Swiss Life targets accelerated growth

A share buyback totalling CHF2.5 billion ($2.4 billion) over the
next two years and a bolstered distribution structure are among key
inputs into Swiss Life’s strategy to achieve average annual
earnings per share growth of 12 percent and maintain return on
equity at above 12 percent. While these objectives could be viewed
as conservative, they represent a show of confidence from
Switzerland’s largest life insurer, which has recovered well from
net losses of CHF1.7 billion in 2002 and CHF115 million in
2001.

The targets were announced at an investors’ day held in December
2007 and followed Swiss Life’s recent sales of its private banking
unit, Banca del Gottardo, to Italian insurer Assicurazioni Generali
for CHF1.875 billion and of its Belgian and Netherlands units to
Netherlands bancassurer SNS Reaal for €1.45 billion ($2.12 billion)
to €1.54 billion.

For the year ending 31 December 2007, Swiss Life anticipates total
premium income of CHF24 billion, an increase of 20 percent compared
with 2006, and a net profit of about CHF1.2 billion, an increase of
26 percent. However, the net profit includes a positive
contribution of about CHF200 million from the sale of the
Netherlands and Belgian units. If this is excluded, the forecast
net profit represents an increase of only about 5 percent compared
with 2006.

The forecast results for 2007 should also be viewed in a
longer-term historical perspective. For example, the CAGR of total
premium income between 2000, when CHF19.3 billion was reported, and
2007 is only 3.7 percent. Similarly, the CAGR of net profits
between 2000, when CHF924 million was reported, and 2007 is a mere
4.45 percent, including the CHF200 million profit from the sale of
the Netherlands and Belgian units. If this profit is excluded, the
net profit CAGR falls to 1.3 percent.

However, Swiss Life is aiming to put a difficult period of recovery
and restructuring behind it and move into a period of sustained
growth. A key element of this strategy, and one expected to result
in a considerable rise in new business, was added in December 2007
when Swiss Life announced a strategic alliance with German
financial advisory company AWD Holdings.

The alliance will be underpinned by Swiss Life’s intention to
become AWD’s majority shareholder. In January 2008 Swiss Life will
launch a public offer for AWD at €30 per AWD share, a premium of 30
percent above the weighted average share price during the three
months prior to the announcement. The bid values AWD at €1.16
billion and has AWD’s management board’s backing. In addition, the
family of AWD’s founder, Carsten Maschmeyer, support the bid and
will tender two-thirds of its 30 percent shareholding.

“Swiss Life and AWD complement one another ideally,” said Rolf
Dörig, who has been Swiss Life’s group CEO since 2002. He added
that the strategic partnership with AWD would enable Swiss Life to
access growth markets in Central and Eastern Europe as well as the
Austrian market. “At the same time, we can expand our market
penetration in Germany and strengthen our leading position in
Switzerland,” Dörig said. Swiss Life had a 28 percent market share
in Switzerland in 2006.

According to Swiss Life, AWD employs over 6,300 financial advisers
and is the largest independent financial advisory company in
Europe. AWD has a strong distribution network in Germany, Austria
and Switzerland. In addition, AWD is strongly positioned in Central
and Eastern Europe and operates in the UK. In the first nine months
of 2007, AWD advised about 370,000 customers, 150,000 of whom were
new customers. AWD’s total customer base consists of over 1.9
million private clients. In 2006 AWD generated total revenue of
€728 million and earnings before interest and tax of €77.8
million.