Profi t from other activities / corporate business 2 58.2 14.6 – 74.9
CORPORATE GOVERNANCE Corporate governance report including compensation report: BOARD OF DIRECTORS AND MANAGEMENT
A trade in hand finds gold in every land: for years operational excellence, the championship in mastering the insurance trade, is the guiding principle in implementing our strategy. This strength now pays off in the light of faltering financial markets that have also left notable traces on our financial result. But even here we could limit the damage, thanks to our conservative investment strategy and using our effective risk management.
Bâloise-Holding registered share SWX SP Insurance Price Index (SMINNX) Swiss Market Index
In a turbulent environment, the segment Switzerland affirmed its excellent operational earning power. Business growth was above the market average. We were able to continue down this successful path using our focused financial services provider business model.
Any comparison with the previous year is not meaningful, since Osiguranje Zagreb was only taken over in the second half of 2007.
01 Minimum effort, maximum protection: a regular pump will do. 02 Driftwood, tell-tale sign of storms.
01 FUN FOR THE WHOLE FAMILY Fireman Reinhard Wimmer explains how to use fire-fighting equipment to three generations.
Employees’ average length of service within the Group is 12 years.
In 2009, we will harmonise the image of the Baloise Group and our business units as an employer, in order to again move one step closer to our goal of being an “attractive employer ”.
28 graduates of the “Advanced Management Program (AMP)” for young executives, newly devised in 2007, were able to celebrate their graduation in September 2008. The AMP focuses on the following issues: strategy, leadership and growth. Every participant should understand Baloise’s strategy and values and be able to apply them to his or her area of responsibility. Here the systematic focus is on learning to be effective. Working in small teams, the participants were able to familiarise themselves with various topics based on current issues. In the “mystery shopping” module they played the role of potential customers and took advice from our customer advisors, allowing them to experience directly what it means to be a trusted partner of Baloise from the customer perspective. The new AMP course with 30 participants started in November 2008.
In May 2006, Mercator in Belgium conducted a survey on the well-being of its employees, in cooperation with the University of Brussels. Despite satisfactory stress tolerance, the employees made comments regarding “exhaustion”, “physical working
conditions” and “identification with Mercator”. Together with the Committee for Health and Safety at Work, Mercator initiated a 2-year “Stress Action Plan”, which focuses on healthy living.
Business travel 13.15 million km 15.81 million km 18.36 million km 3,392 km / employee 16.1
THE RISK MAP Baloise is exposed to different risks. The risk map distinguishes between the following categories: Underwriting risks Market risks Financial structure risks Business environment risks Operational risks Strategic / Information risks
RISK PROCESSES Group-wide Risk Management standards lay mandatory foundations for risk processes. This set of rules lays down mandatory methods, rules and caps / f loors across the Group. It is continuously upgraded and is subject to the Risk Management team’s control. These “Group-wide Risk Management Standards” determine how different risk issues are assessed, managed and reported. A system of risk limits, which function as early warning indicators, restricts the risks taken.
1. GROUP AND SHAREHOLDER STRUCTURE Group structure Headquartered in Basel, Baloise is organised as a holding company in the form of a joint-stock company incorporated under Swiss law and listed on the SIX Swiss Exchange in its “EU-compatible” segment. As of 31 December 2008, the Baloise Group had a market capitalisation of CHF 3,925 million.
www.baloise.com → Investor Relations → Bâloise share → Share buy-back programme
The Board of Directors can limit or obviate shareholders’ pre-emptive subscription rights when issuing optional and convertible bonds. More detailed information about the structure of this contingent capital can be found in § 3 of the Bâloise-Holding Articles of Incorporation.
Consolidated equity of Baloise Group On 31 December 2008, consolidated equity of the Baloise Group amounted to CHF 3,895.6 million. Details about developments in 2008 and 2007 can be found in the Financial Report on pages 8 and 9 in the statement of changes to consolidated equity in the consolidated financial statement. Full details about 2006 can be found in the statement of changes to consolidated equity on page 8 of the 2008 Financial Report.
