Swiss Life posts record profit in 2006

The company is nearing the SFr1 billion net profit mark Keystone

Switzerland's largest life insurance company, Swiss Life, has reported a net profit of SFr954 million ($784.5 million) for 2006, a nine per cent increase over 2005.

The company said the “good result” was largely driven by a 23 per cent rise in operations to SFr1.258 billion.

Gross written premiums rose by nine per cent, exceeding market expectations, to SFr22.1 billion, while operating expenses decreased by five per cent to SFr3.2 billion.

“Our strategic and operational progress is clearly reflected in the results for the 2006 financial year. We not only produced a higher profit but also improved the quality of earnings,” commented Swiss Life chief executive Rolf Dörig in a statement on Tuesday.

“The very good results reflect a systematic focus on profitable growth, further increases in efficiency and the good risk experience.”

Analysts had expected Swiss Life to post a four per cent rise in net profit to SFr911 million, according to the average of a Reuters poll. Gross written premiums were expected to rise by seven per cent.

Increased dividend

Excluding SFr21 million for minority interests, SFr933 million is available to shareholders. The company, which is based in Zurich, is proposing to shareholders an increased dividend to SFr7 from SFr5.

Swiss Life has turned to markets outside its Swiss base for growth, with premiums in France rising by 11 per cent and premiums in the Netherlands by 19 per cent. Premium income in Switzerland fell by three per cent.

But it is selling its interests in the French companies ERISA and ERISA IARD to HSBC France for about SFr360 million.

The statement said this would enhance Swiss Life’s strategic and financial flexibility to focus on profitable growth in the French market.

In a conference call with journalists after the announcement of the results, Dörig said the company did not plan to buy back its own share this year with surplus capital, nor did it plan to sell its private bank Banco Gottardo, which is based in Lugano.

Takeover target?

The company, which celebrates its 150th anniversary this year, has repeatedly been mentioned as a possible takeover target for a foreign buyer, after AXA last year bought the Winterthur company. This triggered speculation others might follow the French group’s lead.

Swiss Life confirmed its 2008 earnings objectives of making a net profit of SFr1 billion and a sustainable return on equity (ROE) of more than ten per cent. ROE in 2006 was 12.2 per cent.

“We have built up an attractive portfolio of business activities and will continue to expand it,” CEO Dörig said.

“Our substantially increased strategic and financial flexibility puts us in a good position to remain successful in the long term as well in the growing market for pensions and long-term savings,” he added.

swissinfo with agencies

Key facts

2006 financial figures

Gross written premiums: SFr22.064 billion (up 9% compared with 2005)
Profit from operations: SFr1.258 billion (+23%)
Net profit: SFr954 million (+9%)
Proposed dividend : SFr7 (up from SFr5)
Employees at the end of 2006: 8,693

150 years of Swiss Life

Conrad Widmer of canton Thurgau founded the Schweizerische Rentenanstalt (now Swiss Life) in Zurich in 1857.

It was the first national life insurance company under Swiss law.

The official celebration takes place in Zurich on September 28 but there is a range of activities throughout the year.

These include a national children’s competition and a festival for the football stars of tomorrow.