→ Baloise wants to be the first choice for all those who wish to feel safer. Our customers should always have peace of mind and a sense of reassurance and safety. We want our customers to feel completely safe with Baloise at their side as a reliable partner. This means that we have to consistently align our services and products to the needs of our customers.
Total assets under management 80,167.8 1 Including CHF 54.5 million (2015: CHF 40.2 million) in other assets (precious metal holdings from investment-linked life insurance policies).
In the life division, premium income from classic life insurance reduced by 6�7 per cent year on year to CHF 2,879�3 mil lion� One reason for this decrease was that the growth of comprehensive BVG insurance contracts was deliberately restricted by means of a selective underwriting policy� However, the partially autonomous pension solution Perspectiva emerged as one of the fast-growing collective foundations in the Swiss SME segment�
Growth in the life business has stabilised� Classic life business declined by 0�7 per cent, which was primarily attributable to the challenging environment of low interest rates� At 14�2 per cent, the growth in investment-type premiums was particularly encouraging in 2016�
BEING RESPONSIBLE Being a responsible Company is a core part of the strategy� Responsible companies that give something back to society are critical to the success of any economy, not least because their actions help to build the necessary consensus between business and wider society� The concept of companies acting as good citizens is commonly known as corporate social responsibility (CSR)� In a number of countries, including Switzerland, the concept is broadly accepted at a political level� The Swiss Federal Council, for example, makes the case for responsible companies being a vital factor in the success of the Swiss economy and sets out the government’s intention to help shape the framework for CSR�
A RESPONSIBLE EMPLOYER Baloise’s responsibility as an employer is manifested in the new strategy with a clear employee-oriented objective� It wants to position itself as one of the most attractive employers in its industry� This involves continual improvement of the corporate culture� Baloise’s past efforts have already created a stable basis for achieving this goal� The concept of social partnership has a long tradition at Baloise Insurance in Switzerland� In 2015 the Company’s employee commission (MAKO) celebrated its 40th anniversary� The Baloise MAKO was established long before 1993, when the Swiss federal government passed a co-determination act that made it law for employees to have a say in the workplace and to be given information on particular matters� To this day, the rights of the MAKO go well beyond the provisions of this act� Baloise has always fostered an employee- oriented corporate culture across its organisation� It gives its staff scope to contribute to the success of the Company and to develop both personally and professionally, placing particular emphasis on training and development� In doing so, Baloise secures not only its own long-term viability but also the future employability of its staff in an increasingly competitive economic environment� By giving young people their first experience in the world of work – as trainees, interns and temporary student employees – Baloise is also making an investment in the future of the Company and the employment markets of the countries in which it operates� Every year, across the group, Baloise trains over 200 people who are at the start of their careers� The value that this adds, both for these young employees and the Company, provides a solid basis for the future and enables Baloise to create new jobs and preserve existing ones�
CHALLENGING AND DEVELOPING. TRUSTING PEOPLE TO PERFORM. Baloise cultivates a culture of performance and trust� A key element of this culture is the performance and talent development process, which focuses on continuous learning and on helping employees to make the most of the freedom they are given in their work� This process is made up of two components: → One-to-one meetings between managers and employees: these provide guidance and clarity about the common objectives and continuous learning� They are the central element in an ongoing dialogue focused on performance and development targets�
To help secure long-term success, part of employees’ remuneration is paid in the form of restricted shares, with the senior management team receiving a comparatively high proportion of their pay in the form of shares� This form of remuneration strengthens loyalty to Baloise and gives employees the opportunity to share in the Company’s success�
ENVIRONMENTAL FOOTPRINT Baloise continually reduces its direct impact on the environment by planning, building and operating its office buildings in a resource-saving and energy-efficient manner� It observes the same principles in the procurement and use of office equipment and materials� In doing so, it pays particular attention to its published energy mission statement and its environmental audit�
The employee vehicle fleet is gradually being moved over to low-CO2 vehicles� As at the end of 2016 the average vehicle in the fleet produced 117�7 g / km�
→ Risk governance and risk culture: this involves encouraging risk awareness – how people perceive and respond to risk – and establishing this mindset throughout the organisation�
The reports that were submitted to the issuer and to SIX Swiss Exchange AG’s disclosure office during the reporting year in compliance with article 120 of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FinfraG) and were published on the latter’s electronic reporting and publication platform in compliance with article 124 FinfraG can be viewed using the search function at www.six-exchange-regulation.com/en/home/publications/ significant-shareholders.html�
As a company that adds value, Baloise attaches great importance to practising sound, responsible corporate governance.
