Swiss Life Holding Ag · SIX:SLHN
Swiss Life — FY2016 Earnings Presentation
72 slides from Swiss Life's earnings presentation, Mar 3, 2017
Slide 1: Full-year results 2016 Investors' presentation
Full-year results 2016 Investors’ presentation 3 March 2017
Slide 2: Agenda
Agenda Overview Patrick Frost Financial results and Thomas Buess strategy update 2 | Investors' presentation | Full-year results 2016
Slide 3: Swiss Life delivers strong FY 2016 net profit driven by the fee result
Swiss Life delivers strong FY 2016 net profit driven by the fee result … +5% +14% 400-450 Net profit 878 926 396 818 RoE 346 Net profit, 269 9.6% 9.7% 9.6% Fee result RoE 8-10% (CHF m) (CHF m, %) FY 20141) FY 2015 FY 2016 Target 2018 FY 20141) FY 2015 FY 2016 Target 2018 -2% 4% 395 398 350-400 388 I
Slide 4: … while continuing with its sound capital management
… while continuing with its sound capital management >750 Stable +10% -1% operating 296 1 169 1 089 expense 268 1 082 255 Operating VNB, 2.1% expense, 0.65% 0.61% 1.8% 1.7% 0.58% NBM efficiency (CHF m, %) ratio (CHF m, %) FY 20141) FY 2015 FY 2016 Target FY 20141) FY 2015 FY 2016 Target 2018 (cumula
Slide 5: Agenda
Agenda Overview Patrick Frost Financial results and Thomas Buess strategy update 5 | Investors' presentation | Full-year results 2016
Slide 6: Key figures FY 2016 results
Key figures FY 2016 results Net profit increased by 5% to CHF 926 m Adjusted profit from operations improved by 5% to CHF 1 402 m Premiums decreased by 9% in local currency to CHF 17.4 bn Fee and commission income up by 3% in local currency to CHF 1 361 m Fee result increased to CHF 396 m (F
Slide 7: Selected P&L figures
Selected P&L figures CHF million (IFRS basis) FY 2015 FY 2016 Gross written premiums, fees and deposits received 18 853 17 366 Fee and commission income 1 301 1 361 Net investment result insurance portfolio for own risk 5 208 4 763 Net insurance benefits and claims -15 516 -14 064 Policyholder parti
Slide 8: Profit from operations excluding major one-off effects
Profit from operations excluding major one-off effects CHF million (IFRS basis), adjusted +5% 1 393 +9 1 402 1 329 +11 1 323 +9 1 332 -17 Profit Restruc- One-off Profit FX Profit Profit Restruc- Profit from from turing FX gain from translation from from turing operations operations costs operations
Slide 9: Business review Switzerland
Business review Switzerland CHF million (IFRS basis, MCEV) FY 2015 FY 2016 Change GWP incl. PHD 10 534 9 876 -6% • GL: -6% (market -6%); IL: -7% (market -5%); overall market -6% • Lower single premiums in both GL and IL due to focus on profitability and capital efficiency, partly offset by higher pe
Slide 10: Business review France
Business review France EUR million (IFRS basis, MCEV) FY 2015 FY 2016 Change GWP incl. PHD 4 244 4 134 -3% • Life: -4% (market -1%), UL share of 42% (market 20%); health & protection: 0% (market +5%), individual protection +4% (market +5%) Fee and commission 230 221 -4% • Lower banking fees more tha
Slide 11: Business review Germany
Business review Germany EUR million (IFRS basis, MCEV) FY 2015 FY 2016 Change GWP incl. PHD 1 309 1 183 -10% • Focus on profit before growth; lower traditional premiums partly offset by rising periodic premiums with modern- traditional and risk products (market -2%) Fee and commission 341 347 +2% •
Slide 12: Business review International
Business review International EUR million (IFRS basis, MCEV) FY 2015 FY 2016 Change GWP incl. PHD 2 295 1 576 -31% • Significantly lower single premiums (deposits) with private clients in challenging market environment; higher periodic premiums with corporate clients more than offset by lower single
