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Swiss Life Profit Beats Analyst Estimates as Premiums Climb

Aug. 14 (Bloomberg) -- Swiss Life Holding AG, Switzerland’s biggest life insurer, reported an increase in first-half profit that exceeded analyst estimates after selling more policies in Switzerland and France.

Net income rose to 472 million Swiss francs ($506 million), from 364 million francs a year earlier, the Zurich-based insurer said in a statement today. That beat the 367.9 million-franc average estimate of seven analysts surveyed by Bloomberg. Swiss Life shares gained the most in more than five months.

Chief Executive Officer Bruno Pfister has achieved about 40 percent of targeted cost savings of as much as 160 million francs as the company cuts as many as 400 jobs in Germany and Switzerland. Higher sales in its home market and France helped boost Swiss Life’s total premiums by 5.4 percent to 10.4 billion francs in the first half. The value of new business more than doubled to 141 million francs from a year earlier.

“The results look good,” said Stefan Schuermann, a Zurich-based analyst with Vontobel Holding AG who has a buy rating on the stock. “The strong new business margin jumps out, it is clearly better than expected which is good in such a challenging market.”

Swiss Life rose as much as 5.1 percent and was up 4.2 percent to 180.30 francs as of 9:23 a.m. in Zurich trading, bringing this year’s advance to 48 percent. That compares with an 18 percent gain in the 30-company Bloomberg Europe 500 Insurance index.

Slower Growth

The new business margin increased to 2 percent by June 30, from 1.4 percent at the end of 2012, the insurer said. Swiss Life expects slower growth and a “flat” new business margin for the remainder of the year, Pfister said during a conference call.

Operating profit at its Swiss unit, the company’s biggest business, increased 33 percent to 472 million francs from a year earlier, while that in France rose 14 percent to 93 million francs.

“All market units are growing in terms of both premium income and their contribution to the group result,” Pfister said.

Swiss Life cut its targeted return on equity in November to between 8 percent and 10 percent over the next three years from between 10 percent and 12 percent.

The company posted a net investment result of 2.4 percent after additional gains and “appreciation” in its portfolio.

The company said its solvency capital ratio, a gauge of its ability to cover claims and write new business, dropped to 205 percent at the end of June from 239 percent at the end of last year.

To contact the reporter on this story: Carolyn Bandel in Zurich at cbandel@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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