Dear Shareholders

Swiss Life proved its mettle in 2012 in two respects. Firstly, Swiss Life again improved its operational effectiveness. Secondly, through our new Group-wide programme “Swiss Life 2015” we have set the course for further profitable growth.

Last year, Swiss Life brought its Group-wide programme MILESTONE, launched in 2009, to a successful conclusion and strengthened the profitability and financial solidity of the company in a sustainable way. In so doing, Swiss Life has created the business conditions for the next stage of its journey. In 2012 profit from operations far exceeded expectations: adjusted for one-off effects earnings were 26% up on the previous year at CHF 993 million. Net profit at CHF 93 million was significantly lower than in the previous year (2011: CHF 606 million), mainly due to the one-off impairment in the value of AWD’s intangible assets of CHF 578 million, additional provisions for litigation and restructuring costs arising from the new Group-wide programme “Swiss Life 2015”.

In the 2012 financial year premium income remained at the prior-year level in spite of the adverse market conditions and low interest rate environment. With an investment performance of 8.5% (2011: 7.5%), Investment Management achieved an investment result of CHF 5.7 billion as well as an excellent, by peer comparison, net investment return of 4.8% (2011: 3.8%), which enabled further substantial strengthening of our technical reserves. In the year under review, shareholders’ equity rose by 12% to CHF 10.3 billion, while Group solvency climbed from 213% in 2011 to 242% by the end of 2012.

The fact that our operational progress in recent years has been achieved in extremely challenging markets, not to mention the less than favourable operating conditions, testifies to the resilience of our business model. Our upgrade in 2012 by the rating agency Standard & Poor’s to A– was equally encouraging. This confirms the progress we have made in recent years and is all the more pleasing as the upgrade runs counter to the general negative trend for financial services companies. Our employees played a key part in this success and we owe them our gratitude for the commitment they give our company on a daily basis.

In short: Swiss Life further improved its operational excellence. The Board of Directors will therefore propose to the Annual General Meeting a distribution from the capital contribution reserve of CHF 4.50 per share. Swiss Life will adhere to its dividend policy over the next few years and envisages maintaining a payout ratio of 20% to 40% going forward.

Swiss Life also proved itself in 2012 in terms of its corporate future. The Board of Directors and the Corporate Executive Board have set the course for Swiss Life for the next few years. We need to adapt our business model to the economic reality in light of the persistently record-low interest rates, far-reaching regulatory changes and financial market uncertainty – and this goes hand in hand with our ambition to create added value for customers, partners, employees and shareholders.

Through our new corporate programme “Swiss Life 2015”, which we presented at our Investors’ Day in November 2012, we are continuing along our path of profitable growth and adapting our business areas to reflect changing market conditions. We will do this by pursuing different business strategies in our various markets: Swiss Life in Switzerland will develop from a pure life insurer to a comprehensive life and pensions and financial solutions provider, and in Germany to a financial advisory and insurance company under one roof. In France, the Group will continue to build on its strong position as a “private and personal insurer”. In our international business we will offer protection, financial solutions and advice in selected markets. In asset management we will grow our business with external customers through our new brand “Swiss Life Asset Managers”.

From now on Swiss Life will manage all its production and distribution organisations for each market under one roof to optimise market development, further improve advisory expertise and become more efficient. In this connection the companies which previously operated in the market as AWD will now operate under the brand name “Swiss Life Select”.

From a financial perspective, Swiss Life is committed to continuity and discipline in executing its objectives. On the one hand, we will focus on diversifying profit sources and enhancing earnings quality. On the other hand, we aim to further protect the balance sheet, steadily optimise in-force business and increase the profitability of new business. We aim to achieve a return on equity of 8% to 10% by 2015 and a new business margin of over 1.5%. Furthermore, we are targeting additional cost savings of CHF 130 to 160 million. In the context of diversifying profit sources, we are aiming for a 60% to 70% profit share from risk business, such as death and disability, and fee business.

The progress we have made in recent years gives us confidence that we can achieve these aims. Our operational effectiveness allows us to exploit the opportunities offered even in today’s difficult market environment. All the conditions are in place for Swiss Life to strengthen its position in the market for comprehensive life and pensions and financial solutions – loyal customers, professional expertise, engaged employees, financial solidity and a strong brand. We would like to thank you, our shareholders, most sincerely for your loyalty and commitment in giving your support to the further development of our Group.

Rolf Dörig
Bruno Pfister
Chairman of the Board of Directors CEO  

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