Swiss Life swings back into profit
Switzerland’s largest life insurer, Swiss Life, has posted a SFr66 million ($48 million) first-half net profit, after reporting a record loss last year.
The insurer added that it expected to finish the year in the black despite a projected dip in premium income.
The result was more than double analysts’ expectations of around SFr30 million net profit and a serious improvement on last year’s SFr587 million first-half net loss.
Tuesday’s figures provide the strongest suggestion that Swiss Life is sticking to its promise of turning a profit this year.
Chief executive Rolf Dörig said a drastic overhaul of the firm, including cost and job cuts and the sale of businesses, appeared to be bearing fruit.
“The strategic and operational measures are beginning to take hold,” he said.
“The company has regained the confidence of the public.”
The company posted a record loss of SFr1.69 billion for 2002, as it struggled to recover from negative headlines about its business operations, as well as a secretive investment fund run by six senior managers.
The insurer’s group life business was hardest hit, as falling equity prices undermined the company’s ability to generate legally required minimum returns.
The Zurich-based insurance group said the result had been helped by operating improvements in all business areas, and positive trends on the financial markets.
It said it was on track to meet its goal of bringing down costs by SFr515 million by the end of 2004.
Dörig also reiterated that the Swiss private bank, Banca del Gottardo, was still for sale.
Quiet boom
Since hitting a six-year low in March of SFr41.75, shares in Swiss Life have surged to around SFr176.
Swiss Life’s share run reflects a general industry trend.
Insurers, hard hit by the September 11 attacks, the global downturn, falling stock markets and early-year worries about the war in Iraq, have enjoyed a quiet boom in recent months.
Swiss Life has pursued a common industry strategy of focusing on its core businesses, selling off assets and slashing staff.
The first-half result was coloured by a SFr106 million loss on the sale of its private asset management subsidiary.
In May, Swiss Life announced the sale of STG Schweizerische Treuhandgesellschaft to a Liechtenstein-linked firm in a deal that generated SFr197 million in cash for the firm.
At the time, Dörig said the book loss on STG would not affect the planned return to profit this year.
“Providing that market conditions do not deteriorate, we expect to return to the profit zone this year in spite of the loss on this sale,” he said.
The company remains on schedule to cut around 800 staff from its 11,500-strong workforce by 2004.
swissinfo, Jacob Greber in Zurich
Swiss Life posted a record SFr1.69 billion loss in 2002.
Its share price has climbed over 60% this year, after falling 80% in 2002.
A further 300 jobs are to be axed before the end of 2004.
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