ZURICH, Sept 12 (Askume) – Swiss insurer Baloise (BALN.S) said on Thursday it plans to raise return on equity, cut jobs and consider a stock buyback after Swedish activist investor Cevian Capital disclosed this week that it had become its biggest buyback shareholder.
Baloise said in a statement that its new goals include a return on equity of 12% to 15%, generating more than 2 billion Swiss francs ($2.34 billion) in cash between 2024 and 2027 and raising its cash payout ratio to 80% or higher.
CEO Michael Mueller said, “After a careful analysis of our business activities, we have identified significant potential for efficiency gains and associated cost savings and growth opportunities across all business units.”
“To maximize this potential, we are launching a realignment strategy focused on the performance of our core businesses and their ability to create value.”
The company’s shares were up as much as 2% in early trade on Thursday after it gave up gains and said it would consider launching its first stock buyback program next spring.
Vontobel analyst Simon Fossmeyer welcomed Baloise management’s focus on strategy, but said at first glance the new targets appeared to be only “moderately ambitious”.
Savion disclosed its 9.4% stake in Baloise on Monday, prompting calls from shareholders to restructure its portfolio and boost returns. The Swedish company declined to comment on Baloise’s new strategy.
However, Baloise Chairman Thomas von Planta said the company was considering replacing its board starting next year, another sign that the insurer was trying to assuage investors’ concerns.
Baloise had spoken with representatives of Cevian and other investors as it discussed its new strategy and that he was listening “very carefully” to the Swedish company, he told Askume in an interview .
Baloise said it expected to improve cost efficiency by reducing the expense ratio of the non-life insurance business by 2-3 percentage points, which would lead to 250 job cuts company-wide.
The insurance company currently has around 8,000 employees at its headquarters in Basel and subsidiaries in Belgium, Germany and Luxembourg.
Baloise is making plans for the future, reporting a 6.9% increase in profit attributable to shareholders in the first half of 2024, amounting to around 220 million francs.
However, due to unfavorable currency effects, trading volume fell 0.9% from the same period last year to 5.29 billion Swiss francs.
(1 USD = 0.8533 Swiss Francs)