Slide 13: Business review Asset Managers
Business review Asset Managers CHF million (IFRS basis, AuM fair value basis) FY 2015 FY 2016 Change Total income 575 619 +8% • PAM: Higher average asset base partly offset by PAM 267 281 +5% lower transaction volume in real estate TPAM1) 307 338 +10% • TPAM: Strong inflows and higher profits from r
Slide 14: Expense development
Expense development CHF million (IFRS basis) FY 2015 FY 2016 Change Total operating expense 2 649 2 765 +4% Commissions and DAC amortisation -1 205 -1 284 Operating expense (before FX) 1 444 1 482 +3% Restructuring costs and one-offs -36 -46 Scope changes -4 -10 FX translation effect 16 Operating ex
Slide 15: Investment result
Investment result CHF million (IFRS basis), insurance portfolio for own risk FY 2015 FY 2016 Direct investment income 4 311 4 307 Direct investment income in % 3.0% 3.0% Expense -298 -321 Net capital gains/losses on investments and impairments1) 1 196 777 Net investment result 5 208 4 763 Net invest
Slide 16: Investment portfolio
Investment portfolio CHF million (fair value basis), insurance portfolio for own risk1) 146 413 153 289 Equities & equity funds Alternative investments 3.9% 5.0% 0.9% 15.8% 1.0% Real estate 16.4% Mortgages 5.2% 5.3% Loans 6.6% 5.8% Government & supranational bonds 31.7% 31.4% 66.3% 64.3% Corporate b
Slide 17: Insurance reserves excluding policyholder participation liabilities
Insurance reserves excluding policyholder participation liabilities CHF billion (IFRS basis) +3% +15.7 144.9 144.2 +2.3 +0.4 147.9 -0.7 -14.7 31.12.2015 FX translation 31.12.2015 Premiums/ Withdrawals/ Interest Market 31.12.2016 effect excl. FX deposits benefits accrued movements received incurred a
Slide 18: Shareholders' equity
Shareholders’ equity CHF million (IFRS basis) +922 13 657 +12% +824 0 +5 12 177 -271 31.12.2015 Change in Change in Distribution Change in Profit 31.12.2016 unrealised foreign from capital treasury shares attributable gains/losses currency contribution and share to share- net translation reserve pre
Slide 19: Key financial targets of Swiss Life 2018
Key financial targets of Swiss Life 2018 Customer centricity and advice Quality of earnings Operational efficiency Capital, cash and dividend and earnings growth • Fee result FY 2018: • Cost savings FY 2018: • Cumulative cash remittance CHF 400-450 m CHF 100 m to Holding (2016-2018): > CHF 1.5 bn •
Slide 20: Profit by source: Improved fee and cost results
Quality of earnings Profit by source: Improved fee and earnings growth and cost results CHF million (IFRS basis) FY 2015 FY 2016 adjusted adjusted Savings result 805 57% 804 55% Risk result 398 28% 388 26% Fee result 346 25% 396 27% Cost result -133 -10% -110 -7% - Thereof admin cost result gross1)
Slide 21: Continued strong returns in a low interest rate environment
Quality of earnings Continued strong returns in a low interest and earnings growth rate environment Direct and net investment yield (IFRS basis, in %) 5.0 4.5 4.1% 4.8% 3.9% 3.8% 3.9% 3.8% 3.7% 4.0 3.5 3.8% 3.8% 3.3% 3.7% 3.5% 3.4% 3.0 3.3% 3.0% 3.0% 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 31.12.09 31.12.
Slide 22: Average technical interest rate decreased further
Quality of earnings Average technical interest rate and earnings growth decreased further • FX translation effect -0 bps Statutory basis • Reserve strengthening -6 bps • Mandatory group life CH -4 bps • Non-mandatory group life CH -8 bps 2.60% 2.55% • Business mix -4 bps 2.35% Total -23 bps 2.12% 2.
