Dear Shareholders | The Swiss Life Group generated the best result of its 150-year history in 2007, with a net profit of CHF 1368 million. Adjusted for the profit contribution of around CHF 300 million from the dissolution of reserves following a change in Dutch law, the figure came to CHF 1064 million. Thus we already achieved our 2008 profit target of CHF 1 billion in 2007. The return on equity stood at 18.1%, thereby continuing to exceed the 10% level as in previous years. The successful implementation of our strategic priorities of growth, efficiency and leadership led to this very good result, despite the decline in the financial result vis-à-vis the previous year.
Of the profit from operations amounting to CHF 1706 million, CHF 650 million was generated in Switzerland, CHF 324 million in France, CHF 65 million in Germany and CHF 93 million by Investment Management. The contribution to profit from operations by the units sold in the Netherlands and Belgium came to CHF 471 million, around CHF 300 million of which stemmed from the dissolution of reserves mentioned above. Banca del Gottardo turned in a good performance, which was reflected in its segment result of CHF 168 million.
The positive trend in premium growth was maintained. The overall premium volume of CHF 24.2 billion for the Swiss Life Group represented 10% growth over the previous year. The Swiss business made an important contribution to these figures. In our home market we continued to expand our leadership position with premiums growing 11%, which was above the market average, to stand at CHF 8413 million. The company in Liechtenstein, specialising in structured pension solutions for high net worth individuals, recorded a veritable growth surge. The previous year’s premium growth of CHF 646 million to CHF 2786 million included the acquisition of the Liechtenstein company CapitalLeben, which was fully consolidated from the end of March 2007, and the consistently strong organic growth. France showed a decline of 10% with premium income at CHF 7411 million, but adjusted for the sale of the ERISA companies, the growth rate of 6% outperformed the market. In Germany, the premium volume advanced by 2% to CHF 2158 million. In the Netherlands, Swiss Life acquired further autonomous pension funds as customers, raising the premium income by 21% to CHF 2302 million. In Belgium and Luxembourg, premium income declined due to special situations.
A very good overall result was achieved, although the financial result on assets held for own risk was, at CHF 4885 million, 8% or CHF 422 million lower than in the previous year. This was a consequence of the negative development on the international financial markets since the middle of 2007. Direct investment income increased 25% to CHF 4627 million, but – in contrast to the previous year’s net capital gain of CHF 783 million – there was a net capital loss of CHF 218 million. Direct and indirect investments in subprime US mortgages total CHF 83 million overall, which represents less than 0.1% of overall investments. Swiss Life is, therefore, not directly affected by the crisis on the US mortgage market. However, for the 2007 accounts, we decided to completely write off positions vulnerable to a further aggravation of the liquidity situation brought on by all the market turbulence. This reduced the net profit by CHF 72 million. We made further efficiency gains in 2007. Despite the premium growth of 10% we were able to reduce our operating costs by a further 2%. Stringent cost management will continue to be a top priority for us. Swiss Life has a solid financial base for the next development stage. Shareholders’ equity amounted to CHF 7277 million on 31 December 2007. Because of the negative trend in unrealised gains on investments, it was slightly below the previous year’s level. The solvency margin of the Swiss Life Group came to 162% on 31 December 2007.
Employee commitment increased further. The value determined in the annual survey for job satisfaction and employees’ identification with the company rose by another four points, from 73 to 77 index points, thus moving closer to the target of 80. Commitment has risen by 16 points since the first time it was measured in 2004. To enable this positive trend to continue, we have systematically expanded the training and development measures available to employees, and above all to managers.
With the progress we have achieved and our strategic focus, Swiss Life is well positioned for the next growth surge. The strategic directions defined in 2007 will lead to further gains in Swiss Life’s attractiveness to customers, shareholders and employees. The focus will be placed even more sharply on our strengths in the area of pensions and long-term savings. To respond still better to customers’ requirements we are stepping up product management. With AWD, we can expand our multichannel distribution capability in existing markets and tap into attractive growth markets. The new financial objectives underscore our commitment to profitable growth and the efficient use of capital.
It is a great honour and pleasure for me to be given the opportunity to continue my work at Swiss Life over the long term. In my new role as Delegate of the Board of Directors, I will primarily be responsible for strategy development and for overseeing strategy implementation, and will work closely with the Chairman of the Board of Directors, Bruno Gehrig, and with Group CEO, Bruno Pfister.
I wish to thank all employees very much for their commitment and contribution to Swiss Life’s progress. For myself and on behalf of my colleagues on the Corporate Executive Board, I would like to extend my thanks to Bruno Gehrig and the members of the Board of Directors for the confidence shown in us and the constructive cooperation over the past years. I am convinced that we have laid the groundwork for Swiss Life to enjoy a very successful future.
Rolf Dörig | Group Chief Executive Officer
