Nationale Suisse increases profit and records sustained growth

Key figures of the 2012 annual result at a glance: Pleasing increase in consolidated profit by 5.8% to CHF 103.5 million. Equity even more robust and increase in solvency 1 ratio to 259.2%. Organic growth in gross premiums of 1.5% in local currencies. Very good performance of non-life premiums, up 4.9 %, but fall in life premiums of 13.2% in local currencies due to the economic situation. Growth in specialty lines adversely impacted by slump in Credit Life brought on by the economic situation; growth excluding Credit Life 12.2% at constant exchange rates. Combined ratio improved from 92.9% to 91.2% thanks to lower cost ratio. Return on investment unchanged at 3.2% with a slightly lower return on current investment of 2.5%. Dividend of CHF 1.70 to be proposed.

All the previous year’s figures are restated to take account of the effect of applying the revised IFRS standard IAS 19 early, as announced in the 2012 interim report. In addition, for comparison purposes, figures will be used from 2011 that exclude the effect of the reserve release in the Non-Life Switzerland segment in 2011.

Pleasing profit increase and stronger equity base
In 2012, the Nationale Suisse Group increased its profit by 5.8% to a pleasing CHF 103.5 million. Excluding the conversion effect resulting from a change to the rules relating of the Nationale Suisse pension fund in Switzerland in the first half of 2012, profit from continuing operations rose by 5.4% to CHF 96.7 million. Thanks to the good result and positive valuation effects in investments, Nationale Suisse successfully increased its equity by 12.4% to CHF 893.9 million. This led to a further improvement in the solvency 1 ratio from 234.4% to a very robust 259.2%. “Nationale Suisse is financially sound and clearly positioned”, says Hans Künzle, CEO of Nationale Suisse. “In view of the persistently difficult market environment this cannot be taken for granted. We are constantly developing in order to continue operating successfully and independently in the future. We want to remain successful in our traditional markets and at the same time generate long-term growth in new markets with the specialty lines.”

Growth in non-life premiums – life business cautious
Nationale Suisse increased gross premiums to CHF 1 512.5 million in 2012, up by 0.8% in Swiss francs.

Thanks to support from the specialty lines, the non-life business performed well, as it had in the previous year, posting premium growth of 4.9% in local currencies. This rise was underpinned by the Non-Life Switzerland segment, which grew by 8.4 % to CHF 865.8 million. The injection of fresh momentum into sales and the new performance-based sales team agreement, introduced in 2012 and with a strong focus on the target groups, made a key contribution in this regard.

In the life business, however, gross premiums fell by 13.2% at constant exchange rates. Traditional mixed insurance and single-premium retirement pensions were only offered on a selective basis as interest rates were at record lows, while the Credit Life business suffered a slump brought on by the economic situation. In contrast, the less capital-intensive unit-linked products experienced triple-digit growth, as planned, to CHF 11.0 million.

The specialty lines saw gross premiums increase by 2.0% at constant exchange rates. Excluding Credit Life, the specialty lines once again enjoyed double-digit growth, up by 12.2% at constant exchange rates. Overall premiums in the specialty lines rose to CHF 495.5 million, representing 32.8% of the total premium volume, a slight increase.

Improved combined ratio thanks to progress in the Non-Life Foreign Countries segment At Group level, the net combined ratio was reduced by 1.7 percentage points year-on-year to 91.2%. While the Non-Life Switzerland segment saw an increase from 85.5 % to 87.6%, still a respectable figure, Non-Life Foreign Countries enjoyed a marked improvement from 107.0 % to 96.3%. Due to natural events and other major claims, the claims ratio in the Non-Life Switzerland segment increased from 52.7% to 57.4% in the reporting year, whilst the figure for Non-Life Foreign Countries improved from 74.0% to 64.0%, primarily on the back of a portfolio restructure in Belgium. The cost ratio was reduced in both segments, down from 32.8% to 30.2 % for Non-Life Switzerland and from 33.0% to 32.3% for Non-Life Foreign Countries. This was, among others, the result of optimised processes and increased efficiency, with the adjustment to the rules relating to the Nationale Suisse pension fund in Switzerland also impacting positively.

Higher investment income brings improved results in the life business
Thanks to a major improvement in the investment result, the profit before income taxes in the life business increased from CHF 6.0 million to CHF 14.4 million in 2012, while the premium volume fell. In 2011, impairments had been required on Greek government bonds. In 2013, Individual Life Switzerland will complete its strategic repositioning towards innovative, less capital-intensive products.

Investment income steady despite persistently low interest rates
With only marginal changes to the average volume of investments, the net return from current investment income of 2.5% was down slightly on the 2.7% achieved in the previous year. This is a result not least of the decrease in current income from financial investments and from real estate (due to lower volumes). Investment management costs were also higher in 2012. However, this decline was offset by higher gains on financial instruments resulting in a return on investment unchanged at 3.2%.

Slightly higher dividend proposed in demanding market environment
Thanks to the good operating result and excellent capitalisation, Nationale Suisse intends to continue its profit appropriation policy despite a demanding market environment. The Board of Directors is to propose to the Annual General Meeting that a slightly higher dividend of CHF 1.70 per share be paid for 2012. Although CHF 1.80 was paid out in 2011, the figure would actually have been CHF 1.60 excluding the positive impact contributed by the reserve release in the Non-Life Switzerland segment.

Controlled growth and stringent cost management: the watchwords for 2013
Given the economic outlook, the insurance business remains fiercely competitive, with little growth in market volumes. The economic situation will continue to have an adverse impact on foreign activities this year. However, on the back of the renewals concluded at the start of the year, the situation for Nationale Suisse in Switzerland is cautiously positive. Hans Künzle is convinced: “Controlled growth and stringent cost management combined with a long-term investment policy will remain the order of the day in 2013.”

The 2012 annual report can be downloaded from: www.nationalesuisse.com/annualreport

Media Contact:
Nationale Suisse Steinengraben 41 4003 Basel www.nationalesuisse.com/investor-relations

Remo Meier Investor Relations Tel. 061 275 22 45 Fax: 061 275 22 21 remo.meier@nationalesuisse.com

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