Swiss Life’s German unit comes good

 
City A.M. Reporter
SWISS Life’s profits nearly doubled in the first half of the year on the back of a strong performance by German subsidiary AWD, allaying fears the insurer could be forced into an embarrassing writedown of AWD’s value.

Switzerland’s biggest life insurer also said it was on track to achieve key margin targets for 2012 after deep cost cutting, as it reported a first-half net profit of SwFr269m (£165m).

That compares with SwFr139m in 2011 and analyst consensus of around SwFr218m.

AWD, a German group of independent financial advisers bought for €1.2bn (£1bn) in 2008, bounced back to an operating profit of €20.4m after losing money in the first half of 2009.

Swiss Life’s management has said the costly investment in AWD was crucial to growing sales of Swiss Life products, particularly in the strategically important German market.

“The problem child AWD seems to be on the road to recovery,” analysts at private bank Wegelin said.

The insurer said its solvency ratio -- a measure of assets over liabilities that gives an indication of capital strength -- rose to 175 per cent from 165 per cent at the end of the previous quarter, dampening worries about needs for a capital hike under new Swiss regulations.