Basler Financial Services GmbH, Hamburg other o 100.00 100.00 F eUR 1.5 7.7 –
ZeUS Vermittlungsgesellschaft mbH, Hamburg other o 100.00 100.00 F eUR 0.5 13.3 –
Baloise life (liechtenstein) aG, Balzers life l 100.00 100.00 F cHF 7.5 3,241.1 1.1
Baloise Group annual Report 2017 Financial Report notes to the consolidated annual financial statements 46. CHANGES TO SHAREHOLDINGS the share of capital and share of voting rights in the real-estate company Sa Keiberg 401 in Belgium was increased from 46.8 per cent to 100 per cent in the second half of 2016. as a result, the company switched from being an associate to a fully consolidated subsidiary. in 2017, there had been no transactions resulting in a change of control over a subsidiary.
Baloise Group annual Report 2017 Financial Report notes to the consolidated annual financial statements this page has been left empty on purpose.
In our opinion the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2017, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Area of focus Claims reserves non-life include Management’s estimate of notified but not yet paid claims, reserves for incurred but not reported losses and the provision for claims handling costs.
Management discloses the valuation principles used in the recognition of the claims reserves in note 5.4 “Non-Life” and note 5.4.2 “Assumptions”. The impact of various scenarios is described in note 5.4.4 “Sensitivity analysis”. We also refer to notes 3.18 and 23.1 on pages 135 to 137 and 227 to 230 of the Group’s financial statements.
Area of focus Life insurance technical reserves consist of the actuarial reserves and the policyholders’ dividends credited and provisions for future policyholders’ dividends. The actuarial reserves are valued using actuarial methodologies and assumptions (such as biometric, economic and cost assumptions).
As part of the audit, we involved our life insurance actuarial specialists. On a sample basis, the actuaries assessed the methodology and underlying assumptions used by Management as well as the implementation of the technical reserves based on tariff assumptions.
In addition, we assessed the technical reserves by reviewing Management’s Liability Adequacy Tests (LAT). We further tested the operating effectiveness of selected key controls over the input parameters and the mathematical correctness of the actuarial calculations. In addition, we evaluated the required disclosures in the notes to the financial statements.
Area of focus Certain investments (such as derivatives and investment properties) are valued using generally recognised methods without reference to any observable market data. Due to the complexity of those models and the significant judgement exercised by Management in determining the parameters of the models, any deficiencies or inaccurate input data could lead to a material misstatement within the Group’s financial statements.
Management discloses the inherent risks related to the valuation of investments without publically available market prices in note 4 “Key accounting judgements, estimates and assumptions” and the valuation principles in note 5.10 “Fair value measurement”. We also refer to notes 3.7 and 12 on pages 127 to 129 and 203 to 207 of the Group’s financial statements.
Other information in the annual report The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work performed, we conclude that there is a material misstatement of the other information, we are required to report it. We have nothing to report in this regard.
Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users of these consolidated financial statements.
Baloise Group annual Report 2017 Bâloise Holding ltd income statement of Bâloise Holding ltd cHF million income from long-term equity investments 256.3 406.8 income from interest and securities 2 102.0 33.8 other income 12.4 6.9
Baloise Group annual Report 2017 Bâloise Holding ltd notes to the financial statements of Bâloise Holding ltd 1. ACCOUNTING POLICIES
Cash and cash equivalents cash and cash equivalents include bank deposits and cash equivalents such as call money, fixed-term deposits and money market instruments. they are recognised at their nominal amount.
Loans to Group companies these loans are measured at their nominal amount less any impairment losses. Specific write-downs are recognised for all identifiable risks in accordance with the prudence principle.
Baloise Group annual Report 2017 Bâloise Holding ltd notes to the financial statements of Bâloise Holding ltd
Interest-bearing liabilities interest-bearing liabilities include bonds to third parties and interest-bearing liabilities to Group companies are recognised at their nominal amount. issuance costs – less any premiums – are charged in full to the income statement at the time the bonds are issued. the liabilities are categorised as current (less than twelve months) or non-current interest-bearing liabilities depending on their residual term.
