL BOARD OF DIRECTORS
Martin Strobel (1966, D, Dr. rer. pol.) studied computer science, business management and business information systems at the Universities of Kaiserslautern, Windsor (Canada) and Bamberg, prior to obtaining his doctorate (Dr. rer. pol.). From 1993 to 1999 he held various posts at Boston Consulting Group, Dusseldorf, dealing with strategic IT management issues in the banking and insurance sector. He joined the Baloise Group in 1999. Initially he was Head of IT at Baloise Switzerland, with responsibility for major cross-division projects in the insurance and banking divisions of the Baloise Group. He joined the Corporate Executive Committee in 2003, with responsibility for the Switzerland division. Dr Martin Strobel is a member of the Board of the Swiss
Insurance Association (SIA) and of the Board of Directors of Prevo-System AG, Basel. With effect from 1 January 2009, Dr Martin Strobel takes over as Chief Executive Officer. He continues in his previous function as CEO Switzerland on an interim basis until 1 March 2009.
Martin Wenk (1957, CH, lic. iur.) graduated with a degree in law (lic. iur.) from the University of Basel and subsequently held various posts in a major bank from 1982 to 1992. Initially he worked as an investment advisor to institutional clients, going on to head a private banking team in New York and subsequently becoming securities sales team leader, focusing on looking after major institutional clients. During this time, Martin Wenk attended a number of professional training courses in Switzerland and the USA. From 1992 until 2000, he was Head of Portfolio Management Switzerland within the Baloise Group, with responsibility for managing the assets of various companies in Switzerland and within the Group, including the Pension Fund. He joined the Corporate Executive Committee (as Head of Asset Management) in 2001, with responsibility for Asset Management, including the Investment Strategy, Investment Controlling, Baloise Asset Management, Real Estate and Baloise Fund Invest units, and for developing Baloise Life (Liechtenstein) AG up until 31 December 2008. Martin Wenk is Chairman of the Investment Commission of the Swiss Insurance Association (SIA) and is a member of the Board of Directors of both Unigestion Holding, Geneva and HW Finanz AG, Pratteln.
With the exception of Dr Martin Strobel and Martin Wenk, none of the members of the Corporate Executive Committee serve on the Boards of Directors of non-Baloise Group companies.
5. COMPENSATION REPORT: COMPENSATION, PARTICIPATIONS AND LOANS TO MEMBERS OF THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE Baloise is an attractive employer and aims to retain talented employees and executives on a long-term basis and attract well-qualified and motivated employees. The success of Baloise depends on the skills and the commitment of its employees. We strive to perform well, focus on achieving good results and pay compensation to our employees based on these principles. Hence the recognition of sustainable performance forms the basis of our market-oriented compensation system. Baloise also provides attractive incentive / bonus plans, including programmes for long-term employee participation, as part of its competitive compensation. The compensation strategy of the Baloise Group is geared to a high degree of alignment between the interests of the shareholders and the management, besides being market- and performance-oriented.
The Chair of the Compensation Committee reports to the Board of Directors regularly on the activities of the Committee. The minutes of committee meetings are also available to the whole Board.
5.2. Remuneration system: basic salary and incentives Source market and function value system Baloise regularly compares the salaries of its senior executive managers with those of relevant competitors (Dow Jones STOXX Insurance and local employment markets) and strives to pay salaries in line with the market.
Furthermore, the variable compensation systems were reviewed in respect of their retention and management effects.
The function value system of Baloise comprises nine function levels (FL); levels 1 to 3 pertain to the Group, the other levels 4 to 9 are only applicable in Switzerland: FL 1: Member of the Corporate Executive Committee (including the Chief Executive Officer)
Se ni or m an ag em en t F L
The aim of this remuneration system is, on the one hand, to promote a performance culture in the Baloise Group and, on the other, to facilitate the retention of qualified and management personnel within the organisation. The remuneration philosophy of Baloise aims to pay basic salaries geared to market. Furthermore, the variable remuneration components are designed so that in a very good year (as regards individual performance and the success of the company) incentive payments above the market average are also possible, just as they can fall below the market average in a weak year.
achieve outstanding results. Performance management is a fixed and integral component of in-house talent management. Actual performance forms the basis for further development, career planning and the fostering of our talents.
