Swiss Life to cut 520 jobs as net profits fall 92%

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    Swiss Life Holding has announced it is to implement a cost cutting programme after revealing that net profits for the first half of the year have fallen 92%.

    Insurer Swiss Life said it would cut 520 jobs in Switzerland as it posted an 8.6 percent drop in first half net profit to 139 million Swiss francs (91.5 million euros, 131 million dollars).

    “To remain competitive in the closely-fought life and pensions market and to enhance our ability to compete, we must focus more strongly on client needs and product profitability and further reduce our cost base,” chief executive Bruno Pfister said in a statement.

    The Swiss insurer aims to save up to 400 million Swiss francs through measures such as job cuts which would be implemented by 2012.

    Analysts at Bank Wegelin described Swiss Life’s latest earnings as “disappointing” and said the cost-cutting measures were “inevitable.”

    These measures “should pay off in the long term but the group therefore remains a construction site with an uncertain future,” they added.

    The insurer’s stock was the worst performer in early morning trade, slipping 2.20 percent to 124.20 Swiss francs, while the overall Swiss Market Index was up 0.06 percent.

    half year results highlights :

    • Swiss Life achieved a profit of CHF 172 million from continuing operations in the first six months of 2009 (+13%; HY 2008: CHF 152 million); the net profit stood at CHF 139 million.
    • The Group improved its result from operations by 11%.
    • Adjusted for extraordinary impacts and currency effects, premiums rose 7% to CHF 10 387 million.
    • The net investment result of 1.8% was significantly higher than the prior-year figure.
    • Shareholders’ equity came to CHF 6 752 million at the end of June 2009 (end 2008: CHF 6 609 million).
    • The IFRS solvency ratio remained solid at 155%.
    • Swiss Life is launching an extensive set of measures to boost competitiveness, achieve profitable growth and reduce costs.
    • Efficiency gains and cost savings of around CHF 350 to 400 million compared to 2008 will be achieved by 2012.
    • As a result of the cost savings, Swiss Life is making 520 job reductions in Switzerland over the next three years. A programme of measures, which was agreed on with the social partners, is in place for the employees affected to assist them with their professional reorientation.

    Bruno Pfister, Group CEO: “We can look back on a satisfactory first half in 2009. This performance results from overall improvements at operational level within the Group. Over the last few months, we have prepared the company for the persistently challenging economic environment and tougher competitive climate. With the measures to boost competitiveness announced today, we are creating the conditions to grow profitably under our existing strategy and to exploit our business opportunities in the international life and pensions market using Swiss Life’s proven strengths.”