Baloise asset Management international aG, Basel 100.00 100.00 cHF 1.5 1.5
Bâloise (luxembourg) Holding S.a., Bertrange (luxembourg) 100.00 100.00 cHF 250.0 250.0
Bâloise Delta Holding S.à.r.l., Bertrange (luxembourg) 100.00 100.00 eUR 224.3 224.3
Baloise alternative investments partner S.à r.l., Bertrange (luxembourg) – 100.00 eUR <0.1 <0.1
Baloise Group annual Report 2017 Bâloise Holding ltd notes to the financial statements of Bâloise Holding ltd 8. LONG-TERM INTEREST-BEARING LIABILITIES
Reduction of share capital – 0.1 – – – 126.6 – 126.7 0.0 change in treasury shares – – – – – – 41.9 – 41.9 profit for the period – – – – 367.3 – 367.3
Bank of new York Mellon n. V.1 5.9 0.0 5.8 0.0 credit Suisse Funds aG <3.0 <2.0 <3.0 <2.0 1 custodian nominees who hold shares in trust for third parties are counted as part of the free float under the SiX exchange regulations. Such shareholder groups are not subject to disclosure requirements under Swiss stock market legislation.
14. REMUNERATION PAID TO THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE the information to be disclosed in accordance with sections 663b (bis) and 663c of the Swiss code of obligations (oR) is contained in the Remuneration Report, which can be found on pages 80 to 107 in the part of corporate governance. the key information disclosed here includes
DISTRIBUTABLE PROFIT AND APPROPRIATION OF PROFIT the profit for the period amounted to cHF 367,343,969.45.
Phone +41 58 286 86 86 Fax +41 58 286 86 00 www.ey.com/ch
As statutory auditor, we have audited the financial statements (pages 270 - 280) of Bâloise
Holding Ltd, which comprise the balance sheet, income statement and notes, for the year ended 31 December 2017.
Opinion In our opinion, the financial statements for the year ended 31 December 2017 comply with Swiss law and the company’s articles of incorporation.
We have fulfilled the responsibilities described in the Auditor’s responsibility section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements.
Area of focus Bâloise Holding Ltd accounts for long-term equity investments at cost less necessary impairments and valued on an individual basis. Management assesses whether there are any impairment losses in the carrying value of the long-term equity investments by comparing the carrying amount to the net asset value of the subsidiary or to a valuation of the subsidiary using a discounted cash flow analysis. The determination whether a long-term equity investment needs to be impaired involves management’s judgement. This includes assumptions about the profitability of the underlying business and growth.
We consider this a key audit matter not only due to the judgement involved but also based on the magnitude of the carrying value of the long-term equity investments within the financial statements of Bâloise Holding Ltd.
In relation to the key audit matter set out above, we assessed the appropriateness of the company’s impairment testing methodology. We reperformed management’s impairment test on the carrying value of each investment, including the assessment of management’s assumptions and challenged the impairment decisions taken. We have audited the required disclosures in the notes to the financial statements as at 31 December 2017.
4 Baloise 16 Review of operating performance 36 Sustainable business management 58 corporate Governance 110 Financial Report 268 Bâloise Holding ltd 286 General information
▸ Baloise “Baloise” stands for “the Baloise Group”, and “Bâloise Holding” means “Bâloise Holding ltd”. Baloise shares are the shares of Bâloise Holding ltd.
▸ Broker insurance brokers are independent intermediaries. these are firms or individuals who are not restricted to any particular insurance companies when selling insurance products. they are paid commission for the insurance policies that they sell.
▸ claims incurred claims incurred comprise the amounts paid out for claims during the financial year, the reserves set aside to cover unsettled claims, the reversal of reserves for claims that no longer have to be settled or do not have to be paid in full, the costs incurred by the processing of claims, and changes in related reserves.
▸ claims ratio the total cost of claims settled as a percentage of total premiums.
▸ combined ratio a non-life insurance ratio that is defined as the sum of the cost of claims settled (claims ratio), total expenses (expense ratio) and profit sharing (profit-sharing ratio) as a percentage of total premiums. this ratio is used to gauge the profitability of non-life insurance business.