Incentives as a variable and performance-related remuneration component depend on the attainment of certain targets. Individual performance is measured as part of the “Individual Performance Management” process (IPM) introduced in 2006. To this end and in cooperation with their employees, superiors annually define key individual targets and assess the full extent of attainment by March of the following year at the latest.
At a 100 % level of attainment, incentives have the following values (target incentive): FL 1: 54 % of basic salary FL 2: 38 % of basic salary FL 3: 30 % of basic salary FL 4: 22 % of basic salary FL 5: 14 % of basic salary
Incentives are paid with the salary for June. Basically, employees in Switzerland have the choice which proportion they would like to have paid out in cash and which they would like to receive as shares. The obligation to draw shares exists solely for function levels 1 to 3: Members of the Corporate Executive Committee must draw 50 % of their incentives in the form of shares.
Four members of the Corporate Executive Committee have a twelve-month notice period. In addition, they are, as are seven other members of the executive management, entitled to a severance payment amounting to one annual salary (including bonus), in the event that the employment relationship is terminated within twelve months after a change of control due to a take-over or merger or a merger of employers (under certain circumstances also of employees). The notice period for the Chairman of the Board of Directors, who simultaneously held the post of Chief Executive Officer, is six months. No change of control clause exists.
5.3. Overview of the participation programmes For quite some time, the Baloise Group has offered employees and executive management personnel various plans where shares are granted as part of their total remuneration package.
Subscribed shares per participant (average) 88.4 87.5 5.4. Employee Incentive Plan The Basler foundation for employee incentive plans set up in 1989 offers employees from various Group companies in Switzerland the option of buying Bâloise-Holding shares at a preferential price, as a rule once a year, according to stipulations laid down in the regulations established by the foundation council. The subscription price is determined by the foundation’s council at the beginning of the subscription period and published on the intranet. It is equivalent to half of the average rate determined for the month of August in the subscription year and amounts to CHF 50.30 for the reporting year (2007: CHF 54.60). The subscribed shares are always transferred on 1 September and are subject to a blocking period of three years.
The foundation is managed by a council that is predominantly independent of the Corporate Executive Committee. Peter Schwager (Chairman) and Dr Heinrich Koller (solicitor ) function as independent members of the foundation council; the third member is Andreas Burki (Deputy Head of Legal and Taxes).
Employee Share Ownership Plan Since May 2001, the majority of senior staff in Switzerland can draw a proportion (freely selectable within certain ranges) of their incentives in shares instead of in cash. Upper limits exist for function levels 1 to 3, members of the Corporate Executive Committee, who are obliged to draw at least half of their incentives as shares, may not draw more than 50 % of their incentive entitlement in shares as part of the Share Subscription Scheme. As with the Share Subscription Scheme, the subscription date is always 1 June; on this day, ownership of the shares is transferred to the employee without further vesting conditions, however, they may not be sold during a blocking period of three years. The subscription price is determined by the Corporate Executive Committee each year and published in advance on the intranet. On 21 April 2008, the Corporate Executive Committee decided that the subscription price for the reporting period be based on the stock average from 5 to 15 May 2008 (previous year: decision dated 23 April 2007; stock average from 7 to 11 May 2007). The discounted dividend right is deducted from this stock average over the period of three years, so that the subscription price in the reporting period amounted to CHF 100.85 beträgt (2007: CHF 115.55).
In order to increase the impact of this Employee Share Ownership Plan, each employee receives an interest-bearing loan on market terms, which allows the employee to draw more shares in relation to the incentive granted at fair value less the discounted dividend right over a three-year period. The repayment of the loan after the three-year blocking period is hedged using a put option, which is financed by the sale of a complementary call option. After the three-year blocking period has expired, the shares remaining after the options have been exercised less the repayment of the loan and the interest accrued, are placed at the employee’s disposal.
Fair value of subscribed shares as of subscription date in CHF million 27.1 32.4
1 Including shares fi nanced by loans. 2 Net of the discounted dividend right over three years.
5.6. Performance quota and Performance Share Units (PSU) Since 2007 two plans have existed for employees at function levels 1 to 3 in the Group: the performance quota as part of short-term variable remuneration, to raise the variable salary component and the shareholding quota, the Performance Share Unit programme as part of long-term variable remuneration, to achieve long-term employee retention in direct relation to the share price performance.
