TLDR:
- Baloise reported a 7.6% increase in consolidated profit to CHF 219.1 million for H1 2024
- Operating profit (EBIT) rose 1.8% to CHF 271.9 million
- Business volume slightly decreased by 0.9% to CHF 5.29 billion
- Life insurance EBIT increased by 40% to CHF 145.5 million
- Baloise targets higher returns for shareholders, including 12-15% ROE and 80%+ cash payout ratio
Swiss insurance company Baloise has reported robust financial results for the first half of 2024, demonstrating resilience in the face of challenging market conditions.
The insurer also unveiled a new strategy aimed at boosting returns for shareholders, following the recent acquisition of a significant stake by activist investor Cevian Capital.
Financial Performance
Baloise’s consolidated profit for the first half of 2024 rose by 7.6% to CHF 219.1 million, surpassing analysts’ expectations of CHF 201 million. The company’s operating profit (EBIT) also saw an increase, rising by 1.8% to CHF 271.9 million, again beating the projected CHF 253 million.
The life insurance segment performed particularly well, with EBIT surging by 40% to CHF 145.5 million. This strong performance was attributed to higher profit contributions from operations in Germany and Belgium, as well as favorable conditions in the financial markets.
However, the company faced some challenges in its non-life insurance segment. Early summer storms in various parts of Switzerland negatively impacted results, leading to a deterioration in the combined ratio by 3.1 percentage points to 90.4%. Despite this setback, the figure remains below 100%, indicating that the business remains operationally profitable.
Business Volume and Market Conditions
While Baloise’s profitability showed improvement, the company’s overall business volume experienced a slight decline of 0.9% to CHF 5.29 billion. This figure fell short of analysts’ expectations of CHF 5.39 billion. The company noted that in local currency terms, there would have been a slight increase of 0.3%.
The non-life segment grew by 3.2%, while the life business saw a decrease of 5.1% in volume. Baloise explained that the growth of semi-autonomous solutions in occupational pensions is only partially reflected in the premium development figures.
New Shareholder Strategy
In response to the recent acquisition of over 9% of Baloise’s stock by activist investor Cevian Capital, the company has announced a new strategy aimed at enhancing shareholder returns. The key elements of this strategy include:
- Targeting a return on equity (ROE) of 12% to 15%
- Aiming for cash remittance of more than 2 billion Swiss francs in the period 2024-2027
- Increasing the cash payout ratio to 80% or more
- Considering the launch of an initial share buyback program in spring 2025
CEO Michael Mueller stated, “Following careful analysis of our business activities, we have identified substantial potential for raising efficiency along with related cost savings and opportunities for growth in all our business units.”
Capital Position and Future Outlook
Baloise maintains a strong capital position, with an estimated SST capital ratio of 210% as of the end of June 2024, up from 207% at the beginning of the year.
The company expects to generate over CHF 500 million in cash for the full year, which will serve as a foundation for its “attractive” dividend policy.
