Swiss Life Holding Ag · SIX:SLHN
Swiss Life — H1 2008 Earnings Presentation
68 slides from Swiss Life's earnings presentation, Aug 28, 2008
Slide 1: Half-year results 2008 Investors' Presentation
Half-year results 2008 Investors’ Presentation Zurich, 28 August 2008
Slide 2: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Müller 3. Priorities and outlook Bruno Pfister 2
Slide 3: Highlights
Highlights z Net profit of CHF 1.64 bn impacted by sharp downturn of financial markets – Extraordinary gains on disposals totalling CHF 1.49 bn – Financial result impacted by net capital losses and impairments of CHF 1.2 bn – GWP growth of 5%, of which 14% outside Switzerland and -2% in Switzerland
Slide 4: Key figures
Key figures GWP incl. PHD (cont.; excl. ERISA) CHF 10 888 m +5% Net profit incl. e.o. gains CHF 1 637 m n.a. Net profit (continuing) CHF 152 m - 64 % Shareholders’ equity CHF 7 240 m -1% Group solvency 162 % 0% Embedded value CHF 12.6 bn -2% 4
Slide 5: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Müller 3. Priorities and outlook Bruno Pfister 5
Slide 6: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Gross written premiums, fees and deposits received 10 888 12 265 Asset management and other commission income 350 104 Financial result for own risk 1 215 3 367 Net insurance benefits and claims -8 459 -8 246 Policyholder
Slide 7: Positive premium growth
Positive premium growth GWP & PHD; CHF million (IFRS basis) 5 907 Switzerland -2% 6 001 France 1) 3 168 +17% 2 715 Germany 908 -9% 994 Luxembourg 225 -19% 279 Liechtenstein 2) 703 +61% 436 Continuing 3) 10 888 +5% 10 385 ERISA 1 880 Continuing 10 888 -11% incl. ERISA 12 265 HY 2008 HY 2007 1) Withou
Slide 8: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Gross written premiums, fees and deposits received 10 888 12 265 Asset management and other commission income 350 104 Financial result for own risk 1 215 3 367 Net insurance benefits and claims -8 459 -8 246 Policyholder
Slide 9: Cost development reflecting growth initiatives
Cost development reflecting growth initiatives CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Change Total operating expense 1 456 1 295 12.4% Commissions and DAC amortisation -562 -469 Restructuring costs -3 -21 AWD -136 ERISA/CapitalLeben -117 Currency effects -5 Operating expense
Slide 10: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Gross written premiums, fees and deposits received 10 888 12 265 Asset management and other commission income 350 104 Financial result for own risk 1 215 3 367 Net insurance benefits and claims -8 459 -8 246 Policyholder
Slide 11: Investment portfolio
Investment portfolio CHF million (IFRS basis) insurance portfolio for own risk 111 552 113 619 Equities & equity funds 5.9% 8.3% Alternative investments 4.9% 5.3% Real estate 11.2% 10.8% Mortgages 5.2% 5.2% Loans 12.4% 13.3% Bonds 55.7% 54.5% Cash and other 4.7% 2.6% 30.06.08 31.12.07 Net equity exp
Slide 12: Very low exposure to structured credit reduced further
Very low exposure to structured credit reduced further CHF million (IFRS basis) 682 55 125 1 1437 574 CDO, CLO, Transferred Net Impairments/ Change in CDO, CLO, ABS, MBS positions to redemptions Realised unrealised ABS, MBS as of SNS Reaal losses losses as of 31.12.2007 (NL/BE) 30.06.2008 Realised l
Slide 13: Investment result
Investment result CHF million (IFRS basis) – insurance portfolio for own risk; continuing excl. ERISA HY 2008 HY 2007 Direct investment income 2 381 2 300 Direct investment income in % 2.1% 2.0% Expense -98 -97 Net capital gains on investments and impairments -1 209 516 Net investment result 1 074 2
Slide 14: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Gross written premiums, fees and deposits received 10 888 12 265 Asset management and other commission income 350 104 Financial result for own risk 1 215 3 367 Net insurance benefits and claims -8 459 -8 246 Policyholder
