Press Release

Nationale Suisse announces a pleasing semi-annual result and structural changes to its Swiss business

16.9.2009

In the first half of 2009, the last period to be reported in accordance with Swiss GAAP FER accounting standards, Nationale Suisse attained pleasing results:

- The Group result increased markedly by 36% to CHF 91.1 million (2008: 67 million).

- Premiums grew slightly by 0.8% to CHF 998.8 million on a currency-adjusted basis, due to the rigorous application of a quality-oriented underwriting policy.

- The combined ratio improved to 96.2% (2008: 97.8%).

- The real estate weighting in the investment portfolio was reduced to 22.7%.

- The Group's equity capital was strengthened substantially by CHF 47.5 million to CHF 649.2 million.

- The Solvency 1 Ratio increased strongly to 165.6% (from 156.1% at the end of 2008).

Nationale Suisse is strengthening its market activities in Switzerland. With effect from 1 October 2009, all sales activities will be concentrated in the business unit "Multi-Channel Sales Switzerland", headed by Ralph Jeitziner, the current Head of the business unit "Non-Personal/Sales Switzerland". Sven Cattelan will join the Nationale Suisse Executive Board and will lead the newly created business unit "Customer Service & Non-Life Switzerland". This business unit will encompass all operational activities in the insurance area.

Another good Group result
Nationale Suisse Group reported profit of CHF 91.1 million for the first half of 2009, an increase of 36% on the previous year's level of CHF 67 million. The positive result reflects further operational progress and a good return on investment, largely due to gains realised on the disposal of real estate.

Slight growth in premiums and rigorous application of quality-oriented underwriting principles
In the first half of 2009, gross premiums written were CHF 998.8 million on a currency-adjusted basis (2008: 990.7 million). This corresponds to growth of 0.8%. In the same period last year a fall of 12.4% was reported, but at that time growth was negatively influenced by the sale of the French subsidiary and the receipt of a single premium totalling some CHF 80 million in occupational pension provision. At 10.4%, premium development in specialty lines is extremely plea-sing.

Reported gross premiums in non-life were CHF 681.1 million (2008: 685.1 million), registering a fall of 0.6% on the first half of 2008. Adjusted for fluctuations in exchange rates (euro), growth is reported at 1.4% (2008: 0.2%, excl. the French subsidiary sold in 2007). Premium growth in our European subsidiaries is pleasing at 3.7% (on a currency-adjusted basis).

Gross premiums in life insurance came to CHF 317.7 million (2008: 322.4 million), showing a slight decline over the first half of the previous year of 1.5% (2008: -15.2%), or a 0.4% reduction in local currency. The main reason for the slight decline is the negative development in occupational pensions in Switzerland due to lower single premiums.

In spite of the increased competition, it is worthy of note that Nationale Suisse has rigorously adhered to and applied its underwriting principles geared to quality in all markets. As a consequence it has consciously relinquished business at rates that are too low.

Non-life reports strong improvement and a pleasing fall in the combined ratio
The underwriting result in non-life increased by more than 40% against the same period last year, rising to CHF 86.8 million. This is attributable to operational improvements (predominantly proactive claims management), greatly improved pricing expertise and gains realised on the disposal of real estate. The combined ratio now stands at 96.2% (2008: 97.8%), i.e. has been reduced by 1.6 percentage points.

The underwriting result in life was CHF 8.2 million (2008: 10.7 million). The allocated investment return improved by more than 40% on the previous year's value of CHF 43.4 million, increasing to CHF 62.4 million. Since the investment return often forms a component of life products, which policyholders thus participate in, the cost of participation in profits has also increased significantly, rising from CHF 4.7 million in the previous year to CHF 17.4 million for the period under review. Claims experience was again favourable in the domestic market.

Excellent result in investment activity; reduction in the real estate weighting
Nationale Suisse once again achieved a good investment return. The increase in gains on the sale of investments boosted total investment income from CHF 276.4 million to CHF 332.0 million. Gains were made on the disposal of real estate of around CHF 87 million (2008: approx. 65 million), which reduced the real estate weighting in the investment portfolio to 22.7%, in line with strategy.

