Review of Operations — Swiss Life Holding generated a profit of CHF 40 million in the 2009 financial year vis-à-vis the previous year’s figure of CHF 1921 million. This significant decline can be attributed to the extraordinary dividends included in the prior-year profit distributed as a result of gains realised on disposals.

This considerable decrease in annual profit vis-à-vis the prior year stems from the sale of Banca del Gottardo and the Dutch and Belgian arms, which Swiss Life Holding Ltd (Swiss Life Holding) and its subsidiaries completed the previous year and which had a significant impact on the parent company’s annual financial statements.

In 2009 Swiss Life Holding’s investment income came to CHF 88 million. Interest received on loans to Group companies rose from CHF 28 million to CHF 42 million on the back of additional loans already granted in 2008. Dividends received were CHF 57 million, down on the 2008 figure of CHF 2307 million, which, as mentioned above, included extraordinary dividends arising from gains realised on disposals.

At CHF 8 million, operating expenses remained stable. Other expenses include extraordinary charges of CHF 47 million relating to the sale of Banca del Gottardo. Overall, Swiss Life Holding generated an annual profit of CHF 40 million.

To finance ongoing operations, Swiss Life Holding carried out a capital increase at Swiss Life Products (Luxembourg) SA and Swiss Life International Holding AG. The value of participations thus climbed CHF 60 million from CHF 3147 million to CHF 3207 million. Through its subsidiary Swiss Life Beteiligungs GmbH, Swiss Life Holding built up its participation in AWD Holding AG to 100% as part of the successfully executed squeeze out. The company also reduced its stake in MLP to under 10%, again through Swiss Life Beteiligungs GmbH.

Swiss Life Holding’s profit distribution to shareholders in the period under review came to CHF 159 million or CHF 5 per share, and took the form of a repayment of par value. The par value of the Swiss Life share was thus reduced from CHF 17 to CHF 12. In addition, the 3 003 500 proprietary shares repurchased as part of the share buyback programme were cancelled. As a result of the par value reduction and the cancellation of proprietary shares, the company’s share capital decreased from CHF 596 million to CHF 385 million.

The nominal value of the convertible bond issued in 2004 at CHF 317 million and set to expire in June 2010 amounted to CHF 43 million at the end of 2009. In the period under review Swiss Life Holding bought back convertible bonds to the amount of CHF 8 million. No outstanding convertible bonds were converted into shares during 2009. The conversion price is CHF 200.20. Apart from the convertible bond issue, Swiss Life Holding is financed entirely by equity.

Swiss Life Holding’s year-end liquid assets (liquid funds plus time deposits and comparable instruments) totalled CHF 624 million (2008: CHF 801 million).