Slide 15: Shareholder and policyholder participation
Shareholder and policyholder participation - illustrative - Half-year 2008: Year-end 2008: Long-term view Current situation due to Forecast based on assumption adverse market situation HY2008 with direct yield only Technical interest rate ~ 2.9% Technical interest rate ~ 1.4% 2.9% 4.2% 1.0% 0% Net C
Slide 16: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Gross written premiums, fees and deposits received 10 888 12 265 Asset management and other commission income 350 104 Financial result for own risk 1 215 3 367 Net insurance benefits and claims -8 459 -8 246 Policyholder
Slide 17: Operating profit
Operating profit Segment results; CHF million (IFRS basis) 218 HY HY 2007 2008 Insurance 608 218 120 Switzerland Investment Management 47 48 AWD - 5 Other 41 16 Insurance (Discontinued) 87 1 098 100 France Banking (Discontinued) 102 595 Eliminations -32 -23 19 Germany Unallocated corporate costs -32
Slide 18: AWD performance resilient in Germany and Switzerland
AWD performance resilient in Germany and Switzerland AWD Group, stand-alone HY, IFRS basis, EUR million HY 2008 HY 2007 Change Revenues 335.8 388.2 - 13.5% Germany 185.9 184.8 +0.6% Austria & CEE 64.6 91.5 -29.4% United Kingdom 50.2 77.6 -35.3% Switzerland 35.1 34.3 +2.3% EBIT 24.1 43.0 - 44.0% Germ
Slide 19: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2008 HY 2007 Gross written premiums, fees and deposits received 10 888 12 265 Asset management and other commission income 350 104 Financial result for own risk 1 215 3 367 Net insurance benefits and claims -8 459 -8 246 Policyholder
Slide 20: Stable shareholders' equity
Stable shareholders’ equity CHF million (IFRS basis) 7 277 7 240 -1% -1 437 - 124 -114 1 638 31.12.2007 Change in Change in Change in FX Profit 30.06.2008 unrealised treasury translation, attributable gains/losses shares share premium to share- and share holders capital 20
Slide 21: Balance sheet items
Balance sheet items CHF million (IFRS basis) 30.06.2008 31.12.2007 Insurance reserves 119 201 121 829 Insurance liabilities 93 460 94 492 Investment contracts 12 932 12 907 Financial liabilities FVPL (unit-linked) 10 581 11 042 Policyholder participation liabilities 2 228 3 388 Borrowings 3 215 3 62
Slide 22: Stable group solvency
Stable group solvency Based on IFRS equity +78% -37% 211% -6% -35% 192% 194% 162% 1) 162% 31.12.04 31.12.05 31.12.06 31.12.07 Divestments Acquisition Share Change 30.06.08 BdG, AWD buyback in equity, NL, BE 1st HY08 dividend 1st HY08, etc. 1) Since 2007, according to the adjusted practice of the Swi
Slide 23: Embedded value
Embedded value CHF million (statutory basis), incl. effects from divestments 30.06.2008 31.12.2007 Change RoEV Switzerland 4 559 4 847 -5.9% -1.7% International 2) 2 568 4 996 -48.6% -4.8% ANAV Swiss Life Holding 2) 5 428 2 994 Swiss Life Group 12 555 12 837 -2.2% -2.2% of which ANAV 8 573 8 705 PVF
Slide 24: Embedded value – analysis of change
Embedded value – analysis of change CHF million (statutory basis) Swiss Life Group as per 31.12.2007 12 837 Unwind 2008 +440 Investment return 2008 variance -774 Future investment return variance -114 Operational and demographic variance +41 Tax variance +119 Value of new business 2008 +55 Change in
Slide 25: Value of new business
Value of new business CHF million (statutory basis) Switzerland France Germany Luxembourg Total cont. operations 1) 65 55 36 31 16 15 14 8 0 0 APE 152 184 127 128 66 84 10 22 355 418 3002) 2442) New business margin 15.5% 15.6% HY 2008 HY 2007 1) Results of ERISA, Zwitserleven and Swiss Life Belgium
Slide 26: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Müller 3. Priorities and outlook Bruno Pfister 26
Slide 27: Consistent and fast strategy implementation
Consistent and fast strategy implementation Mission: Committed to helping people create a financially secure future. For life. Ambition: Become the leading international life and pensions specialist Focus on retirement Focus on growth Focus on functional 1 2 3 needs opportunities excellence • Addres
