Six ex-managers of the Swiss Life insurance group who were involved in an investment scandal in 2002 have agreed to pay the company SFr350,000 ($273,000).This content was published on December 14, 2005 - 10:08
The men made a combined profit of SFr11.5 million by investing money in Long Term Strategy (LTS), a firm closely linked to Swiss Life.
An inquiry into the secretive fund found serious shortcomings concerning control mechanisms.
The settlement announced by Swiss Life on Wednesday is based on the proposal of the Zurich commercial court.
In its ruling of April 2003, the Federal Private Insurance Office ordered the company to claim back profits gained by the former board members between 2000 and 2002.
The insurance regulator said that six members of Swiss Life's old guard had endangered the interests of policyholders by investing their own money in LTS.
The six managers made a combined profit of SFr11.5 million on an initial investment of SFr3.8 million.
At the time of the inquiry, Herbert Lüthy, director of the Private Insurance Office commented that senior managers implicated in the scandal had taken on considerable risks in participating in the fund.
If the fund had made losses, it would have been up to Swiss Life to cover them since LTS was not in a position to do so.
Swiss Life's main priority after the scandal was to reach an out-of-court agreement, the company said in a statement.
"This did not materialise as the suggested agreement worked out by the mediator employed did not meet with the approval of the Federal Private Insurance Office," the statement said.
The company subsequently initiated civil proceedings in Zurich. The commercial court recommended an agreement whereby the ex-senior managers in question would pay Swiss Life a total of SFr350,000 towards costs incurred.
This corresponds to ten per cent of the SFr3.5 million sum in litigation. Both sides accepted the recommendation.
The LTS case surfaced in October 2002 at a time when Swiss Life had admitted accounting errors and was under pressure to raise capital through a rights issue to shore up its finances.
LTS investment activities were terminated in July 2002 after Swiss Life's then chairman, Andres Leuenberger, ordered its dissolution.
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The Swiss Life Group is one of Europe's leading providers of pension and life insurance products.
The group employs a staff of around 10,000.
The investment scandal took place when the company was known as Swiss Life/Rentenanstalt. It rebranded to Swiss Life at the beginning of 2004.
Swiss Life revealed in October 2002 that six of its top managers invested their own money in Long Term Strategy (LTS), a firm closely linked with Swiss Life.
They made a combined profit of SFr11.5 million from the investment.
In April 2003, the Federal Private Insurance Office ruled that the managers' actions endangered the interests of policyholders and ordered Swiss Life to claim back the profits made.
A settlement has now been reached through the Zurich commercial court whereby the ex-managers will pay SFr350,000 towards the costs of the LTS commitment.
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