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Swiss Life/Rentenanstalt: Long Term Strategy AG


At its session yesterday, among other subjects, the Swiss Life/Rentenanstalt Board of Directors discussed in-depth the Long Term Strategy AG. The Board of Directors welcomes the review instigated by the Federal Office of Private Insurance and will do everything necessary to achieve complete transparency in this matter.

Long Term Strategy AG (LTS AG) was set up by Swiss Life/Rentenanstalt in December 1999. In the spring of 2000 the Board of Directors' Committee, under the direction of the then Chairman, approved the proposed increase of capital to CHF 2 million with the aim of introducing a co-investment plan. Co-investment plans serve to avoid a conflict of interest for managers who make investment decisions on behalf of a company by allowing them to invest their own money and thus expose themselves to the attendant risks and opportunities. Alongside the capital invested by Swiss Life/Rentenanstalt, members of the Swiss Life/Rentenanstalt Corporate Executive Board invested private funds in LTS AG at their own risk. LTS AG invested its assets, wherever possible, in the same instruments in which Swiss Life/Rentenanstalt invested its Group equity, and in accordance with the same principles. The LTS AG Board of Directors consisted of members of the Swiss Life/Rentenanstalt Corporate Executive Board and representatives of Swiss Life/Rentenanstalt who did not hold a stake in the company. PricewaterhouseCoopers were appointed auditors. At the start of 2000 Swiss Life/Rentenanstalt granted LTS AG a loan which was repaid in full during the course of the year. The loan conditions were the same as those applying to other companies in the Swiss Life Group. In the period 2001-2002 Swiss Life/Rentenanstalt purchased LTS AG shares from the other shareholders at their net asset value.

LTS AG was a great commercial success. This was especially due to the sale of a stake held by the Swiss Life Group in the Swiss hedge fund group RMF Investment Group in May 2002 (see the Swiss Life/Rentenanstalt press release of 24 May 2002) in which LTS AG had been able to acquire a stake in the spring of 2000. Swiss Life/Rentenanstalt has successfully worked together with the RMF Group since 1996 and in 1998 and 2000 was able to acquire shareholdings in the company totalling 23.5% or CHF 44 million. The disposal of this stake, including profits from the sale of a stake in a joint venture, resulted in a profit of CHF 330 million for Swiss Life/Rentenanstalt. The resulting profits from the sale of the LTS AG shares amounted to CHF 14.6 million for Swiss Life/Rentenanstalt and CHF 11.5 million for the six members of the Corporate Executive Board who held shares in LTS AG, based on total investments of CHF 3.8 million. In detail the profits for the individual shareholders were: Swiss Life/Rentenanstalt CHF 14.6 million, Manfred Zobl CHF 2.2 million (CHF 800 000 invested), Dominique P. Morax CHF 3.6 million (CHF 967 000 invested) Roland Chlapowski CHF 3.2 million (CHF 967 000 invested), Hannes A. Meyer CHF 1.7 million (CHF 613 000 invested), Markus Weisskopf CHF 832 000 (CHF 200 000 invested) and Hans-Rudolf Strickler CHF 45 000 (CHF 258 000 invested).

In spring 2002 the Board of Directors, under the direction of Andres F. Leuenberger, decided that LTS AG should no longer function as an investment company for members of the Corporate Executive Board and that its operations should be wound down. The reason for this decision was a reassessment of the situation by the Board of Directors, which now considered the interlocking of capital, although legally and financially unexceptionable, to be undesirable for other overriding reasons.

LTS AG ceased its investment activities on 18 July 2002. Within the Swiss Life Group there are no other investment companies apart from LTS AG in which members of the Corporate Executive Board have personal investments.

The Federal Office of Private Insurance has appointed an independent expert to review the business activities of LTS AG. Swiss Life/Rentenanstalt's Board of Directors supports this measure and takes the public criticism regarding LTS AG very seriously. Swiss Life/Rentenanstalt will release information concerning the results of the review after it has been concluded and in consultation with the Federal Office of Private Insurance.