Milan. He has had numerous solo exhibitions in Europe and the USA to his name since the mid 1960s. He has also published a large number of works on the theory of art and won several international prizes and awards.
Verzekeringen brand. Mercator sees itself as a trusted partner of choice for local professional brokers. The company provides a comprehensive assortment of personal and property insurance products for individuals and for small to medium-sized companies.
We maintain an income-oriented distribution policy. We regularly and transparently inform our owners of the course of business and implementation of our strategy.
As an insurance and pension company, we help sustain the functioning of national economies, societies and enterprises every day. Thanks to our sizable earning power, we contribute substantially to fi nancing the public sector. Our sustainable corporate policy makes us a reliable employer.
F R A N K S C H N E W L I N : We have always believed in our own power to move things in the right direction. We will continue to do so in the future and will maintain our commitment to operational excellence, anchor target customer management even more fi
RO L F S C H Ä U B L E : Acquisitions are an integral part of our strategy. Our focus here is on existing markets. We look for takeover objects that will create a minimum of dilution effects and fi t into our strategic focus.
Shareholding structure On December 31, 2006, one shareholder subject to registration pursuant to stock exchange law owned more than 5% of the outstanding Baloise shares. This was Barclays Group with 5.4% of the outstanding shares as at December 31, 2006.
Consolidated equity per share in CHF 56.3 60.6 63.6 79.8 91.0
The Baloise Group’s scope of consolidation remained essentially unchanged in the year under review.
VORABDRUCK bourg, Austria and Germany. The business volume is fairly evenly distributed by insurance line, with life insurance accounting for 59.1% while nonlife make up 40.9%.
Business volume including unit-linked life insurance reached CHF 4,426.1 million (2005: CHF 4.338.1 million), a gain of 2.0%. Demand for traditional asset building policies remained weak due to continued low interest rates. The strong decline of over 12% in single premiums in the Swiss market was more than offset by the increases in the other business units, leading to almost 4% growth for the Group as a whole. In recurring annual premiums, the Group posted slightly higher revenues than in the year before. Unit-linked life policies, on the other hand, registered a steep increase, with volume rising by 39.7%.
Boosted by bullish equity markets, these products are becoming a compelling alternative to traditional life insurance policies, which suffered from weak demand. Especially Baloise
In the year under review, the embedded value of the life business rose from CHF 2,359.7 million to CHF 2,627.8 million. Investment income, modeled for the future at a slightly higher rate, contributed CHF 83.4 million. The better than anticipated capital market developments in 2006 also had a positive impact, namely CHF 115.0 million, after consideration of the effect on policyholder dividends. The value of new business amounted to CHF 15.9 million, its margin climbing to 7.3% (2005: 5.3%).
Since major central banks further raised short-term interest rates during the strong economy, the interest rate curve fl attened considerably in Switzerland and most other countries. In bonds, there were substantial price drops at the short end and in the midrange maturity segment. Long maturity bonds saw less of a correction due to excess demand and a continued moderate infl ation outlook. Overall 2006 was not a good year for bonds as the performance of both the Swiss Bond Index (SBI) and European bond indexes was slightly negative. In the United States, too, treasury bonds came in below coupon yields with a local performance of 3.2% due to market losses. From a CHF investor’s perspective, investments in the U.S. were unappealing in any case since the US dollar’s 7.4%
Now the primary aim is to sustainably secure the high earning power. Assuming ongoing favorable market conditions, we will aim for a return on equity of at least 15% and a combined ratio in the nonlife business well below 100%. We want to continuously increase earnings per share. Overall, we are aiming for business growth in line with the market average. In our preferred high-value target segments, including unit-linked life insurance, we intend to achieve above-average growth. We are concentrating on organic growth in continued to register impressive gains in 2006. Among the major indexes, the Swiss Market Index at 15.8%, the EuroStoxx50 at 18%, the Standard & Poor’s 500 at 13.6% and the
VORABDRUCKaverage. In our preferred high-value target segments, including unit-linked life insurance, we intend to achieve above-average growth. We are concentrating on organic growth in
VORABDRUCKCHF 122.2 million. The number of policies sold over the Internet increased by 18%.