Solidity strengthened by increased shareholders' equity and a higher Solvency 1 Ratio
As of the end of the first half of 2009, the Group's equity capital stands at a pleasing level of CHF 649.2 million (before deduction of minority interests). This represents an increase of CHF 47.5 million on the level as of 31 December 2008. This development is attributable to the strong interim result and the share dividends approved at this year's Annual General Meeting, which have placed only a minimal burden on shareholders' equity.

The annualised return on equity amounted to 29.4% (2008: 23.5%). The value of shareholders' equity last year was reduced by the large holding of own shares. The deduction due to own shares has been markedly reduced since the sale of this holding to the VHV Group in November 2008.

The growth in shareholders' equity facilitated a marked improvement in the Solvency 1 Ratio, which increased from 156.1% as of 31 December 2008 to a favourable level of 165.6%. The risk capacity of Nationale Suisse derived from this ratio has thus increased once again and is at a sound level in an international comparison.

Adoption of IFRS (International Financial Reporting Standards) for the 2009 financial year
Nationale Suisse will adopt International Financial Reporting Standards (IFRS) for the first time when it publishes its business results for the 2009 financial year. The 2009 Semi-Annual Report has been compiled according to Swiss GAAP FER. The principles applied by these two standards differ considerably, in particular in their accounting treatment of investments. The 2009 interim figures will be presented in the 2009 annual financial statements according to IFRS. The change will strongly affect profit and shareholders' equity. For example, gains from the disposal of real estate, amounting to approximately CHF 87 million under Swiss GAAP FER, will appear significantly lower under IFRS. Given the conversion effects, an interpretation of this semi-annual report with view to the expected full-year net profit and shareholders' equity as of the end of the year under IFRS is possible only to a limited extent.

Outlook for the 2009 financial year and medium-term goals
As a result of the economic and financial crisis and the harsh price war in the insurance industry, adverse market conditions still prevail. It is also to be assumed that investment returns will be lower than they were before the onset of the crisis on the financial markets.

In spite of the difficult market environment, the results for the first half of the year provide a good basis for an attractive overall annual result. It should be noted that the storms, and in particular the hailstorm on 23 July 2009, will have an impact on the results of the second half of the year. The events are expected to generate a net loss burden of CHF 7.5 million.

Traditionally, Nationale Suisse announces medium-term goals in autumn of each year. As the consequences of the financial crisis are still difficult to estimate and a recession has set in, we will refrain from making any announcements this year. It would also be difficult to compare targets published according to Swiss GAAP FER with IFRS.

Organisational changes in the Swiss business strengthen sales force and efficiency
By implementing the following measures, Nationale Suisse is strengthening its efforts to boost sales and increase efficiency in the Swiss business:

• A new business unit "Multi-Channel Sales Switzerland" will encompass all sales activities in Switzerland (Nationale Suisse, smile.direct, European Travel Insurance). The unit aims to implement a comprehensive multi-channel approach and design sales processes with greater efficiency.
• The new business unit "Customer Service & Non-Life Switzerland" will comprise all the operational insurance activities of Nationale Suisse Switzerland (factory approach). The business area "Accident/Health" (including claims handling) will be transferred to the new unit from its current location in the "Personal" business unit. The unit aims to achieve further, quantitative improvements with even better coordinated underwriting and more professional and customer-oriented claims management. Customer service will also be strengthened in first and second level support.

The business unit "Multi-Channel Sales Switzerland" will be headed by Ralph Jeitziner, who currently heads the business unit "Non-Personal/Sales Switzerland". Sven Cattelan has been appointed a new member of the Executive Board of Nationale Suisse with effect from 1 October 2009, when he will also assume leadership of the newly created business unit "Customer Service & Non-Life Switzerland". Mr Cattelan has been working for Nationale Suisse since 2001, holding roles such as manager of the former regional Basel offices. Since September 2005 he has held overall responsibility for claims management within the business unit "Non-Personal/Sales Switzerland".

Nationale Suisse believes these changes will increase customer value, facilitate positive overall growth of 2% and generate additional income of CHF 20 million by 2012. This growth target is 1% above market growth, and would therefore expand the position of Nationale Suisse in Switzerland.

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