Return on Equity: Increased from 7.2% to 13.9%. Cash Remittance: Increased to CHF565 million, including a nonrecurring CHF62 million contribution. Dividend: Proposed increase to CHF8.10 per share. Share Buyback: Planned CHF100 million. Combined Ratio: Improved by 1.7 percentage points to 92.9%. Expense Ratio: 29.9% for full-year 2024. EBIT in Life Business: CHF282 million. Non-life Premium Growth: 2.2% in local currency. Investment Type Premiums: Increased by 20.2%. Shareholder Profit: CHF385 million, 60.6% higher than the previous year. Shareholders' Equity: Grew by 11.7%. EBIT in Non-Life: Increased by 94.9% to CHF261 million. CSM in Life Business: Increased to CHF5 billion. Asset Management and Banking EBIT: CHF89 million.

Warning! GuruFocus has detected 9 Warning Sign with BLHEY.

Release Date: March 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Baloise Holding AG (BLHEY) successfully initiated its refocusing strategy and is on track to meet new ambitious targets. The company reported strong underlying results with growth in target segments, particularly in Non-life and investment-type premiums. Baloise Holding AG (BLHEY) achieved a significant increase in return on equity from 7.2% to 13.9%, aligning with their target range of 12% to 15%. The company increased its cash remittance to CHF565 million, including a nonrecurring contribution from the optimization of the Belgium Life backlog. Baloise Holding AG (BLHEY) proposed an increased dividend of CHF8.10 per share and announced a planned share buyback of CHF100 million, raising the total cash payout ratio to 83%.

Negative Points

The Life segment experienced a decline in growth, reflecting a continuing trend in Swiss group life towards semi-autonomous solutions. The company faced a negative impact of EUR 92 million from the sale of the Friday portfolio and the discontinuation of the ecosystem strategy. The combined ratio improved but still requires further work to reach the target of about 90%, with the current expense ratio at 29.9%. Non-life cash remittance was slightly lower than the previous year, attributed to shifts within the business portfolio. The restructuring and optimization in Belgium resulted in a slight decline in premiums due to the exit from the Marine business.

Q & A Highlights

Q: On Life and the CSM release ratio, how much more upside is there to that number going forward? A: Carsten Stolz, CFO, explained that the 5.4% achieved in 2024 is higher than previous years due to adjustments in the liquidity premium calculations. This is considered a sustainable level contributing to the P&L in life.

Story Continues

Q: Regarding non-life remittances for 2024, what are the drivers of the decline year-on-year? A: Carsten Stolz clarified that the cash remittance is based on the 2024 statutory accounting year. The decline is due to a strong cash remittance from life, including a CHF62 million one-off effect from the Belgium back book transaction. The underlying profitability and earnings power remain unchanged.

Q: Can you explain the guidance for the combined ratio of 90% to 93% for full-year 2025? A: Carsten Stolz mentioned that the guidance includes around 4% for large claims and 2 to 3 percentage points from discounting effects. The aim is for a 90% target in the combined ratio, with a focus on reducing the cost ratio.

Q: On the restructuring and optimization in Belgium, what benefit do you get from that? A: Carsten Stolz explained that the restructuring is an optimization of the legal entity structure, allowing cash remittance from Belgium to flow directly to Baloise Holding. This is a simplification measure with no operational restructuring involved.

Q: Regarding the financial results, particularly the net finance result, how should we model the margin going forward? A: Matthias Henny, CIO, explained that the higher current investment income is driven by a higher interest rate environment. The finance result is expected to be slightly lower in 2025 due to lower interest rates.

Q: On the underlying CSM growth, do you expect to grow that with the higher CSM release rate going forward? A: Carsten Stolz stated that the 5.4% release ratio is sustainable, contributing to CSM growth. The growth depends on new business volume and profitability, with a focus on maintaining a sustainable contribution from the CSM release.

Q: Can you provide more color on general tariff and claim inflation trends in your major markets? A: Michael Mueller noted that after the spike in 2022, inflation is more normalized. Continuous price increases and assessments are in place, with no particular trend to mention. The focus remains on achieving a 90% combined ratio.

Q: Are you able to give a sense of the Friday cash impact from the sale project? A: Michael Mueller stated that they are not disclosing specific details about the Friday impact, only the overall impact on the balance sheet.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

View Comments