Swiss Life Holding Ag · SIX:SLHN
Swiss Life — H1 2007 Earnings Presentation
58 slides from Swiss Life's earnings presentation, Sep 4, 2007
Slide 1: Half-year results 2007 Investors' Presentation
Half-year results 2007 Investors’ Presentation Zurich, 4 September 2007
Slide 2: Agenda
Agenda 1. Overview Rolf Dörig 2. Financial results Thomas Müller 3. Outlook Rolf Dörig 2
Slide 3: Highlights
Highlights z Operating result significantly improved – due to good growth, increased efficiency and solid investment result z Solid investment result – due to hedge fund pay-outs, better diversification and without increasing overall risk z Embedded value significantly increased – due to favourable
Slide 4: Results improving steadily
Results improving steadily Net profit CHF 635 million +21% Profit from operations CHF 884 million +34% Return on equity (annualised) 17.3% + 3 ppts Embedded value CHF 12.5 billion +17% Value of new business CHF 83 million +6% 4
Slide 5: Strong business performance
Strong business performance z International: Good premium growth, well above market – Integration of CapitalLeben on track – Several unit-linked and structured products launched z Switzerland: Improved margins and efficiency – Significant premium growth, well above market – Cost reductions continued
Slide 6: Agenda
Agenda 1. Overview Rolf Dörig 2. Financial results Thomas Müller 3. Outlook Rolf Dörig 6
Slide 7: Net profit increased 21% to CHF 635 million
Net profit increased 21% to CHF 635 million CHF million (IFRS basis) HY 2007 HY 2006 Gross written premiums, fees and deposits received 13 950 12 693 Financial result for own risk 4 219 2 958 Net insurance benefits and claims -9 550 -8 783 Policyholder participation -1 712 -869 Operating expense -1
Slide 8: Profit contribution increased in all segments
Profit contribution increased in all segments Segment results; CHF million (IFRS basis) 706 HY HY 2006 2007 Insurance 573 706 350 Switzerland Banking 98 164 Investment Management 17 35 Other 23 40 200 France Eliminations -26 -29 Unallocated corporate costs -25 -32 66 Germany Profit from operations 6
Slide 9: Efficiency initiatives in Switzerland show effect
Efficiency initiatives in Switzerland show effect CHF million (IFRS basis) HY 2007 HY 2006 Change Total operating expense 1 688 1 474 14.5% Commissions and DAC amortisation -651 -465 Goodwill, PVP and intangible assets impairment 0 -1 Restructuring costs -25 -40 Divestments 1) -5 CapitalLeben -4 Cur
Slide 10: Good growth in Switzerland as well as in international markets
Good growth in Switzerland as well as in international markets GWP & PHD; CHF million (IFRS basis) Total 1) 13 950 10% reported 12 693 6 001 Switzerland 10% 5 474 7 989 International 2) 7 250 10% 4 595 France 3) 8% 4 276 994 Germany 1% 985 1 340 Netherlands 25% 1 072 345 Belgium 411 -16% 279 Luxembo
Slide 11: Solid financial result
Solid financial result CHF million (IFRS basis) HY 2007 HY 2006 Gross written premiums, fees and deposits received 13 950 12 693 Financial result for own risk 4 219 2 958 Net insurance benefits and claims -9 550 -8 783 Policyholder participation -1 712 -869 Operating expense -1 688 -1 474 Profit fro
Slide 12: Shareholders' equity developed as expected
Shareholders’ equity developed as expected CHF million (IFRS basis) 30.06.2007 31.12.2006 Insurance reserves 143 485 153 800 Insurance liabilities 112 411 109 456 Investment contracts 12 873 30 077 Financial liabilities FVPL (unit-linked) 12 997 7 175 Policyholder participation liabilities 5 204 7 0
Slide 13: Group solvency on a solid basis
Group solvency on a solid basis Based on IFRS equity, according to methodology applied by Swiss regulator 252% 211% 192% 194% 1) 175% 155% 31.12.2004 30.06.2005 31.12.2005 30.06.2006 31.12.2006 30.06.2007 1) According to the adjusted FOPI practice 13
Slide 14: Improved diversification within insurance portfolio
Improved diversification within insurance portfolio CHF million (IFRS basis), excluding ERISA 135 123 131 129 Equities & equity funds 9.5% 7.5% Alternative investments 4.5% 3.9% Real estate 8.9% 8.9% Mortgages 4.6% 4.9% Loans 11.5% 12.7% Bonds 54.9% 56.8% Cash and other 6.1% 5.3% 30.06.07 31.12.06 N