Bonds outstanding Bâloise Holding has issued bonds publicly� As at the end of 2016, a total of seven public bonds were outstanding� Details of outstanding bonds of Bâloise Holding can be found on pages 233 and 276 and on the internet�
The Board of Directors will propose Dr Thomas von Planta (born in 1961 and qualified as a lawyer in Switzerland) for election at the Annual General Meeting on 28 April 2017� He is the founder and Principal of CorFinAd AG, a company specialising in consultancy for M & A transactions and capital market finance� He has sat on the Board of Directors of Bellevue Group AG since 2007, Bank am Bellevue AG since 2012 and Bellevue Asset Management AG since 2012, and has been Chairman of the Board 04_JB_Corporate_Governance_en 62 22�03�2017 14:57:18
The Remuneration Committee proposes to the Board of Directors – for subsequent approval by the Annual General Meeting – the structure and amount of remuneration paid to the members of the Board of Directors and of the salaries paid to the members of the Corporate Executive Committee� Under ERCO, the remuneration paid to the Board of Directors and the Corporate Executive Committee has to be approved by the Annual General Meeting� The Remuneration Committee approves the target agreements and performance assessments that are applied to the Corporate Executive Committee members in order to determine their variable remuneration� It also sanctions the remuneration policies applicable to the Corporate Executive Committee members and ensures that they are being correctly implemented� It approves the variable remuneration granted to individual members of the Corporate Executive Committee; this remuneration has to be within the maximum amount approved by the Annual General Meeting�
Division of authorities, functions and responsibilities between the Board of Directors and the Corporate Executive Committee The division of authorities, functions and responsibilities between the Board of Directors and the Corporate Executive Committee is governed by law, the Articles of Association and the Organisational Regulations� The latter are reviewed on an ongoing basis and updated as changing circumstances require�
German Egloff * Martin Wenk * Thomas Sieber * Michael Müller * Jürg Schiltknecht Henk Janssen Romain Braas
The section below describes performance-related remuneration and the performance pool, which are available as shortterm variable remuneration components�
→ Capital-markets perspective compared with competitors The main metric used to evaluate this criterion is the performance of Baloise’s share price compared with the 36 European insurance companies represented in the STOXX Europe 600 Insurance Index (the composition of this index is shown in the table on page 83)�
→ Article 31 Annual General Meeting votes on remuneration → Article 32 Principles of profit-related remuneration and the granting of equity instruments → Article 34 Loans and advances granted to members of the
The lower level of fixed remuneration also reduced the total amount of variable remuneration paid�
Granted in 2016 2016 CHF CHF Number of shares CHF Number of shares CHF Number of PSUs CHF Number of shares CHF CHF CHF CHF CHF
Auditor’s responsibility Our responsibility is to express an opinion on the remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14 – 16 of the Ordinance.
The Annual General Meeting, the Board of Directors or the external auditors decide whether to convene extraordinary general meetings� Furthermore, legal provisions also require the Board of Directors to convene an extraordinary general meeting if requested by the shareholders (article 11 of the Articles of Association)� Article 699 (3) of the Swiss Code of Obligations (OR) states such requests must be made by shareholders who represent at least 10 per cent of the share capital�
Article 5 of the Articles of Association determines whether nominee entries are permissible, taking into account any percentage limits and entry requirements� The procedures and requirements for suspending and restricting transferability are set out in the provisions in article 5 and article 17�
Investor Relations Baloise Group Marc Kaiser Aeschengraben 21 4002 Basel, Switzerland marc�kaiser@baloise�com 04_JB_Corporate_Governance_en 107 22�03�2017 14:58:08
REPORT OF THE STATUTORY AUDITOR TO THE ANNUAL GENERAL MEETING OF BÂLOISE HOLDING LTD, BASEL ������� 260
Addition / disposal of financial contracts and liabilities from banking business 1,769.5 874.1
Gains or losses on the sale of property, plant and equipment are immediately taken to the income statement as either other operating income or other operating expenses.
The mortgage portfolio is regularly tested for impairment. If there is objective evidence that the full amount owed under the original contractual terms and conditions or the relevant pro­ ceeds of a receivable cannot be recovered, an impairment loss is recognised. Loan exposures are individually evaluated based on the nature of the borrower concerned, its financial position, its credit history, the existence of any guarantors and, where appropriate, the realisable value of any collateral security.
3.11.3 Cash flow hedges When the effective portion of hedges is being accounted for, changes in the fair value of derivative financial instruments classified as cash flow hedges are recognised directly in equity. The amounts reported in equity as “unrealised gains and losses (net)” are taken to the income statement at a later date in line with the hedged cash flows. The ineffective portion of hedges is recognised in profit or loss.
