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Swiss Life restates losses after accounting error

Swiss Life's CEO, Roland Chlapowski, said the error was regrettable

(Keystone Archive)

An accounting error has forced Switzerland's largest life insurer, Swiss Life, to restate its first-half losses.

On Monday, the company reported a net loss for the first half of 2002 of SFr578 million ($383 million), SFr192 million more than had been announced in September.

The company blamed the error on a miscalculation of bond values.

"The new reporting error is very regrettable," said Swiss Life's Chief Executive Officer, Roland Chlapowski.

"It reveals weaknesses in the project management in implementing the new securities administration system... We will follow up accordingly... and strengthen the accounting team," he added.

Andres Leuenberger, chairman of the board at Swiss Life, said the mistake was "extremely annoying" and vowed that there would be no repeat of such incidents in the future.

Second mistake

The error marks the second time in a month that Swiss Life has been forced to correct its results.

Last month, the company restated its first-half earnings from 2001 to show a net loss of SFr1 million - rather than a profit of SFr253 million.

Swiss Life said at the time it had misinterpreted the value of shares.

Swiss Life's auditor, Pricewaterhouse Coopers, said it detected the latest error while reviewing the company's results.

"This is terrible," said one analyst at a Swiss bank. "They said it would never happen again and it shows you the whole thing is a mess.

"This is the second time in a row and it doesn't increase trust in their accounting processes," the analyst added.

Fresh capital plans

Company officials denied there was any connection between the two errors and said they would not affect Swiss Life's total equity or its plans to raise fresh capital.

In September, Swiss Life said it would in future concentrate on its core life insurance business and focus on Switzerland and certain European markets.

The company also announced plans to shed 700 jobs - 500 of them in Switzerland - as part of efforts to restore profitability.

In early trading on Monday, Swiss Life shares fell 11.5 per cent to SFr150.

Shares in other Swiss insurance companies also joined in the downward trend, with Swiss Re falling two per cent at the start of trading. Baloise shed six per cent, while Zurich Financial dropped 6.8 per cent.


In brief

Swiss Life has restated its first-half 2002 results to show a wider net loss after discovering it had miscalculated the value of bonds.

First-half results now show a net loss of SFr578 million, SFr192 million more than first reported.

CEO, Roland Chlapowski, said the error was "regrettable" but said it would not affect the company's total equity or plans to raise fresh capital.

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