Swiss Life Holding Ag · SIX:SLHN
Swiss Life — H1 2019 Earnings Presentation
67 slides from Swiss Life's earnings presentation, Aug 13, 2019
Slide 1: Half-year results 2019 Investor presentation
Half-year results 2019 Investor presentation 13 August 2019
Slide 2: Agenda
Agenda Overview Patrick Frost Financial results and Matthias Aellig strategy update 2 | Investor presentation | Half-year results 2019
Slide 3: Good start to the Swiss Life 2021 programme
Good start to the Swiss Life 2021 programme Net profit, RoE Fee result CHF m, % CHF m +10% +7% 617 243 260 561 Net profit 10.4% 11.4% RoE1) HY 2018 HY 2019 HY 20182) HY 20192) VNB, NBM Cash to Holding CHF m, % CHF m +82% +8% 387 657 708 212 2.6% VNB 1.8% NBM HY 2018 HY 2019 HY 2018 HY 2019 1) Equity
Slide 4: Agenda
Agenda Overview Patrick Frost Financial results and Matthias Aellig strategy update 4 | Investor presentation | Half-year results 2019
Slide 5: Key figures HY 2019 results
Key figures HY 2019 results Net profit increased by 10% to CHF 617 m Adjusted profit from operations improved by 6% to CHF 846 m Fee and commission income grew by 13% in local currency to CHF 876 m Fee result increased by 7% to CHF 260 m Premiums up by 33% in local currency to CHF 14.1 bn
Slide 6: Selected P&L figures
Selected P&L figures CHF million (IFRS basis) HY 2018 HY 2019 Gross written premiums, fees and deposits received 10 741 14 080 Fee and commission income 798 876 Net investment result insurance portfolio for own risk 2 637 2 132 Net insurance benefits and claims -8 138 -11 574 Policyholder participat
Slide 7: Profit from operations excluding major one-off effects
Profit from operations excluding major one-off effects CHF million (IFRS basis, adjusted) +6% 830 +3 +13 846 801 +2 +5 808 797 -11 Profit Restruc- Programme Profit FX Profit Profit Restruc- Programme Profit from turing costs for from translation from from turing costs for from operations charges new
Slide 8: Business review Switzerland
Business review Switzerland CHF million (IFRS basis, VNB) HY 2018 HY 2019 Change GWP incl. PHD 6 129 9 636 +57% • GL: +63% (market: +8%) mainly due to higher single and periodic premiums from new clients; growing semi- autonomous business • IL: +10% (market: +1%) driven by higher single premiums wit
Slide 9: Business review France
Business review France EUR million (IFRS basis, VNB) HY 2018 HY 2019 Change GWP incl. PHD 2 550 2 536 -1% • Life: -3% (market +3%); UL share of 46% (market 24%) • Health & protection: +4% (market +4%) with individual protection +7% (market +6%); P&C: +4% (market +3%) Fee and commission 141 139 -1% •
Slide 10: Business review Germany
Business review Germany EUR million (IFRS basis, VNB) HY 2018 HY 2019 Change GWP incl. PHD 589 603 +2% • Higher premiums with risk and modern-traditional products (market +10%) Fee and commission 198 213 +8% • Higher revenues from owned IFAs due to increased income1) number of financial advisors Ope
Slide 11: Business review International
Business review International EUR million (IFRS basis, VNB) HY 2018 HY 2019 Change GWP incl. PHD 810 808 0% • Higher premiums with private clients offset by lower single premiums with corporate clients Fee and commission 106 144 +36% • Increased contribution from owned IFAs (incl. recent income1) ac
Slide 12: Business review Asset Managers
Business review Asset Managers CHF million (IFRS basis, AuM fair value basis) HY 2018 HY 20193) Change Commission and 326 385 +18% • PAM: Increased asset base, higher real estate transaction other net income1) and management fees PAM 151 177 +18% • TPAM: Contribution from Beos and higher transaction
Slide 13: Expense development
