Baloise Holding AG (HBAN.SW) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Bâloise Investor Day 2020. Please welcome on stage, Gert Winter, group CEO of Bâloise.

Ladies and gentlemen, dear investors, dear analysts, dear journalists and my dearest colleagues, a very warm welcome to all of you. Welcome to our 2020 Investor Day and thank you for being actively part of it. Our Investor Day marks again an important milestone on the next strategic journey of Bâloise. And a special thank you to all of you here, physically present. I know that a lot of you have done enormously work towards this day, and it now has finally come through. A special thank you to all of you. But why are we here today? There are mainly 2 reasons. We are here to look back at the journey so far with Simply Safe. What have we -- the 8,000 employees of Bâloise achieved over this period? How have we served our clients? What have we meant to our partners, our shareholders and other stakeholders? That's what we are here today. But there's a second reason why we are here today. We are looking forward to the next strategic journey. Where will this journey take us? What new horizons will we explore? And what are the ambitions we are setting ourselves. Ladies and gentlemen, it is needless to say that 2020 is and has been a very special year. This year has showed us again why insurance is all about. It's about providing security and protection in difficult times. And we have protected thousands of our customers against great financial damage. And at the same time, shown a very strong resilience. The health of our customers, our partners and our employees has always been the utmost priority. But we're here not today to talk about COVID-19. We informed you about the impact that we expect through the half year results, and that information is still absolutely valid. No, we are here to talk about something different. Every crisis is a pivotal moment in time where also many multiple opportunities emerge. Yes, of course, in difficult times, you have to protect what is the dearest to you, but we also need to be bold and courageous and grab the chances that come along. We are here today to talk about these chances. Today, we disclose our next strategic journey, our next phase of our strategy, and we call it Simply Safe Season 2 and not Simply Safe 2.0 but Simply Safe Season 2. And with a twinkling in the eyes to all these Netflix series and sequels, we also are awaiting, at the end of Season 1, the cliff hanger, but everybody is excited to learn how it continues in Season 2. We also call it Simply Safe Season 2 because we built on the foundation on the bases we have established over the last 4 years. We are going to continue and accelerate. And we are going to disclose Simply Safe Season 2 by telling you a story, a story along 6 chapters. In Chapter 1, we look back at a simply safe journey up to now. And we feel really proud because we have made a really good start with Season 2. In Chapter 2, we look at the severe and threatening challenges ahead of us because if we don't change and adapt and transform us even faster, we risk to lose everything we have achieved so far. But every challenge also brings new opportunities, and we have everything we need to be successful. Our culture is key to becoming truly relevant. And in Chapter 4, we will explain how we deploy our strategy, how we will do it by refining, modernizing and extending everything we do. In Chapter 5, we can plan everything we want. But if we don't have the people, nothing will happen. So we all need to team up, adapt and take ownership. And that's what we actually talk about in Chapter 5. And finally, in Chapter 6, we look at the ambitions of the bright future. For us, for Bâloise, for our employees, our partners, our shareholders and other stakeholders because we'll stand out and become essential to people's lives. These are the 6 chapters we will disclose our Simply Safe Season 2 strategy about. And I think, no, without further due, I would say, let's start with Chapter 1 because behind this scene, there are a lot of people who are excited to tell their story. So let's start with Chapter 1. And let's look back on the Simply Safe journey up to now. What have we achieved? Because Simply Safe Season 2 would not be possible without Season 1. Or in other words, a bright future needs a very solid past. Chapter 1. About approximately 4 years ago, late October 2016, we disclosed at our Investor Day, at that point in time, our Simply Safe strategy. And we announced also our 5 Star cruise ship, our MS Bâloise, was actually leaving a safe harbor, taking along 150 years of strong experience and actually going into the ocean, into an exciting and thrilling ocean but also defying ocean on its way to a new and bright destination, on its way to our 3 strategic islands, our 3 strategic targets. And those 3 strategic targets, let me repeat them. In 2016, we promised to become 1 of the top 10% best employers in the financial industry in Europe. We wanted to win 1 million additional net new clients, and we promised to generate an upstream CHF 2 billion cash into the holding. And although the journey has been excited and thrilling of our MS Bâloise, it has also been defined and challenging. But we will fully deliver against what we promised in October 2016 at our latest Investors Day. I am an extremely proud man. Proud to stand here and proud what our almost 8,000 employees have realized. We have kept our promise. And we have kept our promise in doing mainly 2 things. We have fully leveraged, innovated and optimized our core business to the fullest. But we have not only done that. We have gone beyond insurance. And we have actually innovated in domains adjacent to our core business. But let's start with looking at how we fully leveraged, innovated and optimized our core business. And let's start with non-life. We have further improved the quality and the operating profitability of our non-life business in all our countries and units. And we have done so by rigorously and consistently applying our target customer management. By actually being very disciplined in our client and our risk selection, and by building further on our profound technical underwriting skills. We have continued to build one of the most profitable non-life books in Europe. Over the last period strategic period with an average combined ratio of 91.5%, way better than the years before and clearly in the lower end of our target set of 90% to 95%. We have relentlessly delivered against our promise to turn around our business, our non-life business in Germany. We have reduced our industrial exposure by 60%, and at the same time, we have increased our distribution strength, we have improved the satisfaction of our people, our customers and our partners, we have modernized our IT infrastructure and we have grown in Germany over the last couple of years by 5% per annum in the profitable retail segment. All of this has made Germany life -- non-life business has brought it back into profitability. In 2019, we had a combined ratio in Germany of 91%. And the first half year of 2020, a very strong combined ratio of 93% despite COVID and corona. In Belgium, we have entered into the top 4 position in non-life business. Over the last 3.5 years, our Belgian non-life business has grown with 6% organically per year, 6% organically per year. And we've further increased our footprint in Belgium by acquiring 2 selected targeted focus points. Fidea, on one side; Athora, on the other side, the former Generali Non-life Belgium. At the moment we speak, our Belgium non-life business has the same volume, the same size as our Swiss non-life business. And of course, hereby diversifying, clearly our non-life business across the group. We have also leveraged and optimized our life business, and we have actually fundamentally shifted away and adapted it to the low interest rate environment. We have shifted away from the guaranteed solutions, the high guaranteed solutions into new, flexible and capital-light services. Focused on unit-linked, focused on biometric risks and focused on fee business, everywhere across our group. And in doing so, we have increased the risk business in our new business from 3% to 14% -- from 3% to 14%. We have disposed of a highly loaded guarantee book in Germany. In Luxembourg, we have doubled our assets under management in the fee-based freedom of services business, where we actually serve high net worth individuals and wealthy people across Europe. We have broken through the barrier of CHF 10 billion assets under management. And in group life in Switzerland, we are pursuing a dual strategic direction. On one side, we focus on our semi-autonomous solution, Perspectiva, which we have grown from 0 in 2015 to CHF 800 million assets under management and almost 3,000 SME clients by the half of this year. By the half of 2020. And in the traditional second pillar business, we have grown selectively, improving our business mix, both from an age structure point of view and from a proportion of a non-mandatory point of view. And actually actively managing our life book of business in steering our new business towards capital-light solutions and in rigorously applying our ALM frameworks, we have been able to reduce our average guarantee from 1.9% in 2015 to 1.2% this year. Despite the very low-risk environment, we have stabilized a resilient risk margin of over 100 basis points. And we have a stable risk results and very resilient earnings. In each of the Simply Safe years, we have delivered an EBIT of over CHF 200 million while at the same time, strengthening our reserves and increasing the cash generation capabilities of our life business. In leveraging our asset management and banking business, we have shaped and grown a third-party institutional clients' business. We have recruited an experienced dedicated sales team. We have launched very strong performing products in senior secured loans, in real estate, in global bonds, and we've built a strong asset management brand. Over the last 3.5 years, we have accumulated 2.5 -- almost CHF 2.5 billion new assets under management. And we are convinced that we will go further and accelerate the acquisition of these assets under management. And in our banking business, we have optimized and expanded our unique model in Switzerland, bank and insurance combined. And we have even further intensified the bankingship relations we have in Luxembourg and in Belgium. And if you look at leveraging our capital position, we are still very strongly capitalized, and we actively put our capital at work. We are navigating safely through the difficult economic times and are remaining extremely resilient. Our equity today is higher than in 2016. Our Standard & Poor's rating is higher than in 2016, and our Swiss solvency test is as solid as before. And we also put our capital at work. We actively manage our capital. In 2017, we have used the opportunity to issue a hybrid bond. In 2019, we have issued a senior bond to finance the acquisition of Fidea, a senior bond with a negative yield for the investors. We have actually executed a share buyback program over the period 2017, 2020, where we have bought back 3 million shares, returning almost CHF 0.5 billion to our shareholders. And our balance sheet is still extremely strong and conservative. This, ladies and gentlemen, is how we have leveraged, optimized our core business in life, in non-life, in banking and asset management to the fullest, and we have actually improved our capital position and our balance sheet. But that is not the only thing we have done. Yes, we have leveraged and optimized our core business, but the world is changing rapidly. And we need to actually unlock new sources of client acquisition, of revenue generation and of cash generation. So we have gone beyond insurance. We have diversified our business by investing and innovating in adjacent domains. And we have diversified our business and gone beyond core insurance along 5 dimensions. We incubate, we acquire, we partner, we develop and we invest. And FRIDAY in Berlin and Mobly, our mobility services platform in Belgium, are probably the best-known examples of incubation. What we use to call [ vaguely ] are mobile insurer back in 2016 has grown into FRIDAY, the leading digital insurer in Germany. But we also acquire or take stakes in interesting start-ups that diversify our core business. There are very, very many examples but MOVU, our digital relocation platform in Switzerland should certainly ring a bell. We partner successfully with a lot of banking partners, but not only in the financial industry. We have a lot of other partners to name. Just example, we work intensively together with hundreds of local shops. And we also partner intensively with start-ups. We also develop new IDs into sustainable projects and new business models. We do that on our own, ourselves with actually accumulating the good new IDs that our people bring to the table. And following a very structured innovation process. But we also partner with well-known incubator and accelerators like F10 in Switzerland and the worldwide known Plug and Play. But we also invest, we invest together with the London-based think tank and private equity specialist Anthemis. Over the last couple of years, we have analyzed 1,500 start-ups per year, and we have invested in over 15 of the most promising ones. So we have fully leveraged and optimized our core business and we go beyond insurance, diversifying our core business. And how did we do this? How could we actually leverage and optimize our core business? And how were we able to innovate beyond insurance. The answer, the cornerstone, the alpha and the omega, the beginning and the end of all these achievements, ladies and gentlemen, is very simple. It is all about our people, our 8,000 people highly committed and engaged who have turned these ambitions into reality. This is how we have done them. By putting actually our employees, our people in the center of everything we do. Because our basic philosophy of Simply Safe, our strong beliefs, our key hypothesis is that engaged and committed, motivated people. They actually lead to loyal customers and partners that are satisfied and that, in turn, again, leads to success and to future growth. This is the path we have gone through over the last 4 years, and it has proven to be very successful. This is the basic philosophy of Simply Safe, engaged people, satisfied customers, success. We talked about the MS Bâloise, the 5-Star cruise ship that we disclosed at our latest Investors Day in 2016. And here she is real life. This is our 5-year -- 5-star cruise ship that we actually have been using on our way with Simply Safe. And as you can see, we are actually -- we have started. We have left the harbor. We have almost crossed the ocean now. We're actually in reach of our 3 strategic islands, the 3 targets we set, which again are employees', customers' success, and it has not been without danger, and it has not been always easy, but we are now in view, in reach of these 3 islands, these 3 strategic targets. So where do we stand? Today, with our 3 targets, our 3 goals, almost a year before the end of Season 1, almost a year before the end of 2021. Our employee goal to belong to the 10% best employers in the financial industry in Europe. At the end of last year, at the end of 2019, we had a top 15% position coming from a top 30 position back in 2017. In our latest survey that we did in September this year, 86% of our people recommended Bâloise as a great place to work, 86% of our people across the group. And this has propelled us to the top 8% position of best employers in the financial industry in Europe. Our second goal, winning 1 million new customers. Back in 2016, ladies and gentlemen, we were losing customers. In the first 3.5 years of Simply Safe, we have won almost 650,000 -- 650,000 net new clients. And every unit, every country has contributed substantially to this target by looking at leveraging and optimizing the core and going beyond the core with innovative solutions. And year-by-year, we are winning more and more clients because our initiatives are deploying and becoming maturer, maturer and maturer. And the 2 acquisitions in Belgium, of course, have also allowed us to in one shot actually acquire 500,000 new customers. We are very well on track with our customer goal and have actually already achieved our employee goal 1 year ahead of time. And what about our cash flow? By the end of 2019, we had delivered -- generated and delivered CHF 1.3 billion in the holding. And we are -- that's an average rate, an average run rate of approximately EUR 400 million per year, over EUR 400 million per year, and we are extremely confident that by the end of next year, we will achieve the EUR 2 billion. Let me add just one more thing for our investors and shareholders. Over the last 4 years, we have increased our total shareholder return by 34%. We have increased our dividend by 23%. And we have bought back 3 million of shares, returning almost EUR 0.5 billion to our shareholders. So our Bâloise, our MS Bâloise is perfectly on its way. We've left the harbor. We almost crossed the ocean. We reached of our 3 strategic targets in the islands despite defined challenges and risks, but we're almost there. But now let's flip the page. Now let's turn to chapter 2 because the journey is not over. The journey goes on. And yes, ladies and gentlemen, severe storms, heavy winds, big waves, and rough weather will also accompany us during Simply Safe Season 2 during our second stage. Because if we don't continue to adapt ourselves, to transform ourselves even more rapidly, we risk of becoming irrelevant. We risk of losing everything we have achieved so far. Now let's take a closer look at these threatening and even disrupting challenges for our industry, but also for ourselves. Actually, there are fundamental shifts in society. Digitalization is accelerating as we speak and the structural consumer behavior has changed. And this is transforming and putting our industry even under bigger pressure. Actually, increasing the service expectations of our customers and our partners to levels we have never seen before. We all are customers. We want service and information when we need it. When we want it, find the channel, we prefer at that point in time and preferably all around the world. And we, as an industry, are not yet there. And we as Bâloise are not yet there either. We need to boost the performance of our services to be able to cope with the new increased service expectations of our customers and partners. We need to recalibrate continuously our service and value proposition. We need to continue and even accelerate the radical simplification of our processes and our products. We need to boost our IT infrastructure to be digital, proof and future ready. And we need to be sexy in order to be able to attract all these talents that everybody is hunting for. And we need to become truly 100% customer and partner focused. The second challenge, ladies and gentlemen, is the low and negative interest rate environment. We have been squeezed by the lowest interest rates ever. And although some people said and -- a bit of time ago said, well, this won't come, we are now in a reality of a low for long scenario. This is now the reality. In our core countries, in Europe and across the world, all interest rates have just [ plumbed ]. And in Switzerland, even the 50-year interest rates are negative. The policy of the ECB and the national banks are putting our pension systems and our traditional life insurance under extreme pressure. And although we have coped very well and very successfully with the low interest rate environment for a long period, the prolonged low for long scenario requires us to rethink and to come up with new ideas and new approaches, both on the asset and on the liability side. And our third challenge, is the growing, diversifying and tougher competition. The sea is [indiscernible]. There is a lot of activity and a lot of ships are on their way. The ones we know, the traditional ones, our normal competitors, but we also see increasingly new players coming into the playground. These newcomers, these newly established partnerships between incumbents and between incumbents and start-ups the data specialists, the global tech firm of these worlds, they are with disruptive business models entering the insurance market from the outside. But this is not, ladies and gentlemen, dear colleagues only about digitalization, tough competition, low interest rate environment and the changing consumer behavior. We are also confronted with natural catastrophes and climate risks, with growing -- exponentially growing cyber-attacks, with pandemic threats, with a strong geopolitical instability, with fundamental demographic shifts and also with a very uncertain economical environment going forward. If we don't adapt, transform ourselves even faster, we risk of losing everything. And even strong organizations like the Bâloise can come under a lot of pressure and our ship might even break in 2. Thank you. Ladies and gentlemen, this, of course, all sounds a bit dark and gloomy, but every challenge and every severe storm also offers a lot of opportunities that are actually presenting themselves at the horizon. So let's turn to Chapter 3. And let's see what these chances, these opportunities are, for which we have everything to size -- to seize these opportunities. Let's look at the chances that will be coming our way in Chapter 3. And please join me in welcoming Kim on stage. Kim is actually heading our sustainability network. Hello, Kim, and welcome. Just to name 2 of our key assets, our very strong core business and our solid rock balance sheets. Do you think we are well prepared for building our Simply Safe Season 2 strategy? And do you think -- how do you think we are prepared for this volatile, uncertain, ambiguous complex world?

