Life saving

12 November 2008 By Mike Prest

The insurer is heading for a fullyear loss. Premiums fell 11% in the third quarter and market turmoil since then has wreaked more havoc with hedge fund and bond portfolios. Only a retreat from marktomarket accounting has kept the solvency ratio from looking dangerously low.

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Swiss Life said on November 12 that it will report a clear loss on continuing operations for the 2008 financial year. At the end of August it anticipated a net profit of between SFr1.8bn and SFr1.9bn ($1.6bn).

The company said: Since reliable predictions are impossible in view of the current uncertainty on the financial markets, we are refraining from updating our earnings guidance.

Premium income fell 11% in the third quarter compared with the same period of last year to SFr3.08bn. Premium income from sales in Liechtenstein fell 45% because of a tax dispute between the Germany Liechtenstein. Premium income for the first nine months of the year was 1% higher over the same period at SFr14bn.

The group reclassified SFr15bn of bonds as loans at their market value on 1 July 2008. That put the solvency ratio at 150% on 30 September.

Swiss life also said it lowered its equity exposure to well below 1% and took measures to reduce the risk on the hedge fund portfolio significantly.

The company has halted its share buyback programme and said it no longer assumes that the dividend will come to SFr600m.

Swiss Life shares fell 11% to about SFr13.

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