Meeting adopt a dividend of CHF 0.40 per share. With this – albeit reduced – cash dividend, our shareholders will continue to participate in the company’s performance. Moreover, the Baloise pursues a policy of steady dividend payments geared to long-term investors.
Rolf Schäuble: On the one hand, I am thinking of our customers and sales partners. Our earnings are based on the confidence they place in us. Insurance and pensions are long-term businesses and are built on confidence. On the other hand, I am thinking of our shareholders who provide us with their capital. At the same time, the most important link between all our external partners are our employees. We are convinced that the mutual confidence among all concerned parties represents the key to our success. We need to foster this. I would therefore very much like to say a big thank you to all our partners for their contributions toward the prosperity of the Baloise
At the Baloise Group we are convinced that we made the transition at exactly the right time. When the stock market started to fall, centralized asset management and
Administrative costs: The Baloise’s target is the lowest cost ratios in the industry. Its strategic goal is to reduce administrative costs to less than 25 percent of premium income by optimizing processing. Various IT projects are working on the development of what are in effect assembly lines for a seamless flow of data from the drawing up of a proposal to the issuing of the policy. They will eliminate all breaks between media, a source not only of high personnel costs, but also of delays and errors.
Strengthening existing and building up new highgrowth channels: In the Swiss market, insurance companies own field operations form the principle distribution channel. They account for about 75 percent of all contracts. To raise efficiency, salespersons undergo basic and advanced training programs. At the same time, the Swiss are slowly discovering practices that have long been common in markets abroad: taking out insurance through distribution partners such as brokers, banks (e.g. UBS), cooperation partners like the TCS, or our own banking channel.
Objects alone cannot provide lasting happiness. Relationships can, and they call for proximity. Proximity at the right moment is the key.
In the current year, the Baloise Group will be focusing its attention on steady improvements in intrinsic value. The main strategic axes are the continued safeguarding of solvency, making the life business profitable by eliminating the negative interest margin, implementing the “focused financial services provider” business model, and also reorganizing parts of the portfolio in Belgium and at Basler Deutschland. The last task also involves the effective integration of the newly acquired Securitas company.
24Bâloise-Holding Annual Report 2002 high-quality efficient claims handling, and tight cost management are also reflected in the change to the combined ratio. The combined ratio in 2002 was 97.7 percent (previous year: 98.7 percent). This means that the Baloise remains one of the most efficient insurers in the Swiss non-life market.
The life business recorded an above-average increase in premium volumes of 22.6 percent to around CHF 3.5 billion. In particular, there was a significant rise in individual life premium income. The trend from risk-conscious to conservative investment behavior, already observed in 2001, continued. In individual life business, we were able to benefit from increased demand for traditional insurance products as a safe way of providing for the future with guaranteed elements. This, combined with attractive products, enabled us to achieve strong growth via all distribution channels. The cooperation ventures with UBS Life AG and Credit Suisse also contributed significantly to growth. It was possible to open up new markets using this alternative distribution channel.
The Belgian insurance industry is under pressure from inadequate structures and poor key underwriting figures. Although premium adjustments eased the situation, high losses on investments imposed excessive strain on results here, too.
Non-life premiums declined slightly as a result of profitability measures taken in motor insurance (-0.3 percent in local currency). The effects of these changes were seen in the claims figures, resulting in a combined ratio of 114.4 percent, a year-on-year improvement of 6.4 percent.
Middle and senior management members participate in an incentive program with clearly defined targets and measurement of performance. The amount of the variable salary part depends primarily on the added value generated, but the assessment also includes criteria such as entrepreneurial and target-oriented thinking and acting, the ability to implement, teamwork, team building and staff development. The Baloise plans to expand this performance -related part of remuneration. In the year under review, roughly 400 people were included in the incentive programs, which took up 3.4 percent of the overall personnel costs.
Most of the fundamental rules on corporate governance are contained in the organizational regulations. As a further move toward improved transparency, the Board of Directors has therefore decided to provide public access to the organizational regulations on the Internet along with the Articles of Incorporation.
