The cooperative insurance once again beat the market in 2021 and invested its assets well. But because she’s neither expanding abroad nor paying dividends, she could soon run out of good ideas about what to do with her capital.
ARCHIVE IMAGE OF THE HALF-YEAR RESULT OF MOBILIAR, ON THURSDAY, SEPTEMBER 12, 2019 – Logo of the Mobiliar insurance company, taken on April 29, 2010 in Bern. (KEYSTONE/Peter Schneider)
Wealth brings its own worries: only those who have a lot can also lose a lot.
The Mobiliar insurance company knows this only too well. After a difficult first year of the pandemic, it returned to its old form in 2021. It reports an annual profit of 475 million francs and again increases its market share in almost all lines of insurance: “liebe Mobiliar” is actually popular in the country. Because she did a lot of things right with her investment policy, her equity has swelled to CHF 6.4 billion. The insurance group now holds a good five times more capital than the minimum required by the regulator.
A stock corporation would have increased dividend payments to shareholders long ago. The cooperative furniture lacks such a drain. In turn, it distributes CHF 180 million back to its insured. But while Helvetia or Baloise invest and expand abroad, Swiss Mobiliar, according to its statutes, has to confine itself to Switzerland. However, there are not that many growth opportunities in the saturated domestic market.
Mobiliar is launching new weather insurance in 2022 and would also like to sell more cyber coverage to companies and private individuals. This makes sense, but in both fields the trees will not grow to the sky. The cyber insurance market continues to be fraught with some uncertainty; the reinsurers hesitate to take on too much business on their own books because of possible cluster risks; that inhibits the market.
Companies with too much capital sometimes come up with weird investment plans. So far, Mobiliar has remained quite disciplined. At 7.9 percent, the return on equity is not that bad – at least in terms of the enormously high capital stock. However, the furniture also includes the office software house Bexio, a quarter of the Ringier media group and almost 30 percent of the country’s most important online marketplaces, including Ricardo, Immoscout and Homegate.
In view of the bulging cash stores and the lack of alternatives, the temptation to drift further away from the core business is increasing. Management, board of directors and ultimately the cooperative members themselves must ensure that it does not come to that.