Expense development CHF million (IFRS basis) HY 2018 HY 2019 Change Total operating expense 1 472 1 647 +12% Commissions and DAC amortisation -696 -806 Operating expense (before FX) 776 841 +8% Restructuring costs and one-offs -10 -9 Programme costs for new accounting standard -6 -16 Scope changes -
Slide 14: Investment result
Investment result CHF million (IFRS basis), insurance portfolio for own risk HY 2018 HY 2019 Direct investment income 2 235 2 242 Direct investment income in % 1.5% 1.4% Expense -176 -248 Net capital gains/losses on investments and impairments1) 578 138 Net investment result 2 637 2 132 Net investme
Slide 15: Investment portfolio
Investment portfolio CHF million (fair value basis), insurance portfolio for own risk1) 160 907 171 415 Equities & equity funds Alternative investments 8.0% 8.3% 1.2% 1.2% Real estate 19.8% 19.7% Mortgages Loans 5.6% 5.7% 4.5% 4.6% Government & supranational bonds 30.1% 30.6% 58.3% 58.7% Corporate b
Slide 16: Insurance reserves excluding policyholder participation liabilities
Insurance reserves excluding policyholder participation liabilities CHF billion (IFRS basis) +5% +13.1 +1.9 165.4 158.5 +1.0 157.6 -0.9 -8.2 31.12.2018 FX translation 31.12.2018 Premiums/ Withdrawals/ Interest Market 30.06.2019 effect excl. FX deposits benefits accrued movements received incurred an
Slide 17: Shareholders’ equity
Shareholders’ equity CHF million (IFRS basis) +10% +1 874 -56 +615 15 933 -547 -467 -6 14 522 31.12.2018 Change in Change in Dividend and Change in Interest on Profit 30.06.2019 unrealised foreign distribution treasury hybrid equity attributable gains/losses currency from capital shares to share- ne
Slide 18: Capital structure
Capital structure Capital structure1) (IFRS basis) 3 812 3% 449 Senior Senior & Carrying value (CHF m) 25-30% 23% hybrid Shareholders’ 3 363 Hybrid 70-75% 74% equity2) Reference level HY 2019 HY 2019 Maturities (senior) and next optional call dates (hybrid); nominal value, CHF million CHF Hybrid 200
Slide 19: Swiss Life 2021 financial targets
Swiss Life 2021 financial targets CHF Quality of earnings Operational efficiency Capital, cash and payout and earnings growth Fee result 600-650 m Life efficiency ratio < 40 bps SST ambition range 140-190% FY 2021 FY 2021 2019-2021 Risk result 400-450 m Distribution operating < 25% Cash to Holding 2
Slide 20: Strong fee and commission income growth
Quality of earnings and earnings Strong fee and commission income growth Fee and commission income1), CHF million (IFRS basis) +10% +13% LC Local 876 currency 798 Swiss Life Asset • PAM: Higher asset base and real estate fees 374 +20% +22% Managers2) • TPAM: Beos and higher transaction fees 312 +16%
Slide 21: Growing fee result
Quality of earnings and earnings Growing fee result growth Fee result, CHF million (IFRS basis) +7% 260 243 thereof thereof Asset 130 118 Asset Managers Managers Insurance 125 Insurance 129 segments segments HY 20181) HY 20191) 1) Adjusted for restructuring charges and FX translation effect 21 | Inv
Slide 22: Yield development in low interest rate environment
Quality of earnings and earnings Yield development in low interest rate growth environment Direct and net investment yield (IFRS basis, in % not annualised) 4.0 3.5 3.0 2.7% 2.5 2.4% 1.9% 2.0% 2.0 2.1% 1.8% 1.9% 1.7% 1.6% 1.7% 1.9% 1.5% 1.4% 1.5 1.8% 1.7% 1.5% 1.5% 1.4% 1.5% 1.0 1.3% 0.5 0.0 -0.5 -1
Slide 23: Declining average technical interest rate
Quality of earnings and earnings Declining average technical interest rate growth Statutory basis 01.01.2019 – 30.06.2019 2.60% • FX translation effect 0 bps • Reserve strengthening -2 bps 2.35% • Business mix -3 bps 2.04% Total -6 bps 1.64% 01.01.2010 – 30.06.2019: • FX translation effect -3 bps 1.
