Swiss Life warns on profit, ING posts first loss
Swiss Life (SLHN.VX: Quote, Profile, Research, Stock Buzz) warned on profits and cut its dividend, while Dutch financial group ING (ING.AS: Quote, Profile, Research, Stock Buzz) posted its first quarterly loss, as the financial crisis bites into insurers’ investment income and premiums.
Swiss Life, Switzerland’s third-largest insurer, said on Wednesday third-quarter premium volumes fell 11 percent to 3.075 billion Swiss francs ($2.61 billion), warned it would not meet its full-year net profit guidance and halted its share buyback program.
ING reported its first-ever quarterly loss as impairments on stocks and bonds, counterparty losses and property writedowns ate into its income.
Banker and insurer ING projected its loss in October before agreeing to a 10 billion euro ($12.7 billion) cash injection by the Dutch government to shore up its core capital.
Swiss Life said it no longer assumes its dividend will be 600 million francs and halted its share buyback programme.
Shares in Swiss Life fell steeply, down 14 percent at 93.6 Swiss francs, while ING shares were up 1.7 percent at 8.2250 euros at 0825 GMT. The DJ Stoxx European insurers index was up 1.2 percent.
“It’s really a problem that the dividend is going to be cut. It was said this was a sure thing and people bought the share in the hope of an attractive yield,” said one trader.
The insurer now expects to report a clear full-year loss on continuing operations but said it would post extraordinary gains of 1 short-term cash loans.5 billion francs from disposals.
“The pronounced intensification of the financial crisis since the end of September, however, means that we cannot confirm our earnings guidance for 2008,” Chief Executive Bruno Pfister said in a statement.
A Swiss Life spokesman confirmed the company does not intend to sell its stake in German pensions specialist MLP (MLPG.DE: Quote, Profile, Research, Stock Buzz) or launch a hostile bid.
Swiss Life shares have fallen around 60 percent since the company bought a near 25 percent stake in MLP in August. It trades at about five times forecast 2009 earnings, just behind the average of the European insurance sector .
German financial services provider AWD (AWDG.DE: Quote, Profile, Research, Stock Buzz) also said on Wednesday it was closing some of its activities in the UK.
ING LOSS ALREADY PROJECTED
ING was one of the healthier financial institutions with relatively manageable losses from the credit crisis, but it decided to take the capital injection to shore up its balance sheet after its share plummeted to a 15 year-low on investor concerns over the impact of the credit crisis.
Its net loss for the third quarter was 478 million euros, after writedowns totaling 1.5 billion euros. ING posted a profit of 2.3 billion euros a year earlier.