Yes, Gert. I think we are very well prepared. It's like building Lego. You need a solid foundation to build on and all the different building blocks to transform something existing into something new. And of course, it's good to have as many motivated hands as possible who help you rebuild the blocks. I believe Bâloise has all the required building blocks to be successful and to adapt in future environments and also be successful in future markets.

That sounds good, Kim. So could you please, would you be so kind then to tell us which resources we will be using to build our Simply Safe Season 2 future and how we will, for all our stakeholders and vice versa, generate sustainable value.

Of course, I'm very happy to do that. Building a promising future, while at the same time, tackling severe challenges and seizing opportunities is no 1-man or 1-woman show. We have several internal and external hands who help us build a successful future. A future, we focus even stronger on sustainability because we all know short-term thinking does not lead to long-term success. Internally, we established a group-wide sustainability network, which consists of 35 employees from different departments and all Bâloise countries. Together with our management, our Board of Directors and all Bâloise employees, we are, as we speak, integrating sustainability in all our activities, and are as such, creating substantial value. Externally, we are interconnected with our stakeholders since we contribute daily to the protection and functioning of economies, companies and individuals. We use these internal and external stakeholder groups as resources. And that is exactly how we approach sustainability as a holistic view on value creation. Our stakeholder groups, as you can see them on the left-hand side of our value creation model and also here as floating islands connected to Bâloise are: our employees, our customers, the society at large, the environment we live in, our partners and our investors. They provide resources. We need to continue to be successful and thrive in Simply Safe Season 2. These resources are, amongst others, manpower, trust, the foundation to operate, natural resources, know-how and skills as well as capital. Together with our economic strength, our strategic focus and the 4 important supporting pillars, IT security, compliance, risk management and corporate governance, we establish a secure and stable framework, which gives us the ability to create value for a livable and secure future. The center of our value creation model, which I just described, indicates sustainability cannot be viewed in isolation of the management of a company. It is an integral part of it. This is why we embed sustainability in the core of our strategy, in all our business activities and in our mindset, and we do not see it as a side issue, we simply need to deal with out of compliance reasons. Now you might ask yourself how does this contribute to success? Well, let's take a closer look at the right-hand side of our value creation model. And therefore, at the effects we achieved on our stakeholder groups by incorporating sustainability in our activities. Our employees, for example, they provide us with manpower and know-how. In return, we strive to increase their happiness at work and provides an inspiring and motivating work environment, which fosters productivity and continuous development. Our customers, on the one hand, can live a safer life with more flexibility and decision-making and more flexibility in taking entrepreneurial risk as business owners to grow their businesses. This leads to more satisfied customers. And on the other hand, we as followers, benefit from the fact that more satisfied customers enhance our reputation, and they are usually more profitable customers. Including the society and the environment in our decision-making benefits all stakeholder groups and us as followers. Since we all depend on the state of the environment and the societal structures we live in, we are convinced that we can only thrive when everything else around us thrives too. In addition, value-driven partnerships lead to great cooperation, synergy potential and mutual success. And finally, for the investments we receive from our investors, we are an attractive, reliable and responsible investment. This ensures our continuity in our further business development. And provides us with the ability to provide innovative solutions in the long run. The values we create do not only benefit the individual stakeholder groups but they also flow back into our value creation cycle and ensure our long-term success. By incorporating an holistic and balanced view on sustainability even stronger within Bâloise, we are able to strengthen our resilience, enhance our reputation and gain further relevance. Thank you. I would like to hand back over to Gert Winter.

Many thanks, Kim. Ladies and gentlemen, with Simply Safe Season 2, we will integrate sustainability in everything we do, which for, thanks to and on behalf of all our stakeholders. We will actually use the resources they put at our disposal, trust investments, know-how and actually use them to turn them around into considerable, sustainable value for all of them, including for us. We are extremely proud of our Simply Safe journey so fast. We've made a really good start. But we are also aware of the fact that we cannot just sit back and lay back and relax because the challenges are huge. But we do have everything we need to succeed with Simply Safe Season 2. Our outstanding culture, which is key in becoming truly relevant, our committed people and the trust of our partners, our customers, our shareholders and all other stakeholders. We have everything we need to be successful. And by using exactly the same components of our 5-star cruise ship or Simply Safe Season 1, our MS Bâloise, we have now built the Bâloise Tower. Bâloise Tower, which is the safe harbor for all our stakeholders, who are actually living in the 6 floating islands. Let's now take a look, ladies and gentlemen, on how we will deploy our strategy. How will we execute our Simply Safe Season 2 strategy? And we will do that along 4 key strategic pillars: focus the core, reimagine the core, diversify the core and transform Bâloise. And the first key strategic pillar is focusing our core business, where we will further focus and [ relently ] optimize and leverage our non-life live banking asset management business. The second key strategic pillar is actually to reimagine the core business. We need to rethink how we interact with our customers and our partners. That's the second pillar. The third pillar is diversify the core because we cannot wait. The world is changing, and we need to go beyond insurance and diversify our business. And the fourth key strategic pillar is transform Bâloise, where we will build the skills of the future, we will actually work much smarter together across the whole group in which we will further develop our already strong culture. Ladies and gentlemen, let's start by looking at the first strategic pillar, focusing our core. And let's move to the mission control and our Bâloise Tower is actually controlling our core business. We will ask a number of colleagues to come on stage and explain our strategic pillar focus the core. And we'll start with Henk, the CEO in Belgium. Henk, please join me on stage.

Thanks, Gert, and thanks for the great opportunity to talk about the success story of Belgium. We're proud to be part of the Bâloise group, but we are also proud of our contribution to the group. We are now the second leg in the whole group, after Switzerland, of course, but you do need a target on the horizon after all. Since the last 8 years, we have grown our premium income from EUR 1 billion to EUR 2 billion. That's a compound annual growth rate of 7.2%. Of course, the last acquisitions last year, Fidea and Athora contributed to that. But our organical compound annual growth rate is 5.5%, which is more -- is somewhat 2% higher than our peer group. And that over a period of 8 years. And during that period of strong growth, we were always a solid cash and profit generator to the group. With the acquisitions of Athora and Fidea, we completed our footprint in Belgium, not only in the North but also in the South, resulting in a fourth place in the attractive non-life market in Belgium. And of course, 2020 will be the year of the integration. We already approached our distribution channel on a unified way. In 2021, we will have a unified product offering to our distribution partners, and the whole integration will be finished also internally with ICT systems in 2023. And from that moment on, those acquisitions will contribute some EUR 35 million on an annual basis to the group. So what's key of our success and I really think that it's the emotional connection with our brokers and with our end clients. And the basis of the emotional connection outside is to have an emotional connection between our employees. We invest heavily in that, in culture, in working together, in the well-being of our employees resulting in a [indiscernible] price of top 3 employer in Belgium and also resulting in a recommendation rate of 90% of our employees recommending Bâloise as an employer to family and friends. And that's something we were really proud of, but we do a lot on that. To our distribution partners, the independent broker in Belgium, we won the award of the biggest broker association, the [indiscernible] to be the most broker friendly company in Belgium. You have to know that over 50% of all new policies in Belgium are sold by the independent broker. So it's the most important distribution channel in Belgium. And you probably know that on the previous Investor Day, we started with an interview between Gert Winter and [ Francois Lutz ]. François is a Belgian guy, who lost his daughter in a car accident with a drunken driver. After death, he founded a foundation, the [ Emily Lutz Foundation, ] to make people in Belgium aware that you don't drink and drive together. We support that foundation to show our engagements. We have a better together charter. We sell policies through that charter. That means that the end customer can choose the charity where the broker and Bâloise contributes to. Those initiatives are all initiatives to stay relevant in every day's life of our end customers. [Indiscernible] group, [Audio Gap] on group [Audio Gap] in Belgium, that's easy. We merged 3 companies, and you can really make efficiency gains in processes and in products, to make it more simpler and more efficient. But also on a group level, it's the same. We do a lot on a standalone basis in every country where we operate. And if you look at best practices, if you look where -- what is done in the best way, you can really contribute to efficiency gains. And smarter together, as a lever of the Simply Safe Season 2 strategy is the perfect lever for that. We have analyzed it, and we are sure that from 2025 on, we can really make efficiency gains of some CHF 200 million per year. And that's not everything. Looking at process simplifications, product simplifications, we are sure that we can be commissioning our product range with some 30%. So that's quite a target for our future period of our new strategy. And with that words, I give the floor to [ Jurg ], the CEO of Germany.

Thank you, Henk, and a very warm welcome to all of you. In 2016, I stood in front of you, and I had to explain why our combined ratio once more was well above 100%. And I also outlined a plan how we want to improve the situation. Today, I stand in front of you, and I'm quite pleased to inform you that our plans have worked out really nicely. We have turned around the non-life portfolio in Germany. And today, and now we have a combined ratio, which is clearly below our communicated combined ratio range of 96% to 98%. So looking into the future, looking into Season 2, because of the very good quality of our non-life portfolio, we are convinced that throughout the whole Season 2 period, we will deliver a combined ratio, which will be clearly below our communicated combined ratio range. And we will also grow during Season 2. We will grow significantly, we will grow our non-life portfolio by 3.3% year-on-year until 2025. And in order to achieve our growth and our profitability ambitions, we will focus on 4 areas. First of all, we will continue focusing on our retail segment, which is around 60% of and we will grow it through the Season 2 period by 4%. And we will also focusing on the SME segment, which is around 30% of our portfolio. And we will grow it by 2.5%. Secondly, we will continue focusing on the employee, on the customer and on the distribution partner satisfaction. And actually, I'm quite pleased to inform you in 2018 and '19, twice in a row, our non-life brokers rated us as the #1 insurance company in Germany. We were the best of the best of all participating insurance company with a Net Promoter score of 26. And this is an excellent position to be in. If your brokers or your distribution partners love to do business with you. Thirdly, we will continue focusing on the product quality. Every time, when I look at product ranking table, I see that our products in our target segments are very much at the top of this lead papers. And this is a very good position to be in if you want to talk about profitable growth. And last but not least, we will continue investing into the digitalization of our non-life business. Maybe you have seen it in September of this year, we went live with the motor business on Guidewire. And Guidewire is one of the most modern, one of the most advanced IT platforms that you can get in the insurance space. And we will add one line of business next to the other on to Guidewire until our whole non-life portfolio will be on Guidewire. And this will make it even more easy for our distribution partner to work with us. So in a nutshell, we have very successfully turned around the non-life portfolio in Germany. In Season 2, we will grow significantly and profitably in Germany. And in Season 2, we will continue investing into the digitalization of our non-life business. Now moving on to the group. We will also, on group level, improve the profitability of our non-life portfolio. Currently, we have a guidance out in the market that we can achieve a combined ratio between 90% and 95%. Our new ambition throughout the whole Season 2 period is to achieve a combined ratio of 90%. And we will also grow our non-life portfolio over Season 2. We will grow it significantly. And at the same time, we will reduce the cost. As Henk has just highlighted before, we will reduce our costs in life and non-life by CHF 200 million. And on top of that, we will continue improving the journeys for our customers and our distribution partners. And as I just outlined, we will have a new combined ratio ambition of 90%. This is a highly ambitious plan, and we are absolutely convinced that we can deliver on it. Thank you for your attention. And now I will hand over to Romain our CEO of Bâloise Luxembourg, who will tell you more about our life business.

Thank you, [ Jurg ], and good afternoon to everybody. I'm really happy to speak about our life business. And Gert mentioned it earlier, we have successfully adapted to the low interest rate environment. We have further improved our business mix in all our 4 countries, and we have reduced our average guarantees from 1.9% in 2015 to 1.2% in half year 2020. And if you look at the new business, we did even better. Overall, we have a guaranteed rate from below 0.5% in all the 4 countries. And if guarantees have to be granted, they are either limited in time for 8 years, like we do it in Belgium or we use the lowest possible interest rate like we do it in Switzerland. Another way to focus on capital-light products is to offer almost only risk or unit-linked business. And that's the case in Germany and in Luxembourg. In Luxembourg, we achieved the turnaround from traditional classical guarantee-based insurance product to modern capital-light ones years ago. And as CEO of Bâloise Luxembourg, I'm really proud to say that 93% of our life provisions are in unit-linked business. A result of our success in the international life business. The freedom of service business, as we call it also, is certainly a particularity of Luxembourg. We started this challenging -- this big experience in the early 2000s, while others have started 10 years earlier. And now almost 20 years later, it has -- it represents an enormous and tremendous growth engine for Luxembourg. During 2019, we have surpassed the CHF 10 billion mark. And in our plans, we will reach at least CHF 15 million in 2025. That represents an increase of 32% between 2019 and 2025 and almost that we doubled our assets under management since the launch of our Simply Safe strategy in 2016. But international life business is not only a growing business. It is also a profitable one. In the last 5 years, we increased the gross income generated by the steel business by 32% from CHF 17 million to CHF 22 million. And the planned evolution will lead to an acceleration of that income in the coming years. That's from Luxembourg. Now let's welcome Michael Müller, CEO of Switzerland, he will explain the Swiss situation.

