Press Release

Nationale Suisse reports an exceptionally high profit in 2011, very good profitability in its Swiss business and an extremely robust solvency 1 ratio

28.3.2012

The Nationale Suisse Group held up well in 2011 in what was a tough economic environment. The insurer posted an exceptionally high profit and significantly increased its solvency 1 ratio. The profitable non-life business in Switzerland put in a very good performance. Nationale Suisse is moderately optimistic regarding the 2012 financial year.

2011 key figures at a glance:

• Exceptionally high consolidated profit of CHF 167.7 million (+ 82.1 %) including CHF 67.1 million after taxes from reserve release and CHF 6.1 million after taxes from discontinued operations (sale of Group life)
• Profit up by a pleasing 14.3 % to CHF 94.5 million from continuing operations excluding reserve release
• Slight increase in gross premiums to CHF 1 500.4 million (+ 0.4 % in local currencies) with the business mix fine-tuned by cutting down on life business
• Very positive growth in non-life premiums of + 6.7 % in local currencies, with specialty lines again enjoying double-digit growth (+ 11.9 %)
• Combined ratio improved from 96.6 % to 92.6 % (84.8 % including reserve release) thanks to a good claims trend
• Significantly higher equity and solvency 1 ratio increased to 271.9 % (2010: 183.8 %)
• Proposed dividend of CHF 1.80 (2010: CHF 1.50)

Exceptionally high consolidated profit
The Nationale Suisse Group recorded an exceptionally high profit of CHF 167.7 million (+ 82.1 %) in 2011 in a challenging economic environment. This includes a one-off reserve release of CHF 67.1 million after taxes in the Non-Life Switzerland segment as well as a post-tax transaction profit of CHF 6.1 million from the sale of the Group life business. Excluding the reserve release, continuing operations contributed a profit of CHF 94.5 million, a pleasing increase of 14.3 % on the previous year.

Commenting on the result, CEO Hans Künzle said: “Thanks to its clear strategy, Nationale Suisse once again succeeded in seizing the opportunities offered by the market in the 2011 reporting year. Our success is founded on our profitable business in Switzerland with increased focus on our target groups and on greater market cultivation and risk selection expertise in the strong growth area of our specialty lines.”

Very good premium growth in non-life, business mix fine-tuned in the life business
The Group’s gross premiums were increased slightly to CHF 1 500.4 million, up 0.4 % at constant exchange rates.

The non-life business performed very positively, posting gross premiums of CHF 1 216.9 million (+ 6.7% in local currencies). “Motor”, the most important line of business in premium terms at CHF 423.9 million, reported a 1.3 % increase in premiums. In local currencies, premiums in the specialty lines were up by 11.9 % to CHF 521.3 million. In line with strategy, they now make up 34.7 % of the Group’s premium volume as against 31.5 % in the previous year.

By contrast, the life business was affected by low interest rates and the implementation of Nationale Suisse’s new individual life strategy. For the purposes of fine-tuning the business mix, traditional life insurance products were underwritten with even greater caution in favour of less capital-intensive products. This strategy saw life premiums fall by 20.0 % in local currencies to CHF 283.5 million.

Further improvement in combined ratio thanks to good claims trend
Positive claims handling in the Non-Life Switzerland segment over the past few years necessitated a reserve release of CHF 85.0 million before taxes. This was underpinned by good claims experience in Switzerland and caused the underwriting result in the non-life business to rise sharply in the reporting year, up from CHF 24.3 million to CHF 67.4 million excluding the reserve release or as much as CHF 152.4 million including the reserve release. The Group’s combined ratio and claims ratio improved accordingly, falling respectively from 96.6 % to 92.6 % (or as low as 84.8 % including reserve release) and from 62.7 % to 59.7 % (51.9 % including reserve release).

In the profitable Non-Life Switzerland segment, the combined ratio improved to 85.1 % excluding the reserve release (2010: 92.2 %) with a slightly lower cost ratio. The improvements achieved during the reporting year not connected with the reserve release are mainly down to the implementation of the “Schlagkraft Schweiz” projects. The combined ratio in the Non-Life Foreign Countries segment suffered mainly from claims due to natural events, particularly in Italy, and from isolated major claims in Spain and Germany. The underwriting result was also adversely affected by the restructuring measures in Belgium, which were largely completed in 2011. The combined ratio in foreign countries thus increased from 105.2 % to 107.0 % despite a fall in the cost ratio by three percentage points.

Life result influenced by a fall in premiums and a lower investment result
The life business remained affected by persistently low bond yields in 2011. These placed continuing pressure on profitability in the traditional life business. The deliberately cautious underwriting policy adopted as a result led to a sharp fall in single premiums. This was only partially offset by an increased focus on less capital-intensive Credit Life and unit-linked products as well as pure risk cover. The result contributed by the life business fell from CHF 17.5 million to CHF 6.0 million before income taxes, with the impairments on Greek government bonds having a negative impact on the investment result. The restructuring measures introduced in Belgium in 2011 also adversely affected the result.

