×

Swiss Life Beats Expectations, Raises Dividend

Life insurer Swiss Life's 2007 net profit beat expectations and it promised shareholders a fat pay-out after a major overhaul of its business, sending its shares soaring.

The company repeated ambitious goals for 2012 set in December, saying it saw little impact from any possible further credit writedowns, despite turbulent markets.

"We are fully aware that market development of recent months poses a further challenge. However, we see no reason to adjust our goals," Chief Executive Rolf Doerig said on a conference call with journalists.

Net profit rose 44 percent to 1.345 billion Swiss francs ($1.35 billion), the group said on Thursday, well above the 1.24 billion franc average forecast in a Reuters poll.

Swiss Life wrote off its exposure to U.S. subprime mortgages, which made up less than 0.1 percent of its investment portfolio, reducing net profit by 72 million francs.

It saw no need for further credit writedowns.

"We don't expect them, and still if there are any ... they will have a minimal effect on the profit and loss account," Chief Financial Officer Thomas Mueller said.

Swiss Life shares were 7.2 percent higher at the market close.

"We continue to be very positive on the stock, given its highly attractive valuation ... and the massive capital management measures which should definitely support the stock price," brokerage Helvea said in a note.

Swiss Life has gone through drastic change in the last few months of 2007, selling its Belgian and Dutch operations and the Banca del Gottardo banking unit, and using some of the money to buy German adviser AWD.

But it will still be flush with cash after the deals, and has promised to buy back 2.5 billion francs of shares.

The company said it would raise its dividend to 17 francs per share from 7 francs in the previous year.

The dividend would take the form of a reduction in the shares' nominal value.

The group repeated its targets through 2012, aiming to grow earnings per share by at least 12 percent a year, with a return on equity of at least 12 percent a year.

Foreign predators have bought a string of Swiss insurers recently, and mid-sized insurers like Swiss Life, which has a market value of around $8.5 billion, are busy designing strategies to remain independent.