insurance switzerland — Swiss Life posted a segment result of CHF 467 million in Switzerland for 2009. The financial result for the Swiss business recovered strongly and came to CHF 2.7 billion. Direct investment income declined slightly on the back of lower hedge fund distributions and reduced dividend income from equities. Unlike in the 2008 financial year, which saw impairments on equities and hedge funds, capital gains performed well in 2009, contributing CHF 73 million to the financial result.

Operating expenses increased by 20% to CHF 860 million. However, this is not representative of the actual costs situation, as last year’s expenses figure included net deferred acquisition costs. The 2009 figure was also hampered by restructuring charges of over CHF 63 million from ongoing efficiency programmes. Administrative costs from operations fell by 14%, thanks to efficiency improvements achieved from optimising processes and streamlining the project portfolio.

According to the Swiss Insurance Association (SIA), premiums in the Swiss life insurance market receded 1.9% to CHF 27.9 billion. This reflected a 3.6% decrease in group insurance and a 2.4% increase in individual insurance. At CHF 7.5 billion, Swiss Life’s premium income remained at a high level. 77% of the premiums were written in occupational benefits insurance. Premium income in group insurance declined 3.4% on the prior-year figure, after adjustment for a one-off impact, lowering Swiss Life’s market share to 29.6%. Swiss Life grew its premium volume in individual insurance by 2.0%, bringing its market share to 19.4%.

In the year under review, the rate of Swiss Life products distributed through AWD (measured on basis of production volume) advanced noticeably to CHF 112 million.

Insurance benefits, including changes in insurance reserves, fell by 2.0% to CHF 7.9 billion, mainly due to the reduction in the BVG minimum interest rate from 2.75% to 2% and to lower savings deposits. The significantly improved financial result led to a considerable rise in allocations to the reserves for policyholder bonuses.

Despite the decrease in premium volume, Swiss Life posted a much healthier segment result in Switzerland, thanks to its enhanced competitiveness and sharper focus on client needs.

Swiss Life launched an array of attractive products in 2009: The unit-linked endowment insurance Swiss Life Champion Invest was introduced in the fourth quarter, as were Swiss Life Protection – a life insurance and/or disability insurance with an individual risk premium rate – and Swiss Life Active Win – a pure endowment insurance combined with a fixed-term deposit. In the second quarter, the company also added a variant of Swiss Life Champion Duo to its portfolio, offering policyholders the option of waiving the guaranteed lump-sum death benefit to receive higher savings premiums. In group life, Swiss Life met the requirement for a more diverse and flexible product portfolio by offering inexpensive standard products and customised solutions. In addition, it further expanded its competency center for autonomous and semi-autonomous pension funds, which is operated by Swiss Life Pension Services.

In keeping with the new product range, adjustments were made to the organisational structure within both the company and the sales force. Sales managers were also appointed within the sales force and the number of general agencies was reduced from 58 to 42. The agencies are now based in key sales regions and have benefited from investments made in their locations. In 2009, the Swiss Life Group intensified its cooperation with brokers and focused on boosting its distribution power through its multi-channel strategy, leading to a considerable rise in business production through brokers (incl. AWD).

For 2010, plans are in the pipeline to introduce additional modern life and pensions products with variable guarantees and risk products, which tie up less capital and generate lower costs. Swiss Life also plans to offer topic-based advisory services, to expand its range of advisory services for investment funds and pension funds, and to introduce a new semi-autonomous standard solution for collective foundations. Execution of the measures to boost efficiency by 2012 is on track and will lead to a further reduction in administrative costs.

Key figures for insurance switzerland
Amounts in CHF million 
Gross written premiums, policy fees and deposits received
  7 5188 172–8.0%
Net earned premiums and policy fees
  7 2887 963–8.5%
Commission income
Financial result
  2 704–25n/a
Other income
Total income
  10 1268 27922.3%
Net insurance benefits and claims
  –7 887–8 059–2.1%
Policyholder participation
Interest expense
Operating expense
Total expense
  –9 659–9 0277.0%
Segment result
Assets under control
  73 84170 3654.9%
Insurance reserves
  65 40664 4621.5%
Number of employees (full-time equivalents)
  2 4892 743–9.3%