Slide 24: New business margin development
Quality of earnings and earnings New business margin development growth New business margin (NBM) development (VNB in % PVNBP) 2.6% 2.6% Economic variances • Unfavourable development of interest rates -0.2% 1.8% Volume, business mix and pricing variances -0.6% 0.0% Strong VNB with margin above ambit
Slide 25: Swiss Life 2021 efficiency ratios
Operational Swiss Life 2021 efficiency ratios efficiency Life efficiency ratio1) Distribution operating TPAM cost income ratio3) expense ratio2) Operating expense life insurance only / Operating expense / gross commission Operating expense / commission income average life insurance reserves income n
Slide 26: Continuous monitoring and ALM
Capital, cash and SST ratio estimated to be around 200% payout based on regulatory solvency model Regulatory Solvency Model Business steering • Capital management actions 190% Continuous monitoring and ALM Focus on Ambition range internal SST ratio estimated 140-190% economic to be around 200% Ambit
Slide 27: Healthy solvency ratios
Capital, cash and Healthy solvency ratios payout Swiss Life Group SST standard model sensitivities (as of 01.01.2019) (as of 01.01.2019) Real estate -10% -18 ppts SST 185% standard model Credit spreads1) +100 bps -13 ppts Interest rates2) -50 bps -4 ppts Solvency II Equities -30% -10 ppts standard m
Slide 28: Increased cash remittance to Holding; on track with share buyback
Capital, cash and Increased cash remittance to Holding; payout on track with share buyback Cash remittance to Holding (CHF million) Update on share buyback (as of 30.06.2019) +8% 708 Target by end of 2019 CHF 1 bn 657 Total shares repurchased 1 297 400 (thereof in Dec 2018) (227 700) Total amount pa
Slide 29: Good start to the Swiss Life 2021 programme
Good start to the Swiss Life 2021 programme Swiss Life 2021 financial targets Current assessment • Fee result FY 2021: CHF 600-650 m Quality of earnings and • Risk result FY 2021: CHF 400-450 m On track earnings growth • Cumulative value of new business (2019-2021): > CHF 1.2 bn • Life efficiency ra
Slide 30: Supplementary information
Half-year results 2019 Investor presentation Supplementary information
Slide 31: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Value of new business Abbreviations Contact details and financial calendar 31 | Investor presentation | Half-year results 2019
Slide 32: Net profit excluding major one-off effects
Net profit excluding major one-off effects CHF million (IFRS basis, adjusted) +7% 617 +2 +10 599 561 +1 +5 567 560 -30 -7 Net Restruc- Programme Net FX Net Net Restruc- Programme Tax Net profit turing costs for profit translation profit profit turing costs for one-off profit charges new excl. effect
Slide 33: Premium development
Premium development CHF million (IFRS basis); GWP, fees and deposits Local currency 9 636 Switzerland +57% +57% 6 129 2 865 France -4% -1% 2 986 681 Germany -1% +2% 689 912 International -4% -1% 948 14 080 Total1) +31% +33% 10 741 HY 2019 HY 2018 1) Total includes intersegment eliminations of CHF -1
Slide 34: Fee and commission income development
Fee and commission income development CHF million (IFRS basis) Local currency 133 Switzerland +6% +6% 125 157 France -5% -1% 165 241 Germany +4% +8% 232 162 International +31% +35% 124 Asset 374 Managers +20% +22% 312 876 Total1) +10% +13% 798 HY 2019 HY 2018 1) Total includes Other and intersegment
Slide 35: Switzerland: Premium development
Switzerland: Premium development CHF million (IFRS basis) HY 2018 HY 2019 Change Total life GWP incl. PHD 6 129 9 636 +57% Single premiums 2 837 6 020 +112% Periodic premiums 3 292 3 616 +10% Group life 5 443 8 884 +63% Single premiums 2 653 5 775 +118% Periodic premiums 2 790 3 109 +11% Individual
Slide 36: Details of net investment result
Details of net investment result CHF million (IFRS basis), insurance portfolio for own risk HY 2019 Direct Net Gains and losses through investment Impairments investment income statement income result On On Net underlying derivatives Bonds 1 270 -2 111 -61 50 1 318 Equities 224 -1 1 121 -1 052 68 29
Slide 37: Profit from operations
Profit from operations CHF million (IFRS basis), segment result (reported vs. adjusted) HY 2018 HY 2019 Change Segments reported adjusted1) reported adjusted1) reported adjusted Switzerland 439 442 460 460 +5% +4% France 153 147 153 154 0% +5% Germany 93 91 96 96 +2% +6% International 34 33 40 40 +1
Slide 38: New business mix
