Swiss Life boss sees better times ahead

Dörig had plenty to smile about on Tuesday Keystone

The head of Switzerland’s largest life insurance firm says his company has completed its turnaround following the 2002 financial crisis.

In an interview with swissinfo, Swiss Life CEO Rolf Dörig said that the restructuring programmes of the past few years had paid off handsomely.

He is also convinced that the company is now clearly focused on its profitable core markets.

According to Dörig, Swiss Life – which announced a massive increase in 2004 net profit on Tuesday – intends to become the market leader for pension insurance.

And he is cautiously optimistic about the prospects for another organisation in the throes of a major turnaround – Zurich’s troubled Grasshoppers football club, of which he is group president.

swissinfo: The 2004 results are certainly an improvement on a few years ago. Have you been doing something right, or have you just benefited from improved market conditions?

Rolf Dörig: Maybe a bit of both. A new management team took the helm at the end of 2002, adapted the business model to a different environment, reduced costs, implemented a comprehensive risk management framework – including group-wide asset and liability management – according to this new model, and introduced a product pricing strategy in line with demographic and economic reality.

Market conditions certainly helped, too – with the exception of the historically low interest rates that, for a life insurance company, are about the nastiest thing that can happen. As for stock market performance, it is certainly an important factor, but the business model we have chosen – following the crash of 2001-2002 and the [subsequent] need to increase capital – means that we are no longer heavily dependent on it.

swissinfo: After all the cuts and restructuring, you are now looking to grow again. Where will the growth come from?

R.D.: Growth and profits will come from two main areas. First, from a combination of organic growth and being more efficient in all the markets we operate in. Second, from a sustained and accurate investment result.

swissinfo: What about your decision to ditch the well-known La Suisse brand as part of moves to focus on the Swiss Life brand – do you not risk losing a lot of loyal customers?

R.D.: We thought about this a lot and came to the conclusion that consolidating the Swiss Life brand by integrating the two distribution channels was a much more promising approach than keeping both brands. Of course, we will lose some customers, but [the initial reaction] is not at all disturbing. Even in the worst-case scenario, which might see us lose five to 10 per cent, this would still be the better strategic option in the medium to long term.

swissinfo: A similar question arises with your decision to focus primarily on the pensions and life insurance business – do you not risk abandoning valuable customers in other areas?

R.D.: I believe concentration on these core areas really is a growth path. Pensions and life insurance, as shown by the astonishing growth rates in markets like France and Germany, [have enormous potential] because customers really do want to act to ensure their long-term financial future.

Also, at governmental level, there is so much pressure to reform the pension system in European countries – to make a switch from a largely state-funded system to a more private sector-type solution. This will obviously create opportunities for us.

swissinfo: A few years ago, private insurers were being labelled “pension thieves” and the like – are you managing to win back public confidence?

R.D.: I believe we are, although there is more to do. Customers have seen over the past two or three years that their policies have been safeguarded. In Switzerland, private companies have always had to secure their customers’ money 100 per cent, whereas considerable amounts have been lost in the pension funds of the public sector and there is now no chance of recovering them. Also, politicians really are taking steps now to change the regulatory environment.

swissinfo: If you had the power to change one thing in your operating environment overnight, what would it be?

R.D.: What I would like to do is have an IT platform that allows me to operate at 50 per cent of current cost levels.

swissinfo: Moving on from Swiss Life, are you hopeful that you can manage the same sort of turnaround at Grasshoppers as at Swiss Life?

R.D.: The big difference is that with Swiss Life I know exactly what I am talking about! I come from a tennis background; football is not even my sport. But what Grasshoppers needed, and what I also wanted to see as a shareholder, was a stop to the potential reputation damage, so we had to take some radical steps.

Since last November, we have made tremendous progress. Both on the field and in terms of structure, governance and even finance, things are now going in the right direction. But it will still take a few years and there may be more tough decisions. In a word, we are still short of money.

swissinfo-interview: Chris Lewis in Zurich

Key facts

Swiss Life more than doubled its 2004 net profit to SFr624 million ($515 million) –shaking off the memory of a SFr1.7 billion loss in 2002.
The former Rentenanstalt has shed jobs and divested a raft of businesses since Dörig and his new team took over in 2002.
In February, it announced that it was also shedding its well-known La Suisse brand.

In brief

Dörig says the turnaround is down to a mixture of management initiatives and improved market conditions.

He adds that the company is no longer so vulnerable to stock market swings.

Dörig is also confident that integrating the well-known La Suisse brand with that of Swiss Life is the right decision – even if it means losing some customers.