Swiss Life Holding Ag · SIX:SLHN
Swiss Life — FY2001 Earnings Presentation
71 slides from Swiss Life's earnings presentation, Apr 11, 2002
Slide 1: Swiss Life Group Annual Results 2001
Swiss Life Group Annual Results 2001 Zurich, April 11th, 2002
Slide 2: Agenda
Agenda Introduction Andres F. Leuenberger, Chairman Highlights 2001 Roland Chlapowski, CEO Full Year Results 2001 • Group and Insurance Roland Chlapowski, CEO • Private Banking and Investment Management Dominique P. Morax, CFO • Investments and Capitalisation Dominique P. Morax, CFO Embedded Value 2
Slide 3: 2001 - A challenging business year
2001 - A challenging business year n Strategic review and operational initiatives underway n Implementing rigorous cost cutting program n Making group life business in Switzerland profitable n Focusing on core activities n Strengthening the balance sheet n Improved corporate governance n Appointment
Slide 4: New organisational structure Swiss Life Group
New organisational structure Swiss Life Group Chief Executive Officer Roland Chlapowski Chief Risk Officer and Group Actuary Chief Financial Officer Michael Koller Dominique P. Morax ad interim E-Business Hannes A. Meyer Switzerland International Investments Roland Chlapowski Hans-Rudolf Strickler D
Slide 5: Agenda
Agenda Introduction Andres F. Leuenberger, Chairman Highlights 2001 Roland Chlapowski, CEO Full Year Results 2001 • Group and Insurance Roland Chlapowski, CEO • Private Banking and Investment Management Dominique P. Morax, CFO • Investments and Capitalisation Dominique P. Morax, CFO Embedded Value 2
Slide 6: Strong solvency despite difficult market environment
Strong solvency despite difficult market environment n Net profit of CHF 124 m – in line with announcement n Shareholders’ equity declined to CHF 4 982 m n Embedded value stands at CHF 8 102 m n Operational costs in 2001 up by +4.5% n Good growth of life premiums and net new money inflow n Above ave
Slide 7: Operating profit
Operating profit* In million CHF 2000** 2001 Change (in %) Life Insurance 1 186 273 - 77.0% Non-Life Insurance 154 35 - 77.3% Private Banking 242 102 - 57.9% Investment Management 97 148 52.6% E-Business and Other*** 17 - 42 Intersegment eliminations**** - 184 - 120 - 34.8% Operating profit* 1 512 3
Slide 8: Agenda
Agenda Introduction Andres F. Leuenberger, Chairman Highlights 2001 Roland Chlapowski, CEO Full Year Results 2001 • Group and Insurance Roland Chlapowski, CEO • Private Banking and Investment Management Dominique P. Morax, CFO • Investments and Capitalisation Dominique P. Morax, CFO Embedded Value 2
Slide 9: Further improving transparency
Further improving transparency Completed measures n Introduction of IAS and IAS seminar in spring 2001 n Disclosure of Embedded Value starting in 2001 What’s new n In annual report 2001 n Segmental P&L and Balance Sheet n Disclosure of senior management and Board of Directors remuneration n On the I
Slide 10: Key figures - Income Statement
Key figures - Income Statement In million CHF Change 2000 2001 (in %) Premiums & policyholder deposits (gross) 19 318 19 980 3.4% n Gross written premiums 14 652 15 630 6.7% n Policyholder deposits 4 666 4 350 - 6.8% Financial result 10 420 6 470 - 37.9% Net benefits paid 11 679 11 591 - 0.8% Operat
Slide 11: Key figures - Balance Sheet: Assets under management remain stable
Key figures - Balance Sheet: Assets under management remain stable In million CHF Change 2000 2001 (in %) Insurance policy and claim reserves 98 900 98 827 - 0.1% Shareholders' equity 7 665 4 982 - 35.0% l Shareholders' equity (excl. rev. res.) 4 370 4 938 13.0% l Revaluation reserves 3 295 44 - 98.