Slide 23: Disciplined ALM has safeguarded the interest rate margin
Quality of earnings Disciplined ALM has safeguarded the and earnings growth interest rate margin Aggregated view, IFRS basis, in % of technical reserves 4.0 Interest rate margin remained stable Net investment as a result of disciplined ALM yield • Long asset duration supports yield excl. net gains/
Slide 24: Higher fee and commission income
Quality of earnings Higher fee and commission income and earnings growth Fee and commission income1), CHF million (IFRS basis) +5% +3% LC Local 1 361 1 301 currency Swiss Life Asset • Higher average asset base in PAM (+5%, LC) +6% +5% 560 591 Managers • Strong inflows in TPAM (+5%, LC) • Higher prod
Slide 25: Continued margin management
Quality of earnings Continued margin management and earnings growth New Business Margin (% PVNBP) Economic variances • Challenging capital market environment with substantially lower interest rates +0.2% 2.1% +0.6% +0.0% Volume, business mix and pricing variances 1.7% Continued margin management eff
Slide 26: Implemented cost savings of CHF 59 m
Implemented cost savings of CHF 59 m Operational efficiency Non-variable cost savings1), gross CHF million (project view), vs. cost base FY 2014 ~ 100 • CH: Optimisation of various business processes • FR: Renegotiation of supplier contracts, internalisation of resources 5 59 • DE: Optimisation of o
Slide 27: Further improved efficiency ratios
Further improved efficiency ratios Operational efficiency Adjusted operating expense in % of average technical reserves, excl. deferred PHP (adjusted IFRS basis) Excluding expense from owned IFAs Change vs. FY 2013 FY 2014 FY 2015 FY 2016 FY 2015 Switzerland 0.51% 0.46% 0.44% 0.42% -2 bps France 1.5
Slide 28: Well-balanced capital structure
Well-balanced capital structure Capital, cash and dividend Capital structure1) (IFRS basis) 4 523 Senior 0-5% 6% 423 Senior bonds Carrying value (CHF m) Hybrid 25% 467 Convertible bonds 25% Shareholders’ 3 633 Hybrid debt 70-75% 69% equity2) Reference level 31.12.2016 31.12.2016 Maturities (senior)
Slide 29: Increased cash remittance to Holding and dividend to shareholders
Increased cash remittance to Holding Capital, cash and dividend and dividend to shareholders Cash remittance to Holding Dividend per share (CHF million, cash remittance in % of previous (CHF, payout ratio in % of IFRS net profit) year’s IFRS net profit) 50% 68% 31% 38% 598 11.0 Cash remittance FY 20
Slide 30: Swiss Life 2018 well on track
Swiss Life 2018 well on track Swiss Life 2018 financial targets Current assessment • Fee result FY 2018: CHF 400-450 m Ahead Quality of earnings and • Risk result FY 2018: CHF 350-400 m On track earnings growth • Cumulative value of new business (2016-2018): > CHF 750 m On track Operational • Cost s
Slide 31: Supplementary information
Full-year results 2016 Investors’ presentation Supplementary information
Slide 32: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 32 | Investors' presentation | Full-year results 2016
Slide 33: Net profit
Net profit CHF million (IFRS basis, adjusted) +7% 926 +7 933 878 +8 870 +5 875 -17 Net Restruc- One-off Net FX translation Net Net Restruc- Net profit turing FX gain profit excl. effect profit profit turing profit costs one-offs comparable costs excl. basis one-offs FY 2015 FY 2016 33 | Investors' p
Slide 34: Premium development
Premium development CHF million (IFRS basis); GWP, fees and deposits Local currency 9 876 Switzerland -6% -6% 10 534 4 507 France -1% -3% 4 536 1 290 Germany -8% -10% 1 399 1 718 International -30% -31% 2 453 17 366 Total1) -8% -9% 18 853 FY 2016 FY 2015 1) Total includes Other and intersegment elim
