The all-insurance insurer is on the right track, developing its ecosystems and innovative spirit. Interview with Michael Müller, CEO of Switzerland.
After successfully completing its first “Simply Safe” strategic program, the Baloise Group has entered phase 2, which will last from 2022 to 2025. The all-line insurer is staying its course so far, according to Michael Müller, CEO of Baloise in Switzerland and member of the group’s management. The objectives outlined are certainly ambitious: -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 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 started this “Season 2” globally well, given the evolution of our business this year, despite a very uncertain economic and geopolitical environment. Growth must be organic, through acquisitions and through our ecosystems. This is preserving our profitability and being more than a traditional insurance company. All the group’s business units must contribute to this, in particular the Swiss activities. Without losing sight of the fact that the Swiss insurance market is mature and that size also influences.
To reinforce this dynamic, the group now operates under a single common brand: “Baloise”.
Baloise is very diverse geographically and by type of activity.
Switzerland remains the group’s leading figure in terms of operating profit (EBIT) and cash payments to Baloise Holding…
It is, in fact, a considerable part of the group’s results, both in terms of business volume and EBIT and cash flow. However, Baloise is well diversified geographically, with Switzerland, Germany, Belgium and Luxembourg, and by type of activity: life, non-life, as well as banking and asset management. It is a strength of Baloise.
Are your habitat and mobility ecosystems differentiating factors while insurance activities are little differentiated and form a highly competitive market?
They help us to offer a complete range of products and services in terms of prevention, pension insurance, assistance and insurance. In these ecosystems, partnerships were forged with external companies, investments were made in startups and startups were created. Baloise intends to be the first choice with the best solutions for people who simply want to feel safe.
The habitat ecosystem, particularly in Switzerland with Movu, Batmaid, devis.ch and Houzy platforms with UBS, which for self-accommodation, seems closer to our core insurance business than mobility. The latter is rapidly evolving and accelerating our classic motor insurance business. We must adapt to it and explore new paths, working with startups.
These ecosystems lead to more customer interactions. The Baloise bank also contributes to this global offer.
We certainly have to meet this ambition not only by being more versatile and faster, but also by being efficient and disciplined in risk management.
Phase 2 of “Simply Safe” should pave the way for the future and be for our processes that of sustainability. This leads us, for example, to question ourselves about the risks that should and can still be insured, with, implicitly, the need to preserve our profitability in the long term.
A differentiating factor is also hiring the right people, as well as learning and initial training in insurance.
What are the best growth opportunities at the moment, especially in Switzerland?
The Perspectiva semi-autonomous pension solution for small and medium-sized companies is one of them. We also see profitable growth opportunities in individual pensions, fee and commission business income, as well as with young companies and start-ups for which Baloise can offer a wide range of solutions and products.
“Our expense ratio is lower in Switzerland than elsewhere, due to a more favorable distribution network.”
In both life and non-life, we continue to follow a restrictive underwriting policy, particularly in the group life segment in Switzerland. In Germany, Baloise also sold its hospital civil liability insurance portfolio in this year’s second round.
The group has a solvency rate of over 200%. At the end of 2021, available or risk capital exceeded 13 billion francs. It’s well above the stock market value and published net worth…
Venture capital does not mean the same thing as shareholders’ equity, which has an accounting character. The Swiss Solvency Test (SST), which measures the capitalization of an insurance company, shows the insurance and investment risks incurred and is based on a balance sheet approach. As far as Baloise is concerned, the SST rate is solid and stable.
Do you use reinsurance solutions to improve the SST ratio?
We do not reinsure to improve the SST, but to cover large losses. Moreover, we do this in non-life business and practically not in life. In this sense, it is worth mentioning the solidarity in Switzerland, at the national level, in terms of insurance against damage due to natural events. 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 insurable. Prevention and assistance are essential elements here.
Is Baloise Switzerland’s non-life portfolio one of the most profitable in Europe?
The fact that the combined ratio (Editor’s note: management costs and claims costs relating to premiums collected) consistently falls below 90% and therefore below the group average for an extended period demonstrates the quality of this portfolio. However, Baloise also operates quality non-life portfolios in the other countries where it operates, most notably Germany, where it has made great strides. Our cost rate is lower in Switzerland than elsewhere due to a more favorable distribution network.
What about accident and health insurance for companies?
Our target segment within accident and health insurance is daily sickness benefits. Corporate insurance generally tends to have a higher combined ratio than insurance for private customers. In particular, daily sick pay is very cyclical, sometimes with a combined ratio that can exceed 100%.
In addition, we attach great importance to balance and health. We pay a lot of attention to this, both at Baloise and with our customers. For example, in Switzerland, burnout is among the top 20 reasons for startup failure. That’s why Baloise – among many other support measures – warns entrepreneurs of burnout. Because we see ourselves as a reliable partner for our customers in all situations in life.