Swiss Life Restates Results After PwC Discovers Errors

by Ulrika Lomas, Tax-News.com, Brussels

22 October 2002

In a further blow to the credibility of major Swiss financial institutions, the country's largest life insurer, Swiss Life, has been forced to restate its first-half losses, reporting a net loss for the first half of the year of SFr578 million ($383 million), SFr192 million more than it had announced in September. Swiss insurance shares fell sharply, led by Swiss Life itself.

The disclosure, which results from a error in bond valuations discovered by auditors PricewaterhouseCoopers, comes just a month after the company restated its first-half earnings from 2001 from a profit of SFr253m to a loss of SFr1m.

“The new reporting error is very regrettable,” said Swiss Life’s Chief Executive Officer, Roland Chlapowski, who recently replaced Manfred Zobl, and has been struggling to bolster the company's credibility in advance of an attempt to raise SFr1.2bn ($794m) of new capital needed to repair the damage done by years of ill-considered acquisitions. In September, Swiss Life said it would in future concentrate on its core life insurance business, focusing on Switzerland and key European markets.

“It reveals weaknesses in the project management in implementing the new securities administration system… We will follow up accordingly… and strengthen the accounting team,” he added.

Andres Leuenberger, chairman of the board at Swiss Life said the group planned to strengthen its internal controls and that there would be no repeat of such incidents in the future. The company said that the error in its latest half year results did not affect the group's reported equity position and the planned capital increase remained unaffected.

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