Review of Operations | The 2008 financial statements of Swiss Life Holding are shaped by the strategic acquisition and disposal of business units. The company’s annual profit came to CHF 1921 million. This significant increase vis-à-vis the previous year can be attributed in particular to the distribution of an extraordinary dividend by the subsidiary Swiss Life Insurance and Pension Company.

Swiss Life Holding and its subsidiaries effected various transactions in the 2008 financial year which had a considerable impact on the parent company’s financial statements. Swiss Life Holding sold Banca del Gottardo to BSI for a profit of CHF 486 million. Swiss Life Insurance and Pension Company sold its Dutch and Belgian arms to SNS Reaal and, based on the realised gain, distributed an extraordinary dividend of CHF 1551 million. On the other hand, Swiss Life invested in its distribution capabilities. Through its subsidiary Swiss Life Beteiligungs GmbH, Hanover, Swiss Life Holding built up its participation in AWD Holding AG to 96.7% and took over a 24.3% stake in MLP.

Swiss Life’s Holding’s net investment income grew from CHF 337 million to CHF 1919 million, mainly as a result of the above-mentioned disposals. Other financial expenses and income increased to a net CHF 40 million due to the rise in interest received on loans to Group companies. In particular Swiss Life Holding granted a loan of EUR 300 million to Swiss Life Beteiligungs GmbH, Hanover, to partly finance the takeover of AWD Holding AG and the stake in MLP. The reported currency loss of CHF 78 million can be attributed to the fact that a considerable proportion of the loan was issued in euros. Operating expenses were up slightly on the previous year from CHF 8 million to CHF 9 million. All in all, Swiss Life Holding generated an annual profit of CHF 1921 million.

As a result of the disclosed transactions, Swiss Life Holding’s liquid assets (liquid funds plus time deposits and comparable instruments) rose significantly from CHF 159 million to CHF 801 million.

The value of participations increased from CHF 2665 million to CHF 3147 million following the acquisition of the stakes in AWD and MLP and the takeover of Swiss Life Selection AG from the sale of Banca del Gottardo. To finance ongoing business operations, Swiss Life carried out a capital increase at Swiss Life Products (Luxembourg) S.A. The sale of Banca del Gottardo and the distributed dividend of CHF 185 million in net worth realised from the sale of the Dutch business lowered the value of participations by CHF 1425 million. In addition an impairment of CHF 149 million was taken, based on the valuation of MLP.

Within the context of the share buyback programme, Swiss Life Holding repurchased 3 003 500 shares with a value of CHF 686 million. An impairment totalling CHF 691 million had to be made on own shares repurchased and already held. The unrealised loss on investments thus amounted to CHF 840 million.

Swiss Life Holding’s profit distribution to shareholders in the reporting period came to CHF 596 million or CHF 17 per share. It took the form of a repayment of par value. The par value of the Swiss Life Holding share was thereby reduced from CHF 34 to CHF 17 and the share capital decreased from CHF 1189 million to CHF 596 million. This includes a CHF 3 million increase in share capital due to the conversion of outstanding convertible bonds into shares. The nominal value of the convertible bonds issued in 2004 at CHF 317 million and set to expire in June 2010, was thereby reduced to CHF 42 million. The conversion price at the time of writing is CHF 200.20. Apart from the convertible bond issue, Swiss Life Holding is financed entirely by equity.