Pleasing return on investment against a background of low interest rates
Despite low interest rates and quality improvements within the portfolio, the current return on investment was kept constant at 2.7 %. By contrast, the return on investment fell from 4.3 % to 3.2 % due to lower gains and losses on investments and the impairments on Greek bonds in the amount of CHF 25.2 million. These effects were partially mitigated by significantly higher gains and losses from real estate management.

With investment policy continuing to focus on security, changes to the asset allocation were kept within tightly defined limits. Debt instruments (particularly bonds) as a percentage of total investments were increased by 0.9 % to 70.4 %. These are the most significant form of investment by some margin. Bonds issued by GIIPS countries were reduced significantly from CHF 401.7 million to CHF 162.9 million.

Marked increase in solvency 1 ratio
Equity increased substantially to CHF 914.5 million, with the solvency 1 ratio improving accordingly from 183.8 % to 271.9 % as at the end of 2011. This large increase was primarily the result of the high profit for the period. In late 2011, the rating agency A. M. Best awarded Nationale Suisse a Financial Strength Rating of “A-” (Excellent) with a stable outlook, underlining the Group’s excellent capital base. Dividend increased once again and authorised share capital created In view of the excellent result and the strong capital base, the Board of Directors is once again proposing an increased cash dividend of CHF 1.80 per share for the 2011 financial year (2010: CHF 1.50). It will also propose to the Annual General Meeting that the authorised share capital be retained.

Elections to the Board of Directors and consultative vote on the compensation report
Stephan A. J. Bachmann, a federally certified auditor, will present himself to the Annual General Meeting and the shareholders for reelection to the Board of Directors. He is Chairman of the Commission of the Swiss Institute of Certified Accountants and Tax Consultants and a member of the Board of Directors of Banque Cantonale Vaudoise.

As in the previous year, the Board of Directors will put the compensation report to the Annual General Meeting for a consultative vote. It contains the basic principles governing the compensation of the Board of Directors and Executive Board, as well as the reporting on compensation in 2011.

Cautiously optimistic outlook for 2012
The debt crisis and historically low interest rates look set to curb economic growth in 2012 too. Fierce competition can be expected to continue on the saturated insurance markets. With renewals having gone well in January 2012, however, Nationale Suisse has grounds for cautious optimism. In addition, another good technical result is expected at Group level, provided that natural disasters and major claims remain at a normal level in 2012. CEO Hans Künzle: “The foundations have been laid to achieve another pleasing Group result in 2012. In view of the vagaries of the economy and investments, however, forecasts for the financial year can only be made with great uncertainty. We dare to be different and do all we can to remain successful in this environment.”

The annual report 2011 can be accessed via the following link:
www.nationalesuisse.com/annualreport  

Brief profile
Nationale Suisse is an innovative, international and independent Swiss insurance group providing first-rate risk and pension solutions in non-life and life business as well as a growing number of tailored specialty lines products. Consolidated gross premiums came to CHF 1.5 billion in 2011. The Group comprises the parent company and about 20 subsidiaries and branch offices for   focused product lines in Switzerland, Italy, Spain, Germany, Belgium, Liechtenstein, Malaysia, Latin America and Turkey. The headquarters of Swiss National Insurance Company Ltd are in Basel. Nationale Suisse is listed on the SIX Swiss Exchange (NATN). On 31 December 2011, the Group employed 1 874 staff (full-time equivalents).

Disclaimer and exclusion of liability
The purpose of this press release is to inform the public about certain events or developments arising from the company's business.  The information published in this article is not an advertisement, offer or recommendation to engage in transactions involving securities or other products of Nationale Suisse or any other type of transaction. This press release may contain certain forward-looking statements.  Even if these forward-looking statements reflect the opinion and expectations of Nationale Suisse, a number of risks, uncertainties and other important factors may lead to actual developments and results differing strongly from the expectations of Nationale Suisse. It is pointed out expressly that the statements and projections contained in this press release are selective in nature. Nationale Suisse provides no guarantee, either explicitly or implicitly, regarding the accuracy and completeness of the statements and forecasts published in this press release.  Neither Nationale Suisse nor its executive bodies or senior managers accept any liability for any damage or losses arising directly or indirectly from the use of this press release.  Unless otherwise provided by applicable binding law Nationale Suisse is under no obligation to update or amend the statements contained in this press release, be it in response to new information, future events or any other reasons.

Updated post-publication information is available on our website www.nationalesuisse.com. You may find further details and forecasts about the business of Nationale Suisse there.

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