Premium income (gross) 736.3 751.4751.4 of which: life in CHF million 153.5 161.8161.8 of which: nonlife in CHF million
VORABDRUCK The contribution of the segment “Other countries” to earnings before taxes advanced to
C H R IS T I A N A N D R I K : Besides competent advice and solutions from a single source, the added value lies primarily in our bundled solutions. These consist of intelligently linked banking and insurance products. BALOISELIFE PLUS is an example of this, the ideal combination of insurance protection and saving. Customers can pay in in a fl exible way and still withdraw assets at an early stage, for instance to fi nance residential property.
Residential property is a form of provision for the future. Does this make sense – or do you have alternatives for someone who wants to remain fi nancially fl exible?
� Our customers have a single point of contact for all their money and security related issues.
VORABDRUCK This is where our advice becomes particularly valuable. We have products to suit every life situation and are well aware of how quickly circumstances can
� Brokers receive individualized support from Mercator for the planning and implementation of marketing measures.
With such benefi ts extended, clients are usually willing to fi ll out the questionnaire enclosed with the RingCard mail. This in turn provides Deutscher Ring with valuable information on its new clients, in particular on any further insurance needs they may still have.
VORABDRUCKThis is precisely what Deutscher Ring wants to prevent. Hagemann explains how: “We want the dialog with our customers to continue, we want to add variety and, from time to
Service Center with its 100 or so insurance specialists. These inform the distribution partner responsible, who immediately contacts the client in question. This ensures that customers will always end up talking to their personal advisors, irrespective of the channel through which they have voiced their request. And Deutscher Ring quite literally gives face time to its client.
VORABDRUCKcan be derived directly from our strategy. We regularly measure staff satisfaction. The results are very good in comparison with our direct competitors. This does not, however,
First, there is the targeted identifiVORABDRUCK First, there is the targeted identifi cation and recruitment process. Then come systematic VORABDRUCK
The following case examples provide an insight into how the key competencies stipulated by the HR strategy are developed and put into practice in the various countries.
Deutscher Ring launched the second edition of its demanding two-year development pro-
� The number of younger staff members increased somewhat in 2006. Overall, the average age went up, refl ecting the general demographic trend.
VORABDRUCK Fluctuations in consumption fi long, warm summers with strong demand for cooling or relatively mild winters with a corre-VORABDRUCK long, warm summers with strong demand for cooling or relatively mild winters with a corre-
Bâloise-Holding Annual Report 2006 2004 absolute 2005 absolute 2006 absolute relative Unit
Copy paper consumption 85.3 m A4 sheets 81.6 m A4 sheets 81.6 Mio. A4 sheets 17,659 A4 sheets / employee –4.56%
gures for the Luxembourg unit are not included in the table as the company was moving into new premises at the time.
The system is supported by an internal organizational structure incorporating a system of checks and balances which defi nes and embodies clear risk categories in the roles of risk owners and risk controllers.
Distributions to shareholders Through our shareholder-friendly distribution policy, the Baloise has repaid CHF 484.3 million to its shareholders via cash dividends and share buybacks over the past fi ve years.
In CHF million, at March 31 of each year before 2005, at December 31 starting in 2005 (end of the fi scal year).
Klaus Jenny was a member of the General Directorate of Schweizerische Kreditanstalt and member of the Credit Suisse Group Executive Board from 1987, serving most recently as
Werner Kummer is a self-employed business consultant, member of the Boards of Directors of WMH Walter Meier Holding AG and Schlatter Holding AG, Chairman of the Board of
Deutschland Holding GmbH and member of the board of the Zurich Chamber of Commerce.
Each of the committees appointed by the Board of Directors is composed of four members, who are elected each year by the Board. The Chairman and Deputy Chairman of the
In 2006 the full Board of Directors met fi ve times. The following table shows the directors’
Members of the Corporate Executive Committee are regularly invited to meetings of the full Board of Directors. Meetings of the Audit Committee are generally attended by the
Bâloise-Holding Annual Report 2006 ve times. The following table shows the directors’
Master of Science at the London School of Economics, Master of Business Administration
VORABDRUCK employed at Zurich Financial Services Group from 1983 to 2002 in various positions. He joined its Group Management Board in 1993 with responsibility for the Southern Europe, VORABDRUCK joined its Group Management Board in 1993 with responsibility for the Southern Europe,
(For example, if the incentive is CHF 20,000, the Compensation Committee may, considering corporate earnings, reduce this amount to as little as CHF 16,000 by applying a factor of 0.8 or increase it to as much as CHF 26,000 by applying a factor of 1.3.)
VORABDRUCKment Commission of the Swiss Insurance Association SIA and serves on the boards of Unigestion Holding, Geneva and HW Finanz AG, Pratteln.
