dear shareholders | Swiss Life consistently advanced the implementation of the Group strategy in the first half of 2008. Our product initiatives are beginning to show results and the distribution capabilities have again been strengthened. The announced disposals were brought to a successful close and we acquired a majority stake in AWD.

The Swiss Life Group generated a net profit of CHF 1.6 billion in the first six months of the year, which includes the extraordinary gains resulting from the disposals of our Dutch and Belgian insurance units and of Banca del Gottardo. The net profit from continuing operations came to CHF 152 million, down by around CHF 270 million year on year. This reflects the CHF 2.2 billion decrease in the financial result, a direct consequence of the sharp downturn on the international financial markets.

We achieved 5% growth in our premium volume, net of the ERISA companies sold. In Switzerland, premium income receded by 2%. Outside Switzerland, however, we maintained our strong growth, pushing up the premium volume by 14%.

The AWD Group has been consolidated in the Swiss Life Group’s accounts since the end of March. In line with our takeover offer, we had acquired an 86% shareholding in AWD by mid March for around CHF 1.5 billion. As announced on 14 August, we will raise this stake by a further 10.5%, which means we will hold roughly 96.7% of all AWD shares when the transaction comes to a close. The AWD Group strengthened its position in both the German and Swiss markets in the first half of 2008. This shows that the new ownership structure at AWD does not have a negative impact on the performance and the business model. As communicated at the end of March, Swiss Life and AWD launched various market, product and operations-related projects aimed at accelerating international growth. In Germany, Swiss Life and AWD have already intensified their long-standing partnership. Certain Swiss Life product lines have been included in AWD’s best-select range since May 2008, leading to a distinct increase in the volume of Swiss Life products sold by AWD advisors. In accordance with our announcement, AWD’s Board of Management will be reinforced as of 1 September 2008 and endowed with new management functions. We are convinced that this measure lays a solid foundation for further growth and the exploitation of potential efficiencies, and thus paves the way for AWD’s future success.

As a second step towards strengthening our position in the independent financial advisor sector, we announced on 14 August that we were acquiring a strategic participation in MLP. MLP operates exclusively in Germany and is the number two player in the sector behind DVAG and ahead of AWD. It is particularly strong in the attractive customer segment of academics seeking optimal solutions for their retirement needs. We are especially keen to grow in the large German market, where we currently rank 19th among life insurers, but are determined to gain a top ten spot within the next few years. This is why we need new distribution channels besides the successfully established ones. For us, it is clear that the successful AWD and MLP brands and business models must remain untouched in every conceivable case. Closer cooperation would, in fact, bolster and boost the business model. AWD’s and MLP’s distribution concepts and target groups complement each other perfectly. Cooperation would enable both companies to negotiate better terms when procuring products and services and lead to significant cost savings. It would also open up cross-selling potential from which MLP in particular would stand to benefit. The obvious business logic of closer cooperation is what makes us convinced that we can resume our dialogue with MLP and its major shareholders.

To increase our financial flexibility going forward, we announced on 14 August that we were limiting our ongoing share buyback programme of up to CHF 2.5 billion to CHF 1 billion. The cancellation of the second tranche of the programme does not herald a departure from our corporate policy of efficient capital management. As originally planned, we will repurchase own shares for another CHF 500 million plus in the course of this year.

We are also going to retain our attractive dividend policy for shareholders, and plan a dividend distribution in the range of CHF 600 million for 2008. From the 2009 financial year onwards, the distribution ratio should amount to between 40% and 60% of the reported profit. However, due to the distortions on the financial markets in the opening months and their repercussions, it has become clear that we cannot achieve our 2008 financial targets. Barring unforeseen events, we expect an overall net profit of CHF 1.8 to 1.9 billion for 2008, of which CHF 300 to 400 million from continuing operations. Furthermore, without the effect of the 2009 share buyback programme and given the persistently difficult market environment, we cannot attain the original earnings per share target set for the coming year. Looking beyond 2009, however, we are certain that our business model will enable us to achieve the targeted annual profit growth of 12% and a 12% return on equity.

Pensions and long-term savings remains a growth market and Swiss Life is in an excellent position to reap the benefits. Our sharper focus on attractive and fast-growing customer segments, the shift in our product mix towards non-traditional solutions, the measures we have taken to reinforce and diversify our distribution capabilities, and the continuation of our attractive dividend policy all enhance our standing with customers, shareholders and employees.

BRUNO GEHRIG   BRUNO PFISTER  
Chairman of the Board of Directors   Group Chief Executive Officer  

André Collomb
 
We consistently advanced the implementation of the Swiss Life strategy in a difficult market environment.

Outside Switzerland we maintained our strong growth, pushing up the premium volume by 14%.

For us, it is clear that the successful AWD and MLP brands and business models must remain untouched in every conceivable case.

We are going to retain our attractive dividend policy for share- holders.