Thank you very much, Romain. Ladies and gentlemen, a warm welcome also from my side. Low interest rates are a challenge to launch new insurance products with guarantees. Low interest rates are also challenging the needs of our customers, particularly when it comes to financial management and also retirement planning, our unique business model, combining banking and insurance in Switzerland allows us to cover all these needs. Starting with saving products and also management, asset management solution within the bank, but also having unit-linked solution without guarantees, to state-of-the-art guaranteed product in life insurance, the demand of such solutions in future will even be higher than today because the baby boomer generation is still to retire. And our unique business model gives us a full pipeline because of the expiring life insurance contracts there, where we have the full range to reinvest and having a high rate of reinvestments. That's also why we are investing in our presence all over Switzerland in that area. Being a big player in the pension fund business, we have done a cautious decision. We want also to fulfill there all the needs of our customers. We do have our full insurance. It's a traditional, conventional insurance product. We are doing -- pursuing there, also in future, a very strict underwriting policy as in past, also looking on the age structure. In the semi-autonomous solutions, where it is foreseen that the customers are assuming the risk of investment, we also have a solution together with Perspectiva. Perspectiva was launched in 2015. It's one of the fastest-growing solutions in the Swiss market with more than 2,600 affiliated companies and also nearing now the 1 billion mark in assets under management. Besides these 2 solutions, we also have the chance, the skills and also the know-how for pure asset management solution for pension funds and also the risk coverage. Especially the part of the pure asset management solution is very important. It's a focus, a real focal point in our Season 2, Season 2 Simply Safe strategy. The customers there are investing in the same part, so also in the same structure as we are for our own risk in the pension fund business. Matthias Henny will later going into more detail and also explaining our ambition in this area. Interest rates are falling since a long time. We showed also in past the interest rate margin during our annual meetings. It's quite a stable picture we are showing here with the interest margin. Now looking more into future, doing a projection in the future also assumed on the forward rates at the end of 2019, we also estimate the margin in 3 decades of over 75 basis points. So having a stable interest rate margin and the second very important lack of very good risk results makes us confident that we also have in future the contribution, earnings before interest and taxes, of group level from the life business of over CHF 200 million, which also makes clear that we also have the chance to distribute a very important part also of the cash remittance of Bâloise Group. Let me summarize we want to deliver and to offer the full range of possible solution for our customers because we also believe that their needs are very different. This is solid interest rate margin and also very good risk results. We are confident also in the future to provide more than CHF 200 million, earnings before interest and taxes to Bâloise Group coming from the life business. Thank you very much for your attention, ladies and gentlemen. And with that, I hand over to my colleague, the CFO of the group, Carsten Stolz.

Henk, Gert, Romain and Michael focused on our life and our non-life business, and they have shown how our future ambition is grounded in convincing past success. In further enhancing the value of Bâloise Group in the next strategic phase, it goes without saying that capital and cash also remain focus topics because this will keep our island afloat and driving forward. I'm very happy to share with you how our strong capital position, combined with an even stronger capability to generate cash, will create new leeway for investing into our core business and beyond and for returning capital to our shareholders. Let us start with our strong capital position that is demonstrated by a comfortable SST ratio, by a strong S&P rating and by a small proportion of hybrid debt. Even in a triple stress scenario, comprising a drop of equity markets, a drop in interest rates and a spike in credit spreads simultaneously, our SST ratio remains safely in the green zone, and therefore, we can also, in such a scenario, continue to invest and pay out to our shareholders. Our low proportion of hybrid debt and our current leverage ratio provide us with financial flexibility. We can safely navigate challenging market conditions and take opportunities to create further value should they arise. Let's now look at cash generation. As we speak, we are still executing on Simply Safe Season 1 with CHF 1.3 billion cash remitted between 2017 and 2019 and with an expected robust cash generation for 2020. We are fully on track to achieve our CHF 2 billion target by the end of 2021. For the next strategic phase, comprising the years from 2022 to 2025, we rise our cash remittance target by 25%. This translates into CHF 2 billion over a time horizon of 4 years. All of this is fueled by further expanding and developing our business in a profitable manner. I would like to reiterate that for the next strategic phase, Simply Safe Season 2, we rise our cash remittance target by 25%. Now let's shed some light on cash deployment. We remain fully committed to our attractive and reliable dividend policy, "up only." We link our dividend payments closer to cash remittance. From 2020 onwards, we aim for an annual 60% to 80% cash payout ratio. Cash remitted and not used for dividend payments, for covering holding costs and financing costs is available for investments into our core business and beyond. When investing, we follow our strict investment guidelines established in the context of Bâloise's value management framework and based on 4 pillars that we call ECCO, standing for earnings, capital, cash and optionality. For the remaining time in Simply Safe, Season 1, we are focusing on investments in innovation and do not intend to buy back further shares. Capital not invested in innovation remains available for active capital management. So Bâloise continues its reliable and attractive payout policy and continues to invest in innovation in the core and beyond. In concluding, I would like you to take 3 messages with you. First, Bâloise embarks into Simply Safe Season 2 based on a strong and flexible capital position. Number two, Bâloise rises its cash remittance target by 25%. And number three, Bâloise provides clear guidance on cash deployment, comprising an annual 60% to 80% cash payout ratio. This is what, from a capital and cash perspective, keeps our island afloat and driving forward. And with that, I hand back to Gert De Winter.

Thank you very much, Carsten. Thank you all -- to all the other colleagues who have just been explaining how we will actually implement relentlessly the first key pillar of our Simply Safe Season 2 strategy, the first pillar being focus the core, leveraging, optimizing our non-life and life business and, by doing so, improving our cash generation -- cash earnings generation capabilities and our capital position. But ladies and gentlemen, only sharpening and optimizing what we already have today is, of course, not enough. It's simply not enough. We need to reimagine our business. We need to rethink how we do business, and this is the second pillar of our Simply Safe Season 2 strategy: reimagining the core, and let's explore how we will be doing that. And let's start with our asset management and banking business in which we particularly reimagine the core for our third-party institutional investors. Let's hear it from Matthias, who is heading our Asset Management practice.

Thank you, Gert, and a warm welcome also from my side. At the last Investor Day, we spoke for the first time about asset management as a business for Bâloise and our ambition to grow in the third-party asset management. Today, I will take a broader perspective at the various dimensions where asset management is contributing to the overall success of the Bâloise Group. I will speak about how we deal with the low interest rate environment for insurance assets and about our new ambition to generate net new assets of CHF 10 billion over the next strategic phase and, thirdly, how we're going to integrate ESG criteria into the investment process for all assets managed by Bâloise. Now let's start with the insurance assets. I'm proud to say that we safely navigated the various crises encountered by capital markets in the past. That was possible through a high-quality asset allocation and risk management embedded deeply in the investment processes. We address the double challenge of low interest rates and solvency capital requirements by shifting our asset allocation to asset classes that provide a high and stable current income and provide a superior return per solvency capital. This strategy put us in a situation where we did not have to derisk our portfolio in a crisis situation. To the contrary, this spring, we could even increase our corporate bond allocation by CHF 1.5 billion at the time where credit spreads were highly elevated. And with this, we could secure an additional current income of 1.25%, hedged in Swiss francs. In real estate, we have increased the allocation, and we'll further do so in the future. And in private debt, we're going to diversify beyond senior secured loans into other subcategories such as infrastructure debt and Dutch mortgages. All this taken together will help to dampen the impact of the low interest rate environment and will make our interest rate margin in life business more resilient, as we have just seen in the section focused [ before ]. Now let's move to third-party asset management, where we want to grow in the retail and in the institutional market. In the retail market, we have been growing successfully in the past. Nevertheless, we still see future potential for growth. Today, retail customers are faced with 0 or even negative interest rates on their saving accounts. So they are basically forced to invest their money for long term savings. And we, as Bâloise, with our unique combination of bank, life insurance and asset management capabilities in-house, we are in a position to provide the necessary product and to deploy them through our existing distribution networks across the group. We have been successfully growing in Switzerland through Bâloise Invest Advice and in Germany through a similar offering. We want to further grow by first making use of our full existing distribution networks within Bâloise and related brokers; two, by increasing the penetration ratio of products managed by Bâloise; and three, by extending our offering to Belgium, which has become a focus market only recently. Now let's move to institutional segment. We started back in 2017 to build up the necessary structures, products, sales team and the brand as an asset manager. Based on these early successes, we want to further accelerate the growth with a special focus on the Swiss pension fund market. We see a lot of potential for an asset manager coming from an insurance group with, on the one hand, long-term investment horizon and having skin in the game by investing own assets like the clients' assets. For small and midsized pension funds, we will rely on our successful semi-autonomous pension fund, Perspectiva. And for larger pension funds, we will focus on a few asset classes with a strong link to the insurance assets and where there is limited competition due to the narrowness of the Swiss market. These asset classes are, within liquid assets, some specific fixed income strategies from a Swiss-franc based perspective; our USP, our systematic and rule-based strategies as a sweet spot between passive and active management. In real estate, we want to further grow in the Swiss market-based on our early success of the Bâloise Swiss Property Fund. And we want to expand to the European real estate market in a first step with a focus on those markets where we have already a footprint as Bâloise and where we can rely on an existing local real estate organization. With private debt, we want to further enhance our manager selection and product structuring capabilities to provide a fully comprehensive private debt offering. Up to now, all in all, we have increased our assets under management since 2017 by CHF 2.4 billion. We are not yet at the target of CHF 5 billion, but we're working hard to get there. For the next strategic phase, we have set an ambition of CHF 10 billion net new assets coming from third-party asset management. Why do we think that this acceleration is possible? Back in 2017, we set the foundation for future growth. We invested in people, in products and in processes. But the most important step is the cultural change, and it was sometimes very frustrating for me to see how silo thinking was hindering us from being truly customer-centric. We have highly skilled people who performed a function in a very professional way but most of the time confined to their very specific function and no one really taking the full customer view across all the functions. That's why we have fundamentally changed the way we work together. We are currently transforming the asset management organization in a fully agile organization with teams having full end-to-end responsibility for a specific customer segment and a specific investment product. These teams have the full competence to decide and execute, and this helps us to react faster and in a much more efficient way to customer needs. And I'm personally fully convinced that this way of working together will also be the future of the financial services industry to meet the customer needs and to become truly customer-centric. And for our employees, they can see a higher purpose for their work. Now the next topic in our asset management strategy is responsible investing. In future, all our assets, insurance assets and third-party assets, will be managed in an ESG integrated way. As the team has mentioned before, integrating sustainability in Bâloise Group's strategy helps us to become stronger and more resilient. In future, we will manage all assets according to the ESG compliant way. We'll integrate the decision-making. We will integrate ESG criteria into the decision-making process. Today, more than 80% of our assets, of our insurance assets and 100% of third-party assets are managed already according to our internal responsible investment policy. This policy contains 3 things: first, we only invest in companies with a minimum rating of B according to MSCI; two, we exclude producers of controversial weapons and companies with a revenue share of more than 30% coming from thermal coal; and the third one, we actively use our shareholder rights for Swiss companies. We are a member of PRI and the Swiss sustainable finance, and we are actively contributing to the further development of this field. Our efforts have already yielded some benefits. MSCI has upgraded the ESG rating of Bâloise from BB to BBB, and we were recently included in the FTSE4Good-index. Now what's coming next. There are mainly 2 topics that we are working on just to give 2 examples. One is we're developing an active ownership strategy because we are convinced that through our financial power we can produce a positive impact while reducing risks. And the second example is a focus on climate. We're going to develop a specific dedicated climate strategy. We are convinced that, as a long-term investor, it is essential to include ESG criteria into the investment decision-making process to optimize long-term risk return relationship. To sum everything up, we will move our asset allocation further towards corporate bonds, private debt and real estate for the insurance assets. We have set an ambition of additional CHF 10 billion assets under management for third-party asset management, and we will include ESG criteria into the investment process for all assets managed by Bâloise. And with that, I'd like to hand over back to Gert De Winter.

Thank you, Matthias. Ladies and gentlemen, reimagining our core is, of course, not limited to asset management and banking only. It is much broader. We need to rethink the way we do business. We need to reimagine how we interact with our customers and partners. We need to become 100% easy to do business with. And we need to continuously redesign and adapt our customer journeys. Our customer journeys are a key component in our second pillar of Simply Safe Season 2: reimagining the core. And let's now move to the design studios in our Bâloise Tower where we are reimagining the core as we speak. And please join me in welcoming Professor Hato Schmeiser from the Insurance Institute of the University of St. Gallen.

Thank you very much for the introduction. Thank you very much for giving me the opportunity to talk a bit about our study, and the study is based on empirical data that we got from the Bâloise. It's a joint work together with Jonas Jahnert from the Institute of Insurance economics and from the colleagues from the Bâloise that you will meet later on in the session. So what is actually the main question that we would like to focus? And we want to focus on the interrelation between customer satisfaction and customer profitability, profitability here from the point of view of the insurance company. Actually, we got quite a lot of research outside the insurance industry with very firm conclusions, and there, we got a strong positive interaction between customer satisfaction and customer profitability. And actually, the line of reasoning is quite simple. So happy customers typically often buy and rebuy products if they are happy with the provider, if they are happy with the product. And if the product has a profit margin, then it's, of course, also good for the provider and their shareholders. However, things could be quite different when it comes to insurance. Why? We could, for example, assume, and I think that is quite ambitious, that there are policyholders out there that maybe, over the years, compare their payments they did to the insurance company and compare it with things they actually got from the insurance company to cover claims, and if that ratio looks very well to them, then they say, okay, that was a good deal for me -- but it's the other way around for the insurance company. Also, you could argue as an example that high-risk policyholders that have private information that they are high-risk policyholders are happy if they actually get coverage and maybe get coverage in a portfolio where we also have low risk policyholders. And so they would be happy because they get additional utility out of that. But certainly, they will commit the larger fraction of the claims. So this could be different. So far, there is no study that looked into it, and so we thought that would be a good idea. What did we do? Actually, we had a huge amount of observations with these data from Bâloise. We had more than 28,000 observations. It's really a lot, and that helped us to get robust, significant results. And we measured the satisfaction with the individual Net Promoter Score number, and we measured profitability with the individual contribution margin. The contribution margin, I think, is a strong figure because it includes premium. It includes claims, provisions and also changes in the reserving. And we looked at the non-life sector only, non-life sector and a policyholders that have a long relation to Bâloise, that means 5 years or longer, in order to get stable results. And we also checked for different control variables and looked, okay, what is their interaction to our 2 main figures, which is the Net Promoter Score on the individual level and also the contribution margin. I have to say the contribution margin means on a customer level. So they are customers that maybe have just one contract, and there are also customers which have maybe 2, 3, 4, 5 with Bâloise. What can we say as a result? And actually, we get very strong and highly significant results. We can say indeed also, with Bâloise, we have a very strong positive interrelation between customer satisfaction and profit and profitability. So I think that's quite [ astonishing ] that we see that there is no correlation between customer satisfaction and cost and claims per customer. So it's not what we thought that maybe the ones that have quite a lot of claims are the heavy ones. So it's really uncorrelated. And that strong positive effect comes mainly from the premium volume. So it's a volume effect, which means that the happy customers do more business at Bâloise, and that leads actually to this significant result. I have to say significant -- the 3 stars actually indicate that it's significant on the 1% level, which is very strong, and the number 11 tells you it's 1:11 ratio between the Net Promoter Score and actually the contribution margin. What we did, but here, I'm running out of time, is we also tried to bring it down to different subgroups, which is very interesting to see, okay. It is also strong, if you look at different ages, gender, region and also distribution channels, and the study gives you additional information in that respect. But to put it in a nutshell, and I think that's a very important point, should actually shareholders want to have happy policyholders, we can really give a firm conclusion, and it's a strong yes. Thank you very much for your time and your attention. At this point, I would like to hand over again to Gert.

Thank you very much, Hato, for this very interesting insights. But if I'm honest, it's not really a big surprise to us, but it's good to hear that scientific research confirms the basic philosophy of Simply Safe, which we have been pursuing since 2017. That engaged motivated employees create satisfied and loyal customer and partners, and then it turns into happy shareholders. That's all very nice to hear, but how do you increase the satisfaction level of your customers and partners? How do you get to the next satisfaction level on the ladder? Actually increasing loyalty of customers and partners and thereby actually increasing the long-term profitability. Now the answer to that question is actually pretty straightforward and simple. It's by truly listening to your customers, by putting yourself in their shoes, how they feel, what they want, what their concerns are, and then to adapt and adjust the way we service them. Actually, it is by continuously using feedback and data from our customers by redesigning the customer journeys and reimagining the business all the time. And let's hear it now from Melanie and afterwards from Simon, how we're actually already designing, redesigning continuously our current customer journeys day in, day out. Please join me in welcoming Melanie on stage.