Slide 28: Shifting product mix: Fast development of non-traditional life products
Shifting product mix: Fast development of non-traditional life products z Good progress with Private Placement Life Insurance – Leading position (#2) in the growing global HNWI market – Investments in market entries and sales enhancements z Launches of non-traditional life insurance products in all
Slide 29: Strengthening multi-channel distribution: Leveraging AWD to accelerate growth
Strengthening multi-channel distribution: Leveraging AWD to accelerate growth z Substantial growth prospects in German IFA distribution – Underfunded social security system fuels demand for retirement products – IFA already a large and fast growing distribution channel for life insurance z AWD provi
Slide 30: Strengthening multi-channel distribution: Acquisition of strategic stake in MLP
Strengthening multi-channel distribution: Acquisition of strategic stake in MLP z MLP with attractive positioning for Swiss Life – Independent brand and distribution concept provide access to attractive customer segment – Second-largest IFA in Germany, with strong focus on old-age provision and pens
Slide 31: Capital management and Outlook
Capital management and Outlook Active capital management to continue z Share buyback of CHF 1 bn in 2008 z Dividend of CHF 600 m for 2008 z Dividend pay-out ratio of 40-60% of net profit as of 2009 Outlook adjusted given cancellation of share buyback and persistently difficult market environment z 2
Slide 32: Supplementary information
Half-year results 2008 Investors’ Presentation Supplementary information
Slide 33: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Transactions 5. Contact details and financial calendar 33
Slide 34: Organic premium growth
Organic premium growth CHF million (IFRS basis) 30.06.2008 30.06.2007 Change GWP & PHD 11 812 13 950 -15% Less discontinued -924 - 1 685 Continuing operations 10 888 12 265 -11% Less ERISA - -1 880 Currency effects - -64 GWP & PHD adjusted 10 888 10 321 +5% 34
Slide 35: Switzerland: Life insurance premiums
Switzerland: Life insurance premiums CHF million (IFRS basis) HY 2008 HY 2007 Change Total life GWP incl. PHD 5 907 6 001 -1.6% Single premiums 2 737 2 633 4.0% Periodic premiums 3 121 3 322 -6.1% Reinsurance premiums assumed 49 46 6.8% Group life 5 099 5 148 -1.0% Single premiums 2 465 2 332 5.7% P
Slide 36: Performance-oriented products in Switzerland
Performance-oriented products in Switzerland New business gross volume (unit-linked, funds and account solutions); CHF million 215 183 155 133 112 87 27 1HY 05 2HY 05 1HY 06 2HY 06 1HY 07 2HY 07 1HY 08 Unit-linked and funds Vitality Index GarantiePlus GarantiePlus VitalityPlus 90/100 single 100 peri
Slide 37: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Transactions 5. Contact details and financial calendar 37
Slide 38: Allocation of unrealised gains/losses on bonds HY2008
Allocation of unrealised gains/ losses on bonds HY2008 CHF million (IFRS basis) - 2 235 - 4 371 713 1 192 1 230 Allocated to shareholders’ equity Unrealised Deferred Shadow Deferred Minority gains/losses policyholder DAC taxes interest on bonds bonuses adjustment 38
Slide 39: Statutory solvency at 185%
Statutory solvency at 185% CHF million (statutory basis) Available solvency margin Statutory solvency 1) Parent company statutory equity 2 430 Intangibles -7 7 353 185% 3) Eligible part of hybrid capital 1 991 Fund for future appropriation 370 2) 3 981 Additional zillmerisation 479 Unrealised capita
Slide 40: Insurance reserves by country
Insurance reserves by country CHF million (IFRS basis) – Continuing business 65 590 Switzerland -2% 67 256 23 393 Luxembourg France -1% 2% Liechtenstein 23 657 6% Germany 17% Germany 20 478 -4% 21 243 Luxem- 2 326 -1% France bourg 2 343 20% Switzerland Liechten- 7 486 55% -3% stein 7 711 119 201 Tot
