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ZURICH - Swiss insurer Baloise said on Thursday it plans to boost return on equity, cut jobs and will consider share buybacks after Swedish activist investor Cevian Capital this week announced it had become its biggest stakeholder.
Cevian did not think Baloise's proposals went far enough.
Baloise said in a statement that its new targets included 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 a higher cash payout ratio of 80% or more.
"Following careful analysis of our business activities, we have identified substantial potential for raising efficiency along with related cost savings and opportunities for growth in all our business units," CEO Michael Mueller said.
"To unlock as much of this potential as possible, we are launching our refocusing strategy in which the emphasis is on the performance of our core business and its ability to generate value."
Cevian, which announced its 9.4% holding in Baloise on Monday, prompting shareholders to call for a shake-up in its portfolio and higher returns, said more needed to be done.
"For Baloise to become a great Swiss insurance company, real focus and real ambition are needed," said Cevian partner Robert Schuchna. "Today's announcements are insufficient on both counts."
Baloise, whose shares rose as much as 2% in early trading on Thursday before paring gains, said it will look into launching an initial share buy-back programme next spring.
Vontobel analyst Simon Foessmeier welcomed Baloise management's focus on strategy but noted that at first glance the new targets seemed only "moderately ambitious."
Baloise Chairman Thomas von Planta said his firm was considering changes in its board of directors from next year.
He told Reuters in an interview that Baloise had spoken with representatives of Cevian and other investors when discussing its new strategy and that he was listening "very carefully" to the Swedish firm.
Baloise said it wanted to improve cost efficiency by lowering its expense ratio in non-life business by 2-3 percentage points and thus would cut 250 jobs across the firm.
The insurer currently employs around 8,000 people at its headquarters in Basel and across subsidiaries in Belgium, Germany and Luxembourg.
Baloise was setting out its future plans as it reported that profit attributable to shareholders for the first half of 2024 rose by 6.9% to nearly 220 million francs.
Still, business volume dipped by 0.9% year-on-year to 5.29 billion francs due to unfavourable currency effects, it added.
($1 = 0.8533 Swiss francs)
(Additional reporting by Paul Arnold Writing by Dave Graham; Editing by Rachel More, Sherry Jacob-Phillips, Tomasz Janowski and David Evans)