Baloise Jumps as First-Half Profit Boosted by Life Insurance

August 5, 2014

Baloise Holding AG, Switzerland’s third-biggest insurer, rose the most in nearly three years after saying profit increased more than 40 percent in the first half.

Profit will reach more than CHF 340 million ($375 million), the Basel-based insurer said today in an e-mailed statement. Baloise is due to report earnings on Aug. 28.

The company, which last year cut its return-on-equity goal to between 8 percent and 12 percent, generates more than half its revenue in Switzerland. In March, it raised its dividend for the first time in six years after full-year profit climbed on sales of life insurance policies.

“Baloise shows a strong start to the year,” Stefan Schuermann, a Zurich-based analyst with Vontobel who has a hold rating on the stock, wrote in a note to investors. He said the results were “helped by extraordinary items” including valuation gains on swap options in life insurance.

Shares rose as much as 6.2 percent and were up 5.4 percent at 9:13 a.m. in Zurich trading, the most since Oct. 27, 2011, valuing the company at CHF 5.69 billion [$6.263 billion].

“The growth in earnings from life insurance business was especially pleasing,” the company said in the statement. “The life insurance operating segment was boosted by gains on interest hedging instruments and the strengthening of reserves that had already taken place in previous periods due to the low level of interest rates.”

Growth in the non-life business was due to a low level of claims in Switzerland and to operating profits achieved abroad, including in Germany, Belgium and Luxembourg, the company said.

Baloise agreed to sell its Austrian business to Helvetia Holding AG for €130 million [$175 million] in May, with the transaction expected to be completed in the second half.

 

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