Baloise Net Climbs 7.7% on Investment Income, Non-Life Gains

Baloise Holding AG (BALN), Switzerland’s third-biggest insurer, said first-half profit rose 7.7 percent after increases in non-life earnings and investment income.

Net income climbed to 218.9 million Swiss francs ($229 million), from 203.3 million francs a year earlier, beating the 192.9 million-franc average estimate of nine analysts surveyed by Bloomberg. The shares rose as much at 0.9 percent in Zurich trading and were up 0.1 percent to 69.40 francs at 9:17 a.m.

Baloise, which said in March that its return-on-equity target of 15 percent is under review after declining interest rates and stock markets led to a loss on investments, posted a 20 percent increase in first-half investment income. The tax rate fell to 15 percent from 18 percent.

“The first-half result is a good step forward toward an earnings stabilization,” Stefan Schuermann, a Zurich-based analyst with Vontobel Holding AG (VONN) who has a hold rating on the stock, said in a note to investors. “The result beats our and the street’s expectations, helped by non-life reserve releases and higher-than-expected net realized gains.”

The company changed its equity portfolio, selling index funds and buying more shares that pay high dividends, which led to realized gains of 114 million francs, said Chief Financial Officer German Egloff. Writedowns have reached a “relatively normal level again,” he added on a conference call.

Operating profit at the non-life unit, which sells mainly car insurance, rose 32 percent to 213.7 million francs after higher sales and a positive development of prior-year claims leading to reserve releases. The combined ratio, a measure of profitability, improved to 92.6 percent from 93 percent.

The results “are primarily attributable to the impressive operating performance of our non-life business and the significant improvement in our investment income,” Chief Executive Officer Martin Strobel said in the statement. “Our strength enables us to look to the future with confidence, and we will continue to pay an attractive dividend.”

The insurer targets a new business margin of at least 10 percent.

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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