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Profit attributable to shareholders for the first half of 2020 amounted to CHF 177.7 million (H1 2019: CHF 395.0 million). The figure for the first half of 2019 had been boosted by a non-recurring tax effect of around CHF 128 million that was not repeated in the first half of this year. Profit attributable to shareholders in the reporting period was adversely affected by coronavirus-related claims incurred. Moreover, turmoil in the capital markets resulted in a decline in the gains on investments achieved for insurance assets.
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The claims incurred for 2020 in connection with COVID-19, including the necessary reserves, are expected to amount to up to CHF 200 million gross and, after measures to reduce the impact of claims, CHF 62.6 million net. This amount was recognised in full in the first half of the year.
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The business volume contracted by 10.4 per cent to a more normal level of CHF 5,389.2 million (H1 2019: CHF 6,014.1 million). The first half of the previous year had been boosted by a non-recurring effect. In the prior-year period, a competitor in the group life business in Switzerland had withdrawn its comprehensive insurance products from the market, resulting in a sharp rise in customers with single premiums.
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The premium volume in the Group’s non-life business increased by 6.9 per cent to CHF 2,419.5 million, partly thanks to the acquisitions of Fidea and the non-life portfolio of Athora (H1 2019: CHF 2,263.6 million). Organic growth was also at the good level of 1.1 per cent (7.3 per cent in local currency terms).
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EBIT in the non-life business fell by 40 per cent to CHF 135.7 million (H1 2019: CHF 226.1 million) owing to the claims incurred in connection with coronavirus and the decrease in gains on investments.
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The net combined ratio stood at 91.1 per cent (H1 2019: 87.4 per cent) due to the excellent quality of the portfolio and as a result of hedging. The impact of the COVID-19 pandemic caused a net increase of 3.7 percentage points. Baloise expects the ratio for 2020 to be at the lower end of the target range of 90–95 per cent.
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As anticipated, the volume of premiums collected in the life business fell by 24.4 per cent to CHF 2,168.1 million (H1 2019: CHF 2,869.8 million) owing to the competitor in the group life business withdrawing its comprehensive insurance products from the market in the prior-year period.
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EBIT attributable to the life business rose by 23.5 per cent year on year to CHF 131.3 million (H1 2019: CHF 106.6 million), partly because there was less need to strengthen reserves.
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Baloise continues to have a resilient and sound balance sheet, even during the coronavirus crisis. The Standard & Poor’s credit rating of A+ was confirmed in June 2020, underlining Baloise’s excellent capitalisation. Although equity fell to CHF 6,208.4 million (31 December 2019: CHF 6,715.6 million) as a result of the dividend payment, the share repurchase completed in March and a downward adjustment of the valuation of available-for-sale financial assets, it remains at a high level.
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Despite the turmoil in the capital markets, asset management and banking reported a net return on insurance assets of 1.0 per cent, which was only down by 0.2 percentage points on the prior-year period (H1 2019: 1.2 per cent). This resulted in a decrease of CHF 54.6 million in gains on investments.
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Further capital expenditure on the digital transformation: In the first half of 2020, Baloise extended its ‘Home’ ecosystem by investing in cleaning services company Batmaid and in Keypoint and Immopass, which are both digital assistants for property management. In addition, Baloise entered into a strategic partnership with Tolomeo Capital in order to further expand its capabilities in fully automated and data-driven asset management. More information: www.baloise.com/innovations