Slide 41: Swiss Life Group reserves subject to BVG minimum interest rates
Swiss Life Group reserves subject to BVG minimum interest rates Breakdown of insurance reserves (incl. unit-linked) as per 30.06.2008; CHF billion (IFRS basis) Non-life (1 billion) Investment contracts & PH deposits 28 Europe 28 Continuing operations Traditional 119 business 90 Guaranteed Individual
Slide 42: Average technical interest rate of 2.88%
Average technical interest rate of 2.88% CHF / EUR / USD / GBP million (statutory basis) CHF EUR USD GBP Total reserves 63 790 21 437 100 8 Average technical 2.77% 3.07% 4.13% 3.59% interest rate Overall: 2.88% (FY 2007 on comparable basis: 2.90%) 42
Slide 43: Duration gap
Duration gap Total weighted duration gap in %, excl. NL & BE starting from Q4 2007 3,1 2,7 0,9 0,9 0,9 0,7 0,7 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 43
Slide 44: Investment return on insurance portfolio
Investment return on insurance portfolio CHF million (IFRS basis) – insurance portfolio for own risk; excl. ERISA, NL & BE Direct investment income of 2.1% Total investment return of -1.2% 1) Bonds 1 282 2.1% -738 -1.2% 1 311 Equities 140 1.8% -1 269 -15.9% Alternative 199 3.5% -172 -3.0% investment
Slide 45: Bond portfolio: Ratings and classification
Bond portfolio: Ratings and classification Insurance portfolio (IFRS basis) Breakdown by rating Below BBB BBB 6% CHF million 12% 111 552 A AAA 15% 50% AA 17% Bonds 55.7% Breakdown by classification ABS / MBS 1% Government and Supranationals 43% Banks and Corporates 56% 45
Slide 46: Bond portfolio: Currency exposure
Bond portfolio: Currency exposure Insurance portfolio (IFRS basis) Before hedges USD CHF million 11% 111 552 CHF EUR 26% 63% Bonds 55.7% After hedges USD 1% EUR 34% CHF 65% 46
Slide 47: Exposure to CDO, ABS, MBS and monoliners
Exposure to CDO, ABS, MBS and monoliners 30.06.2008 Category Fair Rating Value Below BBB Comments AAA AA A BBB (CHF m) or unrated CDO, CLO, ABS, MBS: volume with US subprime and Alt-A components CDO/CLO totals CHF 16 m. Reduction mainly due 225 80% 0% 0% 0% 20% to expiration of two CDO Corporates (d
Slide 48: Exposure to CDO and subprime
Exposure to CDO and subprime 30.06.2008 Category Fair Value Instruments Unrealised Impairments/ Year of maturity (all amounts in CHF m) with US loss realised loss 2008 2009 - 2012 after 2012 subprime component CDO/CLO with ABS collateral 60 16 -10 0 0% 45% 55% CDO/CLO corporates 165 0 0 0 30% 70% 0
Slide 49: Loan and mortgage portfolio
Loan and mortgage portfolio Insurance portfolio (IFRS basis) Breakdown by country France 1% CHF million 111 552 Switzerland Germany 59% 40% Loans & 17.6% mortgages Breakdown by type Due from banks 4% Policyholder loans 3% Mortgages 30% Other loans 63% 49
Slide 50: Real estate portfolio
Real estate portfolio Insurance portfolio (IFRS basis) Breakdown by country Germany 6% CHF million France 11% 111 552 Real estate 11.2% Switzerland 83% Breakdown by type Others 1% Centres 10% Mixed 25% Residential 43% Commercial 21% 50
Slide 51: Equity portfolio: Currency exposure
Equity portfolio: Currency exposure Insurance portfolio (IFRS basis) CHF million Breakdown by currency 111 552 Equities & equity 5.9% USD 4% CHF 8% funds EUR 88% 51
Slide 52: Alternative investment portfolio
Alternative investment portfolio Insurance portfolio (IFRS basis) Hedge funds: CHF 5.3 billion Others Commodity 6% CHF million related 3% Tactical trading 111 552 17% Equity hedged 15% Alternative 4.9% investments Relative value 34% Event driven 25% Private equity: CHF 166 million Venture 1% Fund an
Slide 53: Currency exposure
Currency exposure Insurance portfolio (IFRS basis) Net 3.4% of insurance portfolio (YE 2007: 1.9%) Other 30% EUR 31% JPY 2% GBP 5% USD 32% Gross currency exposure CHF 36 289 million Hedged currency exposure CHF 32 548 million Net currency exposure CHF 3 741 million 53