3.15.2 Capital reserves Capital reserves include the paid­up share capital in excess of par value (share premium), Bâloise Holding Ltd share options, gains and losses on the purchase and sale of treasury shares and embedded options in Bâloise Holding Ltd convertible bonds.
The accounting policies applied by the Baloise Group are de­ scribed below.
Minimum quotas are also applied to some of the Baloise Group’s Swiss occupational pensions (BVG) business, which is subject to the legal quotas of 100 per cent for changes in liabil­ ities and 90 per cent for changes in assets.
→ Financial instruments with characteristics of equity and financial instruments with characteristics of liabilities (available for sale or recognised at fair value through profit or loss) Fair value is based on prices in active markets. If no quoted market prices are available, fair value is estimated using generally accepted methods (such as the present­ value method), independent assessments based on com­ parisons with the market prices of similar instruments or the prevailing market situation. Derivative financial instruments are measured using models or on the basis of quoted market prices. If no publicly quoted prices are available for private equity investments, they are measured on the basis of their net asset value using non­public information from independent external providers. These providers use various methods for their estimates (e. g. analysis of discounted cash flows and reference to similar, fairly recent arm’s­length transactions between knowl­
Additions arising from change in the scope of consolidation – 73.9 73.9
Reinsurers’ share of claims incurred 89.5 96.5 8.3 11.7 – – – – – – 97.9 108.2
10.2 Non-significant investments in associates The Baloise Group holds investments in a number of non-significant associates.
Baloise Group Financial Report 2016 Notes to the consolidated annual financial statements 09_FB_Kapitel_07_bis_17_en 195 22.03.2017 15:01:32
Mortgages and loans recognised at fair value through profit or loss
Fair value of subscribed shares on subscription date (CHF million) 4.8 4.5
In order to increase the impact of this Share Participation Plan, employees are granted loans on which interest is charged at market rates, which enables them to subscribe for shares whose value constitutes a multiple of the capital invested; these shares are purchased at their fair value net of discounted dividend rights over a period of three years. Repayment of these loans after the three-year closed period has elapsed is hedged by put options, which are financed by the sale of offsetting call options. If the price of the shares is below the put options’ strike price when the closed period expires, programme participants can sell all their shares at this strike price, which ensures that they can repay their loans plus interest. In this event, however, they lose all the capital that they have invested. If, on the other hand, the price of the shares is above the call options’ strike price, programme participants must pay the commercial value of these options. Their upside profit potential is thus limited by the call options. If, when the three-year closed period elapses, the price of the shares is between the put options’ strike price and the call options’ strike price, once the loans plus accrued interest have been repaid the employees concerned receive the remaining shares to do with as they wish.
Baloise Group Financial Report 2016 Notes to the consolidated annual financial statements 23.1.4 Claims reserve (including claims handling costs)
Total technical reserves (life) 39,829.6 40,222.5 1 The actuarial reserves include unearned premium reserves and claims reserves.
Total provisions for future policyholders’ dividends 2,386.6 2,376.3 1 The Swiss pensions business is disclosed separately owing to its specific features. It comprises group contracts which may be cancelled annually by either party, whereas the coverage period for the individuals enrolled is significantly longer.
Usage not recognised in profit or loss – 16.0 – 13.3 – 29.3 – 10.7 – 11.1 – 21.8
Fees and commission for financial assets and liabilities not recognised at fair value – 14.1 – 13.9
Baloise Group Financial Report 2016 Notes to the consolidated annual financial statements 11_FB_Kapitel_24_bis_Bericht_en 242 22.03.2017 15:02:04
Baloise Group Financial Report 2016 Notes to the consolidated annual financial statements 11_FB_Kapitel_24_bis_Bericht_en 245 22.03.2017 15:02:04
In the normal course of its insurance business, the Baloise Group provided contractually binding collateral, mainly joint collateral relating to insurance-backed construction guarantees, and professional and commercial surety bonds.
48. JOINT ARRANGEMENTS There were no joint arrangements in 2016 and in 2015.
Report on other legal and regulatory requirements In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial report according to the instructions of the Board of Directors.
Baloise Group Financial Report 2016 Notes to the financial statements of Bâloise Holding Ltd 4. ADMINISTRATIVE EXPENSES
Change in treasury shares – – – – – – 52.9 – 52.9
18. 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 76 to 107 of the chapter on corporate governance� The key information disclosed here includes
→ New business margin The value of new business divided by the annual premium equivalent (APE)�
→ Share buy-back programme Procedure approved by the Board of Directors under which Baloise can repurchase its own outstanding shares� Companies in Switzerland open a separate trading line in order to carry out such buy­backs