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Investing.com -- UBS Global Research has upgraded both Baloise Holding AG and Helvetia Holding AG to “buy,” citing a projected 20% uplift in cash generation from their proposed merger.
HBAN, a combined entity announced on April 22 and expected to complete in Q4 2025, is expected to be the highest dividend-paying Swiss insurance company among UBS’s Swiss insurance coverage, with a 7% dividend yield.
Helvetia’s 12-month rating has been raised to “buy” from “neutral,” with its price target increased to CHF213 from CHF155.
Baloise also received a “buy” upgrade, with its price target lifted to CHF215 from CHF190.
UBS’s pro forma valuation of CHF213 for the combined business is underpinned by a 7.1% cost of equity and 1.2% long-term growth rate.
For Baloise, valuation is based on an exchange ratio of 1.0119 new Helvetia shares per Baloise share.
UBS estimates CHF350 million in total cost synergies, of which CHF220 million will accrue to shareholders.
These synergies are expected to begin contributing in FY28. No capital synergies have been modeled at this stage.
Attention ahead of the 1H25 results is likely to focus on large-loss impacts from the CHF320 million landslide in Blatten, as reported by the Swiss Insurance Association.
Helvetia’s estimated loss is CHF30 million, while Baloise is expected to incur CHF20m in losses, similarly affecting its combined ratio by 1ppt.
Helvetia’s Specialty business is not forecast to report material losses, and Baloise’s overall large-loss ratio is expected to remain within its typical 3–4ppt range.
Helvetia operates as a multi-line insurer focused on life, property & casualty, and reinsurance, primarily in Switzerland, with additional presence in Germany, Italy, Spain, Austria, and global reinsurance markets.
Baloise is a composite insurer with operations across Switzerland, Belgium, Germany, and Luxembourg, with a business mix of 50% non-life, 35% life, and 15% banking & asset management.
It targets personal lines, SMEs, and industrial clients, and is aiming for a ~90% combined ratio in non-life and CHF200 million annual EBIT in life during its 2022–25 strategy cycle.