New business mix New business production (NBP) 27% 24% 25% 27% 26% 33% 34% 34% 33% 33% 35% 40% 30% 31% Risk, health and P&C 18% 21% 26% 22% Modern 28% 26% 26% Modern-traditional 20% 21% 16% 19% 9% 7% 9% Traditional FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 HY 2019 Shift excl. traditional 88% 9
Slide 39: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Value of new business Abbreviations Contact details and financial calendar 39 | Investor presentation | Half-year results 2019
Slide 40: Allocation of unrealised gains/losses on financial assets
Allocation of unrealised gains/losses on financial assets CHF million (IFRS basis), as of 30.06.2019 17 154 -10 445 -267 0 5 095 -1 347 Unrealised Deferred Shadow Deferred Non-controlling Allocated to gains/losses policyholder DAC taxes interests shareholders’ on financial bonuses adjustment equity
Slide 41: Return on equity
Return on equity CHF million (IFRS basis) FY 2018 HY 2019 HY 2019 RoE calculation (annualised) Net profit HY 2019 Shareholders’ equity 14 522 15 933 615 (attributable to shareholders) Unrealised gains/losses on financial Average adjusted -3 139 -5 095 11 110 assets allocated to shareholders’ equity
Slide 42: Insurance reserves excluding policyholder participation liabilities
Insurance reserves excluding policyholder participation liabilities CHF million (IFRS basis) Local currency 94 159 Switzerland +5% +5% 89 723 International 31 853 13% France +5% +7% Germany 30 239 11% 17 525 57% Germany 0% +2% 19% 17 489 France 21 911 International +4% +5% Switzerland 21 093 165 370
Slide 43: Insurance reserves and borrowings
Insurance reserves and borrowings CHF million (IFRS basis) Local 31.12.2018 30.06.2019 currency Insurance reserves 170 048 181 498 +7% +7% Policyholder participation liabilities 11 539 16 128 +41% Insurance reserves w/o PHP liabilities 158 509 165 370 +4% +5% Insurance liabilities 118 771 123 884 +5
Slide 44: Swiss Life Group reserves subject to BVG minimum interest rates
Swiss Life Group reserves subject to BVG minimum interest rates CHF billion (IFRS basis) Breakdown of insurance reserves (incl. unit-linked) as of 30.06.2019 1.0 Non-life 53.0 Investment contracts & PH deposits Europe 31.7 Total Group Individual 181.5 19.6 Traditional business Annuitised & other Gua
Slide 45: Average technical interest rate
Average technical interest rate CHF / EUR / USD / GBP million (statutory basis), as of 30.06.2019 CHF EUR USD GBP Total reserves 90 291 32 820 141 13 Average technical interest rate 0.88% 1.99% 2.21% 2.11% Overall: 1.20% (01.01.2019: 1.26%) 45 | Investor presentation | Half-year results 2019
Slide 46: Weighted duration gap
Weighted duration gap 1.2 1.0 0.9 0.9 0.8 0.7 0.7 0.6 0.5 0.4 31.12.2010 31.12.2011 31.12.2012 31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 31.12.2018 30.06.2019 46 | Investor presentation | Half-year results 2019
Slide 47: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Value of new business Abbreviations Contact details and financial calendar 47 | Investor presentation | Half-year results 2019
Slide 48: Change analysis of assets under management
Change analysis of assets under management CHF billion (fair value basis) Assets under management HY 2018 HY 2019 Change (bn) Total beginning of period 223.6 232.6 +9.0 Net new assets PAM -1.4 -0.8 TPAM 3.7 6.2 Market performance 0.0 12.8 FX translation effects -0.8 -1.2 Scope changes - - Total end
Slide 49: Assets under management and administration
Assets under management and administration CHF billion, as of 30.06.2019 278.5 249.7 28.8 Total real estate under 96.0 management and administration 67.2 Real estate under management (both PAM & TPAM) Share of real estate Share of real estate Share of real estate by managing country by managing coun
Slide 50: TPAM: AuM and NNA
TPAM TPAM: AuM and NNA TPAM AuM: CHF 79.5 bn as of 30.06.2019 TPAM NNA: CHF 6.2 bn as of 30.06.2019 (fair value basis) (fair value basis) Breakdown by asset class Breakdown by asset class Infrastructure Equity 7% Real estate 3% 34% Bonds Balanced mandates Real estate 21% 41% Balanced mandates 12% Eq
Slide 51: Bond portfolio: Ratings and classification
PAM Bond portfolio: Ratings and classification Insurance portfolio for own risk (fair value basis) Breakdown by rating CHF million BB B 171 415 3% BBB 2% 20% AAA 37% 14% A 24% AA Breakdown by classification Bonds 58.7% Corporate bonds1) 48% 52% Governments & supranationals 30.06.2019 1) Including se
Slide 52: Government & supranational bonds: Ratings and currency