Slide 15: Solid investment result on insurance portfolio
Solid investment result on insurance portfolio CHF million (IFRS basis) – insurance portfolio own risk; yields not annualised; excl. ERISA HY 2007 HY 2006 Change Direct investment income 2 732 2 288 19% Expense -110 -78 41% Net capital gains on investments and 586 222 164% impairments Net investment
Slide 16: Embedded value increased by 17%
Embedded value increased by 17% CHF million (statutory basis) 30.06.2007 31.12.2006 Change RoEV1) Embedded value Switzerland 4 828 4 053 +19% +22% Embedded value International 5 154 4 502 +14% +15% ANAV Swiss Life Holding 2 497 2 110 Swiss Life Group 12 479 10 665 +17% +17% of which ANAV 7 290 6 793
Slide 17: Embedded value – analysis of change
Embedded value – analysis of change CHF million (statutory basis) Swiss Life Group as per 31.12.2006 10 665 Unwind 2007 +341 Investment return 2007 variance +485 Future investment return variance +740 Impact of new hybrid +21 New treatment of policyholders’ participation in unrealised gains -435 Rev
Slide 18: Value of new business increased by 6%
Value of new business increased by 6% CHF million (statutory basis) Switzerland France Germany Netherlands Belgium / Total Luxembourg 83 78 36 32 18 19 14 15 15 12 0 0 APE 184 206 156 207 84 94 227 188 38 36 689 731 309 1) 325 1) New business margin 12.0% 10.7% HY 2007 HY 2006 1) Non consolidated AP
Slide 19: Agenda
Agenda 1. Overview Rolf Dörig 2. Financial results Thomas Müller 3. Outlook Rolf Dörig 19
Slide 20: Priorities
Priorities z International: – Push fast-growing distribution channels (private banks, brokers) – Focus on strict cost management z Switzerland: – Continue growth in group business, maintain margins in individual life – Complete efficiency projects in group and individual life z Investment Management
Slide 21: Outlook 2007
Outlook 2007 CHF 1 bn net profit expected to be achieved already in 2007 Update on group strategy and targets on Investors‘ Day 4 December 2007 21
Slide 22: Supplementary information
Half-year results 2007 Investors’ Presentation Supplementary information
Slide 23: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Banca del Gottardo 5. Contact details 23
Slide 24: Switzerland: Life insurance premiums
Switzerland: Life insurance premiums CHF million (IFRS basis) HY 2007 HY 2006 Change Total life GWP incl. PHD 6 001 5 474 +10% Single premiums 2 633 2 223 +18% Periodic premiums 3 322 3 199 +4% Reinsurance premiums assumed 46 51 -10% Group life 5 148 4 600 +12% Single premiums 2 332 1 909 +22% Perio
Slide 25: Performance-oriented products in Switzerland
Performance-oriented products in Switzerland New business gross volume (unit-linked and funds); CHF million 155 133 112 87 27 1HY 05 2HY 05 1HY 06 2HY 06 1HY 07 Unit-linked and funds Vitality GarantiePlus GarantiePlus 90/100 single 100 periodic Accounts 3a account AccountPlus 25
Slide 26: ERISA treatment in 2007
ERISA treatment in 2007 z All relevant assets and liabilities of ERISA have been transferred into the category “assets held for sale and associated liabilities” z Swiss Life’s CHF 19 million share of the net profit of CHF 38 million has been deferred under the position “other income” z The gain gene
Slide 27: ERISA key financials
ERISA key financials CHF million (IFRS basis) HY 2007 HY 2006 Gross written premiums, fees and deposits received 1 880 1 758 Total Income 733 490 Total Expenses -670 -448 Segment result 63 42 Netting out ERISA’s result in other income -19 - Net contribution of ERISA to Segment result 44 42 Net profi
Slide 28: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Banca del Gottardo 5. Contact details 28
Slide 29: Development of shareholders' equity
Development of shareholders' equity CHF million (IFRS basis) 7 579 7 195 -348 -5% -849 615 -267 117 31.12.2006 Change in Change in Change in FX Profit 30.06.2007 unrealised treasury translation, attributable to gains/losses shares share premium shareholders and share capital 29
Slide 30: Allocation of unrealised gains/losses on bonds
