G ROUP MANAGEMENT REPORT Life and Health Insurance 69 SWITZERLAND  Allianz Suisse _  Allianz Suisse Lebensversicherungs-Gesellschaft posted revenues of 1.2 billion euros. _  That makes the company number six in the Swiss market. Total premium income remained at 1.2 billion euros. It came mainly from the consumer life insurance business, which in- cludes a high percentage of non-recurring premiums. Revenues were boosted by the introduction of unit-linked products. Pre- mium income from group health insurance plans also posted  2 percent growth. Revenues in IFRS accounts, which only rec- ognize the risk and cost components of premiums from invest- ment-oriented life insurance products, total premium income declined to 557 (651) million euros. This regulatory measure enables us to once again under- write profitable new business. In addition, we have introduced comprehensive measures aimed at revising our product port- folio, standardizing our administrative systems and implement- ing new requirements due to changes in the regulatory en- vironment. The  expense ratio improved 3.7 percentage points to 8.6 per- cent. Write-downs of deferred acquisition costs were lower than in the previous year, and our cost-cutting measures in distribu- tion began to show palpable results. Lower realized losses and write-downs on the investment port- folio pushed up  investment income to 205 (31) million euros.  *) In relation to total premiums earned (net). But despite operating improvements and higher investment in- come, our Swiss company once again posted an after-tax loss. This  loss came to 9 (loss of 80) million euros and is again at- tributable to an excessive guaranteed interest in the Swiss life insurance business. This interest rate had been lowered from  4 to 3.25 percent at the beginning of 2003, but even that level cannot be sustained under the prevailing conditions in the finan- cial markets. Swiss government bonds, for example, have a yield of 2.5 percent. A further cut of the interest rate to 2.25 percent was decided, effective January 1, 2004. In the group insurance business, this new rate also applies to the insurance portfolio. With a uniform and modernized product portfolio, we antici- pate a return to the profit zone in the  current fiscal year .  2003 2002 2001 Total revenues ¤ mn 1,197 1,197 1,174 Gross premiums ¤ mn 557 651 584 Premiums earned (net) ¤ mn 542 624 557 Expense ratio *) % 8.6 12.3 10.9 Earnings after taxes ¤ mn – 8.5 – 79.6 – 17.1 Investments ¤ mn 7,736 8,819 8,066