Slide 54: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 30.06.08 31.12.07 30.06.07 1.1.-30.06.08 1.1.-30.06.07 EUR 1.6054 1.6552 1.6570 1.6060 1.6320 GBP 2.0265 2.2561 2.4621 2.0745 2.4187 USD 1.0156 1.1249 1.2285 1.0506 1.2281 Interest rates 1) 30.06.08 31.12.07 30.06.07 CHF 3.288 3.048 3.226 EUR
Slide 55: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Transactions 5. Contact details and financial calendar 55
Slide 56: Implementation of embedded value at Swiss Life
Implementation of embedded value at Swiss Life z ANAV and PVFP have been calculated for more than 90% . Swiss Life LU of the mathematical reserves z For other life insurance entities Swiss Life DE only the statutory book value Swiss Life has been included FR Swiss Life CH z The banking and non-life
Slide 57: Key assumptions for embedded value calculation
Key assumptions for embedded value calculation 30.06.2008 31.12.2007 z Weighted new money return based on asset CH EU CH EU allocation z Weighted returns are Risk discount rate 7.0% 8.0% 7.0% 8.0% higher due to increase in assumed future Equity return 6.5% 7.5% 6.5% 7.5% investment returns z Long-te
Slide 58: Asset allocation assumptions by region
Asset allocation assumptions by region 30.06.2008 31.12.2007 CH EU CH EU Cash and cash equivalents 2% 1% 2% 1% Bonds and loans 63% 77% 62% 75% Mortgages 6% 3% 7% 4% Real estate 15% 7% 13% 7% Equities 6% 8% 8% 9% Participations 0% 0% 0% 0% Alternative investments 8% 4% 8% 4% 58
Slide 59: Sensitivities of embedded value
Sensitivities of embedded value CHF million (statutory basis) Switzerland International Total EmbV HY 2008 (base case) 4 559 2 568 12 555 1) Δ Bond returns +100 bps +174 +221 +395 Δ Bond returns -100 bps -195 -214 -409 Δ Investment returns +100 bps +511 +369 +880 Δ Investment returns -100 bps -690 -
Slide 60: Sensitivities of value of new business
Sensitivities of value of new business CHF million (statutory basis) Total VnB HY 2008 (base case) 55 Δ Bond return +100 bps +16 Δ Investment returns +100 bps +24 Δ Risk discount rate -100 bps +15 Δ Administration costs -10 % +10 Δ Acquisition costs -10 % +10 60
Slide 61: IFRS equity to embedded value bridge
IFRS equity to embedded value bridge CHF million 4 785 -803 12 555 3 599 -2 266 7 240 IFRS Difference in Goodwill & PVFP Cost of Embedded shareholders’ tangible/net other holding value equity assets intangible capital assets 1) 1) Including goodwill CHF 1 736 million, customer relationship asset of
Slide 62: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Transactions 5. Contact details and financial calendar 62
Slide 63: Transition AWD segment result to EBIT AWD
Transition AWD segment result to EBIT AWD CHF million (IFRS basis), AWD stand-alone AWD segment result HY 2008 5 + Amortisation customer relationship asset +7 - Financial result AWD Q2 2008 -2 + EBIT AWD Q1 2008 +29 EBIT AWD HY 2008 1) 39 1) EBIT AWD HY 2008: EUR 24 million / HY 2007: EUR 43 million
Slide 64: Accounting treatment of announced MLP and AWD transactions
Accounting treatment of announced MLP and AWD transactions MLP z The stake in MLP will be treated as an investment in associates in accordance with IAS 28 (equity method) z The investment in MLP is initially recognised at cost (including goodwill and other intangible assets acquired) and adjusted th
Slide 65: 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 66: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Transactions 5. Contact details and financial calendar 66
Slide 67: Contact details and financial calendar
Contact details and financial calendar Contact Marcus Händel Tel. +41 (43) 284 67 67 Head of Investor Relations E-mail: marcus.haendel@swisslife.ch Rolf Winter Tel. +41 (43) 284 49 19 Senior Investor Relations Manager E-mail: rolf.winter@swisslife.ch Financial calendar Interim statement Q3 12 Novemb
Slide 68: SwissLife
be SwissLife Prepared for the future.