Slide 35: Fee and commission income development
Fee and commission income development CHF million (IFRS basis) Local currency 233 Switzerland +17% +17% 199 241 France1) -2% -4% 246 379 Germany +4% +2% 364 213 International -5% -7% 225 Asset 591 Managers 560 +6% +5% 1 361 Total1) 2) +5% +3% 1 301 FY 2016 FY 2015 1) Incl. banking and Pôle Agami 2)
Slide 36: Switzerland: Premium development
Switzerland: Premium development CHF million (IFRS basis) FY 2015 FY 2016 Change Total life GWP incl. PHD 10 534 9 876 -6% Single premiums 6 021 5 312 -12% Periodic premiums 4 513 4 564 +1% Group life 8 921 8 381 -6% Single premiums 5 391 4 857 -10% Periodic premiums 3 530 3 523 -0% Individual life
Slide 37: Switzerland: Statutory distribution ratio in BVG business
Switzerland: Statutory distribution ratio in BVG business CHF million (statutory basis) FY 2013 FY 2014 FY 2015 FY 2016 Gross revenue 2 387 100% 2 477 100% 2 532 100% 2 189 100% Total insurance benefits 2 206 93.3% 2 294 92.4% 2 353 92.9% 2 053 93.8% paid (incl. bonuses) Operating income 181 183 179
Slide 38: Details of net investment result
Details of net investment result CHF million (IFRS basis), insurance portfolio for own risk FY 2016 Direct Net Impair- Gains and losses through investment investment ments income statement income result On On Net underlying derivatives Bonds 2 943 -28 744 30 774 3 688 Equities 177 -7 -265 -167 -432
Slide 39: Profit from operations
Profit from operations CHF million (IFRS basis), segment results (reported vs. adjusted) FY 2015 FY 2016 Change Segments reported1) adjusted2) reported adjusted2) reported adjusted Switzerland 761 762 812 814 +7% +7% France 234 239 244 244 +4% +2% Germany 130 136 125 127 -4% -7% International 42 44
Slide 40: Profit by source
Profit by source FY 2016, based on adjusted segment result1) Asset Group2) thereof Switzerland France Germany International Managers CHF m CHF m EUR m EUR m EUR m CHF m 1 468 814 224 116 44 246 9 63 Savings 804 6 175 534 28 Risk 388 31 90 253 57 Fee 396 16 39 12 Other -10 -3 -32 Costs -110 -80 There
Slide 41: Profit by source: Structure and scope
Profit by source: Structure and scope + Income from investments1) + Income from savings premiums – Expense related to savings process Savings result – Technical interest2) = Investment spread – Policyholder participation = Net savings result Non-Life + Income from risk premiums Group Life – Expense
Slide 42: New business mix
New business mix New business production (NBP) 25% 27% 24% 25% 33% 39% 35% 34% 33% 30% Risk, health and P&C 12% 18% 21% 26% Modern 28% Modern-traditional 24% 20% 21% 16% 9% Traditional FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Shift excl. traditional 85% 88% 90% 92% 95% CH group life 42 | Investors' p
Slide 43: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 43 | Investors' presentation | Full-year results 2016
Slide 44: Allocation of unrealised gains/losses on bonds
Allocation of unrealised gains/losses on bonds CHF million (IFRS basis), as of 31.12.2016 12 032 -7 024 -238 0 3 697 -1 073 Unrealised Deferred Shadow Deferred Non-controlling Allocated to gains/losses policyholder DAC taxes interests shareholders’ on bonds1) bonuses adjustment equity 1) Including c
Slide 45: Return on equity
Return on equity CHF million (IFRS basis) FY 2015 FY 2016 FY 2016 RoE calculation Net profit FY 2016 Shareholders’ equity 12 177 13 657 922 (shareholder part) Unrealised gains/losses on bonds Average adjusted -2 998 -3 697 9 570 allocated to shareholders’ equity shareholders’ equity Adjusted shareho
Slide 46: Insurance reserves excluding policyholder participation liabilities
