Helvetia and Baloise plan to merge: This will create Switzerland's second-largest insurer – but there is also the threat of significant job cuts

Insurers Helvetia and Baloise have announced their intention to merge. This would create the second-largest insurance group in Switzerland. According to the two companies, this would have a share of approximately 20 percent of the Swiss insurance market. In Europe, the merged company would be among the ten largest listed insurers.

The new company will be called Helvetia Baloise Holding AG. The two companies announced that it is a merger of equals. Helvetia and Baloise share similar strategic orientations. The merger will be carried out through a share swap, with shareholders receiving 1.0119 Helvetia shares for each Baloise share.

The transaction is expected to close in the fourth quarter of this year. Extraordinary general meetings of both companies are scheduled for May 23 of this year, at which shareholders are expected to approve the merger. Patria Cooperative, Helvetia's largest shareholder with a 34.1 percent stake, has already announced its approval of the merger.

Thomas von Planta, the current Chairman of Baloise, will become Chairman of the Board of Directors of the new group. Fabian Rupprecht, the current CEO of Helvetia, will become CEO of the new group. The new group's headquarters are planned to be in Basel.

Both insurers are traditional Swiss companies. Helvetia was founded in 1858. Baloise's predecessor, the Basler Insurance Company against Fire Damage, was founded in 1863.

The merged company would be the largest employer in the Swiss insurance sector. The group would have a total of more than 22,000 employees, the press release stated. In addition to Switzerland, the company would also be active in Germany, France, Italy, Spain, Belgium, Austria, and Luxembourg. The goal is to build a leading European insurer with strong Swiss roots, it added. Rupprecht spoke of the "beginning of a new era" at a press conference on Tuesday morning.

However, the merger threatens to result in job cuts. The merger would result in significant annual cost reductions of CHF 350 million before taxes. Rupprecht did not provide precise details on the amount of the job cuts at the press conference. There will be some overlap in personnel, but it is still too early to provide specific figures, especially since the merger agreement was only signed this weekend. However, the job cuts will be spread over several years, with natural turnover also playing a role.

The stock market initially reacted positively to the merger announcement. Baloise shares rose by 3.5 percent on Tuesday morning, while Helvetia shares rose by 4.5 percent. This merger comes as no surprise after the various market speculations of the past few months, Zürcher Kantonalbank (ZKB) wrote in a report. The new group will be a significant competitor, from which shareholders could benefit with improved financial figures.

Rumors of a possible merger between the two insurers had been circulating for some time. They gained momentum after activist investor Cevian acquired a stake in the Basel-based insurer in spring 2024 and criticized its profitability. Among other things, Cevian demanded Baloise's withdrawal from the German market. A solution was also needed for the group's own bank, as it has one of the highest cost ratios of any bank in Switzerland. Baloise's profitability is 50 percent below the industry average, Cevian CEO Lars Förberg said in an interview with the "NZZ am Sonntag" newspaper at the end of February this year.

Cevian has yet to officially comment on the merger of the two insurers. The new circumstances must first be analyzed. A piquant detail: The Annual General Meeting will take place next Friday, at which Robert Schuchna, the representative of the financial investor, is expected to be elected to the Baloise Board of Directors.

With the merger announcement, the two insurers have now presented their shareholders with a fait accompli. Baloise CEO Michael Müller has, in a sense, preempted Cevian's demands. The actual impact of the financial investor's involvement on the merger can only be speculated upon. However, the anticipated savings of CHF 350 million demonstrate that there is certainly potential for greater efficiency at the insurers.