Performance quota The performance quota is a f lexible, discretionary instrument available to the Compensation Committee of the Board of Directors. This instrument allows the parties to participate in the success of the company and increases compensation variability. The performance quota was introduced in 2007 for employees at function levels 1 to 3 in Switzerland (including the Chairman of the Board of Directors). In the reporting period, the group of participants was expanded to include members of the Corporate Executive Committee of foreign business units.
Fair value of subscribed shares as of subscription date in CHF million 1.1 2.4
Performance Share Units (PSU) With its Performance Share Units programme, Baloise has had an instrument to involve its employees in the success of the company on a long-term basis and retain key personnel since 2007. Thus participants can profit even more from the long-term value enhancement of the company, as long as they stay at Baloise. This means that the PSU programme creates a commonality of interests between the shareholders and management. The programme was introduced in 2007 for employees at function levels 1 to 3 in Switzerland (including the Chairman of the Board of Directors). In the reporting year, this group of participants was expanded to include members of the Corporate Executive Committee of foreign business units.
At the beginning of any performance period, participating employees are awarded rights in the form of Performance Share Units (PSU), which entitle them to subscribe for a certain number of shares free of charge after the performance period has expired. The Compensation Committee of the Board of Directors specifies the day of allocation and defines those entitled to participate in the programme at function levels 1 to 3 at its discretion. It defines the total number of PSU available as well as approximate distribution amongst
The composition of the index can be subject to changes. Due to company mergers, for example, companies can drop out of the index, others may be newly included in the index. The composition of the index at the point in time when the respective PSU are issued is decisive for determining the performance factor, adjusted by the companies that are no longer included in the index. Companies that have meanwhile been newly included in the index are not considered for plans that are already running.
The index included the following 34 companies as of 31 December 2008: COMPANIES IN STOXX 600 INSURANCE INDEX
The participant receives the corresponding number of shares at the end of the performance period (“vesting”), i. e. on 31 December 2010 for the PSU allocated in 2008. The PSU become void without compensation or substitution, should the employment contract be terminated (except in the case of retirement, invalidity or death) during the performance period. To emphasise the long-term character of the programme, 50 % of the allocated shares are subject to an additional three-year blocking period after the performance period expired.
In principle, the PSU programme runs for a period of three years. The performance period was shortened after it was first introduced in 2007, since the PSU were provided only after the decision of the Board of Directors on 9 March 2007.
Entitled employees (FL 1 – 3) as of start of programme 45 64
Number of active PSU as of 31 December 2007 36,015 –/–
Number of active PSU as of 31 December 2008 35,673 53,332
Basler Versicherungen offers its employees in Switzerland an attractive pension solution as part of the 2nd pillar, which fulfils the following objectives: It meets the requirements of the insured in case of a risk event (old age, death or invalidity) and absorbs the resulting financial consequences with a solution based on social partnership. It permits an appropratiate maintenance of a lifestyle enjoyed to date with a sufficiently high substitution rate (1st and 2nd pillar services combined) to replace discontinued earned income. The employer makes an above-average contribution to financing of occupational pensions. It is forward-looking, sound, can be calculated and is reasonably priced.
The Chairman of the Board of Directors and the members of the Corporate Executive Committee are insured in the office staff pension scheme. The same terms apply to them as to all other insured parties.
With this system change, insured parties will be offered several pension plans as of the age 30. In addition to the basic plan, they can pay further contributions into the pension scheme as part of a Pension Plan Plus or Pension Plan Ultra, and so increase their pension balance. Insured parties can change their choice of pension plan annually.
As far as the basic plan is concerned, the contribution ratio between employer and employee remains unchanged.
The “new” pension scheme autonomously bears the risks of old age, death and invalidity; the existing group life insurance contracts were terminated.
The one-off costs for this adjustment amounted to CHF 136 million. The pension foundations of Basler and Baloise each absorbed half the total amount.
Non-insured incentives Since incentives were not insured in the pension fund as per the regulations valid until the end of 2007, additional assorted single-premium insurance policies existed for the employees at function levels 1 to 3 (including the Chairman of the Board of Directors). These were free life insurance policies, which were concluded to apply at the regular retirement age. As policyholders, the employees could dispose freely of the benefit if the insured event occurred. The single
5.8. Compensation for members of the Board of Directors (not including the Chairman) With the exception of the Chairman, members of the Board of Directors receive a lump-sum settlement, which is determined by the Compensation Committee.