Allocation of unrealised gains/losses on bonds CHF million (IFRS basis) -3 115 -894 313 0 430 1 478 Unrealised Deferred Shadow Deferred Minority Allocated to gains/ policyholder DAC taxes interest shareholders’ losses on bonuses adjustment equity bonds 30
Slide 31: Statutory solvency at 236%
Statutory solvency at 236% CHF million (statutory basis) Available solvency margin Statutory solvency Parent company statutory equity 3 519 11 094 236% Intangibles -13 Hybrid capital 2 352 Fund for future appropriation 398 Additional Zillmerisation 495 4 705 Unrealised capital gains 3 245 Unattribut
Slide 32: Insurance reserves by country
Insurance reserves by country CHF million (IFRS basis) - comparable basis2), excluding ERISA 68 576 Switzerland +2% 67 134 22 151 France +7% Luxembourg 20 727 2% Liechtenstein 20 912 4% Germany 19 871 +5% Belgium 4% 19 177 Netherlands Switzerland Netherlands 18 327 +5% 13% 48% 5 010 Belgium +6% Germ
Slide 33: 9% of Swiss Life Group reserves subject to BVG minimum interest rates
9% of Swiss Life Group reserves subject to BVG minimum interest rates Breakdown of insurance reserves (incl. unit linked) as per 30.06.2007; CHF billion (IFRS basis) Total: 143 Non-life (1 billion) Investment contracts & PH deposits 33 Europe 45 Traditional business 109 Individual 22.2 Guaranteed CH
Slide 34: Average technical interest rate of 3.02%
Average technical interest rate of 3.02% CHF / EUR / USD / GBP million (statutory basis), without ERISA CHF EUR USD GBP Total reserves 64 995 30 467 470 8 Mean technical 2.75% 3.35% 4.09% 3.67% interest rate Overall: 3.02% (FY 2006 without ERISA: 3.04%) 34
Slide 35: Investment return on insurance portfolio
Investment return on insurance portfolio CHF million (IFRS basis) – insurance portfolio own risk; yields not annualised; excl. ERISA Direct investment income of 2.1% Total investment return of 0.0% Bonds 1 457 2.0% -1 998 -2.7% 1 311 Equities 172 1.5% 691 6.1% Alternative 4.9% 276 505 9.0% investmen
Slide 36: Bond portfolio: Ratings
Bond portfolio: Ratings Insurance portfolio (IFRS basis), excl. ERISA Breakdown by rating Below BBB CHF million BBB and not rated 135 123 4% 2% A1) 10% Bonds 54.9% AA1) 20% AAA1) 64% 1) Including 52% government bonds in aggregate 36
Slide 37: Bond portfolio: Currency exposure
Bond portfolio: Currency exposure Insurance portfolio (IFRS basis), excl. ERISA Before hedges USD 4% JPY 1% CHF million CHF 135 123 22% EUR 73% Bonds 54.9% After hedges USD 2% CHF 47% EUR 51% 37
Slide 38: Bond portfolio: Duration incl. interest rate hedges
Bond portfolio: Duration incl. interest rate hedges Effective duration parent company (Stammhaus); years 30.06.2007 31.12.2006 30.06.2006 CHF 8.8 8.7 7.2 EUR 9.4 8.5 4.8 GBP 4.6 2.4 5.1 USD 7.9 6.4 2.9 JPY 20.2 —1) —1) Average 9.3 8.4 5.4 1) No significant investments in previous periods 38
Slide 39: Loan and mortgage portfolio
Loan and mortgage portfolio Insurance portfolio (IFRS basis), excl. ERISA Breakdown by country Netherlands 1% CHF million 135 123 Switzerland Germany 55% 44% Loans & mortgages 16.1% Breakdown by type Due from banks 2% Policyholder loans 3% Mortgages 29% Other loans 66% 39
Slide 40: Real estate portfolio
Real estate portfolio Insurance portfolio (IFRS basis), excl. ERISA Breakdown by country Belgium 1% Germany 6% CHF million France 11% 135 123 Real estate 8.9% Switzerland 82% Breakdown by type Others 1% Centres 9% Mixed 25% Residential 43% Commercial 22% 40
Slide 41: Equity portfolio: Currency exposure
Equity portfolio: Currency exposure Insurance portfolio (IFRS basis), excl. ERISA CHF million Breakdown by currency 135 123 GBP JPY Other Equities & equity 9.5% 2% 1% 3% USD funds 8% CHF 7% EUR 79% 41
Slide 42: Alternative investment portfolio
Alternative investment portfolio Insurance portfolio (IFRS basis), excl. ERISA Hedge funds: CHF 5.9 billion (2006: CHF 5.0 billion) Others 6% CHF million Tactical trading Equity hedged 135 123 18% 24% Alternative 4.5% investments Event driven 22% Relative value 30% Private equity: CHF 157 million (2
Slide 43: Currency exposure
