Baloise's new strategy not bold enough, say investors
By Oliver Hirt
ZURICH, Sept 13 (Reuters) -Investors in Baloise BALN.S say the Swiss insurer's plans to shake up its business with bigger returns to shareholders and job cuts are unlikely to be enough to satisfy the market, and it may end up having to sell parts of its business.
Baloise unveiled its strategy on Thursday and said it could also consider share buybacks next year.
But the plans drew a lukewarm reaction from Swedish activist investor Cevian Capital, which revealed on Monday it had become Baloise's top stakeholder, owning 9.4%. Soon after Baloise had set out the new strategy, Cevian said it was insufficient.
Philipp Buchli of investment firm Hindsight Capital, which has bought Baloise shares on behalf of clients, said on Friday he had also been expecting a more ambitious plan from Baloise.
"If Baloise doesn't deliver in the next 12 months, the pressure on the board of directors and management will massively increase," said Buchli, who argued it would be difficult for Baloise not to sell its German business in the end.
In Germany, Baloise ranks only 28th in non-life insurance according to German financial market regulator BaFin, and investors argue it is not big enough to thrive there.
Baloise, whose shares crept up slightly on Thursday and rose another 1.5% on Friday, said it was sticking to Germany as it set out its new strategy to investors.
"It's certainly a step in the right direction, but a small step and more must follow," a representative of one major Baloise shareholder told Reuters regarding the strategy.
A Baloise top-20 investor was more positive, welcoming the plan to increase returns to shareholders.
"Baloise has heard the wake-up call. The job cuts are also something new. Baloise has changed course," the investor said, before noting the overhaul was only just beginning.
"Now the company must implement what it promised. We want to see results," he added, noting that Baloise would ultimately probably have to sell off parts of the business.
Speaking to Reuters on Thursday, Baloise Chairman Thomas von Planta said the company might have "spread itself too thin," and had work to do on improving operational efficiency.
However, he said Baloise remained on track where it operates in Switzerland, Germany, Belgium and Luxembourg.
"If we come to the conclusion that it's not working," he said, "then we will adjust our course."
Reporting by Oliver Hirt
Writing by Dave Graham; Editing by Susan Fenton
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