The all-lines insurance company is on the way, developing its ecosystems and innovative spirit. Interview with Michael Müller, CEO for Switzerland.
After completing its first “Simply Safe” strategic program, Baloise Group has entered Phase 2, which will run from 2022 to 2025. The all-lines insurer is staying the course for now, according to Michael Müller, CEO of Baloise in Switzerland and member by the group management. The goals set are certainly ambitious: -to be among the top 5% of European employers; -attract 1.5 million new customers; – generate a total of 2 billion francs of liquidity injected into the holding company, of which a share of 60% to 80% will be distributed in the form of dividends.
Are the current dynamics of the Baloise Group and Baloise in Switzerland in line with the objectives for the period 2022-2025?
We have started this “Season 2” well, overall considering the development of our business this year, despite a very uncertain economic and geopolitical environment. Growth must be both organic, through acquisitions and through our ecosystems. This at the same time as we maintain our profitability and are more than a traditional insurance company. All the group’s business units must contribute to this, especially the Swiss activities. Without losing sight of the fact that the Swiss insurance market is mature and that size also plays a role.
To reinforce this dynamic, the group now operates under a single common brand: “Baloise”.
Baloise is well diversified both geographically and by type of activity.
Switzerland remains the group’s figurehead in terms of operating profit (EBIT) and cash payments to Baloise Holding…
It is actually a significant part of the group’s results, both for business volume and EBIT and cash flow. However, Baloise is well diversified both geographically, with Switzerland, Germany, Belgium and Luxembourg, and by type of activity: life, non-life insurance and banking and asset management. This is a strength of Baloise.
Are your habitat and mobility ecosystems factors of differentiation, while insurance activities are not very differentiated and form a highly competitive market?
They help us offer a full range of products and services in the form of prevention, life insurance, assistance and insurance. Within these ecosystems, partnerships have been entered into with external companies, investments have been made in startups and own startups have been created. Baloise aims to be the first choice with the best solutions for people who just want to feel safe.
Habitat’s ecosystem, especially in Switzerland with the platforms Movu, Batmaid, devis.ch and Houzy with UBS for owner-occupied housing, seems closer to our core business of insurance than mobility. The latter is developing rapidly and is accelerating our classic motor insurance business. We have to adapt to it and explore new avenues by dealing with startups.
These ecosystems lead to more interactions with customers. The Baloise bank also contributes to this global offer.
We must certainly meet this ambition by not only being more versatile and fast, but by being efficient and disciplined in terms of risk management.
Phase 2 of “Simply Safe” must pave the way for the future and be the sustainability of our processes. It makes us, for example, ask ourselves about the risks that should and can still be insured, with the implicit need to maintain our profitability in the long term.
A differentiating factor is also the employment of the right people, as well as apprenticeship and insurance training.
What are the best growth opportunities right now, especially in Switzerland?
The semi-autonomous pension solution Perspectiva for small and medium-sized companies is one of them. We also see opportunities for profitable growth within individual pensions, income from the fee and commission business as well as with young companies and start-ups, for which Baloise can offer a comprehensive range of solutions and products.
“Our cost ratio is lower in Switzerland than elsewhere due to a more favorable distribution network.”
In both life and non-life insurance, we continue to pursue a restrictive underwriting policy, particularly in the Swiss group life segment. In Germany, Baloise also sold off its hospital liability insurance portfolio this year.
The group has a solvency of over 200%. By the end of 2021, the available or risk-bearing capital exceeded 13 billion francs. Is well above market value and published equity…
Risk-bearing capital does not mean the same as equity, which has an accounting nature. The Swiss Solvency Test (SST), which measures the capitalization of an insurance company, shows the incurred insurance and investment risks and is based on an overall balance sheet approach. As for Baloise, the SST rate is both solid and stable.
Are you using reinsurance solutions to improve the SST ratio?
We do not do reinsurance to improve SST, but to cover major claims. Moreover, we do it in the non-life business and practically not in life. In this context, the solidarity in Switzerland at national level with regard to insurance against damage caused by natural events should be emphasized. This solidarity works well. In addition to reinsurance, we have a good system in Switzerland for natural damage; Therefore, unlike other countries, most risks are insured. Prevention and assistance are essential elements here.
Is Baloise Switzerland’s non-life insurance portfolio one of the most profitable in Europe?
The fact that combined ratio (Editor’s note: administrative costs and claims costs in relation to the collected premiums) consistently falling below 90% and therefore below the group average over a long period shows the quality of this portfolio. However, Baloise also operates quality non-life insurance portfolios in the other countries where it operates, particularly in Germany, where great progress has been made. Our cost percentage is lower in Switzerland than elsewhere due to a more advantageous distribution network.
What about accident and health insurance for companies?
Our target segment within accident and health insurance is daily sickness benefits. Business insurance generally tends to have a higher combined ratio than insurance for private customers. Daily sick pay in particular is highly cyclical, sometimes with a combined ratio that can exceed 100%.
In addition, we place great emphasis on balance and health. We are very aware of this both in Baloise and with our customers. For example, in Switzerland, burnout is among the top 20 reasons why a startup fails. Therefore, Baloise – among many other support measures – makes entrepreneurs aware of burnout. Because we see ourselves as a trusted partner for our customers in all life situations.