BAL Bioenergy AF.(See LSE:SBLM)

    

Half year report

 
Baloise with CHF 274 million profit thanks to strong operative performance
 
 
Basel, 27th August 2008. The Baloise Group achieved a profit of CHF 274 million
in the first half-year 2008. The basis for this was the strong performance in
the operative insurance business. The business volume grew by 1.7%. The Baloise
registered share achieved a positive total return. The company adheres to its
medium-term goals and intends to maintain the dividend for 2008 at CHF 4.50.
 
"In this eventful half-year, our sound insurance business proved to be a
reliable earnings pillar," commented Rolf Sch�uble, Chairman of the Board of
Directors and CEO of Baloise. "Above all, the nonlife division was very
successful. We can also be satisfied with the growth that was above the market
average in most of our business units. Our capital investments suffered under
the difficult capital markets; but we have an investment strategy that has
proved itself in this environment. It was, however, not realisable, to come
close to last year's record mark," Rolf Sch�uble continued.
 
Business development of the Group
 
The convincing operative performance in the insurance business is based on the
high earnings quality of the business portfolios; the consistent focus on
risk-conscious customers, as well as efficient business processes. The business
volume grew by 1.7% (currency adjusted: 2.4%) to CHF 4,967.7 million (previous
year: CHF 4,883.6 million). Die IFRS premiums rose by 2.8% (currency adjusted:
3.4%) to CHF 4,554.0 million.
 
Nonlife sector: The sector satisfied with one of its best technical results.
The net combined ratio was with 92.3% again considerably better than the
excellent previous year's value of 95.6%. Even more positive is the gross rate
picture with 88.2% (previous year: 95.4%, including claims due to the "Kyrill"
storm). Decisive factors here were the predominant absence of major claims and
the focus, in line with our strategy, on risk-conscious target customers as well
as the efficient business processes. The impact on capital investments due to
the situation on the financial markets reduced the profit before taxes and
borrowing costs to CHF 230.7 million (previous year: CHF 266.7 million). The
business volume increased by 2.5% (currency adjusted: 3.4%) to CHF 2,123.9
million (previous year: CHF 2,071.8 million).
 
Life insurances sector: The division achieved a profit before taxes and
borrowing costs of CHF 109.2 million (previous year: CHF 269.5 million). Here
too, the markedly lower result is due mainly to the capital investments. The
business volume rose by 1.1% (currency adjusted: 1.7%) to CHF 2,843.8 million
(previous year: CHF 2,811.8 million). The IFRS premiums reached an attractive
plus of 3.1% (currency adjusted: 3.5%) to CHF 2,430.1 million (previous year:
CHF 2,356.2 million). The business volume of the investment-type life insurances
decreased by 9.2% (currency adjusted: 7.8%) to CHF 413.7 million (previous year:
CHF 455.6 million), since - as expected - Baloise in Luxembourg could not tie in
with the exceptional growth of the previous year. The growth in all other
countries continues to be attractive, so that Baloise is convinced of the
long-term potential of these products and will develop further innovative
offerings for privat pension and wealth-building.
 
The embedded value decreased from CHF 3,230.6 million to CHF 2,905.4 million.
The value of new business rose by 72.9% to CHF 19.0 million (previous year: CHF
11.0 million). Its margin reached 14.3% (previous year: 10.3%).
 
Banking sector: The profit before taxes and borrowing costs was CHF 30.2
million (previous year: CHF 31.7 million). The result confirms the performance
strength of the Baloise Bank SoBa, the Baloise Asset Management and the Baloise
Fund Invest.
 
Asset management: The capital investments stood in the strong wind of the
worldwide financial market crisis. The net income declined compared the previous
year's strong half-year to CHF 819.8 million (previous year: CHF 1,413.7
million), corresponding to a net return of 1.5%. The recurrent revenues rose to
CHF 1,071.6 million (previous year: CHF 1,053.0 million), despite the decreased
average of the capital investment holdings. The bad capital markets provided the
IFRS half-year performance of- 0.9% (not annualised, by cost).
 
In response to the difficult capital markets, Baloise started hedging measures,
as defined by the capital investment strategy. An exposure reduction in shares
and share-type investments after hedging from 13.0% to 8.7% to year-end 2007 was
performed - above all with derivatives. Impairments of CHF 199.7 million
resulted due to the worldwide fall in share prices, especially of financial
futures. It is a testament to the very sound investment situation of Baloise
that the balance sheet still contains unrealised profits on shares. In July, the
situation on the share markets again worsened, whereupon the share exposure was
once more reduced to 7.0% net, realised through sales and the application of
derivative instruments.
 