Mortages and policy loans (1 Person) CHF 1,000,000 1 Mortgages are granted at employee terms (1% below the client interest rate for variable-rate mortgages; preferential interest for fi xedrate mortgages). There are no policy loans.
Extraordinary General Meetings are convoked by resolution of the Annual General Meeting, the Board of Directors or the external auditors. An extraordinary General Meeting must also be convoked by the Board of Directors, in accordance with applicable law, at the request of shareholders (Art. 11 Articles of Incorporation). Pursuant to Art. 699 (3) Swiss
Agenda items Pursuant to Art. 699 (3) Swiss Code of Obligations, one or more shareholders who together represent shares with a par value of at least CHF 100,000 may apply for items to be placed on the agenda. Such application must be submitted to the Board of Directors in writing with an indication of the matters to be brought before the General Meeting no later than six weeks before the regular Annual General Meeting (Art. 14 Articles of Incorporation).
Procedures and requirements for prohibition or restriction of transferability are governed by the provisions of Art. 5 and Art. 17.
VORABDRUCK represent shares with a par value of at least CHF 100,000 may apply for items to be placed on the agenda. Such application must be submitted to the Board of Directors in writing with VORABDRUCK on the agenda. Such application must be submitted to the Board of Directors in writing with
+/– 0.5% change in new money rate +4.5/–4.9 +3.8 / –4.1 in percent 1 Annual premium equivalent = 100% annual premium of new business + 10% single premium.
Amortization and depreciation on property, plant and equipment and on intangible assets –10.5 –4.1
Meetings of Baloise Fund Invest Advico, Luxembourg, February 8, 2007; of Baloise Finance (Jersey) Ltd., St. Helier (Jersey), February 15, 2007; of Baloise Asset Management Schweiz AG, Basel, Baloise 12/31/2006
Realized gains and losses on fi nancial instruments, investment properties, and associates –568.2 –756.0
Increase / decrease in minority interests due to change in the scope of consolidation –/– –0.7 –0.7
IAS 19 Amendments contain, besides further-going disclosure requirements, additional changes in the areas of group plans involving several employers and a choice of options regarding actuarial gains and losses. The Baloise currently does not make use of the new option with regard to actuarial gains and losses.
The Baloise Group now discloses deferred taxes on a net basis.
Due to statutory requirements in Germany, unrealized gains are fi rst allocated to each policyholder’s legal quote share and only then apportioned to the remaining shadow accounting items
nancial statements and the Holding approved the annual fi nancial statements and the Holding approved the annual fiVORABDRUCK Holding approved the annual fi nancial statements and the Holding approved the annual fi
IFRIC 9 Reassessment of embedded derivatives addresses the peculiarities of accounting for embedded derivatives under IAS 39. An assessment is required as to whether the embedded derivative must be separated from the host contract and accounted for under the rules for derivative fi nancial instruments. This assessment must be made when the entity fi rst becomes a party to the contract. Subsequent reassessment is permitted only if there is a change in the terms of the contract that signifi cantly modifi es the associated cash fl ows. No material effect on the corporation’s earnings or balance sheet is expected from application of IFRIC 9.
Companies newly acquired during the course of the reporting period are included in the consolidated annual fi nancial statements as of the date of the effective assumption of control, and all companies disposed of during the year are included up to the relinquishment of control.
Property, plant and equipment are normally self-fi nanced. If any dept fi nancing is used, interest is capitalized during the construction period.
FINANCIAL REPORT 2006 on the management of the company in question. Adjustments of associates are normally recognized in income, taking possible ows into account. If the share in the losses exceeds the value of the associate, no additional loss shares are recognized. The goodwill paid for associates is included in the carrying value of the equity investment.
Monetary and non-monetary balance sheet items carried at fair value from foreign currency transactions of Group companies are
VORABDRUCK nancial statements using Each subsidiary prepares its annual fi nancial statements using Each subsidiary prepares its annual fi
3.5.2 Present value of the profi ts on acquired insurance contracts (present value of future profi ts – PVFP) The present value of the profi ts from acquired insurance contracts arises from the purchase of a life insurance company or upon the purchase of a life insurance portfolio. The initial measurement as well as the determination of the amortization model is made in accordance with actuarial principles and the PVFP is subjected to regular impairment testing. See also section 3.18.2.
used by a third party), if a division is not possible the entire property is allocated based on the intended purpose of the majority of usable space. Investment properties are recognized at fair value using the discounted cash fl ow (DCF) method. This is determined internally each year by trained experts by using assumptions approaching market conditions. The fair values are derived primarily from the future cash fl ows (net cash fl ows from rental income, maintenance expenses and administrative costs) and by means of mathematical methods from comparable transactions.