Thank you, Gert. Yes, for Baloise, it is really important to stay focused on our customers, and that's why we make it super easy for them to stay in touch with us. And therefore, we have built up our own 360-degree customer feedback system. Bâloise's customers are people like you and me with their own needs, emotions and experiences and, to be honest, usually with little interest in insurance. We seek the dialogue with our customers and offer, therefore, a really fast and convenient solution. After every person in contact with us, they are invited to give feedback, and this happens in a fully automated process and costs them only 2 clicks and, if desired, one comment to explain their experience to us. With our 360-degree customer feedback system, we are technical pioneers in the market. We're not only collecting [ further ] results. Moreover, because of that, we are able to react directly and very individually. So why do we call it 360-degree? We call it like that because, for example, complaints are forwarded directly to the right contact persons in the department. And then they try to get in touch again with the customer and solve the problems directly together with them. And same happens to prices and complements. They are forward as well to the right employees, and who would be not motivated by that? Why is this also really good for Bâloise? A customer who tells us about his disappointment and bad feelings gives us a second chance, and we know how to use this potential. Only at the moment of truth our customers will make the experience if Bâloise is really trustworthy or not. And the evidence shows that customers are even often more loyal after a well-handled complaint than ever before. So let me explain that with a well-known model of an iceberg. Everything above the water is everything we are told. So for example, our customers' feedback or maybe complaints. But simply spoken, if we know something about it, we can do something to it. And so far, we've got almost 200,000 customer feedbacks, which means a response rate from 25%, what is actually really a lot. Everything under the water surface is everything we are not told, so for example, hidden thoughts and feelings of our customers. And this part is actually really dangerous because we know nothing about it. But for us, it is also potential because with our 360-degree customer feedback system, we have the technical infrastructure to release also this potential. And with our systematic approach, we will keep inviting our customer to give us feedback at all time and even increase our response rate. But due to artificial intelligence, we don't even need every single customer's feedback to help them individually. Because of AI, we learn overall how to make our customers more comfortable and loyal. So to give one example, you've learned that our customers are really unhappy about detailed telephone redirections, and that's why we're looking at various innovative speech recognition tools to get faster. And on the other hand, we have learned that Bâloise customers appreciate Bâloise for being a really strong and competent partner. So today, 78% of our top loyal customers rate us with scores 9 to 10 on a 10 scale. They are promoters. And our fundamental study showed up that 80% of them really recommended us to family or friends at least once, and we are really proud of these results. So thank you for your confidence. For the next part of our chapter, our customer journey, please welcome Simon now.

Thank you, Melanie. And isn't it really interesting to see that reacting to feedback and addressing customer, customer needs on an individual level has a big impact on customer satisfaction. This exact shift towards a data-driven and individual need based marketing approach, which holds an important key for the success of Bâloise. To illustrate what I'm talking about, let's think about 2 quite similar women, both living in the same city on the same street, deciding to relocate. The first lady moves just across the street as her old apartment is being renovated, and she wants to stay as close as possible to a known environment. For the second lady, on the other hand, she moves to the countryside. She just got married, and she and her husband built a house where they want to start a family in. Looking at these scenarios, from an insurance perspective, it is obvious that the lady remaining in the city will not necessarily require any insurance advice, while the other woman moving across -- moving to the countryside, she will be glad to get some support from an insurance and financial specialist. So of course, the input relocation alone is not enough to build tailored customer journeys for people moving. We at Bâloise use state-of-the-art machine learning tools to generate further insights and combine design, business and data analytics capabilities to translate those insights into many different relevant customer journeys. Getting back to our 2 ladies. What could that specifically mean? The lady remaining in the same city will receive a newsletter with tips on what to consider when moving and will get a subtle nudge towards one of our many integrated services like, for example, MOVU, the moving specialists. For the lady moving to the countryside, there, her personal client adviser will be requested to check in on her, to support her and help her fulfill her dreams. So what does this all have to do with the figure we have here? It is this paradigm shift towards a more targeted customer management approach which has a big impact on our marketing success. Since the implementation in 2018, we significantly increased the additional amount of premium generated from the customers we contacted with their marketing activities. And when I say significantly, I mean, by a factor of close to 4. And there is even more good news. This steep increase is not accompanied by an increase of contacted customers or costs, which indicates that we have a really strong impact on those customers we select for their customer journeys. To show you another way on why the customer-centric path Bâloise is following is promising is by visiting a concept which has been really fundamental for us in the past, the customer quality segmentation concept. A, a loyal customer who is really good integrated in our ecosystems, bound to a C customer who is rather new and holds a lot of potential to further development. And finally, the D customer, he shows a rather bad claims record. When we look at these 2 pies, we notice that we definitely experienced an increase of the number of customers since the beginning of Simply Safe Season 1. This results in the bigger pie. But following this growth path, we would expect to see a proportion shift in favor of the C segment as [ that sector is ] the segment where new customers typically start out in. Fortunately, the proportions there are rather constant. So we actually managed to further develop new customers, C segment customers, into higher B and A segments. Remembering the insights we got in this part dedicated to the customer journey, it does not surprise that we outperform our competitors and even manage to extend our leading position when we look at the measure profitability. Our customer management approach on an individual need-based level leads to more satisfied and loyal customers and, as we now learned, our happy customers are also the profitable ones. So thank you, and I'll give back to Gert.

Thank you, Simon. Thank you also, Melanie. It's great to hear that actually, every day, we're making the life of our customers better, safer and simpler by using all the feedback we gather and by using all this data. So we are permanently redesigning our customer journeys and are permanently reimagining our core business. Now you can ask yourself the question, that's all fine, but where does that lead to. What is then our growth ambition? Where do we want to go in growing with Simply Safe Season 2? And as Simon explained, we will be growing our A and B customers. We will be massively winning C customers and develop them to A and B customers. And we will continue to re-underwrite our D customers. We have set an ambition for Simply Safe Season 2, which is higher, much higher than it was in Season 1. Over the period, '22-'25, we want to win an additional 1.5 million net new customers. That is compared to today, plus 30%. Ladies and gentlemen, so far, we have heard how we are going to continuously and relentlessly focus and leverage and optimize our core business. And we've heard how we're going to reimagine our business via customer journeys. But like all human beings, also Bâloise has a life curve, and we cannot be satisfied by focusing and reimagining. We need to untap new sources of client acquisition, of revenue and cash generation. We need to diversify our business, and that is the third pillar of our Simply Safe Season 2 strategy, diversifying our business. And I will ask a number of people to come on board and on stage. And we'll start with Ruth from Anthemis, and Ruth will explain how we are partnering with Anthemis to actually anticipate on the future. She will be followed by Sibylle. Sibylle will explain how we put into a traction and into motion, our partnership with Anthemis and how we continuously fuel our innovation funnel. Patrick and Liesbeth will tell us how we diversify our business by focusing on the ecosystems of mobility and home. And Christoph will actually explain the track record of FRIDAY and how the future of FRIDAY will look like. So let's now move to the research and development labs in our Bâloise Tower. And let's see, feel and hear how we are fundamentally diversifying our business. And please join me in welcoming the first speaker, Ruth from Anthemis.

Thank you, Gert. As Gert said, my name is Ruth. I am from Anthemis. Anthemis is a leading global fintech and insurtech investor dedicated to cultivating positive change in financial services. Anthemis is a decade-old fund, and we are global. We have more than 100 portfolio companies in the fintech space worldwide. Anthemis is led by 3 guiding principles: virtuous cycle outcomes, diversity, equity and inclusion and authentic collaboration, such as our partnership with Bâloise. The fintech ecosystem is growing, and Anthemis is helping Bâloise to take advantage of that. The fintech market is projected to be USD 305 billion by 2025. Equally important is insurtech. Since I have been investing in insurtech since 2012, the market has exploded. Together, Anthemis and Bâloise are taking advantage of this explosive growth both by looking at early signals from the startup world and investing in industry-changing businesses. Anthemis' investment thesis is really led by the idea of embedded finance. Thanks to technology, we envision a future where financial services are augmented, embedded and ubiquitous. That means that we focus on all sectors of the economy where we might find startups and innovation which impacts the insurance industry. This allows us to help Bâloise broaden its focus beyond its business today into disruptive sectors to find the best partners and to grow in potentially exponential new businesses. So let me invite on stage Sibylle, my partner in the investment partnership to tell you a little bit more about it.

Thank you Ruth. Through the partnership with Anthemis, we were stepping into the world of ecosystems and start-ups. And since the beginning of the partnership in early 2017, we have done 17 minority investments, but we do not only invest in start-ups. There are many ways how the partnership is successful. We understand pattern and trends while we were screening 1,500 start-ups annually. We are supporting follow-up internal initiatives with our venture capital know-how. We are initiating pilot and partnership with start-ups because we do not only connect our portfolio companies with the core business but also any interesting start-up we meet. And finally, we are aiming for financial return, which corresponds with the venture capital benchmark. Therefore, another EUR 60 million has been committed to invest in the next 4 years. Investing in start-up is not the only thing in diversify the core. There is so much more. And we have taken into consideration all the initiatives we have started in the past years, our learnings, insights, failures and successes and have developed the Bâloise Open Innovation Funnel. Currently, we have around 70 initiatives in this funnel, 45 in exploration and validation, 20 in execution and already 5 in scaling, and we are constantly filling this funnel with new initiatives. The main activities in the Bâloise Open Innovation Funnel are, to invest in start-ups not only through the Anthemis partnership, but also directly into start-ups within our ecosystem; to acquire interesting start-ups, as we have done with MOVU, the Swiss moving platform; to partner with global and local accelerator and incubator but also with start-ups. We have conducted over 40 pilots with start-ups so far to develop new ideas and initiatives. We have started the Bâloise kickbox program where Bâloise employee develop and create new business ideas. In our first group-wide program, we have collected over 90 ideas and 4 of them are still ongoing. And with that, we are simultaneously fostering a culture of innovation within Bâloise and to incubate these successful ideas in our own start-up, as we have done it with Mobly, our Belgium mobility start-up. Overall, we have invested around CHF 200 million into these initiatives, and we expect in 2020 revenues of around CHF 50 million. While we were looking at these trends, taking into consideration all the initiatives we have started but also analyzing the threats and opportunities in our core business, we have prioritized mobility and home as our main ecosystem. Following a value-driven approach, our future investments will be linked to tease prioritized ecosystem, where we do see a big potential for growth but also synergies with the core business. And due to this value-driven approach, our ambition is to create a value of CHF 1 billion until 2025, and we will regularly report on our way towards this EUR 1 billion valuation. We will now deep dive into our prioritized ecosystem, home and mobility. And I will now hand over to Patrick, who will tell you more about the ongoing activities within mobility.

Thanks a lot, Sibylle. And I'm really happy now to explain you what Bâloise is doing and will do in the future in the sphere of mobility. As you now recognize, mobility is part of diversify the core. And on the long term, we build a sustainable and profitable business besides the financial services we're offering today. And while doing that, we generate new revenue streams for Bâloise and we attract new customer groups for Bâloise, too. And all that, we are participating on the fast-changing environment in the mobility economy, which helps us to establish that business I'm talking about. Maybe you remember it, it was 2016 at our last Investor Day, where we announced [ Fillmore ]. And the result of that is Mobly. We mentioned it even before. And since we funded Mobly 2017, the team developed great solutions directly to the end consumers which are linked to the, let's say, mobility car space. To give you some examples. So the very successful products are the warranty insurance for second-hand cars or the roadside assistance on-demand -- or to mention also the Mobly Go app, which are connecting the services around the car. So already today, Mobly has 400,000 subscribers of the newsletter. This is an amazing number only in Belgium. And to accelerate our growth, this year, we bought the platform, Vroom. Vroom is a platform where you can sell your car or buy a car, of course. And Vroom is a perfect fit to Mobly services because both together really has an impact when it comes to mobility and if you're looking for a car and included services. To drop another number, Vroom has today, 2.5 million page views per month. So this puts us in a very good position in the Belgium market when it comes to mobility. But that's not all. Mobly also developed based on the experience, the Moveasy platform, which enables enterprises to offer mobility services to their end clients. And maybe you have seen that. So Europ Assistance is using the move easy platform in Belgium already, and we announced that a few weeks -- a month ago. So Mobly is a great example how we act today and how we will act in the future in the space of mobility. It's about partnerships. It's about [ fail fast. ] And if it works, let's grow it and let's scale it. But of course, besides the new mobility services, the car insurance is still highly relevant for Bâloise in the future, too, especially when it comes, of course, to revenue and profit. But why not using this [ fundamental, ] the network, the partnerships, the experience we have to establish a new business and why not benefiting from these huge changes and big changes in the mobility economy, which gives us access to new markets even geographically? And you all know the big trends, which are connectivity, which are sharing, the electrification or the autonomous cars. And all these big trends helps us because there's a big shift in mobility. And our study of the regarding the future of Mobility 2040 has shown that technology is really the driver behind this change. And in 2035, the projection is that we see more spendings on on-demand mobility than we will see it on the first and secondhand car sales. That's unbelievable. And let's not look into the future 15 years. Today already, in Europe, the growth in shared mobility is 25% per year, and this is the space where we would like to be in. So now it's the time to think from a holistic perspective, put the customer in the center and not think about single products and solutions, and we are convinced to build this portfolio, this portfolio of solutions, to fulfill the customer needs is only possible if you be part or build a community in these markets. And when I'm talking about a community, what do I mean? The community we would like to be part of, or we will build, there will be our ventures we bought, we build, we buy. There will be the minority investments we do from a strategic perspective. There will be, of course, a lot of partnerships. This is a need for a working community. And last but not least, think about the 4 million customers we today have we can bring into that community in mobility. So what I'm talking about is an open innovation portfolio approach, and not only about one single big investment because this will never work out. And as you see here on the slide, we are already heavily active in that market. So we are not starting by 0. And we already have 50,000 customers in this sphere in mobility. And today, I'm so happy and proud to announce 2 new members in our community. As a result of 300-odd years and evaluation afterwards, we have now -- we welcome 2 companies, which are Ben Fleet Services and AboDeinauto. AboDeinauto is an all-inclusive car subscription platform which gives you instantly availabilities to cars. So that means you can have a car in front of your door, the contract is 1 to 12 months, highly flexible, and in a monthly fee, everything is included. You do not have to care about anything. And we can give you this instantly availability to a car because we are partnering with car dealers and using their inventory. And at the same time, while doing that, the car dealers can participate on this huge growing space of car subscription. So this is really a win-win-win situation we have here. And AboDeinauto as a company, we built by ourselves. It's our idea. Of course, we had some support from a venture builder, to be honest. And Ben Fleet Services, instead of that, is a company which already runs and we're investing in. Ben Fleet Services is taking care about fleets, especially about the fleet of the future. So the issue for fleet of the future is that these decentralized vehicles must be ready to use every time, and that in a safe and convenient way for the end consumer. And Ben Fleet Services is exactly concentrating on that. They are maintaining and cleaning these decentralized fleets. And I really love the business model what they have, of course. But besides that, Ben Fleet Services is bringing in a lot of partnerships, which will help us to build this community I've talked about. And what I also love, when it comes to Ben, is that I think we will see them very soon outside the German market. So what I'm talking about is that we are currently growing our existing ventures and, in parallel, we are building the portfolio of solutions with community. And while doing that, we are diversifying the core and followers in 2 ways: geographically; and secondly, income streams, because we will generate fee-based incomes and not insurance business. And let's make it concrete. In 2025, we have CHF 100 million revenue in that portfolio from our balance sheet. We will have attracted 400,000 new customers, mainly in new target groups, and we aim to cross-fertilize the existing business, the existing insurance business and network within new services and mobility. And all that will contribute to Baloise's values, which are, in that context, safety, convenience, trust and sustainability. And now I will hand over to Liesbeth. She will explain to you what we are doing in our second big focus area ecosystem, home. Thanks a lot.

