Swiss Life profit jumps by 44 per cent

Net profit at Swiss Life shot up by 44 per cent in 2005 (Swiss Life) Swiss Life

Swiss Life, Switzerland's largest life insurer, increased its net profit in 2005 to SFr874 million ($667 million) from SFr606 million the year before.

Gross premium income was SFr20.211 billion, up 0.2 per cent, amounting to an organic growth of eight per cent.

The net profit exceeded analysts’ expectations, as the company continues to cut costs and its sizeable operations abroad balance out a weak home market.

CEO Rolf Dörig has set an ambitious target of a net profit of SFr1 billion ($765 million) by 2008 for the company, which is recovering from a SFr1.8 billion net loss in 2002.

However, low Swiss interest rates have slowed the company’s financial recovery as they make it unattractive to take out life insurance and also reduce margins for the company.

But analysts say bond yields are creeping up again, boding well for the insurer, which is only active in life insurance.

Swiss Life’s operations abroad – in Germany, France and the Benelux states – make up roughly half of sales and are a key driver of profit, as interest rates in the euro zone are higher than in Switzerland.

Swiss Life’s shares have gained 14 per cent so far this year, after adding more than 40 per cent in 2005.

Organic growth

Dörig said on Tuesday that Swiss Life plans no acquisitions of rival insurers, adding however that the group’s financial strength was sufficient for smaller or mid-sized purchases.

“We clearly intend to grow organically,” he said.

Dörig declined to give an outlook for the current financial year or how business had been so far in 2006.

“We will come up with a next trading update when we announce half-year results.”

swissinfo with agencies

Key facts

Swiss Life results 2005:

Net profit: SFr874 million (2004: SFr606 million)
Pre-tax profit: SFr853 million (SFr943 million)
Gross premium income: SFr20.211 billion (SFr20.18 billion)
Employees: 8,979 full-time positions (9,419)