Switzerland's Bâloise Holding AG will look to cut the capital allocated to its life insurance business by shifting its focus to investment-linked products in a bid to reduce interest rate risk.
The move is part of a strategy through 2021 set out by the company Oct. 26. Bâloise expects its life insurance business to continue contributing roughly CHF200 million of earnings before interest and tax, despite the low interest rates prevalent at present.
The company said its turnaround in Germany is "imminent" after it strengthened reserves in its industrial and liability business and shifted its focus to retail and small-business customers. It will also seek to launch an independent mobile startup offering "easy-to-understand and tailor-made insurance solutions from 2017."
In addition, Bâloise will move into third-party asset management and set up a real estate management company and a new real estate investment fund, to be launched in 2017. The company set a target of increasing AUM by more than CHF5 billion in the next five years and increasing its fee income substantially.
It also said its Swiss Solvency Test ratio would remain "in the green zone" even after a one-in-50-year event such as a 100-basis-point fall in interest rates or a 50% stock market crash. It launched a share buyback program covering 1 million shares and said it expects to "upstream" cash of CHF2 billion to the holding company between now and 2021.
Overall, it aims to increase its customer base by 1 million, or 30%, by 2021.