Baloise Declines After Reducing ROE Target: Zurich Mover

Baloise Holding AG, the 150-year-old Swiss insurer, declined the most in four months in Zurich trading after cutting a target for return on equity.

The stock fell as much as 2.2 percent and was down 1.2 percent to 89.65 Swiss francs at 10:10 a.m. in Zurich. That pared this year’s gain to 14 percent and cut the Basel, Switzerland-based firm’s market value to 4.48 billion francs ($4.7 billion).

Switzerland’s third-biggest insurer reduced its return-on-equity target to a range of 8 percent to 12 percent from a previous goal of 15 percent because of declining interest rates. Baloise kept its dividend unchanged at 4.50 francs a share, the company said today in statement.

“The new financial targets include a new return-on-equity range which we see as rather modest,” said Stefan Schuermann, a Zurich-based analyst with Vontobel. “Baloise clearly has a great focus on safety and balance sheet strength rather than higher profit generation, which could disappoint investors.”

Full-year net income rose sevenfold to 436.6 million francs from 60.8 million francs in 2011, Baloise said, after investment gains and as year-earlier writedowns on Greek sovereign debt holdings weren’t repeated. That compared with the 430 million-franc average estimate of seven analysts surveyed by Bloomberg.

“Our robust financial results can be attributed to our extremely strong insurance business and the high level of income from our investments,” Chief Executive Officer Martin Strobel said in the statement.

Baloise will aim for a non-life combined ratio -- spending on claims and costs as a percentage of premiums -- of 93 percent to 96 percent and a new business margin of more than 10 percent for the life unit, the company said.