The rise in the interest rate led to lower fair values for the fixed-interest
investments. Baloise used the favourable interest rate environment in the months
of May and June to reinvest the securities due for repayment at more attractive
terms. The Baloise was hardly affected by the raised credit risk surcharges,
thanks to the focus on high quality bonds. The caution exercised towards
structured products has likewise proven successful. The investment policies of
Baloise resulted in the fixed-interest securities requiring no provision of
impairment.
 
The Swiss franc that strengthened against the US dollar and the euro had a
negative effect on the capital investment results.
 
Volatile capital markets are to be expected also in the second half-year. A
reliable forecast of the financial result at year-end is not possible under
these circumstances.
 
Equity: Baloise continues to be financially sound, although the value
adjustments for the capital investments resulted in a reduction of the
consolidated equity of 16.9% to CHF 4,020 million compared to the year-end 2007.
The outstanding solvability margin of 224% also proves the sound condition of
Baloise.
 
Business development in the markets
 
All business units achieved a growth of the total business volume or in central
sub-areas in the first half-year 2008. With the exception of the Croatian
companies that are currently being integrated, all business units contributed to
the Group profit.
 


Switzerland: The performance of the largest segment was again convincing in the
operative insurance business with all business areas, in particular the nonlife
business.  Dampened by the result of the capital investments, the profit before
taxes and borrowing costs was with CHF 115.2 million markedly below the previous
year's value of CHF 238.3 million. The business volume reached CHF 2,838.9
million (previous year: CHF 2,752.8 million), an increase of 3.1% mainly thanks
to the contribution from life insurances, which developed above the market
average.
 
The Swiss nonlife business once again proves its operative earning power and
the quality of the business portfolio. Thus it was possible to considerably
improve the outstanding combined ratio of the previous year; the gross value
reached the historic record mark of 83.6% (previous year: 88.1%). This is
accountable to the absence of major claims, but also the lower claim frequency
and the consistent focus on justifiable business risks. The business volume
increased by 0.9% to CHF 986.2 million (previous year: CHF 977.2 million). We
achieved strong growth in the areas of transport, liability and sickness daily
allowance insurances. The property insurances and the motor insurance business
ranged from stagnant to slightly declining.
 
The Swiss life insurance business is characterised by its high operative
earning power; while the financial result was not as good as in the same period
in the previous year, due to the bad share markets and the high interest rates.
The growth dynamics of the sector is to be recorded as positive. The business
volume showed a rise of 4.3% to CHF 1,852.7 million (previous year: CHF 1,775.6
million) which is above the market average. The collective life business
developed well, with a plus of 4.7%; above all, in the one-time deposit market,
which increased by 12.4%. In a demanding market, the individual life insurance
business grew by 1.8%. This was mainly due to the dynamics of the
single-premiums, with an increase of 15.5%. The investment-type life insurances
developed above the market with an increase of 22.8%.
 
The business model of the focused financial service provider- the sale of
banking products through the insurance sales force - was also successful in
the first half-year 2008. The new business volume rose by 31.2% to CHF 299
million. The number of customers from this business model increased since the
end of 2007 by 2,500 to about 23,500.
 
The Baloise Bank SoBa was able to continue growing in a demanding market
despite a decreasing margin and the declining commission and service business;
above all, to grow as a focussed financial service provider. The difficult
capital markets and provisions for a new data processing system allowed the net
profit (according to local financial reporting) shrink to CHF 13.3 million
(previous year: CHF 15.5 million). However, the bank further developed its
market position as the regional universal bank in northwest Switzerland.
 
Germany: The business units Basler and Deutscher Ring together achieved a
profit before taxes of CHF 91.3 million (previous year: CHF 108.9 million);thus
confirming their operative earning power. The business volume of the segment
amounted to CHF 1,271.3 million (previous year: CHF 1,285.0 million), an
increase in euro of 0.5%.
 
In the demanding German market, the Deutsche Ring could convince first and
foremost with the investment-type life insurances with a growth in euro of 9.5%.
The sales power, strengthened through further sales channels and new products,
paid off here. However, the business volume decreased overall  in euro by 1.0%
to CHF 616.1 million (previous year: CHF 632.1 million). On the other hand, the
marketing organisation OVB achieved significant sales successes with its dynamic
expansion in Eastern Europe. The Deutsche Ring was also able to expand its
business in Eastern Europe, especially in Slovakia. The claims rates of the
property insurances was encouraging; the gross combined ratio was at a low 89.1%
(previous year: 99.8%).
 
