Switzerland’s largest life insurer, Swiss Life, said on Monday its Swiss Life Select unit had reached an agreement with the Austrian consumers’ association to end litigation over allegations the unit gave customers misleading advice.
The former AWD unit, which Swiss Life bought in 2008 for €1.2 billion (CHF1.48 billion) and re-branded as Swiss Life Select earlier this year, still faces similar allegations in Germany.
The company, which reports first half 2013 results on Wednesday, said payment of the €11 million settlement will be made to the Austrian consumers association, VKI. The association had previously sought compensation of €40 million.
«We are very content with this outcome as it is quick and it allows VKI to pay out 30 per cent of the differential damage to the consumers,» said Josef Kubitschek, head of VKI.
In a statement, Swiss Life said that in light of the settlement the allegation of systematic misleading advice was not upheld. «The present agreement represents a full and final settlement of all claims of the investors in connection with the ‘collective actions’,» it said.
Numbers game
Swiss Life was founded in 1857 in Zurich as Schweizerische Rentenanstalt. The group is one of Europe’s leading providers of life insurance and pension solutions.
In 2012, Swiss Life increased its profit from operations, adjusted for one-off effects, by 26 per cent from CHF788 million ($850 million) to CHF993 million. Adjusted net profit stood at CHF681 million, up from CHF557 million.
Primarily as a result of the impairment in AWD’s intangible assets and additional provisions for litigation, together with restructuring costs under the new group-wide programme «Swiss Life 2015», this produces reported net profit of CHF93 million.
At the end of 2012, Swiss Life employed a staff of 7,046 (full-time equivalents).