Swiss Life, the country’s largest life insurer, had better-than-expected earnings growth in the first half and is well on course to reach its targets. The only worrying sign was the development of business in Switzerland.

Swiss Life CEO Patrick Frost was back from an illness, right on time to announce the good news: «We managed to further strengthen our earnings power and, in particular, to expand our fee business,» he said according to a statement released by the company today.

The company was «ahead of schedule» in implementing its Swiss Life 2018 programme to reorient its business towards profitability and capital efficiency: «Swiss Life is therefore in a very good position to achieve its financial goals for 2017.»

Better Than Expected

Adjusted profit from operations rose 5 percent to 763 million Swiss francs in the first half, while net profit increased by an equal margin to 524 million, a stronger result than analysts had expected.

Shareholders’ equity rose 2 percent to 13.9 billion francs. Swiss Life achieved an adjusted return on equity of 10.5 percent, which was 0.6 percentage points lower than in the corresponding period for the previous year, due to the markedly higher average equity, the company said.

All of Swiss Life’s market units improved their segment results. Switzerland had an increase of 1 percent to 425 million francs, France reported a rate of 7 percent, Germany even a plus of 15 percent, while Swiss Life International contributed with a growth rate of 2 percent.

One Blemish Only

The one blemish of the first-half result was the 10 percent decline in premium volumes in Switzerland compared with the first half of 2016, resulting in a drop to 5.9 billion francs. Premium income in local currency declined 1 percent to 10 billion francs on a group-wide basis.

Strong Asset Management

While the company is holding back on generating more premium volume, it is putting a stronger focus on asset management. The division generated 3.3 billion francs in net new assets for its third-party business in the first half. Total assets under management reached 54.3 billion francs, up 10 percent from the end of 2016, making Swiss Life a very substantial player in the Swiss fund industry.

Swiss Life generated direct investment income of 2.2 billion francs, unchanged from a year earlier. The non-annualized direct investment yield was 1.5 percent. The net investment yield on a non-annualized basis fell to 1.4 percent from 1.6 percent due to lower net realized gains.