Thank you, [ Patrick ]. So Baloise is also building its home ecosystem for the last 2 years. We've indeed acquired companies, invested in promising start-ups and collaborated with others in all of the Baloise countries. So we are implementing that strategy to diversify our core. And we have, in fact, established Baloise as a front runner of this housing and service market. But why? What is the connection between those investments? And what is the right to win for an insurance company? Well, we believe to stay relevant to our customers, we have to extend our services and focus on the full customer journey. And that is exactly what those investments are focused on: innovative and digital service offerings, covering the end-to-end journey and its needs. Together, we focus on the tenants, the property owners and the real estate professionals. So let me explain to you the DNA of our home ecosystem and make it all a bit more tangible. And let us start with the tenants, because we all remember being a tenant, looking for that first apartment, the time-consuming administrative and often complex task of finding the right match and getting that option applied, place subscriptions, solvency checks, rental cautions. These are just a few examples. [indiscernible], our partner in Belgium, is covering all of those steps with a digital solution. But they're not only focused on the onboarding process, they also cover the steps during and after the rental contracts. But as a tenant, we're also looking for convenience. We're looking for a balanced lifestyle. And that is what we offer with the investments in Switzerland. Moving services offered by MOVU; cleaning laundry services offered by Batmaid and Bubble Box; and the craftsmen offered by Devis. And we can easily think of extra services to be added to that list. So as a landlord, you're also profiting from these services, whether you're an institutional partner like Baloise or a private partner, maybe like yourselves. But some of you might be living in your own properties, your own homes, and you'll probably consider it to be the most important investment you'll ever make. You want to manage it as effective and efficient as possible. You wanted to keep its value, or even better, let's be honest, increase the value. Houzy, our recent investment in Switzerland, covers that need. It's a digital platform that they'll tell you how to create value from your property. They will tell you when to renovate and how much it will cost you. It will lead you to the right craftsmen. It will even remind you when to water your plants. So let's move on to the real estate professionals, the one managing the increasing amount of buildings. And let's take the example of the [ Sandvik Order Trustee Professional ], a well-known profession in the Belgium and Luxembourg markets, dealing with the management and the maintenance of residential buildings and its owners. They too suffer from an administrative overload, a lack of an efficient tool set and frequent legislative changes, though Baloise is supporting them. Baloise is strengthening this profession, together with our partners, Keypoint and ImmoPass, and potential new partners on the horizon. We offer a central communication and collaboration platform with integrated services such as legal advice, local repair network, technical audits and so on. Again, a fully digital alternative to a very contact-driven profession, something that is becoming, unfortunately, more and more important these days. So what's Baloise's role in this DNA? Well, we are orchestrating this ecosystem. We connect different parties to each other and to that customer base. But we're also a service provider. We offer our core insurance and financial products through these channels and we profit from the many cross-sell opportunities. And that brings me to the next question. How will this lead to sustainable revenue? Well, we go beyond that traditional business models. Each of these partnerships is a new distribution channel, a new sales opportunity with integrated customer touch points. We are expanding our customer base in a growing and evolving real estate market. These clients are paying for the services they subscribe to. Third-parties are paying license fees when connected to the ecosystem. At Baloise, we generate revenue cross-selling our new and existing products. By 2025, we will reach 250,000 new customers, both private and SME. This year, already, with the investments and developments already done, we will reach CHF 10 million additional sales. By 2025, there will be CHF 100 million additional sales. So in summary, this home ecosystem is positioning Baloise as a preferred partner on the home and servicing market. We're securing our revenue and keeping our customers Simply Safe. Let's invite Christoph to the stage, the CEO of FRIDAY.

Thank you, and hello. At the Investor Day in 2016, Baloise presented its plan to incubate a European mobile insurer, starting with motor insurance in Germany. Today, I'm talking to you because in just a few years, this idea has turned into a fully-fledged digital insurer. But let's take a step back. What was the motivation of Baloise to set out on this journey? Changing customer behavior and demands. If you ask the customer, their insurance experience is still a massive pain point. It diverges dramatically from any experience of leading tech companies, but customers demand the same experience from their insurance. This is why more people will switch to digital insurers like FRIDAY. COVID-19 proves to be another accelerator. And it has stimulated the adoption of the remote channels across all age groups. The customer of today wants simple, flexible and sustainable insurance solutions. Baloise positioned FRIDAY perfectly to close the gap between customer expectation and market reality. Our continued focus on growth and agility enables FRIDAY to capitalize on the emerging opportunities in the digital sphere much faster than any incumbent may believe. Before we dig into our strategy and numbers, I would love to share with you the insurance experience, FRIDAY offers already today. Let's take a look. [Presentation]

Amazing, isn't it? In our product development, FRIDAY follows a virtuous cycle strategy to accelerate growth, productivity and value generation for the benefit of the customer. Understanding the customer and its behavior, in detail, improves the user experience as well as the risk selection in the portfolio. It further allows FRIDAY to optimize cost structures by providing instant [ sale ] services even beyond insurance. At the end, it enables us to offer attractive prices and to accelerate the flywheel of virtuous growth. How do we make this strategy happen? We invest heavily into 3 core competencies, tech leadership, data intelligence and most important, customer excellence. You could say FRIDAY is a new breed of insurance company. We are a full spec digital insurer, a tech company with a European insurance license, enabling a fast-to-market customer-centric product development while owning the whole value chain. Also, FRIDAY represents a deep pool of talent. More than 60% of my colleagues work in tech- and data-related positions in a truly agile setup. Our team aspiration is to be a role model. As a first mover in Europe, FRIDAY now went net zero. It shows, we believe in ESG leadership as a strategic foundational pillar for A long-term outperformance. Also this enables us to react quickly to a volatile world and to deliver truly loved products. What does it mean? Personalized at scale and sustainable at heart. Let's take a look at the numbers. Not only has FRIDAY achieved a CHF 30 million GWP run rate in 2020, doubling its top line year-by-year, FRIDAY is also the best known digital insurer in Germany. 1 out of 8 persons knows FRIDAY and loves our exceptional brands. This growth was managed thoughtfully, without any dilution of the customer experience. Customers voted FRIDAY, for the fourth time in a row, the best digital insurer of the year. Last but not least, we improved our core economics year-by-year significantly. In 2020, our loss ratio will be well below 100%, despite the exponential growth of the last years. This is a significant achievement for a growth company like FRIDAY, being active in one of the most competitive insurance markets in Europe. In the next strategic period, FRIDAY will focus on becoming the most popular digital insurer in Germany and maybe even beyond. In the last years, we built the foundation of a great business. So naturally, we're looking into various opportunities for expansion. Until 2025, we are committed to a 5x growth and, at the same time, to achieving profitability in the -- in our core market, Germany. Also, in those years to come, we will never, never let the customer out of sight. FRIDAY's key objective will remain creating the insurance experience customers truly love. Thank you, and handing back to Gert.

Thank you, Christoph, and thank you all these colleagues for explaining how we are fundamentally diversifying our core business. FRIDAY has grown into the leading digital insurer in Germany and has all the power and know-how to expand and scale over the coming years. A bit like Lemonade, but then in Europe. But it's not alone. It's not only about FRIDAY, of course. We have heard multiple examples, and the focus on our home and mobility ecosystems have generated an innovation funnel that is full. And as Sibylle said, this innovation funnel will yield the value of CHF 1 billion by 2025. Ladies and gentlemen, how have we done all of this, what we have talked about up to now? And how do we further relentlessly implement Simply Safe Season 2? And realize all the things we have discussed about in this chapter 4? The answer is crystal clear. It would not be possible at all without our almost 8,000 committed, motivated, engaged employees. This is what truly makes the difference. One can copy our products and services. One can also copy our strong processes. One might even copy our bright new ideas, but you can never copy what is the secret ingredient of Baloise, our culture and our highly committed people that continue to transform Baloise every day. And this is the fourth strategic pillar of our Simply Safe Season 2 strategy, transform Baloise. So now let's take a closer look in the culture center, way up in the Baloise Tower, where we're actually always linking happy employees at work with happy customers. And let's explore that going forward. Let's hear it from some employees first. [Presentation]

I have nothing to add to this. No comments. No remarks. And now let's switch to something different. And let's hear what science thinks and scientific research thinks about the link between happy employees and happy customers. I'm very pleased to invite to the stage Peter Gloor, a member of the MIT Center for Collective Intelligence. Please join me in welcoming Peter. Peter, the floor is yours.

Thank you very much. Over the last 18 years, in studying happiness and well-being at MIT, we found that if you invest into happiness of your employees, you are not just surrounded by happy smiling faces, as you just have seen, which makes your workplace so much happier, but it also pays in the bottom line. And research in happiness and well-being has become a well-established research topic. And the United Nations is even doing an annual survey of happiness, where the research normally is done by asking people question like taken overall, how satisfied are you with the life you lead and the scale from 0 to some number. And then you take this answer, you aggregate it, and you compare it with other questions that the people answered. Now what has been found is that getting a good salary is a factor that makes you happy, but only up to a point. And after that, it's things that cannot be compensated with money like having the trust, like having good friends, like having a short commute, by the way, and having the feeling of being in control, and those are the key criteria. And if you have happy employees, and this has been shown repeatedly in research, that will also increase productivity and bottom line revenue. United Nations is doing an annual happiness survey. Switzerland is normally scoring quite highly. As you see here, this is the most recent one. We are on spot #3. We have even higher up before. I think in one year, we were the happiest nation. However, the question is how is it done when we are measuring happiness? Now research and studying happiness is a very old subject. It started with the Greek philosophers. However, they were making a distinction between 2 types of happiness. There is lower happiness, sex and drugs and rock n' roll, and that makes you happy short-term. And in the long run, it might make you really unhappy because your body cannot really keep up. It's much more sustainable if you are in a healthy environment, if you are surrounded by nature and if you are surrounded by good friends. In a recent book about happiness, there is many of them. It's basically those 3 things. You have to have an optimistic attitude, and you get that by being surrounded by good friends and by being kind to other people. In our own research, we are studying happiness in a way which should make it more measurable than just answering questions of a survey. The problem with the surveys has been shown many times. While happiness research basically says how happy have you been in the previous year, you actually only remember the moment. And if it has had a car crash, but overall, really happy year, you will be very unhappy. And so what we are doing, we are measuring emotions using hardware. So here, you see the sort of emotions that we measure. And we have built some tools like, for example, this happy meter here. These measures how happy I am. So right now, it was say I'm a bit nervous. I'm stressed. I'm also happy because I'm a happy person, because I can share my happiness. And we have also built smartphone apps. It's a happy meter, by the way, measures my heart rate. It measures the energy in my voice. It measures how I move my hands. It also measures things like the weather forecast, because it turns out that 50% of your happiness is the weather. So there is many things you cannot do to influence how happy you are. Your lighting is also a factor that is influencing it. And in our experiments, we are using a smartphone app that is also showing you how you exchange e-mail with others. It measures how well you are embedded. We call that the social compass. And as you just have seen in that video before, here at Baloise, you are really extremely well embedded. And we have done such experiments where from e-mail, we -- we call that entanglement, we calculate how happy, how well integrated you are. And this has actually a big impact on the bottom line. The experiment you see here, we did in a German bank. Last year, we gave people a smart watch. There's a happy meter on it. And then we gave half of the people, that's what we called the experimental group, feedback. What makes them happy? What doesn't make them happy? And the others say, "We're just here in the happy meter." And as you can see here, if you get feedback on what makes you happy and unhappy, you will actually be 14% more happy. We also looked at what makes you happy. And there's another thing I learned, no pain, no gain. And you are actually in positive stress. In the end, you will be happier. So to come -- to conclude, what you see here is another experiment we have done with a 90,000 people service company where we measured, through e-mail, how they communicate how happy they are. And we measured the happiness of their customers through Net Promoter Score. And again, you see that if you tell employees how you can make your customers happy by communicating with them in a better way, your customers will actually be 16% more happy. So the conclusion is very clear, investing into happiness. It's not just good for you, but it's also good for a customer, in the end, for more productive, more profitable business. Thank you very much. So now I'd like to pass the word to Gert.

Thank you very much, Peter. One of the key ingredients of our Simply Safe strategy, that happy employees generate happy customers, ladies and gentlemen, is not just a hype or just a cool trend, it's a business reality and effect, as Peter has explained, underpinned by long-term scientific research of the MIT. But the question is, of course, how can you then increase happiness at work? How can you actually get these dynamics going? How can you stimulate a culture of collaboration, agility and cooperation? You cannot command from the top that people have to be happy. You cannot command from the top that people need to be motivated, engaged and committed. So how have we done that? How have we tackled this challenge? And in trying to answer that question, I need to get back to 2017, the start of Simply Safe, where we actually created our Sparks community. Let me give a bit of background on the theory. Every company has 2 worlds, 2 worlds. World 1 is the formal one, the organization chart, all the combinations of functions, departments and hierarchies. And World 2 is the real world of the company, the informal one. The one where all the important decisions are being taken. The one where the future of a company is being decided over a cup of coffee at the coffee corner. World 2 has the real impact. World 1 just consists of a number of structures, formal, fixed, are article, and has relatively little impact, about 10%. So if you want to transform a company, actually, you need to tackle World 2. And you only need 2 ingredients to change World 2. The first thing you need, the first ingredient, is to actually identify the highly interconnected, highly influential people in your company. Every company has around 5% of these people. You all know them. Those are the people you go to when you have a problem, may have an issue, and you have a vital question or whether you're seeking for good advice. Those are the people everybody trusts and everybody knows. And you can easily identify them via social network analysis. And the second ingredient you need is a simple set of behaviors. This is the way we do things at Baloise. This is what we do. This is what we don't do. No more comments and questions asked. And if you combine these 2, if you have this very interconnected influential people starting to live that behavior, colleagues will start copying these highly influential people until you reach a tipping point where everybody says, this is just the way we do it at Baloise. This is completely normal. And this is exactly what we did back in 2017. We did a social network analysis and identified among almost 400 colleagues which are highly interconnected throughout the whole group and very influential. And we asked them to step up, to march along and to actually help us transform Baloise, in their own way, with their own pace, with their own ideas and initiatives like employees, for employees, and they joined us. And the very first thing they did was to create the Baloise Code, a set of simple behaviors of how we do things at Baloise and how we don't do things. This is simply the way we do it at Baloise. And this is how we started by activating the Sparks community, not only changing and transforming Baloise by role modeling from the top, but also by activating the Sparks community horizontally and bottom up. This is how we are transforming Baloise. And I'm very pleased today that 2 of these Sparks are here, to share what they experience in the Sparks community and beyond in the broader Baloise community. Please join me in welcoming Burcu first on stage, and afterwards, Janneke. Burcu, your turn.