PAM Government & supranational bonds: Ratings and currency Insurance portfolio for own risk (fair value basis) Breakdown by rating CHF million A BBB 171 415 6% 4% 51% AAA 39% AA Government & Breakdown by currency GBP CAD supranational 30.6% USD bonds 2% 8% 1% 47% EUR CHF 42% 30.06.2019 52 | Investor
Slide 53: Government & supranational bonds: Country split
PAM Government & supranational bonds: Country split Government and supranational bond portfolio (fair value basis), as of 30.06.2019, 30.6% of insurance portfolio for own risk (CHF 52.5 bn) % of total government and supranational bond portfolio Switzerland 32% France 12% Netherlands 11% Germany 11%
Slide 54: Corporate bond portfolio: Ratings and currency
PAM Corporate bond portfolio: Ratings and currency Insurance portfolio for own risk (fair value basis) Breakdown by rating CHF million B BB 171 415 AAA 7% 4% 21% 8% AA 37% BBB 23% A Breakdown by currency GBP Other 2% USD 1% 28% EUR 41% Corporate 28.1% bonds1) 28% 30.06.2019 CHF 1) Including senior s
Slide 55: Corporate bond portfolio: Industry split
PAM Corporate bond portfolio: Industry split Corporate bond portfolio1) (fair value basis), as of 30.06.2019, 28.1% of insurance portfolio for own risk (CHF 48.2 bn) Breakdown by rating Breakdown by industry % of total BBB corporate bond portfolio 22% Banks 37% Other financials 5% 49% AAA Utilities
Slide 56: Loan and mortgage portfolio
PAM Loan and mortgage portfolio Insurance portfolio for own risk (fair value basis) Breakdown by country CHF million 171 415 Germany 46% 53% Switzerland Mortgages 5.7% 4.6% 1% Loans France Breakdown by type Other loans 2% Purchased loans 43% 55% Mortgages 30.06.2019 56 | Investor presentation | Half
Slide 57: Real estate portfolio
PAM Real estate portfolio Insurance portfolio for own risk (fair value basis) Breakdown by country CHF million 171 415 Germany 10% France 10% Real estate 19.7% 80% Switzerland Breakdown by type Residential Commercial 32% 45% 23% 30.06.2019 Mixed-use 57 | Investor presentation | Half-year results 201
Slide 58: Equities and alternative investments: Gross exposure
PAM Equities and alternative investments: Gross exposure Insurance portfolio for own risk (fair value basis) Breakdown by currency CHF million Other CHF 171 415 GBP Equity & 10% 3% 15% 8.3% equity funds 1.2% Alternative investments USD 31% EUR 41% Breakdown by investment type Hedge funds Private equ
Slide 59: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 30.06.18 31.12.18 30.06.19 01.01. – 30.06.18 01.01. – 30.06.19 EUR 1.1583 1.1255 1.1097 1.1707 1.1295 GBP 1.3088 1.2527 1.2402 1.3307 1.2937 USD 0.9920 0.9828 0.9769 0.9671 1.0000 Interest rates (10-year government bond) 30.06.18 31.12.18 30.0
Slide 60: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Value of new business Abbreviations Contact details and financial calendar 60 | Investor presentation | Half-year results 2019
Slide 61: Value of new business per segment
Value of new business per segment CHF million (MCEV basis) Switzerland France Germany International Total 387 282 212 105 70 64 26 26 12 14 PVNBP 3 978 16 884 2 753 2 832 690 813 850 799 8 270 21 327 APE 274 926 323 357 44 47 86 80 727 1 410 NBM in % PVNBP 2.6% 1.7% 2.6% 2.3% 3.7% 3.3% 1.4% 1.8% 2.6
Slide 62: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Value of new business Abbreviations Contact details and financial calendar 62 | Investor presentation | Half-year results 2019
Slide 63: Abbreviations
Abbreviations AM Business division Asset Managers IN Business division International APE Annual premium equivalent LC Local currency AuM Assets under management m Million bn Billion MCEV Market consistent embedded value bps Basis points NBM New business margin BVG Swiss federal law on occupational r
Slide 64: Disclaimer and cautionary statement
Disclaimer and cautionary statement This presentation is made by Swiss Life and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Swiss Life. Although all reasonable effort has been made to ensure the facts stated herein ar
Slide 65: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Value of new business Abbreviations Contact details and financial calendar 65 | Investor presentation | Half-year results 2019
Slide 66: Contact details and financial calendar
Contact details and financial calendar Contact Heidi Hinterhuber Phone +41 (43) 284 67 67 Head of Investor Relations E-mail heidi.hinterhuber@swisslife.ch Rolf Winter Phone +41 (43) 284 49 19 Senior Investor Relations Manager E-mail rolf.winter@swisslife.ch Olga Schmidtberger Phone +41 (43) 284 49 7
Slide 67: SwissLife
é SwissLife