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Swiss Life Rises After Capital Gains on Bond Sales: Zurich Mover

Swiss Life Holding AG, Switzerland’s biggest life insurer, gained the most in two weeks in Zurich trading as first-half profit exceeded analyst estimates after capital gains from selling euro-zone sovereign debt.

Swiss Life climbed as much as 4.1 percent and was 3.7 percent higher at 105.60 francs as of 9:48 a.m. in Zurich. The stock has gained 22 percent this year, booting the insurer’s market value to 3.39 billion Swiss francs ($3.5 billion).

Net income fell 11 percent to 360 million francs, the Zurich-based insurer said today, beating the 304.8 million-franc average estimate of nine analysts surveyed by Bloomberg. Capital gains on investments rose eightfold to 1.17 billion francs after Swiss Life sold about 7.8 billion francs of euro-zone debt and switched mainly into U.S. Treasuries, according to Chief Executive Officer Bruno Pfister.

“These are strong results,” said Daniel Bischof, a Zurich-based analyst with Helvea. “The profit was driven by more capital gains.”

“We decided to reduce our sovereign exposure to euro-zone debt on our Swiss balance sheet,” resulting in an investment gain, said Pfister.

Swiss Life plans to make more savings after reducing annual costs by 404 million francs since 2009 and cutting 520 jobs in Switzerland. The insurer is also trying to reduce its dependency on investment income and compensate for a decline in revenue from selling life policies, known as wrappers, to wealthy clients of Swiss private banks.

Tax Item

First-half profit declined after one-time tax revenue of 89 million francs in the year-earlier period due to the “disposal of business activities” in prior years.

Swiss Life is targeting a return on equity of 10 percent to 12 percent this year from selling more pension products and a new business margin of 2.2 percent.

Total gross written premiums fell 2.6 percent to 9.84 billion francs from a year earlier after declines in Germany and France. The insurer’s biggest unit in Switzerland saw gross written premiums drop to 5.74 billion francs, while premium income fell 8.6 percent in France.

Operating profit rose 17 percent to 528 million francs because of higher income from investments.

AWD Holding AG, the German financial services broker that Swiss Life acquired in 2008, contributed 13.1 million euros ($16.2 million) to group earnings in the first half, down from 21.8 million euros in the year-earlier period.

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