Insurance reserves excluding policyholder participation liabilities CHF million (IFRS basis) Local currency 86 720 Switzerland +3% +3% 83 856 International 25 557 13% France +4% +6% Germany 24 463 11% 16 395 59% Germany -1% -0% 17% 16 633 France 19 215 International -4% -3% Switzerland 20 039 147 85
Slide 47: Insurance reserves and borrowings
Insurance reserves and borrowings CHF million (IFRS basis) Local 31.12.2015 31.12.2016 currency Insurance reserves 154 953 159 899 +3% +4% Policyholder participation liabilities 10 065 12 043 +20% Insurance reserves w/o PHP liabilities 144 887 147 855 +2% +3% Insurance liabilities 108 157 110 935 +3
Slide 48: 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 31.12.2016 0.9 Non-life 45.0 Investment contracts & PH deposits Europe 27.7 Total Group Individual 159.9 20.2 Traditional business Annuitised & other Gua
Slide 49: Average technical interest rate
Average technical interest rate CHF / EUR / USD / GBP million (statutory basis), as of 01.01.2017 CHF EUR USD GBP Total reserves 83 494 29 880 159 11 Average technical interest rate 1.08% 2.25% 2.30% 2.66% Overall: 1.41% (01.01.2016: 1.64%) 49 | Investors' presentation | Full-year results 2016
Slide 50: Total weighted duration gap
Total weighted duration gap In % 0.9 0.9 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 50 | Investors' presentation | Full-year results 2016
Slide 51: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 51 | Investors' presentation | Full-year results 2016
Slide 52: Business review Asset Managers: Change analysis of assets under management
Business review Asset Managers: Change analysis of assets under management CHF billion (fair value basis) Assets under management FY 2015 FY 2016 Change (bn) Total beginning of period 183.0 185.3 +2.3 Net new assets (NNA) PAM 0.9 1.1 TPAM 7.2 8.5 Market performance 0.9 8.8 FX translation effects -6.
Slide 53: Assets under management and administration
Assets under management and administration CHF billion, as of 31.12.2016 233.0 204.2 28.8 Total real estate under 72.3 management and administration 43.5 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 54: TPAM: AuM and NNA
TPAM: AuM and NNA TPAM TPAM AuM: CHF 49.6 bn as of 31.12.2016 (fair value basis) TPAM NNA: CHF 8.5 bn as of 31.12.2016 (fair value basis) Breakdown by asset classes Breakdown by asset classes Infrastructure Infrastructure Equity 7% 5% Equity 11% Real estate 2% Real estate Balanced mandates Balanced
Slide 55: Bond portfolio: Ratings and classification
Bond portfolio: Ratings and classification PAM Insurance portfolio for own risk (fair value basis) Breakdown by rating BB B CHF million 5% 153 289 BBB 1% AAA 18% 32% 18% A 26% AA Breakdown by classification Bonds 64.3% Corporate 51% 49% Governments & bonds1) supranationals 31.12.2016 1) Including se
Slide 56: Government & supranational bonds: Ratings and currency
Government & supranational bonds: PAM Ratings and currency Breakdown by rating Insurance portfolio for own risk (fair value basis) BBB BB CHF million A 153 289 6% 4% 1% 46% AAA 43% AA Government & supranational 31.4% Breakdown by currency bonds GBP CAD USD 5% 11% 1% EUR 34% 49% 31.12.2016 CHF 56 | I
Slide 57: Government & supranational bonds: Country split
Government & supranational bonds: PAM Country split Government and supranational bond portfolio (fair value basis), as of 31.12.2016, 31.4% of insurance portfolio for own risk (CHF 48.1 bn) % of total government and supranational bond portfolio Switzerland 36% France 11% Netherlands 7% Germany 6% Be
Slide 58: Corporate bond portfolio: Ratings and currency