When I started to work at Baloise, I had no idea what to expect. I only knew Baloise as an insurance company. But I quickly made the experience that Baloise is not just an insurance company, it is also a modern company that puts special emphasis on its employees, and I noticed that immediately when I started working. I was involved in many topics from the beginning and was very well received by the team. But on the other hand, I also experienced that in many departments, it's not like that. I had experienced situations where colleagues were reluctant to share their special knowledge or didn't even want to at all. They were insecure and acted with a mindset of knowledge is power. Following, I have to find ways to get the information myself, which was less effective if you just talk openly to each other. One of the initiatives of the Sparks was the concept, "Shadow for a Day," the possibility for employees to get a glimpse of another interesting area for 1 day. This action opened up different perspectives. It was a revolution for employees, like finding a new job within Baloise. And the HR department has even expanded this possibility, this initiative by implementing the concept, "Change of Perspective." It's a similar concept to "Shadow for a Day," but just for a longer period of time, like month or for a year. I also used the opportunity to do a change of perspective for 6 months, and I can say it was the best challenge I could ever accept. I discovered other skills of mine and really put myself in a different perspective. I was in a new role without any previous knowledge. But to achieve a big rethinking, we Sparks could help employees to define their own culture and their own work -- in their own culture and their own values at work, the values that are called Baloise Code, as Gert just mentioned. With these values, the change could be done by the employees themselves. Employees decided how their culture will be like by defining and implementing the values themselves. And not top down, it came from bottom up. When I compare the situation at Baloise some years ago with the situation today, I can say, Baloise employees are much more relaxed and even enjoy sharing their insights. I experienced at various events like [ re-trues ], reviews and [ open next phase ], that many of my colleagues are proud of their work and how proud to have generated added value for everyone. And I can understand that because for me it's also an appreciation by [indiscernible] or I have -- I'm out to speak up. I'm proud to work for such a company where we have the possibility to set our own values, and at the same time, I'm very impressed that we could do the change all together. Thank you. And now I would like to pass the word to Janneke.

Thank you, Burcu. When I was asked to speak at this Investor Day about the theme, happiness, the organizers ask me the following question. What is it that you specifically like about working for Baloise? And the first thing that came into my mind was that you are being valued as a person. You're not just an employee or a number or a person, at Baloise, you can be you. As a bank, an insurance company, you might expect the atmosphere being quite corporate. Yet to me, and I'm sure to many other colleagues, that's not the case at all. The atmosphere is friendly, relaxed. I'm glad to have met a lot of cool people here. I even made friends. I've had and still have good managers whom I can talk about issues and who support me in my learning process. At Baloise, you can come up with your own ideas. It's appreciated and encouraged to give your opinion and feedback. And they listen to you, not only your direct colleagues, but also the management. They support you. They listen to you. They try to respond. And these ideas are, for instance, for me, organizing events, team workshops. In the past, I worked as a chef in different restaurants, so I organized a few cooking classes at Baloise. And what I saw, when you put people an apron on and tell them to cut a pumpkin, was instant teamwork. Things we try to achieve in time-consuming workshops and expensive workshops were immediately there. It was amazing to see the colleagues being happy, collaborating, giving each other feedback, and it made me happy and proud to see also after the workshop, something changed at the work floor. I'm very happy that Baloise gives me the chance to be creative and to implement these ideas. And another difference, important thing to me is the "do culture" at Baloise. In the German language, there are 2 ways of addressing someone. The informal way, do, and the formal way, see. It's a bit difficult to explain in English, but there's quite a difference in using the 2 forms. And a couple of years ago, the Sparks community launched the campaign at Baloise. All of a sudden, there were posters hanging, with the sentence, "Ich bin du" on it, I am you. Or maybe better explained in English, "My name is you." And nobody really knew what it was, except for a small group of people, of Sparks people, and that's what made it interesting. People started asking questions. What is it? Who launched this? Was it the management? The CEOs? But they didn't know either. And because it was a bit mysterious, people also had to question themselves, in what way do I communicate? And is this still the way to go for me? And at that time, I worked at the IT service desk. And for us, as a team, we already communicated in this informal way. And this campaign -- because when people reach out to a service desk, they're often frustrated or stressed, so it helps to be comforting and use this informal way. So it was really interesting to see that because of this campaign, it gave other colleagues also the freedom to decide for themselves in which way they wanted to communicate. And I was really, really glad that, that made it happen. For me, the difference between do and see is, in 2020, not anymore about being polite or impolite. I believe do stands for being open, breaking barriers and working closer and better together. Thank you. Gert, I would like to give the word to you again.

Thank you, Janneke. Thank you, Burcu, for sharing these personal stories and how you experience the Sparks community and the broader Baloise community. And let me just add one more anecdote to that. As Janneke explained, when the Sparks launched, the "ich bin du," or I am the informal you campaign, nobody had a clue what it was about. And a lot of people stepped up to me and said, "Gert, what are you doing? What is this about? This 'ich bin du'?" And I had to admit I have no clue either. I don't know what it is. It is the social movement, the viral change movement of the Sparks community that had orchestrated and initiated this initiative. And I had to trust the Sparks and the process and being drilled for 30 years as a manager in being in charge of everything and on top of everything, it's not easy to let go. But we have heard some great examples of how our culture is evolving and how we are actually transforming our Baloise. Because the basic philosophy of Simply Safe, also Season 2, still is committed and engaged employees lead to loyal and satisfied customers and partners, and leads to growth and success. As I said before, in Chapter 1, we have achieved the top 8% position as an employer, one of the best employers in the financial services industry in Europe. But in Season 2, in Simply Safe Season 2, we go further. We put the ambition even higher. We want to become a part, a member of the top 5% of all the companies in Europe, not only the financial services industry, all the companies, all the industries, because we compete with the talents that they are also chasing. Ladies and gentlemen, let's now change a bit perspective. And let's look at the tower below the water. Let's look at the engine room, where the engine room is empowering the whole tower. By offering agile and digital services, it is enabling true business transformation. So please join me in welcoming Alexander, our group CTO.

Thank you, Gert. It's my pleasure to welcome you to the foundation and core of our Baloise strategic tower. And welcome to the engine room. As all good stories from the engine room, mine will focus on execution and on 2 key success factors that will bring our strategy to life going forward. The first I want to touch on -- the first key success factor is our Baloise culture. You heard a lot about it, and you know by now that it's very unique. But it's also a competitive advantage for our execution of our strategy in the future. It allows us to train, retain and attract key talent to execute our strategic initiatives. It also allows us to react faster, quickly and more decisive to changing market conditions and to seize opportunities when they occur. This concept of agility becomes ever more important with a world that is changing at an ever increasing pace. For us, agility in the enterprise is not a methodology question, it is more a question of outcome-oriented focus and of a principle-based approach that we are fostering in our culture. And the 4 principles that we are fostering of: one, transparency of work. Who's working on what? And in which priority? The second one is the empowerment of our experts closest to the work to make decisions and to move decision authority from formerly complex steering committee structures down to the expert level closest to the work. The third one is incremental value delivery. With that, we fueled the fourth principle, which is reflecting and learning. Only when you iterate in short circles -- or cycles, you have the capability to learn and reflect and to incorporate your customer and user feedback to be even stronger and better in the next iteration. This journey to agility in the enterprise is not new for Baloise. We started the journey already 12 years ago in the IT organization of Switzerland. But by now, we have grown and scaled out of the IT, and we have accomplished a milestone, achieving close to 1,000 man years of practical experience and agile execution. That is an asset that we'll bring to the front for the realization of our strategic journey moving forward. And one very tangible outcome of that capability, you can see in us moving from a formerly 12-month cycle to plan and realize and deliver on innovation and projects, to a now much shorter 12-week cycle for incremental value delivery to our customers and partners. If you want to bring a culture to life, you cannot do that with PowerPoint and smart management messaging. You need to change the reality of the employees on the daily basis, and these 4 principles are thereby not only influencing how we organize ourselves, but also how we execute our work. And one example for that is the setup of the new group IT organization that I'm responsible for. When you come and visit us in group IT, you will not experience a traditional hierarchical organization. What you will see is more a flat network-based organization. You will see small teams of 6 to 12 people working as product and service teams with the empowerment to drive, design and execute their functional road maps for their product and service aligned with our overall IT and business strategy. In IT, we are also delivering incremental value, but we do it in 2-week increments to fuel the 12-week deliverable in alignment with our business partners. And we take those faster increments to be able to learn and adjust even within our 12-week project delivery cycles. One thing that we see as very important in our culture is collaboration and communication. And we IT-enabled that by rolling out a new digital workplace to all of our employees, that is leveraging cloud-based communication and collaboration capabilities. And by having done that, we could also successfully master the challenge that all of us had in the early days of our corona situation, where we had to move our 8,000 employees from a traditionally more office-based work environment to a 98% home-office environment, which we achieved in only 1 week. And if you want to bring your culture to life, you also need to bring your principles to life. And how we do that is with new ways of working. One example I've shown here, which is a picture from a work environment in which a cross-functional team of 6 to 12 people is coming together in something that we call a design sprint, to address a defined challenge or opportunity. They define different options how to address that opportunity, select the most promising one, create a mockup or a proof-of-concept of that solution, and they test it with real customers or users within not a month and month time frame, but in as short of a period of time as only 1 week. So in this way, we bring to life transparency. It's a clear prioritization of the work and across collaborative effort. We bring together empowerment. The team is empowered to drive the selection of the solution, the solution design and the incorporation of the tests. We have incremental value delivery in this extreme example in just 1 week. And we have reflection on learning by going out to the customers and users and to incorporate their feedback for the next iteration cycle. So one thing that I wanted to touch on is the key success factor of our culture. The second key success factor is our IT modernization. In a world that is changing ever more rapidly and where our analog and digital lives are blurring together, it's very important that we have an IT that can keep up with that speed and that can enable our innovation and our strategy execution in the future. What we are competing against thereby is not only the customer experience that our traditional competitors and peers in the financial services are delivering, but we are competing and we want to compete against the customer experience that the digital natives and the key mega tech companies and media companies are generating. They are setting the bar that we are working against, how simple and safe we want to make our interaction with our customers. If you think about one megatrend, it's communication. And I have a teenage daughter and if I want to communicate with her, I can try to give her a traditional phone call, but she'll probably not answer. If I want to interact with her and communicate with her, I need to do it in the environment that she's more comfortable with, which is her favorite messaging platform. And to make your interaction with Baloise as simple and safe as the communication in my family or in your family, we have introduced the first e-banking messenger in Switzerland to bring the world of banking to the messaging environment. And on the insurance side, we have rolled out in multiple countries, the award-winning EasyAsk solution, which is a personalized communication solution that allows us to handle claims in a more efficient and customer-friendly way. With EasyAsk, we are managing to reduce the cycle times of claims, our moment of truth when we are there for our customers, from formerly days and weeks to often minutes and hours, due to a much more efficient communication. If you want to achieve such experiences, you need a modern and state-of-the-art core insurance or banking platform to deliver those experiences to the front. At Bâloise, we have basically started that innovation journey some time ago, and we are now starting to reap the benefits and will do so in the future. You learned earlier today about FRIDAY, our digital insurer in Berlin and its great journey of growth. And the same state-of-the-art platform that is fueling FRIDAY's success has already been implemented for our Swiss insurance organization and will help us to have more process and product innovation in Switzerland in the future. As you have heard from Europe, our CEO from the German organization, we also successfully implemented the same platform in Germany in September for the motor line of business, showing how we are scaling with our innovation within the group. In Belgium, we had the recent acquisition of Fidea. And with Fidea, we gained access to a state-of-the-art cloud-based life system, which will help us modernize it in Belgium and bring innovation to that market as well. So if you think about IT as a car, then the customer experience is like the interior design of the car. You have the fabric. You have the look and feel of the cockpit. You have the sound system. And all of that is powered by the engine, which, in an IT world, is your core application landscape. But if you want to get all that power to the road, you also need state-of-the-art tires. With a flat tire, you won't get very far. And in an IT world, those tires are your compute environment for data centers. And that's why in 2020, we started already our journey to the cloud, in which we will continue to retire all legacy applications. And we will move the remaining state-of-the-art applications into modern, private and public cloud environments to leverage the scale, adaptability and flexibility, but also the efficiency of those environments and to create an end-to-end digitalization, from the customer through the core application to the compute environment and back to the customer. And to summarize the benefits of the IT modernization journey as a key success factor for realizing the Simply Safe Season 2 strategy, for our customers and partners, it means new and enjoyable digital solutions. It also means a faster time to innovation, with increments of 12 weeks to new value delivery of faster. For our employees, it will mean new collaboration and communication capabilities as well as state-of-the-art IT platforms that allow you to generate new product and process innovation going forward. And for the IT, it is the opportunity to work with modern technology, which is more enjoyable for the IT professional, and also to be more efficient and effective. And with that, we want to reduce our around-the-company expenses in the IT world by CHF 20 million on an annual basis. This will create a huge boost to our innovation journey, freeing up resources to realize our strategic vision. And in parallel to that, we will continue to invest and mature in our cybersecurity capabilities as we want to make your analog and digital life as simple and safe as possible. And with that, I hand back to Gert.

Thank you, Alexander, for giving us a glimpse of how the tower looks beyond the C-level. In the engine room, we were actually empowering the whole tower with business transformation capabilities. Ladies and gentlemen, let's now turn to the last chapter of our Simply Stay Season 2, Chapter 6, in which we will actually take a look at the bright future in which we will actually disclose our commitments, our ambitions and our targets. We will relentlessly execute Simply Safe Season 2 by focusing on 4 key strategic pillars: focus; reimagine; diversify; and transform. And in doing so, we will become a technology-driven financial services provider and a key player in the ecosystems of home and mobility. We'll stand out and become essential to people's lives. And with Simply Safe Season 2, we will integrate sustainability in everything what we do, with, on behalf of our stakeholders, to actually generate mutually sustainable value. What are our commitments? For our people, we want to increase happiness at work by providing attractive stimulating collaborative working environments and further developing our agile entrepreneurial and innovative culture so that our people can actually continue to develop themselves. For our customers, we will make their lives better, safer and easier so that they also can focus on deploying further their personal ambitions and their business-wise ambitious. We will be the partner of choice, the partner of choice for our agents, our brokers, our suppliers, our sourcing and our innovation partners. And we will actually generate neutral benefits. For our investors, we will remain a highly attractive responsible investment. For climate, we will reduce our CO2 footprint and actually go for 100% renewable energy. And as Matthias explained, we'll go way beyond in our investment policy towards ESG. And for the broader society, we'll be a valued member of that society, providing security when needed in difficult times. And we will stimulate all our people to take an active role in serving society. This is what we do. This is why we created the Bâloise Tower and the 6 floating islands with the Bâloise Tower being the safe harbor for all our stakeholders. And now what are our ambitions? What will we deliver over the period '22-'25 with executing Simply Safe Season 2? In non-life, a combined ratio in the area of 90%; in life, an EBIT every year over CHF 200 million and a very resilient interest rate margin; in Asset Management and Banking, net new assets under management of CHF 10 billion; cost synergies by working smarter together of CHF 200 million; a cash payout ratio of 60% to 80%; an innovation funnel and pipeline that will be worth CHF 1 billion by 2025; CHF 200 million of additional revenues based on the ecosystems, mobility and home; and CHF 150 million additional premium from FRIDAY and breakeven by 2025. And what are now our strategic targets? Allow me to repeat them once again. Again, our basic philosophy of Simply Safe, also of Season 2, is there to engage employees, generate satisfied partners and customers that leads to success and growth. So we have developed our strategic targets along, again, these 3 dimensions: employees, customers, success. But of course, in Season 2, we are more ambitious. For the employee side, for the employer strategic targets, we want to belong to the top 5% of European companies. No longer financial industry, the broad industry because we are competing for the same talent. And we'll do so by providing a stimulating, learning, working environment and develop our culture from innovation and entrepreneurship and agility further. For our customers, we have a growth ambition, which is way beyond what we have in Season 1. We will, over the next period, '22-'25, win an additional 1.5 million customers. By focusing on our core, by growing our core, but also by diversifying our core and by relentlessly thinking over again and again the customer experience we provide during the customer journey. And last but not least, our cash target is plus 25%, CHF 2 billion cash generation into the holding over a 4-years period; a cash payout ratio of 60% to 80% to actually continue attractive, reliable dividend policy for our shareholders; and an investment in innovation in the core and beyond the core and in growth opportunities. 60% to 80% cash payout ratio, 10% to 30% in innovation. And at the same time, we'll pursue active capital management. Ladies and gentlemen, let me close this Investors Day by saying that we are really proud of the journey so far of what we have achieved with Simply Safe. We will keep and we have kept our promises. But the world is changing, and we want to play a new role in this changing world. And that's why we have to adapt and change even faster than we did up to now. Our culture and our committed people is the key in becoming truly relevant. And in focusing, reimagining, diversifying and transforming Bâloise, we will become a technology-leading financial service provider and a key player in the home and the mobility ecosystems. We will stand out and become essential to people's life. That, ladies and gentlemen, is the essence of our Simply Safe Season 2.