VORABDRUCKline basis over the expected useful life, but no longer than 10 years as a rule. Intangible assets are, usually self-fi
3.7.1 Financial assets recognized at fair value in 3.7.1 Financial assets recognized at fair value in nized as receivables. Financial assets received as collateral from
nancial instruments3.11 Derivative fi nancial instruments3.11 Derivative fiVORABDRUCK 3.11 Derivative fi nancial instruments3.11 Derivative fi Derivative fiVORABDRUCK Derivative fi nancial instruments are understood to be swaps, VORABDRUCK
Cash and cash equivalents consist predominantly of cash, demand deposits and short-term liquid assets with maturities of up to 24 hours. They are measured at their nominal value.
– as compared to the statutory fi nancial statement. Accordingly, that portion of the obligation from an insurance contract that is attributable to a DPF (“DPF component”) must be presented separately. The standard does not provide any clear guidelines regarding the measurement and disclosure of the DPF component.
Minimum quotas are also applied to some of the business under the Swiss Pension Fund Law (BVG) – the business subject to the “legal quote”. The quotas applied are 100% on the change in liabilities and 90% on the change in assets.
VORABDRUCK period and on the same bases as the original transaction and are
Bâloise-Holding Financial Report 2006 21 3.20.3 Measured at fair value and recognized in income 3.20.3 Measured at fair value and recognized in income nancial contracts for which the holder bears the investor’s risk himself, this item also includes liabilities from the banking business that have been classifi es. The banking segment’s bonds are also included in the liabili3. 21 Financial liabilities Bonds issued on the capital market, with the exception of bonds from the banking segment, are recognized in fi
VORABDRUCK at fair value through profi t and loss is recognized using the effec-at fair value through profi tive interest method. If a receivable is remeasured, a write-down
VORABDRUCK tive interest method. If a receivable is remeasured, a write-down equal to the present value of the estimated future cash inflVORABDRUCK equal to the present value of the estimated future cash infl and outflVORABDRUCK and outfl ows is made to the recoverable amount, discounted VORABDRUCK
ows is made to the recoverable amount, discounted and outfl ows is made to the recoverable amount, discounted and outflVORABDRUCK and outfl ows is made to the recoverable amount, discounted and outfl using the contract’s original discount rate. The future write-up is VORABDRUCK using the contract’s original discount rate. The future write-up is nancial assets of a debt nature
VORABDRUCKintent and ability of holding these fi nancial instruments to matu-intent and ability of holding these fi rity. If, contrary to the original intent, these fi
By providing interest rate guarantees, the Group is also exposed to the risk of interest rate fl uctuations. Further, there are implicit fi nancial guarantees and options that affect the companies’
VORABDRUCK Special contingency plans are established in every business unit for extraordinary events such as natural disasters, terrorist
VORABDRUCK unit for extraordinary events such as natural disasters, terrorist attacks, etc. to ensure the continuation of business operations.
Within the Baloise Group, risk controlling focuses on investment risks, business risks (actuarial or banking risks), fi nancial structure risk and compliance. The Group’s most senior risk controller is the Chief Financial Offi cer of the Baloise Group.
VORABDRUCK for the year: estimation errors for the claims reserves (including
VORABDRUCK of the insured event, e.g. survival to a certain age/date or death.
VORABDRUCK upon early death (term or whole life insurance) and upon disability
Technical reserves with positive interest guarantee 9,562.2 9,724.0 12,220.1 1,293.0 305.9
Actuarial reserve 12.31.05 Actuarial reserve 12.31.06 in CHF m Share % in CHF m Share %
For the “reduction in net new capital infl ow” scenario, the fair values of the investments are not adjusted. This means, in particular, that the amount of unrealized gains and losses on fi xed-income securities in equity is not changed.
(asset effect) due to interest rate fl uctuations on money and capital markets. Aside from the economic risk that asset and liability maturities may be mismatched, there is also a balance sheet risk due to sometimes differing fi nancial reporting regulations.