Corporate bond portfolio: PAM Ratings and currency Breakdown by rating Insurance portfolio for own risk (fair value basis) BB B CHF million AAA 153 289 8% 19% 2% 8% AA BBB 33% 30% A Breakdown by currency GBP Other 3% 1% EUR 35% Corporate USD 35% 32.9% bonds1) 31.12.2016 26% 1) Including senior secur
Slide 59: Corporate bond portfolio: Industry split
Corporate bond portfolio: Industry split PAM Corporate bond portfolio1) (fair value basis), as of 31.12.2016, 32.9% of insurance portfolio for own risk (CHF 50.4 bn) Breakdown by rating Breakdown by industry BB % of total BBB corporate bond portfolio 1% 18% Banks 35% Other financials 5% 46% AAA Util
Slide 60: Loan and mortgage portfolio
Loan and mortgage portfolio PAM Insurance portfolio for own risk (fair value basis) Breakdown by country CHF million 153 289 44% Switzerland Germany 55% Mortgages 5.3% Loans 5.8% 1% France Breakdown by type Policyholder loans Other loans 1% 1% Purchased 47% loans 51% Mortgages 31.12.2016 60 | Invest
Slide 61: Real estate portfolio
Real estate portfolio PAM Insurance portfolio for own risk (fair value basis) Breakdown by country Germany CHF million France 8% 153 289 10% Real estate 16.4% 82% Switzerland Breakdown by type Commercial Residential 35% 37% 31.12.2016 28% Mixed-use 61 | Investors' presentation | Full-year results 20
Slide 62: Equities and alternative investments: Gross exposure
Equities and alternative investments: PAM Gross exposure Breakdown by country Insurance portfolio for own risk (fair value basis) Germany Luxembourg CHF million France 4% 153 289 1% Equities & 5.0% 19% equity funds 1.0% Alternative Net equity exposure 2.1% investments 76% Switzerland Breakdown by in
Slide 63: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 31.12.15 30.06.16 31.12.16 01.01.-31.12.15 01.01. – 31.12.16 EUR 1.0863 1.0822 1.0728 1.0689 1.0904 GBP 1.4729 1.2967 1.2557 1.4718 1.3353 USD 0.9997 0.9773 1.0172 0.9630 0.9852 Interest rates (10-year government bond) 31.12.15 30.06.16 31.12.
Slide 64: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 64 | Investors' presentation | Full-year results 2016
Slide 65: Group MCEV
Group MCEV CHF million, MCEV 13 681 12 509 • Group MCEV increased by 9% • Strong operating earnings CHF +1.2 bn +11% 7 851 – covered business CHF +0.9 bn VIF 7 050 Covered – non-covered business CHF +0.3 bn Covered business • Dividend payout CHF -0.3 bn business 11 393 10 564 • Capital market develo
Slide 66: MCEV covered business
MCEV covered business CHF million (MCEV basis) Operating earnings of 9% +285 +269 11 393 10 564 +332 +296 -18 -335 Active new business steering with Excess returns over Favourable biometric and persistency repricings and product reference rate and experience, move to Solvency II discontinuations mor
Slide 67: Value of new business
Value of new business Value of new business (VNB), CHF million +39 296 268 +2 +42 -55 FY 2015 Economic Volume, Expense Other variances FY 2016 variances business mix and variances pricing variances 15 643 PVNBP 13 842 1.7% New business margin (% PVNBP) 2.1% 1 408 APE 1 209 19.0% New business margin
Slide 68: Value of new business per segment
Value of new business per segment CHF million (MCEV basis) Switzerland France Germany International Total 296 268 144 154 94 76 30 33 15 18 PVNBP 8 408 6 815 4 006 4 463 936 1 077 2 293 1 487 15 643 13 842 APE 622 460 491 533 66 66 230 150 1 408 1 209 NBM in % PVNBP 1.7% 2.3% 1.9% 2.1% 1.6% 2.7% 1.4
Slide 69: 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 70: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 70 | Investors' presentation | Full-year results 2016
Slide 71: 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 Financial calendar Annual General Meeting
Slide 72: The future starts here.
é SwissLife The future starts here.