Insurance Switzerland | In Switzerland Swiss Life achieved a segment result of CHF 650 million. With premium growth clearly above the market average and additional advancements in efficiency, Swiss Life again reinforced its leading position in its home market. The segment result could not improve on the previous year’s very impressive figure because the financial result fell by CHF 211 million.
Following four years of declining premium income in the Swiss life insurance market, which was attributable to economic factors and structural changes, the Swiss Insurance Association again reported an increase of approximately 3% to CHF 28.8 billion. Driven on by this environment, Swiss Life outperformed the market and increased its market share from 28% to 29%. With a share of 34% in group insurance and 20% in individual insurance, the company is the clear market leader in Switzerland for pensions and long-term savings.
Swiss Life grew its gross premium income by 11% to CHF 8413 million. The company’s premium income for group insurance climbed 14% to CHF 6630 million. This positive development is mainly attributable to the high level of new business and the introduction of a new booking practice for participation contracts. In individual insurance, premiums declined by 2% to CHF 1715 million. The demand for traditional products fell, but there was a surge of interest in unit-linked products and account-based solutions.
At CHF 2556 million, the financial result was 8% lower than in the previous year. With regard to direct income, Swiss Life benefited from rising interest rates and higher hedge fund and dividend distribution by stocking up its bond portfolio. Realised and unrealised capital gains declined in the second half of the year because of the crisis which hit the international financial markets.
| Key figures for Insurance Switzerland |
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| Gross written premiums, policy fees and deposits received | | 8 413 | | 7 611 | | 10.5% | |
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| Net earned premiums and policy fees | | 8 200 | | 7 373 | | 11.2% | |
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| Asset management and other commission income | | 38 | | 62 | | –38.7% | |
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| Financial result (without share of results of associates) | | 2 556 | | 2 767 | | –7.6% | |
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| Other income | | –24 | | –26 | | –7.7% | |
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| Total income | | 10 770 | | 10 176 | | 5.8% | |
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| Net insurance benefits and claims | | –8 758 | | –7 719 | | 13.5% | |
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| Policyholder participation | | –458 | | –864 | | –47.0% | |
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| Interest expense | | –133 | | –136 | | –2.2% | |
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| Operating expenses | | –771 | | – 800 | | –3.6% | |
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| Total expenses | | –10 120 | | –9 519 | | 6.3% | |
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| Segment result | | 650 | | 657 | | –1.1% | |
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| Assets under control | | 74 996 | | 75 357 | | –0.5% | |
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| Insurance reserves | | 67 256 | | 67 134 | | 0.2% | |
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| Number of employees (full-time equivalents) | | 2 792 | | 2 963 | | –5.8% | |
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Insurance benefits, including changes in insurance reserves, rose by 14% to CHF 8758 million. The increase is primarily due to higher income from savings premiums in group insurance. The need for provisions for future risk remained at the previous year’s level and the favourable loss experience was also similar to that of 2006. The amount allocated to the reserves for policyholder bonuses receded to CHF 458 million due to the considerably lower financial result.
Operating costs decreased by 7%. This development is primarily due to the efficiency gains achieved from the successful integration of «La Suisse» and the measures implemented to simplify the systems landscape in individual insurance. Last year, Swiss Life migrated all the individual life insurance policies to one single contract administration system. Overall operating expenses were reduced by 4% to CHF 771 million.
In 2007 Swiss Life continued its pricing policy aimed at sustainably improving profitability, thereby increasing the value of new business. At the beginning of the second half of the year, Swiss Life brought its organisational structure more closely in line with the business processes and distribution channels in order to further improve customer orientation and efficiency. Besides reducing duplication and the number of interfaces, these measures are aimed at promoting and accelerating the development of market-aligned products and improving the quality of services. Thus both External Sales and Internal Services are well equipped to cope with the intensifying competition.
One of the company’s forward-looking product innovations is Swiss Life VitalityPlus: a unit-linked insurance financed by periodic premiums which offers policyholders the option to waive death coverage in order to receive higher savings premiums. It is available as both a tax-qualified (pillar 3a) or non tax-qualified (pillar 3b) product. In the case of pillar 3a products, Swiss Life grants its customers the option of extending the contract for up to five years after they have reached retirement age or to defer payment of their retirement pension.
Given the fact that the number of pensioners or people who are approaching retirement will continue to rise, this customer group is increasingly important. Swiss Life is stepping up its marketing measures for this segment by offering a portfolio of suitable products and advisory services. In 2008, Swiss Life will pave the way for and begin its partnership with AWD, through which it expects to enhance its market penetration, especially in the younger customer segment, and continue to drive growth in the unit-linked products business.
