Baloise First-Half Profit 13% Higher, Promises Record Year


Swiss insurer Baloise said on Thursday its first-half net profit rose 13%, beating expectations despite claims from winter storm Kyrill, and the company promised a record full-year net profit.

Half-year net profit was 474 million Swiss francs ($391.1 million), beating the average expectation of 403 million francs in a poll of 10 analysts, and up from 419 million a year ago.

"Assuming normal business conditions for the rest of the year, Baloise will exceed its record 2006 earnings of 707 million francs by the end of 2007," the company said.

Baloise, which has long been mentioned as a takeover target, said its combined ratio of costs and claims as a percentage of premium income was 95.6%, worsening from 94.2% a year earlier.

The rise in costs was largely due to net claims of 31 million francs from Kyrill, which hit Baloise's clients in Germany, the Benelux and, to a lesser degree, Switzerland.

The company also said it had no substantial exposure to subprime debt instruments that triggered the crisis in the credit markets. Only 0.024% of its total assets were invested in such paper, it said.

"A solid result ... The only slight negative could be the slightly higher-than-expected combined ratio," Swiss private bank Wegelin & Co. said in a note.

Good results earlier this week from Swiss Life, which has a market value of around $5.1 billion, also strengthened the view that mid-sized insurers are performing well and could be attractive to foreign predators.

A 10.25% stake in Baloise held by UK bank Barclays was a financial investment, Baloise said last month, signaling it thinks it unlikely Barclays would bid for its business. Barclays declined to comment.

Baloise stock has fallen more than 6% so far this year and is trading at 8.7 times expected 2008 earnings, according to Reuters data, making it cheaper to buy than some of its rivals, such as Swiss Life, on a multiple of 9.3, and National Versicherungen, on 10.2.