UPDATE 2-Swiss Life aims for property market as profit jumps
* H1 net profit rises 30 pct, lifts shares to 5 yr high
* Insurer shifting out of cash, bonds and into mortgages
* Gross written premiums rise to 10.4 bln sfr
* Investments in Swiss real estate very attractive - CEO (Recasts, adds CIO)
ZURICH, Aug 14 (Reuters) - Swiss Life heralded a shift in investment from cash and debt and into property and mortgages after posting a 30 percent rise in net profit that pushed shares to a 5-year high.
Low interest rates - slashed close to zero in Europe and the United States - have crimped the investment income of insurers and pension funds, driving many to invest in higher yielding instruments in order to meet liabilities.
The proportion of Swiss Life's portfolio placed in real estate rose to 14 percent at the end of June compared to 13 percent at the end of December, while mortgage investments ticked up to 4.7 percent from 4.5 percent, the company said on Wednesday.
The insurer holds more than 80 percent of its real estate portfolio in Switzerland's booming housing market, where real estate prices and home mortgage loans have grown on average about 20 percent since 2008 thanks to ultra-low interest rates, immigration and Switzerland's appeal as a safe haven.
"The difference in return between government debt and office buildings is something that is still very attractive for us," Chief Investment Officer Patrick Frost said.
The Swiss National Bank has repeated warnings of dangerous dynamics in the Swiss housing market, though the risk of a Swiss housing bubble faded in the second quarter, a recent index showed.
Frost told Reuters that reliable regulation and income in the housing sector compared to stocks plus strong Swiss immigration and robust demand for renting property added to the draw of property investing.
In recent years the insurer has seen a 2 percent appreciation on its portfolio, while the proportion of vacant property has fallen, he said.
The insurer said selling more policies across all of its businesses helped to lift first-half net profit to 472 million Swiss francs ($505.30 million), beating forecasts. Operating costs remained at roughly the same level as the previous year.
Swiss Life was the biggest gainer on the Dow Jones index of European insurance stocks, rising 5.3 percent to a five-year high.
The firm posted an overall net investment result after additional gains and appreciation of 2.4 pct in the first half, down slightly on the year.
Net earned premiums rose to 7.832 billion Swiss francs in the first six months of the year, while premium income rose to 10.4 billion, the insurer said.
Swiss Life said its solvency ratio - a measure of an insurer's ability to meet future claims - fell to 205 percent from 239 percent at the end of 2012.
Reinsurer Swiss Re reported last week it was shifting out of government debt and into higher yielding corporate bonds. ($1 = 0.9341 Swiss francs) (Additional reporting by Martin de Sa'Pinto; Editing by Elizabeth Piper and Thomas Atkins)