Slide 12: Operating expenses increased
Operating expenses increased In million CHF 2’328 n Total operating expenses of CHF 3 600 m 2'211 n Increases due to n Investments in technology and systems n Increased staff numbers due to growth in Private Banking and Investment Management n Set-up costs for e-business 690 652 577 518 188 136 121
Slide 13: Results by Segment: Insurance
Results by Segment Insurance 13
Slide 14: Achievements in 2001 - Insurance
Achievements in 2001 - Insurance Switzerland n Introduced economic value model for group life n Implemented first improvements for group life n Reorganized private client insurance business Europe n Premium growth in most European business units n Reorganized French business into three business unit
Slide 15: Segment result Life
Segment result Life In million CHF Change 2000 2001 (in %) Financial results 9 717 5 866 - 39.6% Premiums, policy fees, other fee income 12 187 13 093 7.4% Other income 141 134 - 5.0% Total Revenues 22 045 19 093 - 13.4% Interest credited to clients & borrowings - 814 - 1 241 52.5% Provisions for in
Slide 16: Segment result Non-Life
Segment result Non-Life In million CHF Change 2000 2001 (in %) Premiums, policy fees, other fee income 1 987 2 034 2.4% Other income 118 75 - 36.4% Revenues from Insurance 2 105 2 109 0.2% Provisions for ins.reserves + benefits paid - 1 502 - 1 544 2.8% PH dividends and participation in profit - 17
Slide 17: Ratios on group level - Improved Combined Ratio
Ratios on group level - Improved Combined Ratio 2000 2001 (earned) (earned) Cost ratio (in % of net earned premiums + Life 12.5% 12.3% deposits) (earned) (earned) Claims ratio (in % of net earned premiums) 76.0% 76.7% Non-Life Expense ratio (in % of net earned premiums) 34.8% 31.7% Combined ratio 11
Slide 18: Results by Segment: Private Banking and Investment Management
Results by Segment Private Banking and Investment Management 18
Slide 19: Achievements in 2001 - Private Banking
Achievements in 2001 - Private Banking n Further on-shore expansion in Italy, Austria and Greece n Acquisition and integration of WestLB (Schweiz) completed n Investment in processing systems and organizational improvements n Already implemented cost cutting program in fourth quarter 2001 19
Slide 20: Segment result Private Banking
Segment result Private Banking In million CHF Change 2000 2001 (in %) Financial result 590 549 - 6.9% Inv. management, banking, other income 523 504 - 3.6% Total Revenues 1 113 1 053 - 5.4% Interest credited to clients & borrowings - 359 - 378 5.3% Operating expenses - 518 - 577 11.4% Other +6 +4 -
Slide 21: Achievements in 2001 - Investment Management
Achievements in 2001 - Investment Management n Substantial net new money inflow n Good investment performance n Launch and successful first year for Adamant Biomedical Investments n Swiss Life Real Estate Partners managing the acquired real estate portfolio from Oscar Weber Holding 21
Slide 22: Segment result Investment Management
Segment result Investment Management In million CHF Change 2000 2001 (in %) Financial results 24 38 58.3% Inv. management, other income 221 298 34.8% Total Revenues 245 336 37.1% Interest on borrowings - 13 -3 - 76.9% Operating expenses - 136 - 188 38.2% Other 1 3 - Total Expenses - 148 - 188 27.0%
Slide 23: Investments and Capitalisation
Investments and Capitalisation 23
Slide 24: Financial result
Financial result In million CHF 2000 2001 Change (in %) Investment income, net 5 767 5 626 - 2.4% Real. & unreal. gains/losses, net 4 134 558* - 86.5% Trading account income, net 519 286 - 44.9% Financial result I 10 420 6 470 - 37.9% Foreign currency gains/losses** 173 - 325 - 287.9% Financial resu
Slide 25: Asset allocation of Swiss Life's insurance portfolio
Asset allocation of Swiss Life’s insurance portfolio In million CHF n Net equity exposure at the end of 2001 (after hedges): 16% 116 686 117 828 117 828 3.5% 4.0% Other invested assets 4 700 6.5% 8.2% Property 9 675 8.5% 8.3% Mortgages 9 758 17.3% 20 435 21.9% Shares & equity funds 68 245 56.1% 57.9
Slide 26: Performance of Swiss Life's insurance portfolio
Performance of Swiss Life’s insurance portfolio In million CHF (Before deferred taxes) 2000 2001 Direct investment income 5 377 5 316 Yield 1 4.6% 4.4% + Realised gains/losses (net) 4 570 9 947 1 352 6 668 Yield 2 8.6% 5.5% + Impairment write-ups/write-downs +8 9 955 -726 5 942 Yield 3 8.6% 4.9% + C
Slide 27: Investment performance insurance portfolio in 2001
Investment performance insurance portfolio in 2001 n Investment performance for the insurance portfolio +0.7% n Compares favourably with peer group performance n Performance of Pictet LPP Index -2.3% n Average performance of Swiss pension plans* -7.1% n Outperformance compared to average Swiss pensi
