* Swiss Life hikes dividend after profit beats forecasts
* Policies for US wealthy are tax compliant overall - CEO
* CEO says cannot rule out request from US tax authorities
(Adds analysts, share price, detail, quotes)
By Alice Baghdjian and Paul Arnold
ZURICH, Feb 26 Switzerland's biggest dedicated
life insurer, Swiss Life, raised its dividend more
than expected after 2013 profits topped even the most optimistic
forecast, sending its shares to a 5-1/2 year high.
Outgoing Chief Executive Bruno Pfister played down concerns
that Swiss Life could get caught up in a U.S. crackdown on tax
avoidance by American citizens, saying its policies for wealthy
U.S. individuals were overall in line with the rules.
Swiss Life's earnings were lifted by cost cutting and
increased premium income, prompting the Zurich-based insurer to
propose a dividend of 5.50 Swiss francs per share for 2013,
compared to 4.50 francs in the previous year, representing a
payout ratio of 23 percent.
The company said it was able to substantially strengthen its
reserves - money that insurers build up against anticipated
claims, making its balance sheet more resilient. It said it had
implemented three quarters of the cost cuts it planned by 2015.
"The increased 5.50 Swiss franc dividend ... is a promising
sign the balance sheet strengthening has progressed well," said
Stefan Schuermann, an analyst at Vontobel, who has a "buy"
rating on the stock.
The higher profit came despite an 8.6 percent drop last year
in gross written premiums at Swiss Life's unit selling insurance
policies to wealthy clients worldwide.
The business sells policies known as wrappers, or Private
Placement Life Insurance (PPLI), into which the very wealthy
place stocks, private equity holdings and other bankable assets,
allowing them to lower their tax rate.
Critics say they can be used as a tax dodging tool, and
insurers in Switzerland have been preparing for months for U.S.
officials to investigate the products.
"All in all, we consider the bulk of the business to be tax
compliant, so I am relatively relaxed, but I cannot rule out
that there may be a few black sheep in there," Pfister said.
Pfister, who will be replaced by Swiss Life's investment
chief Patrick Frost later this year, said the firm had neither
approached, nor been approached by, U.S. tax authorities.
"In light of all the information that is now flowing from
Swiss banks to the U.S. authorities, we cannot rule out that an
enquiry from U.S. authorities will come at some point," he said.
The insurer's dividend yield of 2.2 percent remains below
many of its peers, including Switzerland's Zurich Insurance
at 6.4 percent, and Helvetia at 3.7 percent.
Dominik Studer at J. Safra Sarasin said Swiss Life shares
were attractively priced, and also rates the stock a "buy".
"We see further upside in light of the progress towards the
company's 2015 targets, which will allow Swiss Life to gradually
increase its payout ratio going forward," Studer said.
Shares in Swiss Life jumped 5 percent on the results to 213
Swiss francs by 1050 GMT, their highest since August 2008. The
stock was outperforming a European insurers index, which
fell 0.2 percent.
The Zurich-based insurer posted full-year net profit of 784
million Swiss francs ($882.73 million), compared with a 712
million average of estimates in a Reuters poll.
The result was almost eight times higher than in 2012, when
a writedown of Swiss Life's German advisory arm hit earnings.
Gross written premiums in Switzerland rose 8.8 percent,
helped by demand from small and medium enterprises, while its
second-biggest market, France, had a 10 percent increase in
premiums in 2013.
In January, the U.S. Justice Department received 106
requests from Swiss entities to participate in a U.S. settlement
programme aimed at ending a long-running probe of tax-dodging by
Americans using Swiss bank accounts. Not all the entities might
be banks, it said.
Pfister said Swiss Life ceased to write new business for
clients based in the U.S. in 2012, adding that the insurer had
returned funds to almost all of its American clients who had
invested in wrappers linked to bank accounts at Bank Frey, a
Swiss private bank.
Frey is one of 14 Swiss firms under formal U.S.
investigation for its dealings with U.S. clients and untaxed
assets. It said late last year it would close because the
probe's costs eclipsed the bank's financial strength.
Later on Wednesday, U.S. senators will grill U.S. law
enforcers and Swiss bankers in a five-year-old dispute over
Swiss bankers helping Americans dodge taxes.
($1 = 0.8882 Swiss francs)
(Additional reporting by Katharina Bart editing by Jane
Merriman and Tom Pfeiffer)