UPDATE 3-AWD restructuring weighs on Swiss Life profits

* 2009 net profit 277 mln Sfr vs poll forecast 282 mln Sfr

* Solvency ratio 164 pct vs 168 pct at end-Q3; div halved

* Operating profit 324 mln Sfr vs 1.143 bln loss in 2008

* AWD loss 92 mln Sfr, in black in first 2 months of 2010

(Adds analyst comment, updates shares)

ZURICH, March 30 (Reuters) - Swiss Life's (SLHN.VX) net profit last year just missed forecasts, it reported on Tuesday, with the weight of restructuring costs at struggling German financial advisory unit AWD marring the insurer's return to operating profit.

Its solvency ratio, a measure of assets over liabilities that gives an indication of capital strength, worsened to 164 percent from 168 percent at the end of the third quarter and Swiss Life said it would cut its dividend to 2.40 francs from the 5 francs paid for 2008 in a bid to bolster its capital.

The Financial Times Deutschland said earlier this month that Swiss Life would halve its dividend to 2.50 francs and report a wider loss than previously indicated at AWD. [ID:nLDE62G0U5]

Shares in Swiss Life recovered from a slight dip early on Tuesday to trade up 0.58 percent at 1109 GMT, while the STOXX Europe 600 Insurance index .SXIP was up 0.49 percent.

"The leak of AWD figures two weeks ago avoided a harder landing for Swiss Life today," said Kepler Capital Markets analyst Fabrizio Croce, adding that the market had expected a dividend of around 3.20 francs.

Swiss Life, which accounts for a third of insurers' share of the Swiss company pensions market, said net profit came in at 277 million Swiss francs ($260.1 million), below an average forecast of 282 million francs in a Reuters poll.

Writedowns on investments pushed the insurer to a loss on continuing operation of 1.1 billion francs in 2008. For 2009, profit from continuing operations was 324 million francs.

The sales of its Dutch and Belgian business as well as Banca del Gottardo boosted the previous year's net profit by 1.5 billion francs.

Volatile markets led Swiss Life to cut exposure to equities to near zero in the crisis, reducing investment returns during the recovery. Low interest rates have also hampered its ability to earn the money it needs to repay policyholders and still turn a satisfactory profit.

"In the first two months of 2010, Swiss Life was able to build on the progress made in the fourth quarter of 2009," said Swiss Life Chief Executive Bruno Pfister.

"The same goes for AWD, which was in the black in the first two months of 2010 and is advancing as planned," Pfister said.

AWD LOSS

Restructuring costs pushed AWD, a German group of independent financial advisers bought for 1.2 billion euros in 2008, to a loss of 92 million francs, showing that Swiss Life still has some way to go to turn around the unit.

The loss was more than twice that posted in 2008 but the reorganisation was paying off, Pfister said, adding a writedown on AWD goodwill was not necessary for 2009.

"The good start to 2010 indicated by management should calm investors a little, but will not help too much today," analysts at Swiss private bank Wegelin said.

Swiss Life's management has come under fire over the costly deal as hoped-for sales growth through AWD has been underwhelming and client advisers have left the unit in droves.

Analysts have said a future writedown on AWD could run to hundreds of millions of francs, punching a hole in Swiss Life's profits and book value. [ID:nLDE61F0YK]

"There will not be any goodwill writedown on AWD despite currently widespread fears, but AWD will remain firmly under the scrutiny of investors," said Zuercher Kantonalbank analyst Georg Marti.

Swiss Life confirmed the targets it gave at an investor day in December of a 350 to 400 million franc reduction in costs by 2012 and dividend payout ratio of 20 to 40 percent.

It also stuck to its goal of 10 to 12 percent return on equity, though this fell to 4 percent in 2009 from 5 percent the previous year.

($1=1.065 Swiss francs) (Reporting by Jason Rhodes; Editing by Sharon Lindores)