VORABDRUCK changes in foreign exchange rates. The extent of the effective forex risks is dependent upon:VORABDRUCK risks is dependent upon: net foreign currency exposure, i.e. the net balance of foreign VORABDRUCK net foreign currency exposure, i.e. the net balance of foreign currency assets and liabilities.VORABDRUCK currency assets and liabilities.
VORABDRUCK affecting entire segments and regions may jeopardize the ability to pay of an entire group of otherwise independent counterparties.
VORABDRUCKwriting and fi nance departments. The maturity structure of liabili-writing and fi ties must be considered when managing liquidity: VORABDRUCKties must be considered when managing liquidity: VORABDRUCK Maturity in: VORABDRUCK Maturity in: < 1 year
The residual terms and maturities of the technical reserves concerned are stated in the tables of section 23.
Carrying value as of December 31 15.8 52.5 1,009.0 153.9 –/– 118.1 7.9 1,357.2VORABDRUCK Carrying value as of December 31 15.8 52.5 1,009.0 153.9 –/– 118.1 7.9 1,357.2VORABDRUCK VORABDRUCK VORABDRUCK
Reversals of an impairment loss recognized in income –/– –/– –/– –/– –/– –/– –/– –/–
Accumulated amortization and adjustments2 –145.2 –213.9 –11.5 in CHF million 1 Other than possible goodwill, the Baloise has no intangible assets of indefi nite useful life. 2 Owing to the application of IFRS 3 “Business Conbinations”, and the related changes in IAS 36
In fi scal 2005, the Baloise Group business unit in Belgium invested in long-dated fi xed-income securities. This has substantially increased the interest rate risk on equity. To counter this risk, a part of the portfolio was reclassifi ed from “available for sale” to “held to maturity.”
VORABDRUCK nanced by a fund Present value of liabilities not totally or partially fi nanced by a fund Present value of liabilities not totally or partially fi
VORABDRUCK actuarial and other assumptions made for each company and country. The assumptions presented above are weighted averages.
were subscribed at a price of CHF 49.10 (2005: CHF 33.80). The fair market value per share was CHF 103.10 (2005: CHF 67.10).
Fair value of the subscribed shares as of the subscription date* 2.4 3.0 *in CHF million
Capitalization requirements: Minimum capital (solvency) regulations pursuant to the applicable supervisory law apply to subsidiaries in the insurance business. For the 2005 and 2006 fi scal years, the subsidiaries met all applicable the 2005 and 2006 fi scal years, the subsidiaries met all applicable the 2005 and 2006 fi regulatory provisions regarding capitalization.
VORABDRUCKLoss reserves as of December 31 (gross) 5,207.4 5,330.2Loss reserves as of December 31 (gross) 5,207.4 5,330.2
23.2.1 Technical reserves by maturities Actuarial reserve for non-unit-linked life insurance 2005 2006
Liability for future fi nancial lease payments (present value) 166.7 154.0
Financing contracts for third parties and at third-party risk 929.2 1,357.1
The convertible bond (1%) 1998 – 2006 issued by Baloise Finance
VORABDRUCK in CHF million nancial provisions for restructuring contain primarily amounts VORABDRUCK nancial provisions for restructuring contain primarily amounts for the reorganization of companies in Switzerland acquired in pre-VORABDRUCK for the reorganization of companies in Switzerland acquired in pre-
2 The realized profi t on alternate fi nancial investments is CHF 33.2 million. 3 A gain of CHF 8.5 million from fair value hedging was included in the realized disposal and book profi ts from mortgages and loans. 4 In case of investments of a debt nature held to maturity, currency effects are carried under realized book profi ts / realized book losses.
2 The realized profi t on alternate fi nancial investments is CHF 89.1 million. 3 A gain of CHF 9.4 million from fair value hedging was included in the realized disposal and book profi ts from mortgages and loans.
VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK VORABDRUCK68.3 4.7
Total guarantees and payment guarantees for the benefi of which: For the benefi
43.1.3 Pledged or assigned assets and assets in securities lending Assets
Basler Versicherungs-AktiengesellschaftVORABDRUCK Basler Versicherungs-Aktiengesellschaft in Österreich, WienVORABDRUCK in Österreich, WienVORABDRUCK VORABDRUCK
These consolidated fi nancial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We confi rm that we meet the legal requirements concerning professional qualifi cation and independence.
R Realised and not realized gains and losses on investments 4, 63, 64 Realised gains and losses in equity 3, 6, 8, 17, 54 Receivables, insurance 2, 46, 68, 70 Regions, segment reporting 36