Dr Eveline Saupper x x x x x x = present, o = absent
In the reporting year, a benchmark survey was performed by an external partner. The Compensation Committee has approved the proposition submitted by Kienbaum AG after the evaluation carried out by the consultant. For the survey, the most senior management levels in the Baloise Group were described following a standardised method and compared to the relevant competitors (according to the criteria of premium volume, profit, internationality and complexity of the task). As part of an international compensation survey for selected positions in Group companies in Switzerland, Belgium, Germany, Luxembourg, Austria and Croatia, the overall compensation situation within Baloise was compared to the market, in order to create a basis for remuneration decisions in the upper ranks that are in line with the market and performancefocused.
To ensure in-house comparability, Baloise applies a function value system for senior executive managers in the Group and employees in Switzerland. The requirements of the holder of a certain function / position as regards skills, knowledge and experience are evaluated and weighted in the process. Similarly weighted positions are grouped in function levels. The allocation to a certain function level is key to the identification of the applicable salary range, ancillary pay and other employment contract components as well as the specific management level to which the the individual belongs.
Remuneration system The remuneration system applied by Baloise can be illustrated schematically as follows: CORPORATE GOVERNANCE CORPORATE GOVERNANCE REPORT INCLUDING COMPENSATION REPORT
As a performance-oriented company, Baloise establishes a clear and replicable correlation between the goals of the employees and the business objectives, which can be derived from strategic priorities. Remuneration, target agreements and performance assessments are closely related. Compensation – consisting of basic salary and variable payments – shows a differentiated, clear connection to and recognition of the performance of the individual and the success of the company and is meant to motivate employees to continue to
the participants. In addition, it specifies individual allocation to the Chairman of the Board of Directors and to members of the Corporate Executive Committee.
The number of shares that can be subscribed for after three years, i. e. at the end of the performance period, depends on how Bâloise-Holding shares have performed relative to a peer group. This comparative performance factor can hereby assume values between 0.5 and 1.5. The peer group includes the most important European insurance companies in the Dow Jones STOXX 600 Insurance Index.
Value of allocated PSU as of issue date in CHF million 4.2 6.7 2007 PSU expense for the Baloise Group in CHF million 1.6 –/–
2008 PSU expense for the Baloise Group in CHF million 2.8 1.7
The interest on the pension balance is determined at the beginning of the year for the previous fiscal year by the foundation council, based on the financial situation of the pension scheme.
Back office staff will notice an improvement in standard annual income, since the obligatory AHV (Swiss pension and surviving dependents insurance scheme) incentive is now also insured. Variable salary components were already insured for field sales staff.
These benefits were discontinued as of 1 January 2008 in the course of the reorganisation of the pension fund that in particular provides for the inclusion of the obligatory AHV (Swiss pension and surviving dependents insurance scheme) incentive in standard annual income. This in turn explains, why there are no values for the individual life policies in the table on page 83.
Employee Incentive Plan Portion of remuneration resulting from subscription for company shares at a preferential rate (2008: CHF 50.30). 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).
Head of Corporate Division Finance –/– –/– –/– 3,075,199 –/– –/– –/– 3,075,199
Baloise knows the dangers that lie in rushing things. Baloise also knows that the necessary peace of mind comes with professionalism. We put this expertise into practice in all we do to provide relief to our customers and help them to attain serenity.
Run Off Bruno Rappo * Member of the Corporate Executive Committee
Total technical result for own account 118.0 224.2 – 1,321.0 – 129.6
Accruals Accruals considers both expenses paid in advance for the new fiscal year, as well as revenue from the current fiscal year that will only be received at a later date. Included under the same heading are dividends decided on the balance sheet date by the Annual General Meeting of the subsidiaries. Bâloise-Holding reports these as dividend rights.
Baloise Insurance Co, (I.O.M), Ltd, Isle of Man 100.00 –/– CHF –/–
Actuarial reserves Actuarial reserves refer to provisions for current insurance contracts in the life insurance segment.
Assets managed for third parties Assets held in trust for customers and partners.
Expense ratio The ratio of the cost of nonlife insurance business to premiums, expressed in percent.
Gross In the annual report of an insurance company, “gross” generally stands for a balance sheet or income statement item before the deduction of the business ceded to the reinsurer.
SMI Swiss Market Index (SMI). Main index for the SIX Swiss Exchange.
Profi t-sharing ratio Index expressing the profit-sharing / premium ratio. Profit sharing is a rebate granted to policyholders in the nonlife business due to profitable business.
LUXEMBOURG Bâloise Assurances Atrium Business Park 23, rue du Puits Romain Bourmicht L-8070 Bertrange info@baloise.lu www.baloise.lu