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August 27, 2009

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Swiss Life plans to cut jobs despite profit gain

SWISS Life said it is cutting jobs and costs after two investments in Germany failed to yield hoped-for benefits, even as first-half profits beat forecasts.

Switzerland's largest life insurer said yesterday it aimed to cut 520 jobs in Switzerland by 2012 - about 6 percent of its total work force - and reduce costs of about 350 million Swiss francs (US$329.1 million) to 400 million francs at the same time.

Swiss Life has suffered in the last year from low interest rates, which have hampered its ability to repay policy holders. Plus sales and profitability at recently acquired German financial advisor AWD have not grown as hoped, and strategic dithering has marred its cooperation with German pensions specialist MLP.

"The measures announced are regrettable but necessary. They might pay off in the longer term, but the company remains a building site with an outcome that remains uncertain," said Marco Schwender and Martin Koch, analysts at Swiss private bank Wegelin.

Net profit from continuing operations for the first half rose 13 percent to 172 million francs against an average analyst forecast of 144 million francs in a Reuters poll. Gross written premiums fell to 10.39 billion francs from 10.89 billion francs a year earlier.

Swiss Life's solvency ratio, a measure of assets over liabilities, improved from 150 percent at the end of the first quarter to 155 percent. The higher an insurer's solvency ratio, the better placed it is to repay its debt obligations.


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