Baloise Drops Most in Two Years as Profit Slumps: Zurich Mover

Baloise Holding AG (BALN) dropped the most in almost two years in Zurich trading after full-year profit at Switzerland’s third-largest insurer declined more than analysts expected.

Net income fell to 60.8 million Swiss francs ($67 million) from 433.4 million francs in 2010. That missed the 75.2 million- franc average estimate by 12 analysts surveyed by Bloomberg.

Baloise said on Nov. 16 that second-half profit would be “wiped out” after declining interest rates and stock markets led to a loss on investments. The insurer today reported impairments on equity investments of 119 million francs and wrote down its holdings of Greek sovereign debt by 78 million francs, more than previously announced.

“The impairments are even higher than already announced in November,” said Stefan Schuermann, a Zurich-based analyst with Vontobel Holding AG who cut his rating on the stock to hold from buy. “The market does not like this news.”

Baloise fell as much as 6.3 percent, the biggest intraday drop since April 2010, and was down 6 percent at 71.50 francs as of 11:01 a.m. in Zurich. That pared the stock’s gain this year to 11 percent and cut the insurer’s market value to 3.58 billion francs. Baloise proposed an unchanged dividend of 4.50 francs

“We are of course not satisfied with the level of profit,” Chief Executive Officer Martin Strobel said on a conference call, adding that the firm’s return-on-equity target of 15 percent is “under review.” Baloise will publish a new target next March and faces the future “optimistically despite the uncertain prospects.”

Greece pushed through the biggest sovereign restructuring in history this month after getting private investors to forgive more than 100 billion euros ($132 billion) of debt, opening the way for a second bailout. Baloise also cut the valuation of a Croatian insurer it acquired in 2007.

Baloise, Swiss Life Holding AG (SLHN) and other insurers may post slower premium growth this year as the economy deteriorates, according to the Swiss Insurance Association.

To contact the reporter on this story: Carolyn Bandel in Zurich at cbandel@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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