No emoluments were distributed to former members of the Corporate Executive Committee, who are either associated with their earlier function within the company or that are not customary in the market. Furthermore receivables from this group of people were not waived.
For the first time since 2001, Baloise decided to raise the remuneration of the Corporate Executive Committee in spring 2008 to a level customary in the market, based on a comparison with similar insurance companies in the Swiss market. The rise corresponds to an adjustment of a computed 3.2 % p. a. since 2001.
Member Chairman’s Committee and Investment Committee 50,000 –/– –/– –/– –/–
Member Chairman’s Committee and Investment Committee –/– 50,000 –/– –/– –/– –/–
Explanatory notes to table: Remuneration to former members of the Board of Directors and related persons No remuneration was paid to a) former members of the Board of Directors, pertaining to previous governing body activities in Baloise, or that is not market standard. b) persons or companies related to the members of the Board of Directors and that is not market-standard (related persons: spouses, civil partners, children under 18 years). No receivables from this group of people were waived.
Member Chairman’s Committee and Investment Committee –/– 70,000 –/– –/– –/– –/–
Explanatory notes to table: Remuneration to former members of the Board of Directors and related persons No remuneration was paid to a) former members of the Board of Directors, pertaining to previous governing body activities in Baloise, or that is not market standard. b) persons or companies related to the members of the Board of Directors and that is not market-standard (related persons: spouses, civil partners, children under 18 years, companies controlled by members of the Board of Directors, persons who act as a fiduciary for members of the Board of Directors). No receivables from this group of people were waived. Cash compensation Remuneration as per contract (lump-sum compensation).
Business objectives are worked out in a multi-phase process and are then individually authorised by the Compensation Committee for the coming year. The consolidated result, combined ratio, the business volume and the shareholder value (performance of Baloise shares compared to STOXX Insurance) serve as target figures. The individual targets are closely related to the area of responsibility of the respective Corporate Executive Committee member. They are defined together with the employee’s superior and likewise authorised by the Compensation Committee. Besides the targets mentioned above, targets in respect of talent management were set for the top management level for the first time. This also emphasises that the retention and development of talent represents an essential factor in Baloise’s ability to add value in the future. So the targets focus on adding value today and in the future and on the instruments which the Corporate Executive Committee has, to have an optimum operational impact on today’s results, and chart the course for success in the medium term.
Total remuneration cannot be implicitly compared to the previous year. For one thing, the total earnings of Dr R. Schäuble are included in the sum, given he exercised his dual mandate as Chairman of the Board of Directors and Chief Executive Officer. The increase for the other members of the Corporate Executive Committee ref lects, amongst other things, a slight adjustment of individual salaries as well as the fact that the salary of one member was included pro rata for the month of December.
Total Corporate Executive Committee excluding Chairman of the Board of Directors
Employee Incentive Plan Portion of remuneration resulting from subscription for company shares at a preferential rate (2007: CHF 54.60). Calculation: fair value minus subscription price = non-cash benefits. Share Subscription Scheme (SSS) Portion of incentive received directly in shares. Computation: fair value minus 10 % discount (= tax value).
Share awards (Performance Share Units, PSU) Entitlements, that confer a right to acquire shares at a future date, subject to achieving pre-determined performance targets (cf. section “5.6. Performance quota and Performance Share Units (PSU)”. The accrued value of share awards is only added to the total remuneration when they are converted into actual shares (i. e. at the end of the 3-year performance period), because only then a reliable estimate can be provided and only then have they actually been earned. Non-cash benefits Basis: all elements of remuneration in compliance with the new Swiss salary certificate. The disclosed item is a gift to a member of the Corporate Executive Committee for length of service. Pension provisions Employer contributions to the pension scheme plus premium payments for single life policies (for incentives not insured under the pension scheme). Contributions to individual life insurance policies will be discontinued in 2008.
Explanatory notes to table: This table contains the basic salary and the pension provisions for the year 2008, as well as the variable compensation components for the previous year that were paid in the reporting period. Although these variable compensation components were paid out in 2008, they relate to the 2007 fiscal year. Remuneration to former members and related persons No not market standard remuneration was paid to individuals or companies related to the Chairman of the Board of Directors or the members of Corporate Executive Committee (related persons: spouse, civil partner, children under 18 years, companies belonging to or controlled by board members, or legal or natural entities that act as fiduciaries for them). No receivables from this group of people were waived. CHF 3.8 million were paid to a former member of the Corporate Executive Committee, due to contractual obligations (basic salary and incentives, employer pension contributions). Basic Salary Basic salary as per contract (gross). In 2008, Dr R. Schäuble received a one-off payment of CHF 1.5 million for the dual mandate as Chairman of the Board of Directors and Chief Executive Officer exercised from 6.12.2007 until 31.12.2008. Incentive Variable, performance related portion of total remuneration paid in cash (gross).
