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Swiss Life returns to profit, aims to keep private banking arm
Swiss Life has switched out of record losses, reporting a 2003 net profit of 233 mn Swiss francs and said it would try to keep its private banking arm.
The insurer Swiss Life has switched out of record losses, reporting on Tuesday a 2003 net profit of 233 million Swiss francs (155 million euros, $181 million) in 2003.
The Swiss-based group, formerly Swiss Life/Rentenanstalt said in a statement that it would try to keep the private banking arm, Banca del Gottardo, which it had wanted to sell.
Although the overall result marked a swift turnaround from a 1.7 billion Swiss franc loss a year earlier, premium volumes at Swiss Life fell by four per cent to 18.8 billion Swiss francs -- and by 19 per cent on its dominant Swiss market.
The life insurer cut 1,800 jobs in 2003 and pared down costs by 532 million Swiss francs.
Swiss Life's equity, which had been hard hit by the decline in stock markets in recent years, also recovered in 2003, rising by 19 per cent to 5 billion Swiss francs.
Although Swiss Life had been trying to dispose of Banca del Gottardo for the past 18 months in order to concentrate on its core life insurance and pensions business, it said Tuesday that ownership of the private banking arm would instead be transferred to the parent holding company.
"We have decided to keep the bank as an important part of the Swiss Life Group. We intend to further build on Banca del Gottardo's good market positioning, working together with the existing management," Rolf Doerig, corporate chairman said.
The effective acquisition of the bank by Swiss Life Holding from the life insurance arm will be financed by a combination of internal resources, and an equity and convertible bond issue totalling 1.34 billion Swiss francs.
"In addition, Swiss Life may access the debt market to refinance existing debt equivalent of up to CHF 450 million maturing in 2005, taking advantage of the favourable market conditions," the group said.
No dividend will be paid this year because of the Banca del Gottardo transaction, but the group said it was targeting further "significant improvements" in profitability in 2004 and a return to premium growth.
