- a disappointing financial result, because the reduction of our equity exposure from 16% at the start of the year to less than 2% (net) as of 31 December 2002, undertaken to safeguard the capital base, involved the realisation of losses;
- a loss on business in Switzerland, where falling interest rates caused a further deterioration in underlying conditions;
- a loss by Banca del Gottardo of CHF 160 million in its local closing (after extraordinary adjustments and provisions totalling CHF 200 million);
- the reduced valuation of Banca del Gottardo in the Swiss Life Group consolidated balance sheet to CHF 1.4 billion, and
- restructuring costs totalling approximately CHF 130 million.
Rolf Dörig, Chief Executive Officer of the Swiss Life Group, on the look ahead at the annual figures: "Despite the negative result, there were also positive aspects to 2002, a watershed year. With our decision to concentrate on core business, the measures introduced to boost efficiency and the successful capital increase we have taken our first steps in the right direction. The implementation of the new strategic course is proceeding according to plan. However, considerable effort is still required if we are to achieve lasting success with our ambitious goals in this very challenging market environment."
Stable premiums - noticeably lower costs
Premium volume remained stable compared to the previous year. The targeted CHF 170 million reduction in operating costs for 2002, i.e. one-third of the overall CHF 515 million cost economies which the enterprise aims to make by 2004, was achieved. Staff cuts were also as planned.
Banca del Gottardo makes extraordinary valuation adjustments
After extraordinary adjustments and provisions totalling CHF 200 million, Banca del Gottardo posted a loss of CHF 160 million. The bank anticipates a return on equity of over 10% for the 2003 financial year, which is equivalent to a profit of more than CHF 80 million. The measures to boost efficiency and reduce risk have created the prerequisites that will enable the bank to be sold at a good price once market conditions improve. Bruno Pfister, Chief Financial Officer of the Swiss Life Group, will take a seat on the Board of Directors.
CHF 4 billion in equity
Thanks to the successful capital increase at the end of last year, the Swiss Life Group has sufficient financial leeway to pursue its new strategic direction. Consolidated capital and reserves are estimated at CHF 4 billion as of the end of 2002, taking into account the anticipated loss. Since the equity exposure on investments was reduced early on last year, we were largely able to counteract the impact of persistently negative stock market trends on our capital base and to maintain a high degree of solvency. At the end of February 2003 the equity exposure on investments was less than 2%.
Implementation of strategy proceeds according to plan
The implementation of the strategic realignment is proceeding according to schedule. The new management is single-mindedly pressing ahead with the concentration on core business. Each country has adopted a programme to step up efficiency.
Since the announcement of the new strategic direction last September it has been necessary to revise some earlier decisions. At that point in time, the Swiss insurance company «La Suisse», which generates two-thirds of its premium income from life insurance, was not classified as core business. This decision will be reviewed in the next few months in the context of a general analysis of Swiss Life's positioning in the Swiss market. In France, as has been announced, property and casualty insurance no longer belongs to core business, while health insurance will be maintained in order to build up business in the life sector and with the goal of better exploiting synergies in distribution.
Pulling the group pensions business in Switzerland out of the red is an important objective for Swiss Life. Despite the lowering of the minimum required rate of interest to 3.25% with effect from 1 January 2003, there has been a further deterioration in underlying conditions in this area due both to the steep rise in disability insurance claims, induced by economic trends, and to historically low interest rate levels. For this reason, in addition to the ongoing cost-reduction programmes, premiums were adjusted at the start of the year. Premiums increased by an average 13% for customers. The corresponding premium rate changes have been examined and approved by the Federal Office of Private Insurance (FOPI). Swiss Life will continue to campaign for realistic terms of reference in the group life business, in the interests of creating an occupational benefits system which is secure and stable in the long term.
Continually challenging market environment
The continually unfavourable market environment with negative trends on the stock markets and, in particular, the historic lows in interest rates present life insurers with great challenges. Rolf Dörig, Chief Executive Officer of the Swiss Life Group: "2003 will be another very challenging year for Swiss Life and for the industry as a whole. By introducing measures addressing revenue and costs, as well as clearly lowering the risks, we have created the necesssary conditions for once again generating a profit in the current year."
The Swiss Life Group is one of Europe's leading providers of long-term savings and protection and life insurance. Swiss Life offers comprehensive advice across a broad range of products via agents, brokers and banks in both its domestic market, Switzerland, where the company is market leader, and selected European markets. Multinational companies are serviced with tailor-made solutions by a network of partners in over fifty countries.
Swiss Life Holding, registered in Zurich, was founded in 1857 as the Swiss Life Insurance and Pension Company. The shares of Swiss Life Holding are listed on the SWX Swiss Exchange (SLHN). The company employs around 12,000 members of staff.
This publication contains specific forward-looking statements, e.g. statements including terms like “believe”, “assume”, “expect” or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the company and those explicitly or implicitly presumed in these statements. Against the background of these uncertainties readers should not place undue reliance on forward-looking statements. The company assumes no responsibility to update forward-looking statements or to adapt them to future events or developments.