Swiss Life First-Half Profit Rises on Fees and Commissions

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Swiss Life Holding AG, Switzerland’s biggest life insurer, beat analysts’ first-half profit estimates, led by revenue from fees and commissions.

Net income rose to 490 million Swiss francs ($502 million) from 484 million francs a year earlier, the Zurich-based company said on Friday. That beat the 452-million franc average estimate of five analysts surveyed by Bloomberg. Gross written premiums rose to 11 billion francs from 10.8 billion francs, while fee and commission income advanced 5 percent to 612 million francs.

Swiss Life Chief Executive Officer Patrick Frost has been seeking to boost profitability and cut costs as low interest rates weigh on earnings. The company has also been hurt by the Swiss central bank’s decision to abolish its franc cap versus the euro, prompting a surge in the currency.

“The improvements in profit from operations and net profit demonstrate that we can operate successfully even in a persistently challenging capital market environment,” Frost said in the statement. “We have further diversified our profit sources and more than offset the renewed drop in interest rates.”

The shares rose 1.5 percent to 237.1 francs at 9:34 a.m. in Zurich. They have increased about 0.3 percent this year.

Swiss Life said it achieved “the vast majority” of its targets ahead of plan. Under its so-called Swiss Life 2015 goals, the company is seeking a return on equity, a measure of profitability, of 8 percent to 10 percent, a new business margin of more than 1.5 percent and cost cuts of 130 million francs to 160 million francs by the end of the year.

The company’s new business margin was 1.7 percent at the end of June, down from 2.4 percent a year earlier.

Frost said he continues to seek “bolt-on” deals to increase fee income. The CEO said he is “very happy” with the acquisition of German asset-manager Corpus Sireo last year.

“This proves that Swiss Life has great products for a low rates environment and that its hedging strategy works very well,” Peter Casanova, a Zurich-based analyst at Kepler Cheuvreux with a buy rating on the shares, said in a note.

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