Share Ownership Plan (SOP) Portion of incentives received in shares (excluding of shares financed by loans).
CREDITS AND LOANS TO MEMBERS OF THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
Total Board of Directors 650,000 650,000 –/– –/– –/– –/– 650,000 650,000
Explanatory notes to table: Credits and loans No not market standard loans and credits have been granted to a) former members of the Board of Directors and the Corporate Executive Committee, b) individuals or companies with close family ties to members of the Board of Directors (related persons: spouse, civil partner, children under 18 years, companies belonging to or controlled by Board members, or legal or natural entities that act as fiduciaries for them). Mortgages Mortgages are granted on employee terms: 1 % below the interest rate for customers on variable mortgages, preferential interest rate for fixed mortgages. Interest was charged on market terms on the mortgage held by Dr A. Burckhardt in 2007, since no preferential employee rates existed when the contract was concluded. Loans pertaining to the Share Ownership Plan Loans to fund leveraged Share Ownership Plan (cf. section “5.5. Share Subscription Scheme and Share Ownership Plan”). Interest is charged at prevailing interest rates (2008: 3 %) over a term of 3 years. A loan of CHF 10.5 million to a former member of the Corporate Executive Committee still exists from the Share Ownership Plan. Other loans There are no policy loans.
Total Board of Directors (excluding Chairman) 52,520 59,520 16,012 20,547 68,532 80,067 0.127 % 0.160 %
Percentage of issued share capital 0.097 % 0.119 % 0.030 % 0.041 % 0.127 % 0.160 %
2008 (including the shares allocated / subscribed for during the reporting year as part of share-based incentive programmes ): VORABDRUCK
Head of Corporate Division Finance –/– 262 26,591 40,952 26,591 41,214 0.049 % 0.082 % 2,186 4,698
Head of Corporate Division Switzerland –/– 100 7,973 24,918 7,973 25,018 0.015 % 0.050 % 2,623 5,637
Statutory quorums The Annual General Meeting has a quorum, irrespective of the number of shareholders and proxy votes present, subject to the obligatory cases as prescribed by law (§ 17 of the Articles of Incorporation).
Entry in the share register Shareholders, who are registered with an entitlement to vote in the share register on the cut-off date (a few days prior to the Annual General Meeting) specified by the Board of Directors in the invitation, are entitled to vote at the Annual General Meeting (§ 16 of the Articles of Incorporation).
Retroactively to 1 January 2007, the companies held together with Deutscher Ring Kranken V. V. a. G. have been fully consolidated in the Baloise Group accounts instead of being proportionately consolidated as before. Due to this adjustment, the figures in the table for the previous year also rise by approximately CHF 300,000.
The increase in consulting fees in 2008 is mainly due to costs incurred in conjunction with negotiations about a strategic partnership and possible business activity consolidation between the Baloise Group and the Gothaer group. PwC supported Baloise herein by preparing appraisal reports according to specific standards and reviewing the counterparty’s expert report regarding approach and appropriateness.
The Audit Committee evaluates the performance of the external auditors and their cooperation with Group Internal Audit, Risk Management and Compliance. Primarily, the Audit Committee discusses ongoing audits and audit reports, important results and any issues arising from the audit with the external auditors.
Information about the Baloise share You can find information on the Baloise share in the Annual Report from page 14 onwards.
Information about outstanding Baloise bonds Information on outstanding Baloise bonds can be found in the Financial Report from page 106 onwards.
Document availability Media releases, disclosures, presentations, annual reports, financial reports and half-year reports and other documents are publicly available on the Internet at www.baloise.com. All documents can be obtained from the Investor Relations department or ordered on the Internet.
