In a significant development, Swiss insurer Baloise has unveiled a comprehensive strategy aimed at enhancing operational efficiency and maximizing returns for shareholders. The announcement came on a Thursday, revealing that Baloise surpassed analyst expectations regarding its profitability for the first half of the year.
Contrarily to the anticipated decline, the company's profit attributable to shareholders rose to an impressive 219.8 million francs, up from 205.7 million francs in the previous period, thus signaling robust performance amidst challenging market conditions. In a bold move, Baloise has decided to scrap its existing strategic program, known as Simply Safe, effective immediately.
The primary focus now shifts toward the core business operations and the initiation of share buybacks. This strategic pivot is expected to complement Baloise's longstanding history of consistently returning value to its shareholders, evidenced by over two decades of uninterrupted annual dividend payments. Under this revitalized strategy, the banking and insurance giant is committed to returning capital to shareholders at an elevated cash payout rate, projected to reach at least 80% of a broad-based cash remittance.
This remittance is anticipated to exceed 2 billion francs over the period spanning from 2024 to 2027, thus reinforcing Baloise's dedication to shareholder value. To ensure all business units contribute effectively, Baloise is conducting meticulous portfolio analyses, targeting a return on equity ranging between 12% to 15%.
As part of this strategic realignment, the company has made the difficult decision to reduce its workforce by 250 jobs, aiming to optimize operational costs while embracing new technological advancements to stay competitive in the market. Looking ahead, Baloise plans to consider an initial share repurchase program of at least 100 million francs in 2025.
This will be contingent on the size of the cash remittance by the end of 2024 and will coincide with the declaration of dividends at the company's next annual general meeting. The insurer expects to generate a significant remittance of over 500 million francs in 2024, bolstered by efforts to optimize a Belgian run-off life insurance portfolio in 2023. Chairman Thomas von Planta expressed optimism regarding the new strategy during the announcement, highlighting the excellent performance over the past six months.
The favorable figures were largely attributed to substantial profit contributions from operations in Germany and Belgium, as well as improved results from the life business segment. Furthermore, enhancements in investment outcomes within the non-life business adequately balanced the impact of higher claims resulting from severe storms and flooding incidents in Switzerland. In terms of revenue, the company reported a rise in insurance revenue, climbing to 2.74 billion francs from 2.7 billion francs, primarily driven by robust growth within the non-life sector.
This growth countered the prevailing trend of transitioning occupational pensions in traditional life business toward semi-autonomous solutions. Despite facing adverse currency fluctuations that decreased business volume by 0.9%, bringing it down to 5.29 billion francs, Baloise remains steadfast in its commitment to its strategic initiatives. In market reaction, Baloise’s shares experienced a modest increase of approximately 1% in late-morning trading, indicating positive investor sentiment towards the company's new direction and strategy..