Ladies and gentlemen, the Q&A session is about to start. [Operator Instructions]

Ladies and gentlemen, let's now move to the last section of our Investors Day, a question-and-answer session. And with me on stage are Carsten, our group CFO; Matthias, our Chief Investment Officer; and Pia, who will lead us through the Q&A session. A very warm welcome to our financial analysts, who will be joining us via video call. And thank you to our financial analysts, not because we always share the same opinions, but because you are actually the very first ones, often early in the morning, to analyze our numbers and our key messages. Thank you for providing us clear feedback, and thank you for being the wider bridge to the capital market. I will say welcome, although it's a bit virtual, of course, but very warm welcome to all of you. And a very warm welcome also, for the first time I can say that, to the over 1,000 people who have been watching and following us throughout this afternoon, actually, the Investors Day. But without any further delay, I think we should start trying to answer the questions. We're looking forward to it. So Pia, over to you.

Thank you, Gert. So regarding the procedure, we will start with the questions from the analysts in the call, and then we will turn to the questions that came in via the chat function. [Operator Instructions] Let's get right into it. First question comes from Peter Eliot, Kepler Cheuvreux.

I feel a little bit ashamed. My numbers are and those numbers driven on the targets, but I guess we are analysts. The first was one was you talk about CHF 1 billion value creation from the innovations by 2025. I was just wondering if you could give any insight into how you got that bigger and what the main drivers are. And is it because you've got higher confidence on a few large initiatives like FRIDAY? Or is it more about sort of playing the number again given the number that you've got ongoing? Secondly, I was just wondering if you can give any more detail on the cost-reduction target. I guess all of the countries talked about it, so it's sort of clearly a wide-ranging initiative along the group. But I'm just wondering if there's any levers, in particular, you wanted to highlight? And then finally, just on the new cash ratio target -- sorry, payout ratio target of 60% to 80%, which I think implies immediately. But I guess, you've been at sort of 63% or thereabouts for the last 3 years, so towards the lower end of the range but still within the range. So I guess my question is, has the philosophy now changed? And is there a desire to sort of move up the range or target the middle of the range? Or I don't know if you can shed any light on that.

Well, thank you, Peter. I hope I remember the 3 questions. I will try to actually answer the first 2 ones and then hand over to Carsten for the question on cash. In terms of innovation, as Carsten has said before, we will be actually investing 10% to 30% of what we generate operationally as cash into innovation in the core and beyond the core. Of course, over the last couple of years, we have already been doing that. So it's not new. We have built up a very diversified, very full innovation funnel and pipeline, focusing on mobility and home. That means that it's actually spread over these 2 ecosystems. There are a few bigger initiatives. You know them. FRIDAY, you mentioned it, Peter; but also MOVU, our digital relocation platform in Switzerland; and Mobly, our mobility services platform in Belgium. But actually, as we go along, we will, of course, extend that innovation funnel. So it will be a broad range of innovation. You've heard from a lot of colleagues in the diversifying the core part this afternoon what this will be. And of course, we're not starting from 0. The CHF 1 billion that we talk about by 2025, if you look back at the media for equity transaction we did with FRIDAY 2 years ago, we already valued FRIDAY at that point in time -- or our partners valued FRIDAY at that point in time over CHF 200 million. So we're not starting from scratch. On the second question, the cost ambition, so a cost ambition of CHF 200 million. Actually, you can take them down, I would say, in 2 big parts in terms of how will we achieve them. The first one is we will work smartly together. So we are a relatively small European group and with 4 countries. And actually, we can combine much more forces in doing things together. So an example might be a solvency hub -- solvency competence center in one location. So smarter together is the first element of this cost reduction initiative and actually of the cost ambition. The second one is radical simplification. I'll give you one example. We have over 500 life and non-life products in our group. We have analyzed this, and we will actually shut down over the next year 1/3 of it. You can imagine what kind of complexity reduction and cost reduction this might entail in terms of processes, in terms of knowhow of people, IT systems and so forth. So smarter together working and radical simplification, for example, in the product and services range we are offering. On the third question, Carsten, up to you.

Yes. Thank you very much, Peter, for your question. We remain committed to our attractive and reliable payout policy up only as we have done in the past. So the basic philosophy has not changed. What we are doing, though, is in the next strategic phase, linking it closer to cash remittance. And this is where the 60% to 80% cash payout ratio comes from. But the basic philosophy of up only dividend policy remains unchanged.

Did that answer your 3 questions, Peter?

Thanks very much.

The next question is from Farooq Hanif from Crédit Suisse.

Sorry about my son in the background there. I just want to first touch upon the network effect from the ecosystems. So what evidence can you give us that, let's say, for example, a MOVU customer is buying insurance or an insurance customer is going to use Batmaid? What numbers can you give us on cross-sell on the network effect? That's question one. Secondly, on the CHF 200 million revenue target from ecosystem, how much of that will come inorganically? So clearly, you're investing, but are you going to grow a lot of that organically? Or do you depend on quite a lot of deployment of capital? And I guess the last question is on the combined profit impact of what you're telling us in terms of revenue. So if we had FRIDAY at 1 50, if we had -- of premiums, if we had the CHF 200 million of ecosystem revenues and we have that cost cutting, what are you talking about in terms of incremental profit uplift?

Thank you for the question. No need to excuse for the sun. We are actually standing inside and don't have the sun here in Basel today. So in terms of the innovation, if you look at it broadly, about 50% of the revenues will actually come from cross-selling and upselling our insurance and financial products. So that's more or less the range that we are looking for. So 50% of that revenue will be generated by the cross- and up-selling of our traditional financial services and insurance businesses. And of course, there are investments required in order to get to the CHF 200 million of revenue. However, as I said, we have already invested a lot in the past. We'll continue to do so. So we are actually gradually building on it. On the earnings side, Carsten, up to you.

Well, let me make a reference to our Bâloise value management framework that I was mentioning earlier. And those has 4 pillars: earnings, capital, cash and optionality. And particularly also when we talk about the ecosystems, we are talking also about optionality and maybe a little less about the earnings side of things. So the focus there is on optionality, and therefore, valuation of this optionality that is created within the ecosystems.

Any follow-up question? Or does that -- is that okay with you?

So I mean, in terms of our projections, where will we see -- I guess I was trying to try and to get an angle from you on where we see this reported where we'd see some sort of profit impact. I mean I understand the valuation optionality today when we can look at the revenues you're generating, let's say, from FRIDAY or from the other things. But over time, obviously, there'll be an expectation. And obviously, Christoph talked about it for FRIDAY of profit. So I'm just kind of wondering how will you able to demonstrate that value in numbers rather than what an IPO is willing to pay.

Thank you for the follow-up question. I'm happy to address it. Starting from the beginning of Simply Safe Season 2, and that means from 2022 onwards, we will report about the development of this innovation part of the next strategics then. So we will start to report on it from the 2022 onwards.

Next question, Pia?

And we have a next question from Fulin Liang, Morgan Stanley.

This is a very interesting series of sections today. I have 3 questions. So the first one is you mentioned about CHF 1 billion value creation. Presumably, I would have thought that this all kind of innovation would be done through your general account. Does that mean actually you would, as a shareholder, would basically enjoy 100% of this CHF 1 billion? Or part of them actually will be done through policyholder funds, so you have to share with them? So that's my first question. The -- and also, well, as a follow-up. And this CHF 1 billion, is it simply just understand it as will kind of flow through P&L eventually or gradually? Or how should I think about this CHF 1 billion ultimately impact your financial statements? So that's the first one. And the second one is you're talking about the investment in innovation. So basically, you're talking about roughly CHF 200 million to CHF 600 million for your innovation. Are these all investments into new start-ups? Or some of them are actually just investments into improving your existing infrastructures? So how should I think about that? Kind of what proportion of this is new investments? Actually, what proportion is actually just improving? So that's the second one. And the last one is -- so it sounds like to me that the -- if your life segment is only contributing about CHF 200 million, you kind of -- it sounds like to me, you kind of deemphasize the importance of life segments within the group. Can you -- if that's the case, can you kind of justify what's the point of group on still owning -- the best owner of your life business?

Let me try to answer first and then maybe hand over to Matthias and Carsten because there were multiple dimensions, I would say, in the question. Maybe first reaction on the life business, it is at least CHF 200 million per year, just to make that already sure. In terms of the innovation pipeline, actually, we're doing -- as I said before, this afternoon, we're doing actually innovation along 5 dimensions. We incubate ourselves. We acquire or take portions of interesting start-ups that diversify our core business. We partner, we develop our own ideas. And actually, we invest together with Anthemis in very interesting start-ups. So that's the whole range, I would say, of innovation that is happening. On the other hand, of course, we also innovate in our core business. That is clear. So it's a combination of 2. If we talk about the CHF 1 billion, however, it's linked to the innovation that we talked about along the 5 dimensions of incubating, acquiring and so forth. That's a first rough answer, I think, to your questions. Carsten from your side or Matthias from your side?

I can take up the life question, if you want. And thank you for that question. We are not deemphasizing life. We are looking at our business portfolio from a diversification perspective. And what we are doing in the life business is further adapting to the environment that we are acting in. And that is a journey to be continued that has started in 2016. And this journey has 2 sides of the coin. One is the investment side, and the other side is managing our back books. And based on the resilience of the interest rate margin that is resulting from that, we expect the life business to contribute, as Gert just said, at least CHF 200 million in EBIT, and also to continue to be a contributor with regard to cash remittance. So the life business continues to play a role in the overall portfolio, and we are further adapting and accelerating the journey already traveled. And that includes also measures on the product side, as we have heard from Romain and Michael earlier on. And that will lead to a resilient development in the life business moving forward. And I'm convinced that life business will stay, from a portfolio perspective, an important contributor, both from the earnings as well as from the cash remittance perspective.

I can take the question on the shareholders of policyholder funds. Those kind of investments are done typically from the shareholders' funds. Because normally, in those jurisdictions, it's not allowed to take this into tied assets of policyholder assets. So it has to be funded from the shareholders' funds, but also the value creation then is for the shareholder.

And maybe just one more thing to add to that. You also have the question, is this 100% and so forth, how will this work? It's actually a combination of different things that we already see today. Some of the innovations, we will indeed own 100%. Most of the cases, we will be partially owner of it. It might also be we're not actually investing in it, but we are partnering. So it's a combination of the different forms that you can imagine.

Can I follow up on that?

Sure.

That's very helpful on the shareholder funds. But is my understanding correct that the CHF 1 billion value creation is something which eventually will flow through the P&L?

Carsten, do you want to take it or do I...

Go ahead.

Actually, the -- how we value this CHF 1 billion innovation pipeline is actually, there are different methods of doing it. Of course, there is one method of doing it, which is the easiest one, which is using a multiple. That's one thing. But the other end is, of course, a real transaction. If you do something, a partial sale or a partial IPO, for example, that's where you really get the transaction going. And that's, for example, as I said before, in 2018 -- at the end of 2018, when SevenVentures as a media partner stepped into FRIDAY. He valued -- SevenVentures, of course, valuated FRIDAY, at that point in time, at over CHF 200 million. So there are different ways of valuing actually this CHF 1 billion value. And that's exactly, as Carsten said, we will actually start reporting and feeding back to you on where we stand as from 2022. Pia?

Our next question is from Michael Huttner, Berenberg.

I love your day. It's really a lot of fun. Really a lot of fun. And so the questions are really boring, I'm afraid. The first one is there's no mention of IFRS targets. So I suppose the funny way of asking this is you're banding in IFRS is this way as the part of the cost saves. But I suppose I'm following on Farooq's question here. Is there any way of us to translate into IFRS? Or is IFRS something which is really not reflecting value creation? The second is on the IT. So you've given us a target reduction of CHF 20 million. I just wondered how much you actually spend today. That'd be really interesting. And the third one, and I'm afraid it's a little bit critical, but I probably did my maths wrong. So I see, last year, you paid -- 2019, CHF 6.4 in divi. If I do CHF 500 million, so CHF 2 billion cash over 4 years, that's CHF 500 million a year. 80%, that's CHF 400 million, about 50 million shares. That's about CHF 8 a share. So over a space of 5 years, '19 to '25, the dividend would go from CHF 6.4 to CHF 8, which here, I'm doing the maths on top of my head, so I'm probably wrong, it's about 25% in total or maybe 4-and-a-bit percent per annum. That doesn't seem a fair measure of your ambition. And I just wondered if I've missed something. And then the last one is -- I've got so many questions, sorry, but I mean ignore it. The cash is CHF 2 billion. Can you -- you spoke about life kind of being resilient in earnings. I mean flat maybe, but the cash generation being very strong on. Can you split the CHF 2 billion between the various parts?

I hope I get the 4 questions right. I'm happy that I can actually transfer probably 3. So that's the first point. Let me take the second question. I think it was about IT and how much we invest in the IT environment. Of course, IT is crucial. In our business, we see more -- we are more and more evolving from a financial services provider to a technical-driven financial service provider. So IT is really the core, as Alexander has shown in the engine room earlier this afternoon. What is -- it is, of course, difficult how you define projects and technology projects. What are business projects, what are IT projects, what is the combination? But roughly I would say, roughly, you can say that we spent approximately CHF 150 million a year in IT projects across the group. That's more or less the reference. On the difficult questions, over to Carsten.

Michael, thank you very much for your questions, and thank you for being with us this -- today. It's much, much appreciated. So starting with IFRS. I think we took in -- back in 2016, we took a deliberate step away from an only accounting earnings-driven perspective by widening exactly to the framework that we like to label ECCO: earnings, cash capital and optionality. And as Gert already said before, when we look especially at the innovation part, then we -- I think it's good to look at it from different perspectives and look at it from different methodologies as well. And that is not in the first place by nature an IFRS earnings target in the beginning. So that is exactly why we're going to start reporting about this part of the new strategy in 2022. So that was the part on IFRS. Now while we speak, we are still executing Simply Safe Season 1. And when it comes to dividend and as we speak, we expect for 2020, a robust cash generation, adding this to the CHF 1.3 billion already remitted that Gert has alluded to earlier today already, we are very confident to reach our target for Simply Safe Season 1 by the end of 2021. And then we are starting the new stint with the parameters that we have communicated. So I couldn't follow all your math, but I can reassure you that, that is what we are doing, focusing on getting the Simply Safe Season 1 target achieved, where I'm very convinced that we will get there, and then starting the new strategic journey. Now, unfortunately, you have to remind me of your last question. Can you tell me again what the last aspect was?

