Investors press Baloise to shake up business after Cevian swoop

Swiss Life Holding AG

10/09/2024 10:21

By Oliver Hirt and Paul Arnold
       ZURICH, Sept 10 (Reuters) - Swiss insurer Baloise
 BALN.S  is under pressure to heed shareholder demands to shake
up its portfolio and boost returns since activist investor
Cevian Capital said it held over 9% of the company's stock,
becoming its biggest stakeholder.
    Over the past decade, returns on Baloise's shares, including
dividends, have lagged peers active in Switzerland such as
Allianz  ALVG.DE , Zurich  ZURN.S , Axa  AXAF.PA , Generali
 GASI.MI  and Swiss Life  SLHN.S .
    Critics believe that performance is linked to statutes at
Baloise, Switzerland's sixth biggest non-life and third biggest
life insurer by premium volumes, which made it hard for activist
investors to effect change. With around 8,000 employees, Baloise
also has a bank and an asset management business.
    In April, investors backed a plan by shareholder zCapital to
lift voting rights restrictions.
    "They must become more shareholder friendly," a senior
representative for a top 20 shareholder told Reuters. "They must
send a signal they're ready to change something," pointing to
the need to sell businesses not generating cash.
    One shareholder demand is for Baloise to exit Germany.
There, the firm is number 28 in non-life insurance, according to
German financial market regulator BaFin.
    "Baloise must get out of there. That's the most urgent
issue," said the shareholder, also noting that Baloise did not
need a bank.
    Shareholders say Baloise's capital markets day on Thursday,
when it will present its latest mid-term targets, will be
crucial in convincing investors it has got the message.
    A spokesperson for Baloise said it would detail its
strategic plans on Thursday.
    Since April, shareholders have been able to enact changes
much more easily. Under the old rules, the Baloise board was
living in an "oasis of well-being", said another major
shareholder.
    In March, Baloise CEO Michael Mueller said the firm would
focus on its core business and that investment in start-ups
offering repair, removal or cleaning services should end.
    Analysts expect Baloise to set out new savings targets on
Thursday. So far, the firm has avoided a big overhaul.
    Andreas Brun, an equity analyst at Vontobel Investments,
said investors would want more than moderate savings and details
of the exit from start-ups. "The share price shows the market
expects more, a major shake-up," he said.
    Vontobel says it is a top-10 Baloise shareholder.
    If nothing major is forthcoming, Baloise could come under
more pressure from Cevian, Brun said.
    Cevian, which announced its holding on Monday, has not yet
said what it wants for Baloise.
    But it has previously proved able to push through asset
sales or shake up management not to its liking, according to
Daniel Bosshard, an analyst at Luzerner Kantonalbank.

 (Reporting by Oliver Hirt and Paul Arnold; writing by Dave
Graham; editing by Jason Neely and David Evans)
 ((dave.graham@thomsonreuters.com; Reuters Messaging:
dave.graham.thomsonreuters.com@reuters.net))