| Baloise anticipates considerably lower profit - despite good operating performance |
| 16.11.11 07:06 | |
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Good operating performance of the insurance business despite natural catastrophes and large claims Special factors have a considerable, negative impact on expected profits for 2011 Basel, 16 November 2011. The insurance business is developing well operationally. Capitalisation remains at a high level. The events and developments in connection with the current economic situation, in contrast, will have a considerable, negative impact on the 2011 net profit according to present knowledge. However, the year is still likely to be concluded with a profit. Baloise will, thus, adhere to present dividend pay-out principles. Both the economic situation and the financial markets have deteriorated again in the second half-year of 2011, which has been further aggravated by new developments in dealing with the European debt crisis. This will lead to a distinctly lower result as compared to the previous year, which had benefited from positive one-off effects. However, the year is still likely to be concluded with a profit. Influencing factors in detail In view of the current situation and the expected payment shortfalls, full repayment of Greek government debts may be excluded. Taking a hair-cut on the basis of the current market value would lead to an impairment, thus resulting in a one-off negative impact on the 2011 annual result of approximately CHF 60 million (net, after tax). Shareholders’ equity will hardly be affected. The challenging economic prospects arising from the European debt crisis, especially in Southern Europe, have prompted Baloise to reassess growth prospects for Croatia. This is likely to result in a lower valuation of goodwill of “Osiguranje Zagreb”, which had been acquired in 2007, in a two-digit million figure. Due to a distinct reduction in interests since 1st July 2011 and a sharp drop in stock market indices, during the second half-year, Baloise Group expects clearly negative interest effects and impairments of shares. Depending on market developments, these effects may reach a three-digit million figure by the end of the year. Favourable development of operating insurance business and solid capitalisation In contrast to these market-related and largely one-off negative accounting impacts, the insurance business has developed favourably so far. The net combined ratio in nonlife business is expected to reach between 94.5% and 96.5%, in spite of the impacts of natural catastrophes and large claims, the integration of acquired companies in Belgium and the reorganisation in Germany. The strategic programme “Baloise 2012” is on track. Baloise has an excellent solvency ratio exceeding 200%, which is a proof of quality of its risk management. Baloise Group intends to adhere to present dividend pay-out principles also for the 2011 business year. The concrete dividend proposal will be submitted in spring 2012 as usual. |
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