Contact Corporate Governance Dr Thomas Sieber Member of the Corporate Executive Committee Head of the Corporate Center Division / Secretary of the Board of Directors Aeschengraben 21 CH-4002 Basel
www.baloise.com → Responsibility → Corporate Governance www.baloise.com → Investor Relations → Baloise Share → Share buy-back programme → Bonds → Presentations → IR Agenda www.baloise.com → Media Relations → Media kits → Calendar → Corporate publications
Serenity is the art of being able to look calmly forward to the big performance. Composedly and objectively you can master the most complicated tasks. When we are at ease we go through life confidently, whether on stage, at the wheel or in our free time.
BOARD COMMITTEES Chairman’s Committe Rolf Schäuble, Dr. oec., Chairman Georg F. Krayer, Dr. iur., Vice Chairman Hansjörg Frei, Dr. iur. Klaus Jenny, Dr. oec.
Audit Committee Werner Kummer, Chair Christoph J. C. Albrecht, Dr. iur., Deputy Chair Andreas Burckhardt, Dr. iur. Hansjörg Frei, Dr. iur.
Investment Committee Rolf Schäuble, Dr. oec., Chair Georg F. Krayer, Dr. iur., Deputy Chair Hansjörg Frei, Dr. iur. Klaus Jenny, Dr. oec.
Jan De Meulder * German Egloff * Martin Wenk * Thomas Sieber, Dr. iur. *
Regional Management Wolfgang Prasser Alexander Tourneau, Dr. rer. oec. Peter Zutter
Premiums earned and policy fees (gross) 1 6,936.0 6,835.1 6,706.6 6,880.2 6,945.2
Realised gains and losses on investments 2 265.2 549.4 702.8 597.5 – 1,680.1
Claims and benefi ts paid (gross) – 5,418.4 – 5,772.1 – 5,325.0 – 5,597.9 – 5,676.7
Interest expense on insurance liabilities – 90.1 – 78.5 – 67.0 – 76.1 – 73.8
Assets for the account and at the risk of life insurance policyholders 1,143.6 2,245.8 2,976.6 4,366.9 3,340.1
Total business volume 1 Premiums written and policy fees (gross). 2 Group business, Liechtenstein, Run Off .
Austria, Croatia and Serbia Other 1 as a percentage of premiums earned
Reserve ratio in percent 195.6 183.0 1 Group business, Run Off . 2 Not including capitalised settlement premiums. 3 As of 2008 not including statutory fi re brigade charges.
Exchange rate performance has been a major cause of the reduction in the funding ratio.
Change in loss reserves / actuarial reserves 1 – 101.6 6.3 – 161.2 564.5
Reinsurance share of claims incurred – 17.0 – 2.6 6.6 – 4.6
Total technical result of ceded business – 75.2 – 105.2 – 9.4 – 8.4
Claims and benefi ts paid – 1,768.8 – 1,783.4 – 3,712.6 – 3,827.5
Other fi nancial expenses and income – 70.4 34.2 – 138.1 300.9
Result from investment income 390.6 199.0 1,728.1 218.8 1 Including change in reserves for claims handling expenses. 2 Including fi nancial liabilities held for trading (derivative fi nancial instruments).
Operating profi t from policy portfolio, adjusted equity plus profi t from new business 253.0 347.8
Business changes, including changes in unrealised gains and losses on investments (shares and properties) 372.7 – 939.0
Sensitivity of new business value at risk discount rate (+/– 1.0 %) in percent – 30.3/+ 35.1 – 42.0/+ 50.3
+/– 10 % change in the fair value of shares + 5.0/– 5.0 + 2.6/– 4.8
Th e embedded value of life insurance business consists of three elements: the adjusted equity of life insurance activities and the value of the policy portfolio at the end of the reporting period, with the cost of solvency being deducted. Th e embedded value excludes any value that may be attributed to future new business.
For investments, the adjusted shareholders’ equity is based on fair values, while statutory rates are used for actuarial liabilities. Th e most important components of equity are the sums of unrealised gains and losses on investments (shares and properties ), which can be subject to strong fl uctuations. For business from Luxembourg, Austria and Croatia, Serbia and Liechtenstein only the embedded value disclosed under IFRS is taken into account.
Th e cost of solvency is equivalent to the cost of funding the solvency requirements of the business.
External audit: Deloitte & Touche LLP has examined the calculation method chosen by the Baloise Group and the assumptions and calculations applied to the calculation of the embedded value in the life business as of 31 December 2008. Deloitte considers the calculation method and assumptions used by Baloise to be appropriate and reasonable and the disclosures on embedded value, using the chosen methodology and assumptions have been properly prepared. For the purpose of this report, Deloitte has randomly examined some of the data provided by Baloise whilst relying on the fi nancial information upon which the Financial Report is based.
