Swiss Life has produced its biggest ever half-year loss for the year to June, heralding a fresh round of job cuts.

The company said it made a loss for the six months was 386m Swiss (�166m; $256m) francs, one-third worse than even the most pessimistic predictions, and warned that it was unable to make a forecast for the full year.

The answer to its predicament, it said, is to sell off a huge range of "non-core" assets, including private banking and non-life insurance across Europe - although at the moment the turmoil in the financial services business means finding buyers is proving difficult.

The disappointing performance is just the latest round of bad news to hit the faltering insurance business, which has been in the doldrums ever since September 11.

Dumped

The response among investors was to sell insurance stocks in all major markets.

Swiss Life's own stock, already down 70% this year, fell a further 2.6% in early trading, with investment bank WestLB warning that "the question now is whether Swiss Life can convince investors it has a profitable future."

German insurer Allianz was also punished for its rival's dire showing, its shares falling 3% in Frankfurt.

And in the UK, Royal and Sun Alliance - an insurer with its own problems including a departed chief executive - lost almost 10% of its value in the first two hours of trading.

Core cutbacks

Having cut 600 jobs earlier this year, Swiss Life is now saying a further 700 are due for the axe by 2004.

But the cutbacks will predominantly be in the core life insurance business in Switzerland, France, Germany and the Benelux countries on which the company is concentrating.

The rest of the company, including a collection of private banks, are up for sale as soon as buyers can be found, a process which Swiss Life admitted is taking longer than it had hoped.

On the other hand, it does mean that jobs at the profitable "non-core" assets intended for disposal, such as the 600 people employed by Swiss Life UK, look safe for the moment, a Swiss Life spokeswoman told BBC News Online.