I'll pick a different one. Yes. No, no, very simple one. The CHF 2 billion cash, just for the 4 years, which -- how much life, how much non-life, how much -- I don't know, innovation, if that's a different accounting segment?

I think there -- and I think that's important. We have not deliberately broken down the CHF 2 billion into sub-targets because we look at it as from a portfolio perspective. And it goes without saying that 1 year, one segment is maybe a little bit stronger than the other one and the other way around. But what is important for me, from a CFO perspective, is that we have different sources of this cash remittance and that we have also diversification across lines of business and across geographies. And I think that makes then the cash remittance also resilient and enables us to navigate in different market conditions also when they become a little bit difficult at times or benefit from market opportunities for investments, if we find investments that we consider to be value-creating. And that is why we have not broken it down. But we keep it on an overall portfolio perspective.

May I ask a follow-up? Or I can come back later, whatever.

No. If you -- Michael, you're...

Really simple. Very, very quickly.

You can go ahead and -- yes, go ahead.

FRIDAY. So FRIDAY breakeven in 2025 or profit in 2025. What was the result last year or this year, just to give a base number? And then a more broader question, this innovation. My colleague and I were puzzling over it because your business is basically insurance and other financial services. You've got 2 things. And we just wondered whether it means that innovation will be a third line or third column in the P&L.

Maybe the first question, actually, the answer you can also look at the year-end results. I think in the -- of 2019, FRIDAY has reported approximately minus CHF 30 million. That's more or less the results. So it needs time, indeed, to build up the power and the knowhow of such a new digital model. So in the beginning, it's only normal that you focus on growth and that, indeed, the normal traditional KPIs are not yet following. But that is about to come over the next years. What is clearly also so that we have -- I would say, in terms of our insurance business, our banking and asset management business and what is clearly developing into a third leg is the relevant services where we could cross- and upsell around the ecosystems in home and mobility. We will differently report on them in terms of a separate line, et cetera, P&L line, I will give over to Carsten. But I think what is important, we will value and we will actually report on the value of this third leg of innovation, as Carsten has said, when we start the 2022. I don't think it's the idea to actually break up the P&L that we have, adding this third leg. But Carsten, maybe something from your side.

I think just a word, if I may, on -- and referring back to what Sibylle has shared with you early on today. And you recall the funnel view that she has shared and others, and I think that is the important part to organize the processes around this. And we are not thinking as we speak about an adjustment of segment reporting and IFRS.

Let's give the other colleagues also a chance, Michael, if that's okay with you. And let's go to the next question, Pia.

We have a question from Farquhar Murray from Autonomous.

Just 3 questions from my side, if possible, please. Firstly, just coming back to the CHF 1 billion value creation through innovation figure. I just wondered if you could give us a bit of a run-through the methodology that you'll use to calculate that. And also, does it create any internal incentives to try and realize that value, for instance, through a transaction in terms of actual conversion to cash? And then secondly, just going back on the simplification of the product portfolio in life. I just wondered whether you would expect any kind of closed book outcomes from that exercise. Because obviously, you've done a few bits and pieces here and there. I just wondered if we might see an acceleration on that. And then finally, if you look at kind of stage 1 of your strategy exercise, actually, a lot of the growth came from more conventional M&A, notably around Belgium, for instance. I just wondered where a conventional M&A would sit within your portfolio. Because obviously, you've emphasized a lot on innovation and why maybe that is the focus of the stage 2 side?

Let me pick up a couple of things and maybe the colleagues, of course, Matthias and Carsten, can add to that. In terms of the M&A strategy, the M&A strategy is actually the same and the stable one that we have executed over the last couple of years, meaning if we have an interesting opportunity in one of our core markets, then we will actively pursue that. It has -- of course, the business case has to be right. The cultural fit has to be there, and we need to have the capabilities to integrate them. So that's the M&A strategy we have pursued over the last couple of years, with evidence in Luxembourg and Belgium for the most part. But there is also an alternative M&A strategy, I would say. It's easier to export these new digital models that we are building across actually borders than actually to buy brick-and-mortar and to integrate them. So again, I would say, alongside our traditional M&A strategy, we have the new alternative M&A strategy, allowing digital models to scale. So that's the first part. On how we will evaluate or valuate the innovation pipeline, there are different methods of doing so. As I said, the extreme one is a real transaction where you actually -- it's real. The other one is based on multiples and you have intermediate methods in the middle. But Carsten, maybe you want to say something about that?

Yes. In adding to what you said, and I think Gert's already told us that the playground has different forums also in cooperation, in acquiring, in developing and incubating and so on. So I think it's wise not to take a one size fits all but use these different angles that it has appropriate to the different innovations. And while I speak, if I may, I can take up your question on life, if I may. And Romain and Michael earlier on have talked about the life segment. And I think on life, we have really 2 elements that we are looking into. The one is the question on what is the new business looking like that we are doing, and the second one is how do we manage the existing back books. I already spoke to the existing back books before. And on the new business, focus on capital-light products, as Romain has shown, focus on risk-based products and biometric products. So the journey that we started back in 2016 is going to continue on the new business. And the back book business, I already commented before. So it -- life business really has these 2 angles to it for the next strategic phase.

Thanks. Let's move to the next question, Pia.

Next question is from Thomas Fossard from HIBC (sic) [ HSBC ].

Yes. I've got a couple of questions. First one will be on the P&C combined ratio to the circa 90%. Maybe could you split a bit what you expect to come from cost savings. The CHF 200 million, obviously, will be across different lines of business. But I mean maybe you could say what you expect on the P&C side. And by difference, what would be a normalized loss ratio you're expecting over the duration of the plan? The second question would be on the life side. On the risk product, I mean, actually, the risk EBIT of the life business went up to 14%, but this is still relatively small. I mean what will be the trend over the 7.2%? And should we expect this to grow more rapidly that we've seen it during Season 1? And the third question will be on -- I would say on share buybacks. You mentioned that there will be no share buyback 'til 2021. Is that due to regulatory pressure or discussion you may have with FINMA? Could you tell us a bit more on that?

Well, let me try to tackle question 1, 2, but of course -- and then, Carsten, #3. But of course, again, colleagues please add. On the combined ratio, it's actually the target that has been set. It's clearly 90% throughout Simply Safe Season 2 or in the area of 90%. And actually, we will do that by focusing -- as Henk and [ Ulrich ] has said earlier today by focusing really on our P&C business, excelling in what we already do very, very well today. And it's focused target customer management, it's strong underwriting skills, technical skills, and it's a very disciplined risk and client selection. I think these are the 3 elements that actually contribute to the ambition of the 90% combined ratio. Now I forgot about your life question. Can you repeat it, sorry?

Yes. The question was on the risk...

Exactly.

Risk contribution of the EBIT, yes.

I think there might be a bit of confusion. Because if we talked about the risk proportion going up to 14%, that's the risk proportion in the new business that we are writing. So we've increased from 3% new business in risk products to 14%. So if I understood it was EBIT, but it has nothing to do with EBIT. The risk result of our life business has been very stable and very solid over the last couple of years and contributes much more than 14% to the life results. So we're talking there about new business in risk products. And what is also important, if you look at guarantee products, Carsten said it, we're moving away -- we have moved away from guarantee-intensive solutions to capital-light services. Actually, if you look at the book of business that has guaranteed business, that is decreasing all way because we are generating a lot of capital-light new business. And actually, even the guarantees that we have are limited in time or are actually 0. So a 0% guarantee is also a guarantee, but it's a 0% guarantee. Maybe on the share buyback to you, Carsten.

Yes. Thank you very much. So I'm very happy to put this into perspective. We are currently focusing on innovation. And we have completed, in April 2020, the last share buyback program with 3 billion shares, and we have completed it 100%. And so the current focus until the end of Simply Safe Season 1, as you rightfully said, is on innovation. And we do not intend to buy back shares until then. Yet, as we've done in the past, share buyback are an instrument that is part of our proven and demonstrated capital management toolbox and will also remain so.

Maybe just one more thing to add to that. Carsten talked about a 60% to 80% cash payout in terms of dividend-paying and about the 10% to 30% innovation. Of course, we will only invest and further invest in innovation if it's value generation. So if we will not find good opportunities to invest in innovation in the core or beyond the core, this part, of course, will be available for active capital management going forward, as you said earlier this afternoon, Carsten.

Our next question would be from Rene Locher, MainFirst.

So start with a very simple question. I guess I got the reason now why you have not published an ROE target I guess has to do that you are focusing very much on cash and not on IFRS such as the confirmation then. And then given that I'm quite a simple guy, in P&C, when you target this CHF 200 million cost synergies, I mean, what I thought this morning is CHF 200 million cost savings, CHF 3.3 billion net earned premiums, that will lead to a 6 percentage point improvement in the combined ratio. But I think this is a little bit too simple, and perhaps you can shed a little bit more light here. And next question is on customer satisfaction. Interesting to see, I guess, Bâloise has had a lot of happy clients. But I just saw a presentation from Comparis. So that's a platform where you can compare Paris here in Switzerland. And it showed that in the period, 70 to 20 motor premiums, on average, decreased by up to 18%. So I'm wondering a little bit, on one side, you have happy clients; and on the other side, I do believe that clients are still very, very price-sensitive. And then the last question, I have touched on this already on the new clients, 1.5 million. Could you give a little bit of feel what's the potential for upselling? So my question would be policyholder holds how many Bâloise product today and also cross-selling, so from banking into life, from life into non-life?

Thank you, Rene. Let me try to start with the customer part, the happy customers and the 1.5 million new net customers that we will win over the period '22-'25. It is true, and we've heard it also this afternoon from [ Atos Meister ], that actually happy customers are more loyal and are less price-sensitive because they are really being served well. And of course, the pressures on the premiums and price will always play a role. And of course, you can overcome this, to a certain extent, by really having loyal and satisfied customers. So actually, the basic philosophy, again, of Simply Safe, also of Season 2, motivated employees, satisfied loyal customers, success, that is still valid. On the 1.5 million and the over 600,000 that we have won in Season 1 up to now, we can actually look at it in a bit dissimilar way for Season 2. We are winning new clients -- net new clients in every unit, and that's being based on both cross and up-selling and innovating in our core business in non-life/life, banking and asset management, and by initiating the new innovation initiatives. So it's every unit which is contributing to the growth, and it's also the core business and the diversified so go beyond the core business. And the same will happen in the years '22-'25, with every unit continuing to actually win customers in mature markets by innovating in the core. But of course, the proportion of ecosystems, mobility and home clients with cross- and up-selling will become bigger, as has been explained by the colleagues earlier this afternoon in the diversify the core part. Carsten, maybe on the -- I think the first 2 questions of Rene?

Yes. I think the -- if I heard you right, Rene, the first question was, are we prioritizing cash over earnings. And yes, our first view on managing and steering the business comes from a cash perspective. But obviously, we have to bear in mind other perspectives, too. And that's why we have the earnings, capital and optionality as brothers and sisters in the ECCO framework that we are managing towards. But the main perspective starts from a cash perspective as it has since 2016, and we will continue to do so.

And can you -- I don't get CHF 200 million?

Yes. The CHF 200 million. What was the question again, Rene? Sorry, I forgot about it. So can you repeat it, please? You're muted, Rene, or at least we can't hear you.

Yes. Yes. I'm sorry. I'm up in the mountains. That's why. No, no. I guess what we can do is I'll go back to the IR department tomorrow. Anyway, it's more a number cruncher. That's very fine.

Thank you, Rene. Next question, and I hope there's one. But let's see what the question is, Pia.

As we are now almost at the end of our Q&A, I would suggest that we jump to the questions that came into the chat. So we go with the first one. What are the main drivers to see ingredients to improve employee satisfaction from your point of view?

Well, there is no one single silver bullet. It's clear that there is no one solution, one ingredient or one magical formula that actually -- that increases the motivation and the commitment and the engagement of our people. It's a multitude of things, often very small things. We have been talking about and Burcu and Janneke earlier this afternoon have given a number of examples. It's about small things. It's about team spirit. It's about role modeling from the top, but also the Sparks community that actually changing the culture as we speak from horizontal and bottom-wise point of view. So it's a whole new -- a whole set, I would say, of initiatives. And the good thing to see is that where we already had a very strong culture, we have continued to change the strong culture over the last couple of years. And it's becoming a sort of flywheel, so it's actually it's fueling itself now. So there's not a lot we need to do anymore. It's actually spreading as a viral change, as a social movement throughout our company with people standing up, teaming up, taking initiatives, taking responsibility. And that is actually what is happening almost automatically. So no one single thing. It's a broad thing of initiatives. And they are very often or almost all the time, I would say, to date, initiated by our own people, not by management.

We have a next question on the ESG rating.

Finally.

"Why are you relying on a third-party ESG rating? I have made the experience that the MSCI ESG analysis incomplete and flawed. You should make your own judgment."

That's really a question for you, Matthias.

Yes. Thank you for the question. Indeed, as I indicated earlier this afternoon, we are using MSCI as one of our 3 pillars for the responsible investment policy. And the reason why we chose MSCI was that this gave us a quick possibility to assess the ESG of a broad set of companies, basically the entire market. So it was the first step. But of course, we do not solely rely on the ESG rating by MSCI. We have our own judgment. And in the end, it's always a judgment call, what you do in a specific situation. And going forward, we will further develop our ESG rating and our ESG strategy.

We have time for one more question. "Tesla has announced to enter the insurance market. How does Bâloise deal with such statements?"

We are not worried by competition. Also, if competition comes from not the normal, I would say, usual suspects. In this afternoon, I think we have shown that actually by focusing even better on our core business, by reimagining our core business, becoming really easy to work with and by diversifying our business, we're also moving into the mobility ecosystem, so the Tesla ecosystem. So actually, we're not afraid of that competition.

We have plenty of other questions in the chat. Unfortunately, we don't have the time to answer them now. But we would like to ask every one of you who has asked a question in the chat that you please reach out to our Investor Relations team so they can follow up with you separately at a later point. And with that, I would like to hand back to you, Gert, for the closing.

Thank you, Pia. And I would like now to close our Investors Day just by repeating the key messages of this afternoon. One, we have a very excellent track record with Simply Safe up to now. We have kept our promises, and we will keep our promises by the end of 2021. But of course, the world is rapidly changing, and we want to play a key role in this changing world. And therefore, we need to change, adapt and transform ourselves even faster. With our strong culture and our very committed almost 8,000 people are key in becoming truly relevant. And we will focus our core business to reimagine it, diversify it and transform ourselves to become a tech-driven, customer-centric financial service provider and a key player in the ecosystems of home and mobility. We'll really be standing out, and we will become essential to people's life. That again, ladies and gentlemen, is the essence of Simply Says Season 2.

Ladies and gentlemen, thank you for attending the Bâloise Investor Day 2020. You will find all relevant documents about today's event online on investorday.bâloise.com. Thank you for watching, and have a great day.