SWITZERLAND – Switzerland’s 2.5% legal minimum interest rate guarantee for pensions could be a factor in the possible sale of insurer Winterthur, observers say.

News reports this week said France’s Axa was in talks to buy Winterthur from parent Credit Suisse. None of the companies would comment.

Pictet analyst Peter Thorne told IPE the minimum interest rate guarantee, which was set by the federal council in September at 2.5% a year, was “not a source of attraction” for potential buyers the business. The rate has been a controversial issue in Switzerland for some time.

“Winterthur has been on offer for the last two years and so far nobody has come forward,” Thorne said - but pointed out that some parts of Winterthur’s business could interest buyers.

Previous press reports have named insurer Generali as a potential buyer for Winterthur’s Spanish and German operations. But a spokesman for the Italian company said: “We have opened no dossier on Winterthur.”

Thorne explained the Swiss insurance market currently comes across as “highly regulated and politicised”. Therefore “it is not clear if you can make much money”. And profit prospects could be further impaired by limited growth.

“I think most probably it will end up being spun off to shareholders,” Thorne commented.

At the beginning of the year, Winterthur introduced a way to shift risks from scheme sponsors to employees, the so-called ‘Winterthur Model’.

In a press release the group said: “The key features of the model are the far reaching separation of the pensions and insurance relationships and the resulting partial independence and strengthening of collective foundations”

Winterthur would offer collective foundations an “adequate interest rate” but not as high as the minimum interest rate.