Realised gains and losses and impairment losses recognised in profi t and loss (net)
Total capital gains and losses 141.3 433.4 574.7 – 161.7 – 411.5 – 573.2
Other financial assets Marketable securities are recognised either at their purchase price or at fair value, with the lower of the two being applied.
Accruals Accruals include income already received in respect of the new fiscal year and expenses for the fiscal year which will only be paid later.
For additional information on participations held directly by Bâloise-Holding see pages 134 to 135 of the Financial Report 2008.
Subordinated loan to Baloise Bank SoBa 30.0 30.0 10. ACCRUALS Due to resolutions of the Annual General Meeting on 12 February 2009 of Baloise Fund Invest Advico, Luxembourg, Baloise Asset Management Schweiz AG, Basel, and of Baloise Asset Management International AG, Basel, on 17 February 2009 of Baloise Bank SoBa, Solothurn, and on 10 March 2009 of Haakon AG, Basel, the accrued dividend claims (income from investments in associates) for the fiscal year 2008 were regarded as deferred expenses.
AMOUNT Interest rate Issued Maturity date 1 Raised by CHF 100 million in 2005.
Withdrawal (carry forward to Reserve for treasury shares) – 392.2 – 128.8
Total equity 852.1 659.4 1 Baloise Group companies purchased a total of 623,757 shares at an average price of CHF 94 (not including shares bought back via the second trading line). During the reporting year, Group companies sold 370,540 shares at an average price of CHF 113 and jointly held 355,277 Bâloise-Holding shares on 31 December 2008. In addition, Bâloise-Holding repurchased 1,173,715 shares at an average price of CHF 96 via a second trading line. The shares are stated in the “Treasury shares” balance sheet item. The average purchase price amounted to CHF 95, including those shares bought back via the second trading line. A resolution to reduce share capital by cancelling 4,000,000 registered shares was passed by the Annual General Meeting on 29 April 2008.
13. SIGNIFICANT SHAREHOLDERS As of 31 December 2008 no individual shareholder held more than 5 % of the outstanding Baloise shares.
The table below provides information on the current composition of the shareholders as of 31 December 2008.
14. CONTINGENT LIABILITIES As of 31 December 2008, the guarantee liabilities amount to CHF 131.8 million (previous year: CHF 136.1 million).
A purchase price retention of EUR 5 million to cover any guarantee claims was agreed with the sellers of Osiguranje Zagreb in the purchase agreement. The sum is deposited in escrow at a bank. Furthermore, possible supplementary purchase price payments (earn-outs) were agreed. The amounts depend on the premium growth and net profits of Osiguranje Zagreb in the years 2007, 2008, 2009. However, these additional payments amount to a maximum of EUR 20 million.
16. DETAILS ABOUT THE PERFORMANCE OF A RISK ASSESSMENT Details about the performance of a risk assessment can be obtained from Chapter 5, “Management of insurance and financial risks”, in the Baloise Group’s consolidated Annual Financial Statements in the Financial Report.
Annual premium equivalent (APE) The annual premium equivalent is the insurance industry standard for measuring the volume of new life insurance business. It is calculated as the sum of all annual premiums from new business and a tenth of single premiums of the reporting period.
Claims incurred Claims incurred comprises insurance claims paid out during the fiscal year, reserves formed in connection with unsettled claims, the dissolution of reserves for claims that no longer have to be settled or do not have to be paid in full, the costs of processing claims, as well as the performance of related reserves.
Combined ratio Ratio of nonlife insurance business, expressing the sum of claims incurred (loss ratio), costs (expense ratio) and profit sharing (profit-sharing ratio) in relation to premiums. This ratio is used to assess the profitability of the nonlife insurance business.
Embedded value The embedded value determines the value of the life insurance portfolio for the shareholder on the reporting date. It is calculated using the three components: adjusted equity value of insurance portfolio less solvency costs.
Fixed-income securities Securities (primarily bonds), yielding interest at a fixed rate during their whole term.
Impairment (impairment loss) Impairment of an asset recognised in profit and loss. Whether the book value of an asset is greater than its fair value is determined using an impairment test. If necessary, the asset is impaired down to its fair value and recognised through profit and loss.
Insurance benefi ts The benefits provided by the insurer in connection with the occurrence of an insured event.