▸ embedded value the market-consistent embedded value (MceV) measures the value of a life insurance portfolio for shareholders at the balance sheet date. please also refer to the separate MceV report.
▸ expense ratio non-life insurance business expenses as a percentage of total premiums.
▸ insurance benefit the benefits provided by the insurer in connection with the occurrence of an insured event.
▸ investments investments comprise investment property, equities and alternative financial assets (financial instruments with characteristics of equity), fixed-income securities (financial instruments with characteristics of liabilities), mortgage assets, policy loans and other loans, derivatives, and cash and cash equivalents. precious metals in connection with investment-linked insurance are reported as “other assets.”
▸ investment-linked premium premium income from life insurance policies under which the insurance company invests the policyholder’s savings for the latter’s own account and at his or her own risk. the international Financial Reporting Standards applied by the Baloise Group do not allow the savings component of this premium income to be recognised as revenue on the income statement.
▸ legal quota a legally or contractually binding percentage requiring life insurance companies to pass on a certain share of their profits to their policyholders.
▸ Minimum interest rate the minimum guaranteed interest rate paid to savers under occupational pension plans.
▸ premium earned the proportion of the policy premium available to cover the risk insured during the financial year, i. e. the premium minus changes in unearned premium reserves.
▸ profit-sharing ratio total profit sharing as a percentage of total premiums; profit sharing is defined as the reimbursement of amounts to non-life policyholders to reflect the profitability of insurance policies.
▸ Return on equity a calculation of the percentage return earned on a company’s equity capital during a financial year; it represents the profit generated in a given financial year divided by the company’s average equity during that period.
▸ Risk scoring Risk scoring uses analytical statistical methods to derive risk assessments from collected data based on empirical values. insurance companies use this kind of scoring to ensure that the premiums they charge reflect the risks involved.
▸ Run-off business an insurance policy portfolio that has ceased to accept new policies and whose existing policies are gradually expiring.
▸ Segment Financial reporting in the Baloise Group is carried out in accordance with international Financial Reporting Standards (iFRSs), which require similar transactions and business activities to be grouped and presented together. these aggregated operating activities are presented in “segments”, broken down by geographic region and business line.
▸ Single premium Single premiums are used to finance life insurance policies at their inception in the form of a one-off payment. they are mainly used to fund wealth-building life insurance policies, with the prime focus on investment returns and safety.
▸ technical reserve insurers disclose on their balance sheets the value of the benefits that they expect to have to provide in future under their existing insurance contracts. this value is calculated from a current perspective in accordance with generally accepted principles.
▸ technical result Baloise calculates its technical result by netting all income and expenses arising from its insurance business. its technical result does not include income and expenses unrelated to its insurance business or the net gains or losses on its investments.
▸ Unearned premium reserves Deferred income arising from premiums that have already been paid for periods after the balance sheet date.
▸ Unrealised gains and losses (recognised directly in equity) Unrealised gains and losses are increases or decreases in value that are not recognised in profit or loss and arise from the measurement of assets. they are recognised directly in equity after deduction of deferred policyholders’ dividends (life insurance) and deferred taxes. these gains or losses are only taken to income if the underlying asset is sold or if impairment losses are recognised.
GERMANY Basler Versicherungen Basler Strasse 4 postfach 1145 D-61345 Bad Homburg info@basler.de www.basler.de
AVAILABILITY AND ORDERING the 2017 annual Report and the Summary of the 2017 annual Report will be available from 27 March 2018 on the internet at: www.baloise.com/annualreport corporate publications can be ordered either on the internet or by post from the Baloise Group, corporate communications, aeschengraben 21, 4002 Basel, Switzerland. www.baloise.com/order
INFORMATION FOR SHAREHOLDERS AND FINANCIAL ANALYSTS Detailed information and data on Baloise shares, the iR agenda, the latest presentations and how to contact the investor Relations team can be found on the internet at www.baloise.com/investors. this information is available in German and english.
Baloise accepts no obligation to update or revise these forward-looking statements or to allow for new information, future events, etc. past performance is not indicative of future results.