UPDATE 2-Swiss Life investment return lifts shares
* Net profit 93 mln Swiss francs vs 60 mln fcast
* Further German writedown unlikely
* Confirms dividend at 4.50 Sfr
* Solvency ratio rises to 242 percent
* Shares up 5.5 pct, best since May 2011 (Recasts lead, adds CEO, analyst comments, shares)
ZURICH, Feb 27 (Reuters) - Swiss Life reported a net profit and a return on its investments that beat expectations on Wednesday, driving shares in Switzerland's biggest dedicated life insurer to their best level in almost two years.
The positive earnings drew a line under a difficult year for the wealth manager, which had to write down around half the value of its German business, AWD, after buying it for 1.2 billion euros ($1.57 billion) in 2008.
Chief Executive Bruno Pfister said the likelihood of further writedowns was extremely low.
Shares rose 5.5 percent to 147.3 Swiss francs at 1105 GMT, having hit their best level since May 2011. The rise outperformed a flat European insurers index.
"Book value is at record highs of 320 Swiss francs (per share)," said Kepler analyst Fabrizio Croce, adding that even once a sector discount was factored in, the company's shares could be valued at between 163 and 224 Swiss francs.
The company posted a 26 percent increase in profit from operations to 993 million Swiss francs ($1.07 billion), which Pfister said was driven by operational improvements and a net investment return of 4.8 percent, up from 3.8 percent in 2012.
Net profit fell 85 percent from a year earlier due to a pre-announced writedown on its German advisory arm, but at 93 million Swiss francs ($99.8 million) was ahead of average expectations for 60 million francs in a poll.
Shareholder equity increased by 12 percent to 10.3 billion francs.
Swiss Life said in November it was writing down 576 million francs on the German unit, AWD, after buying it for 1.2 billion euros ($1.57 billion). Last year it took a 47 million franc provision for legal bills involving AWD.
To be rebranded "Swiss Life Select" in April this year, the business has been beset by problems, from client advisers leaving to claims it improperly pushed products in Germany and Austria - allegations AWD denies. AWD founder Carsten Maschmeyer resigned from the Swiss Life board of directors in December.
CEO Pfister said further strategic acquisitions would not be a priority, although Swiss Life would consider opportunistic buys.
He also said performance was unsatisfactory at AWD and at Swiss Life's international business with high net worth clients, where premium income declined 4 percent, and the company reported a 34 million franc loss.
Swiss Life confirmed it would propose a dividend of 4.50 Swiss francs for the year and said its solvency ratio -- a measure of its ability to meet future claims -- rose to 242 percent from 213 percent a year earlier. ($1 = 0.9315 Swiss francs) ($1 = 0.7649 euros) (Reporting by Martin de Sa'Pinto; Editing by Louise Heavens)