Investment performance The performance measures the business success of investments. The gains, losses, income, expenses, as well as changes to as yet unrealised gains and losses, as set out in the income statement are put in proportion to the average balance of the investments.
Investment-type life insurance Life insurance contracts where policyholders invest their savings for their own account and at their own risk.
Investment-type premiums Premium income from life insurance where insurance companies invest the policyholder’s savings for the latter ’s own account and at the latter’s own risk. In accordance with the International Accounting Standards applied by the Baloise Group, the savings that are part of this premium income may not be disclosed as income in the income statement.
Loss ratio The ratio between claims incurred to premiums, expressed in percent.
Loss reserve Provisions for claims that have not been settled at yearend.
Minimum interest rate Minimum required interest rate for the respective savings balance of company pension plans.
Segment Financial reporting at the Baloise Group is carried out in accordance with International Financial Accounting Standards (IFRS), which requires similar transactions and business activities to be grouped and presented together. The grouped business activities are presented in “segments”, by geographic regions and business segments.
Share buy-back programme Procedure passed by the Board of Directors under which the company itself may repurchase outstanding shares. In Switzerland, these buy-backs are carried out through a second trading line.
Shares issued Total number of shares that a company has issued. The total number of shares issued, multiplied by their face value is the nominal share capital of the company.
Scoring Scoring stands for statistical analyses, whereby risk estimates based on experience values are derived from data collected. Insurers apply scoring in order to tariff equitably.
Premium The amount paid by the policyholder to cover the cost of insurance.
Profi t after tax Profit after tax is the final sum of all earnings and expenses, less borrowing costs, as well as current and deferred income taxes. Profit after tax includes the share of minority interests in the result.
Provisions Evaluation of future insurance benefits from identified and not yet identified claims, which are disclosed as liabilities in the balance sheet.
Return on equity Calculated return on the equity of a company during the fiscal year. Return on equity is calculated by taking the profit generated during the fiscal year and dividing it by average equity.
Technical result The technical result includes a comparison of all expenses and income from the insurance business. Expenses and income unrelated to the insurance business and revenue from investments are not included in the technical result.
Unearned premium reserves Accrued portions of the written premiums that have been charged for periods after the balance sheet date.
Value of new business The value of new business created during the reporting period, valued at the time the policy is issued.
AUSTRIA Basler Versicherungen Brigittenauer Lände 50 – 54 A-1203 Vienna offi ce@basler.at www.basler.at
Osiguranje Zagreb Radnička cesta 37 b HR-10 000 Zagreb osiguranje-zagreb@osiguranjezagreb. hr www.osiguranje-zagreb.hr
SERBIA Basler Osiguranja Resavska 29 RS-11 000 Belgrad offi ce@basler.co.yu www.basler.co.yu
SUSTAINABLE BUSINESS MANAGEMENT Sustainable business management of Baloise . . . . . . . . . . 38
Business volume, premiums and combined ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
The Financial Report 2008 contains the audited 2008 annual financial statements with detailed information. It is available in German and in English. The German version is binding.
AVAILABILITY AND ORDERING The Annual Report 2008 and the Financial Report 2008 are available on the Internet at www.baloise.com / annualreport as of 18 March 2009.
NOTE ON FORWARD-LOOKING STATEMENTS Th is publication is intended to provide an overview of Baloise’s business performance. It contains forward-looking statements including forecasts of future events, plans, goals, business developments and results based on the current expectations and assumptions of the Baloise management. Th ese forward-looking statements should be used with due caution as they contain both known and unknown risks and uncertainties and may be aff ected adversely by other factors. In consequence, business performance, results, plans and goals could diff er materially from those presented explicitly or implicitly in these forward-looking statements. Among the infl uencing factors are (i) changes in the overall state of the economy, especially in key markets; (ii) fi nancial market performance; (iii) competitive factors; (iv) changes in interest rates; (v) changes in exchange rates; (vi) changes in the statutory and regulatory framework including accounting standards; (vii) frequency and magnitude of claims and development of claims history; (viii) mortality and morbidity rates; (ix) renewals and maturity of insurance policies; (x) legal disputes and administrative proceedings; (xi) departure of key employees; (xii) negative publicity and media reports.
Baloise assumes no obligation to update or revise these forward-looking statements, to consider new information, future events etc. The past performance of Baloise is no indication of future results.