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Swiss Life Undetermined Share: Swiss Life Unexpectedly Increases Operating Profit in First Half of Year | 13/8/19

Swiss Life grew in the first half of the year and gained a surprising amount.

Above all, the expansion of the taxi business and the one-off tax effect guaranteed this. The volume of premiums in the supply business has swelled as expected following the withdrawal of counterparty AXA.

The life insurance company, which is also heavily involved in financial advisory and asset management, increased its operating profit by 6 percent to 846 million Swiss francs. Net profit rose 10 percent to 617 million, according to a statement Tuesday.

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Swiss Life performed better than expected by bank analysts. In the process of publishing the data, they made an average of 828 million Swiss francs and 610 million net profits.

Swiss Life benefits from a one-off positive effect of 30 million Swiss francs in the implementation of the Swiss tax reform in some cantons. Adjusted return on equity increased by one percent annually to 11.4 percent, more than the target range of 8 to 10 percent.

Growth after AXA download

Expected growth spurt achieved in volume: From January to June, the group claimed premiums of CHF 14.1 billion. Adjusted for currency effects, this is one-third more than a year ago. The growth was striking in Switzerland.

The reason for the noticeable increase: At the beginning of the year, Swiss Life's second largest provider of occupational retirement plans (BVGs) grew. Many Axa customers have switched to Swiss Life. Full insurance is very popular for SMEs in particular, as the offer offers companies comprehensive protection in terms of pensions.

However, this year's growth is unique. "We expect the volume of single premiums to return to normal next year," Swiss Life CEO Patrick Frost said in a statement on BVG's business development.

The taxi business has expanded further

As a whole, Swiss Life has for years been increasingly focused on expanding its business, which has imposed fees. For example, it aims to reduce the dependency on financial market developments with record low interest rates currently.

In the first half of the year, revenues from fees for financial services, asset management and investment-related life insurance rose to CHF 876 million. Adjusted for currency effects, they increased by 13 percent. In the so-called fee-based business, profits thus increase by 7 percent to 260 million.

Both Swiss asset managers and Life's own advisory channels have contributed to the growth, she said. Net investment in new assets totaled CHF 6.2 billion in third-party client investment, increasing management assets by 12 percent to 79.5 billion from the start of the year. One of the main factors is the acquisition of German property manager Beos.

Swiss Life started well in the new corporate program "Swiss Life 2021" and has continued its positive development in recent years during the first half of 2019, Frost commented on the results achieved. To further develop the business, he was confident of a conference call.

In this way, the Group can rely on a solid capital base, which protects the balance sheet from stronger distortions in financial markets. Swiss Life expects the capital ratio in the context of the Swiss Solvency Test (SST) at the end of June to be about 200 percent above the target range of 140 to 190 percent.

Swiss Life shares are heading for good numbers without direction

Although Swiss Life's shares began trading lower on Tuesday, despite good semi-annual data, they were able to make their way to positive territory. In the further course they are unstable.

At the end of trading, they lost 0.24 percent to 465.40 francs.

In analysts' circles, the semi-annual results are performing well. Swiss Life has presented solid figures and further progress at the operational level, writes Georg Marty of ZKB. Both investment performance and own funds have continued to develop well.

UBS's Johnny Urwin is somewhat restrained. He said operating profit was in line with expectations and net income was above consensus estimates, mainly because of a one-time tax credit. Urvin also writes about "solid results" and "stable operating trends" in Swiss Life.



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