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Pleasing Operational Result (Half year results)

26.09.2001

Despite a difficult environment, Swiss Life/Rentenanstalt was able to expand its business volume, increase assets under management and reduce operating expenses. As expected, semi-annual profit at CHF 253 million was below the corresponding previous year's figure. At CHF 11.1 billion, gross written premiums amounted to about 58% of previous year's total figure.
The 2001 interim results are based on IAS for the first time, so that there is no comparability with the 2000 interim results calculated according to ARR. Thus, figures must be compared with the 2000 annual results which were determined according to IAS.

In the first half of 2001, Swiss Life/Rentenanstalt was able to increase premium income as well as assets under management. This positive expansion of business operations, however, was faced by a negative development on those stock exchanges that are important for the Group. Net semi-annual profit amounted to CHF 253 million (CHF 418 million before tax and minority interests). As expected, this is below the previous year's figure. At CHF 3.1 billion, the financial result at the end of June 2001 equalled 30% of the total figure for the previous year. Direct income developed as expected, whereas net realised and unrealised gains were well below expectations due to the unfavourable stock market trend that only allowed for a limited amount of profits compared to the previous year.
The technical result is extremely favourable. Operating expenses after six months equalled only about 45% of the entire previous year's period. This resulted in a substantial improvement of the cost rate in life insurance business from 12.5% to 9.6% and a reduction of the combined ratio in non-life insurance business to 103.8% (110.8%).

Life Insurance Sector
Written premiums in the life sector reached CHF 10 billion in the first half year (about 58% of the entire previous year). About CHF 1.9 billion of this is attributable to individual insurance, approximately CHF 5.7 billion to group insurance, CHF 2.1 billion to insurance deposits and CHF 0.3 billion to indirect and other business. The share of regular premiums remains equal to 56%. A negative development in the investment field is also reflected by a reduction in profit contribution by the life sector (about CHF 345 million).

Non-Life Insurance Sector
Gross premiums almost reached CHF 1.2 billion. This equals about 54% of the total figure for the previous year, to which a positive development in Switzerland ("La Suisse") contributed for the main part. Of these premiums, about 56% are attributable to accident and health insurance, 44% to other business. Contribution to profit amounted to about CHF 19 million.

Investment Management Sector
As on June 30, 2001, Swiss Life/Rentenanstalt managed Group-wide assets in the amount of CHF 217.4 billion. Despite the stock market slump, these assets increased by CHF 3 billion or 1.4% compared to December 31, 2000. Off-balance sheet assets amounted to CHF 64.5 billion (+3.4% compared to the end of 2000). In the first semester of 2001, the investment management sector contributed CHF 51 million to profit. Staff costs increased slightly in the first half year. This increase is mainly the result of the establishment of capacities for the management of third parties' funds.
Swiss Life/Rentenanstalt gained a variety of significant asset management mandates. Net inflow from new funds amounted to over CHF 5 billion in the first half of 2001. The real estate portfolio was strongly expanded in terms of quantity and quality through substantial acquisitions.

Private Banking Sector
As per June 30, 2001, Swiss Life/Rentenanstalt managed assets in the amount of CHF 54.6 billion in the private banking sector. This equals an increase of CHF 0.9 billion. This sector contributed CHF 94 million to profit.

Business Operations in Switzerland
Swiss Life/Rentenanstalt's Swiss Division generated gross written premiums in the life sector of about CHF 5.9 billion in the first semester. This is equal to almost two thirds of the total figure for the previous year. Regular premiums increased, whereas single premiums were slightly below previous year's level.
Benefits paid declined. Targeted measures in group business served to curb previous year's negative trend concerning surrenders and premature contract cancellations.

Business Operations in Europe
Gross premiums (including insurance deposits) amounted to more than CHF 5 billion at the end of the first semester; however, they were slightly lower than the corresponding previous year's figure. Nevertheless, a substantial increase in written premiums is expected for the second half of 2001.

Outlook on the Annual Results
Further growth is expected for the second semester. The development of costs in the first semester indicates that the cost ratio will decrease compared to the previous year. Direct investment income is expected to develop in line with investments. However, earnings from asset management activities will have an extremely positive overall effect on the result.
The slump on the stock markets has worsened since the balance sheet date (6/30/2001) and in particular following the occurrences in the US. Swiss Life/Rentenanstalt has reduced its investments in stocks with the help of suitable measures. As a company that operates almost exclusively in the European market, Swiss Life/Rentenanstalt would like to state that it is neither affected as a direct insurer nor as an active reinsurer by claims arising in the US.
It is difficult to make an estimation on the profits to be expected at present. However, in confirming past statements and particularly in view of the difficult environment it must be said that previous year's result will no longer be achieved. Nevertheless, a positive cost development shows that the operational measures which Swiss Life/Rentenanstalt decided on in the past two years are beginning to bear fruit.
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