Currency exposure Net 7.5% of insurance portfolio JPY Other 2% 4% USD 26% EUR 61% GBP 7% Gross currency exposure CHF 38 007 million Hedged currency exposure CHF 27 923 million Net currency exposure CHF 10 084 million 43
Slide 44: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 30.06.07 31.12.06 30.06.06 1.1.-30.06.07 1.1.-30.06.06 EUR 1.6570 1.6078 1.5670 1.6320 1.5616 GBP 2.4621 2.3949 2.2620 2.4187 2.2729 USD 1.2285 1.2207 1.2330 1.2281 1.2712 Interest rates1) 30.06.07 31.12.06 30.06.06 CHF 3.226 2.521 2.830 EUR 4
Slide 45: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Banca del Gottardo 5. Contact details 45
Slide 46: Implementation of embedded value at Swiss Life
Implementation of embedded value at Swiss Life z ANAV and PVFP have been Swiss Life BE calculated for more than 95% . Swiss Life LU Swiss Life NL of the mathematical reserves z For other life insurance entities Swiss Life DE only the NAV has been included Swiss Life FR2) z The banking1) and non-life
Slide 47: Key assumptions for embedded value calculation
Key assumptions for embedded value calculation 30.06.2007 31.12.2006 z Weighted new money CH EU CH EU return based on asset allocation Risk discount 7.0% 8.0% 7.0% 8.0% z Weighted returns are rate higher due to increase Equity return 6.5% 7.5% 6.5% 7.5% in assumed future investment returns z Long-te
Slide 48: Asset allocation assumptions by region
Asset allocation assumptions by region 30.06.2007 31.12.2006 CH EU CH EU Cash and cash equivalents 2% 1% 1% 1% Bonds and loans 62% 81% 63% 82% Mortgages 7% 2% 7% 2% Real estate 13% 6% 15% 5% Equities 8% 8% 7% 7% Participations 0% 0% 0% 0% Alternative investments 8% 2% 7% 3% 48
Slide 49: Sensitivities of embedded value
Sensitivities of embedded value CHF million (statutory basis) Switzerland International Total 1) EmbV HY 2007 (base case) 4 828 5 154 12 479 Δ Bond returns +100 bps 162 233 395 Δ Bond returns -100 bps -159 -247 -406 Δ Investment returns +100 bps 530 437 967 Δ Investment returns -100 bps -600 -460 -1
Slide 50: Sensitivities of value of new business
Sensitivities of value of new business CHF million (statutory basis) Total VnB HY 2007 (base case) 83 Δ Bond return +100 bps 19 Δ Investment returns +100 bps 31 Δ Risk discount rate -100 bps 18 Δ Administration costs -10 % 11 Δ Acquisition costs -10 % 10 50
Slide 51: IFRS equity to embedded value bridge
IFRS equity to embedded value bridge CHF million 6 012 -823 12 479 1 007 -912 7 195 IFRS Difference in Goodwill & PVFP Cost of Embedded shareholders’ tangible/net other holding value equity assets intangible capital assets 1) 1) Including goodwill CHF 841 million, customer relationships CHF 37 milli
Slide 52: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Banca del Gottardo 5. Contact details 52
Slide 53: Banca del Gottardo: Key financials (I)
Banca del Gottardo: Key financials (I) CHF million (statutory basis) HY 2007 HY 2006 Change Results from interest activities 65 62 +5% Results from commission and service fee activities 135 128 +5% Results from trading operations 40 37 +9% Other ordinary result 3 5 -30% Net revenues 243 232 +5% Pers
Slide 54: Banca del Gottardo: Key financials (II)
Banca del Gottardo: Key financials (II) CHF million (statutory basis) 30.6.2007 31.12.2006 Change Return on equity 1) 19% 10% 90% Risk-weighted assets 6 411 5 946 8% BIS ratio (Tier 1) 12% 13% -1 ppts Assets under management 36 318 35 828 1% Assets under control 2) 104 092 89 307 17% Shareholders’ e
Slide 55: Cautionary statement regarding forward-looking information
Cautionary statement regarding forward-looking information 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
Slide 56: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Banca del Gottardo 5. Contact details 56
Slide 57: Contact details
Contact details Marcus Händel Tel. +41 (43) 284 67 67 Head of Investor Relations E-mail: marcus.haendel@swisslife.ch Mladen Tomic Tel. +41 (43) 284 49 19 Senior Investor Relations Manager E-mail: mladen.tomic@swisslife.ch Visit our website for up-to-date information www.swisslife.com 57
Slide 58: SwissLife
be SwissLife Prepared for the future.