Basler Deutschland showed itself to be in sound condition in the operative
insurance business in the first half-year 2008. It achieved a growth of the
business volume in euro of 1.9% to CHF 655.2 million (previous year: CHF 652.9
million). The business development was at the market average for property and
also for life insurances; whereby the growth in the areas liability and fire
were particularly keen. Basler Deutschland expanded its broker presence
systematically to stimulate further growth. Since major claims remained largely
absent, the gross combined ratio improved to 92.1% (previous year: 104.2%).
 

The Benelux segment with the Belgian Mercator and the B�loise Luxembourg
achieved a profit before taxes and borrowing costs of CHF 59.7 million (previous
year: CHF 106.9 million). The downward movement can be mainly explained by lower
capital yields and positive non-recurrent effects in the previous year.
 
Mercator achieved a business volume of CHF 425.6 million (previous year: CHF
410.6 million), which corresponds to an attractive increase in euro of 5.3%. A
growth in euro of 4.3% resulted in the nonlife business. The business volume of
the life insurances developed promisingly with an increase in euro of 8.9%;
where the classic life insurances even gained 10.1%. The gross combined ratio of
the nonlife business was at 91.1% (previous year: 97.0%). The business unit is
advancing its business growth with innovative services directed at profitable
brokers and customers such as the new "MercatorNet Claims".
 
B�loise Luxembourg continues to impress with its sales successes. The growth
in euro of the classic life insurances was above the market average at 17.5%; in
the nonlife business even approximately double the market average in euro with
8.4%. The exceptional dynamics of the investment-type insurances of recent years
could not be sustained, even although considerable volumes resulted in this
area. All in all, the business volume sank overall to CHF 276.7 million
(previous year: CHF 332.9 million); while the IFRS premiums in euro increased by
12.1% to CHF 59.6 million (previous year: CHF 54.0 million). The gross combined
ratio stood at 97.6% (previous year: 92.2%) due to major claims.
 
Austria and Croatia: Basler �sterreich increased the business volume in euro
by 13.5% to CHF 82.3 million (previous year: CHF 73.6 million). With the rise of
12.4% in the nonlife business and 17.3% in the life insurances, the business
unit grew above the market average thanks to the consistent development of the
sales strenght and the expansion of the product range to include prevention
services. The gross combined ratio improved to 101.6% (previous year: 104.7%).
 
In Croatia the business volume increased markedly to CHF 55.0 million for the
first time, thanks to the consolidated Osiguranje Zagreb in the second half-year
2007. The integration of this unit is well advanced.
 

Baloise share
The Baloise registered share was able to assert itself in the turbulent share
market: the share price loss of 3.5% was low in comparison to the strongly
fallen indices. Together with the dividend, as one of the few European insurance
stocks, the share achieved a positive total return in the first half-year 2008..
 
Outlook
The year 2008 will continue to be characterised by volatile financial markets
and the high pricing and competitive pressure. In this challenging environment,
Baloise strives to achieve a good result. Over the cycle, Baloise expects to see
a return on equity of 15% and a steady increase in earnings per share. In the
nonlife business, it is our objective to keep the combined ratio significantly
below 100%. Based on today's knowledge, and in view of the sound condition,
Baloise intends to propose a dividend of CHF 4.50. - unchanged compared to the
previous year.
 
 
Headquartered in Basel (Switzerland) and with operations in Continental Europe,
the Baloise
Group is a solution provider in the fields of security and provision for the
future. The Group's
strategic focus is on sustainable, profitable growth in preferred target
segments. Its markets
are Switzerland, Germany, Belgium, Luxembourg, Austria, Croatia and Serbia. The
Baloise
Group employs some 8,600 people. B�loise-Holding registered shares are
included in the
Swiss Market Index (SMI).
 
 
 
Company headquarters of the Baloise Group: Aeschengraben 21, CH-4002 Basel
Internet: www.baloise.com (http://www.baloise.com/)   E-mail:
media.relations@baloise.com / investor.relations@baloise.com
 
Investor Relations:       Phone +41 61 285 81 81        Fax +41 61 285 75 62
Media Relations:          Phone +41 61 285 84 67        Fax +41 61 285 90 06
 
 
All presentations on the half-year media conference are available as of now at
www.baloise.com.
 
 
Key figures: see attached pdf file

Media information (incl. Key figures):
http://inbox.newsbox.ch/publish/baloise/18_71/PK_Baloise_Semester_2008_e.pdf


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