The Swiss Life Group generated a net profit of CHF 1.6 billion in the first six months of 2008, including CHF 1.5 billion in extraordinary gains from the disposal of the Dutch and Belgian insurance units and of Banca del Gottardo. The net profit from continuing operations came to CHF 152 million (–64%), a drop of approximately CHF 270 million year-on-year due to the CHF 2.2 billion decrease in the financial result. This decline in the financial result could only be partly offset by the CHF 1.6 billion reduction in policyholder participation.

Result hit by negative financial market developments | The Group reported a CHF 227 million profit from continuing operations (–63%), to which insurance contributed CHF 218 million (–64%). Earnings in Switzerland (CHF 120 million; –65%), France (CHF 100 million; –49%) and Germany (CHF 19 million; –67%) were down on the same period last year because of the significantly lower financial result. In the wake of the investments made in the cross-border business, the Insurance Other segment posted a loss of CHF 21 million. Investment Management, which manages the insurance assets of the Swiss Life Group on a commission basis as well as third-party mandates, registered a profit of CHF 48 million. This was a good performance in keeping with the prior-year level. The AWD Group, which has been consolidated in the accounts since the end of March, contributed CHF 5 million to the profit from operations.

Growth momentum upheld despite unfavourable market conditions | In continuing operations the Swiss Life Group reported CHF 10.9 billion in gross written premiums, policy fees and deposits received under insurance and investment contracts. Net of the ERISA companies, this represents an increase of 5%. Following the 10% advance in premium income recorded the previous year, gross written premiums in Switzerland dipped 2% to CHF 5.9 billion in the first half of 2008. Swiss Life continued to experience strong growth abroad, improving its premium volume by 14% to CHF 5.0 billion. This growth was largely driven by Swiss Life in France (+17%) and the Liechtenstein-based business targeting high net worth individuals (+61%).

Asset impairments pull down the investment result | The financial market performance in the first six months of 2008 was disappointing to investors. Rising interest rates on fixed-interest investments and the widening of credit spreads led to losses in fair value, and equity prices in Europe decreased on average by 20%. Against this background, Swiss Life achieved a direct return on investment of 2.1% in its insurance business in the period under review (2007 HY: 2.0% on a comparable basis). Whereas net capital gains of CHF 516 million were generated in the same period last year, a net capital loss and impairments to the amount of CHF 1.2 billion were posted for the first half of 2008. Taking into account the changes in asset positions relevant to the income statement, together with asset management costs, the net investment return on the insurance portfolio fell to 1.0% (2007 HY: 2.4%). The overall investment performance of the insurance business amounted to –1.2% (2007 HY: 0.4%) and also includes the changes in asset valuations directly reflected in equity, which were negatively impacted by rising interest rates.

Investments in growth initiatives abroad and efficiency improvements in Switzerland | Net insurance benefits and claims and changes in the technical reserves increased in line with premium growth, climbing 3% to CHF 8.5 billion. Due to the unsatisfactory financial result, policyholder participation, at CHF 77 million (–95%), was very low. Operating expenses increased by 12% to CHF 1.5 billion. Operating costs were up 11% on a comparable basis. This figure mainly reflects investments made in various product and growth initiatives, notably relating to private placement life insurance, the expansion of the wealth management business in France, and the establishment of the variable annuities product factory in Luxembourg. The regulatory changes introduced in Germany also drove up costs. In Switzerland, efficiency was enhanced and the operating costs were cut by another 4%.

Equity and embedded value remain stable | The insurance reserves decreased by 2% to CHF 119.2 billion in the first half of 2008, primarily due to the market environment and currency factors. The assets controlled by the Swiss Life Group amounted to CHF 137.4 billion (–1%) as at 30 June 2008. At CHF 7.2 billion, the equity attributable to shareholders remained stable vis-à-vis the year-end figure, due to the extraordinary contribution from the disposals made. Group solvency was also steady on 30 June 2008 at 162%. The embedded value of Swiss Life fell by 2% to CHF 12.6 billion, or CHF 359 per share as at 30 June 2008. The value of new business dropped slightly year on year to CHF 55 million, whereas the margin on new business remained above 15% as in the prior-year period.

Product and growth initiatives progressing well | Swiss Life forged ahead with its product and growth initiatives. Swiss Life Champion, the first variable annuity product created by the product factory in Luxembourg, went on sale in Germany in August. The Luxembourg location makes it possible to market the products throughout the European Union. In France, further non-traditional products were also launched and the private insurer model was expanded through minor bolt-on acquisitions and an extended service range. Swiss Life VitalityPlus, a redesigned unit-linked product, was introduced in Switzerland, and a unit-linked annuity – unique to the Swiss market – is planned for the autumn. Furthermore, the company opened a branch office in Singapore to improve its access to the Asian market in structured insurance solutions for high net worth individuals and to enable it to diversify its range of products and services. In this connection, a sales location will also be unveiled in Dubai in the second half of the year.