2002 also saw the creation of a central compliance function at Group level to coordinate compliance activities in the Group and define minimum standards for compliance with legal and ethical requirements. During the year under review, a detailed review of the compliance situation in the individual Group companies was conducted and concrete measures were developed to train and inform employees. As a key component of the implementation of a group-wide minimum standard of ethical conduct for employees, a group-wide Code of Conduct has been drawn up and will be introduced on a binding basis for all employees later this year. This Code of Conduct includes provisions on how to behave in the event of conflicts of interest and on employees’ actions in dealing with customers, business partners and one another. It is based on the corporate values of the Baloise and provides employees with specific guidelines on how to behave in their daily work. Additional internal rules and directives have also been drawn up and implemented. For example, a so-called “potential insider” directive imposes additional restrictions on trading in Baloise securities on the part of Group bodies and employees with access to insider information.
There has been some movement in the breakdown of Baloise shareholders which has resulted in a significant increase in the free float. Since October 2002 the Baloise has been included in SWX’s index calculations with a free float of 100 percent.
Further information on the members of the Board of Directors can be found on the Internet.
Mortgage loans CHF 500,000 * see “Change of control and countermeasures”, page 39
Rolf Schäuble, Chairman Walter G. Frehner, Vice Chairman Georg F. Krayer
Acquisition of subsidiaries where there is no effect on cash and cash equivalents 5 - 17.1 - 9.3
Administrative and other operating expenses - 515.0 - 476.4 - 347.1 - 340.5
Change in loss reserves/actuarial reserve - 194.2 114.5 - 1,452.6 - 2,240.6
Impairment in value recognized in the income statement (net) - 2.4 - 63.1 – 41.9 - 13.2 - 36.8 in CHF m
The Baloise Group operates solely in Europe. It comprises 13 insurance companies, which provide almost all types of life and non-life insurance. The holding company is Bâloise-Holding, a Swiss stock corporation (Aktiengesellschaft) which has its registered office in Basel, Switzerland. The shares of Bâloise-Holding are quoted on SWX Swiss Exchange. Its subsidiaries operate in Switzerland, Germany, Belgium, Austria, Luxembourg and Croatia. The banking business is carried out by subsidiaries in Switzerland, Germany, Belgium, and Luxembourg (investment fund company).
Lease agreements relating to real estate, fixtures, fittings and other tangible noncurrent assets, whereby basically all the risks and rewards relating to ownership of the asset are transferred to the Baloise Group, are defined and treated as finance leases. The fair value of the leased property is capitalized at the inception of the lease and disclosed as a tangible non-current asset. Each lease payment comprises a depreciation expense for the asset and interest payment. The depreciation expense is deducted from the liability for the leased asset, which is shown under Liabilities from banking business and loans.
Premiums are accounted for as income when due. Claims and benefits paid and costs are accounted for so as to ensure that the profit from the contracts is allocated equally over the anticipated term of the policies. Premiums and services relating to investment-type products are accounted for as follows: the risk and cost element is taken to the income statement, while the savings element is directly credited to or deducted from the policyholder’s deposit.
Loss reserves and provisions for the associated claims processing costs are set up for all losses which have occurred before the end of the fiscal year, whether or not these have been notified to the Baloise Group.
Surplus and profit allocations to policyholders: Insurance contracts may provide for surplus sharing with a client arising from the surplus on his contracts. Payments made during the fiscal year and the change in the relevant provisions combine to give the figure referred to in the income statement as surplus and profit allocations to policyholders.
Accumulated depreciation and write-downs - 39.7 - 53.9 - 93.6 of which assets under finance leases 0.2 11.3 11.5 in CHF m 13.4 Other tangible non-current assets: 2002
Total present value 173.2 164.2 in CHF m 20. Financial Provisions for the Year 2002
Benefits from occupational benefit plans comprise all amounts provided for current employees and pensioners. The following table aggregates pension plans under “pensions” and shows other benefits (such as subsidized mortgages) under “other benefits”.
Total warranties and guaranties for the benefit of third parties 709.9 843.1 of which for the benefit of partners in joint ventures – –