Slide 28: Development of shareholders' equity (I)
Development of shareholders‘ equity (I) In million CHF - 45 - 204 2 683 - 2 358 - 201 +124 7 665 4 982 31.12.2000 Net effect Dividends Change in un- Change Net 31.12.2001 of paid out realised gains in share income adoption / losses and premium 2001 of IAS 39 & currency and IAS 40 translation treasur
Slide 29: Development of shareholders' equity (II)
Development of shareholders‘ equity (II) In million CHF 8 161 7 665 6 901 6 891 4 571 3 294 4 490 3 660 4'571 4 44 982 3 660 3'294 1'372 4 490 44 3 026 4 938 4 371 2 436 2 436 3 590 3 231 5'141 2 411 4'371 3'590 Revaluation reserves** 590 3 231 2 411 Equity (excl. reval. res.)* 1996 590 1997 1998 19
Slide 30: Agenda
Agenda Introduction Andres F. Leuenberger, Chairman Highlights 2001 Roland Chlapowski, CEO Full Year Results 2001 • Group and Insurance Roland Chlapowski, CEO • Private Banking and Investment Management Dominique P. Morax, CFO • Investments and Capitalisation Dominique P. Morax, CFO Embedded Value 2
Slide 31: Economic assumptions on 31.12.2001
Economic assumptions on 31.12.2001 n Economic assumptions by region for: n risk discount rate n pre tax investment return for bonds n pre tax investment return for ordinary shares Region Risk discount rate Bond return Share return CH 7.00% 3.50% 7.00% EU 8.32% 5.13% 8.13% 31
Slide 32: Embedded value impacted by weaker stock markets
Embedded value impacted by weaker stock markets % Change -33.5% +7.8% -23.4% n Significant decrease in embedded value in Switzerland due to EV in million CHF 10 580 n Poor performance of stock 7 990 8 102 markets 4 894 n Increase in embedded value in EU 3 606 5 311 4 644 due to 3 190 n High value of
Slide 33: Change in Adjusted Net Asset Value (ANAV)
Change in Adjusted Net Asset Value (ANAV) % Change n Decline of ANAV from CHF 5.7 -51.6% +2.7% -39.2% bn to 3.5 bn in line with IAS ANAV in million CHF equity decline mainly due to 5 686 n Adverse development of equity markets 4 384 n Higher upfront expenses 3 458 due to growth of new business 2 121
Slide 34: Change in Present Value of Future Profits (PVFP)
Change in Present Value of Future Profits (PVFP) % Change n Slight decrease of the Present -11.5% +12.9% -5.1% Value of Future Profits by 5% to PVFP in million CHF CHF 4 644 m due to 4 894 n Higher expenses 4 644 n Slightly reduced margin 3 606 assumptions 3 190 n Measures to increase profitability
Slide 35: Value of new business 2001
Value of new business 2001 n Value of total new business of CHF 46 m n Value of new business for Switzerland negative (CHF -35 m) n Lower margins in group life due to low interest environment n Decrease in value is also the result of an improved expense allocation model n Measures to improve profita
Slide 36: Change in Embedded Value
Change in Embedded Value In million CHF 3 188 EV / Share*: CHF 728 746 10 580 204 8 102 122 46 EV Dividends Increase Deviation Value Other EV 31.12.2000 in Value in of New 31.12.2001 (unwind) Investment Business Return * Total number of shares (excl. treasury shares): 11 132 711 36
Slide 37: Embedded Value breakdown on 31.12.2001
Embedded Value breakdown on 31.12.2001 In million CHF Invest. Life Non-life Private Mgmt. & Total & Health Banking Other Tangible NAV 683 1444 NA Intangible NAV 306 1160 NA ANAV (1) -135 989 2604 NA 3 458 PVFP 4 644 4 644 EV 4 509 8 102 Value of New Business 46 46 Net Profit (2) 273 35 102 -14 (3) 3
Slide 38: Agenda
Agenda Introduction Andres F. Leuenberger, Chairman Highlights 2001 Roland Chlapowski, CEO Full Year Results 2001 • Group and Insurance Roland Chlapowski, CEO • Private Banking and Investment Management Dominique P. Morax, CFO • Investments and Capitalisation Dominique P. Morax, CFO Embedded Value 2
Slide 39: Strategic and operational review - goals and actions
Strategic and operational review - goals and actions n The goals of the strategic and operational review are to n Improve profitability across all business units n Strengthen balance sheet n The main measures of the operational review, with immediate effect, are n Implementation of cost cutting prog
Slide 40: Cost cutting program - overview
Cost cutting program - overview n Expected administrative cost savings* by n 31 December 2002 of CHF 170 million n 31 December 2003 of CHF 300 million n Savings expected to have marginal impact on revenues and AuM n More than 275 initiatives developed and approved by local managers; divisional manag
Slide 41: Cost cutting program - main initiatives
Cost cutting program - main initiatives Swiss Division, n Over 125 initiatives Corporate Centre and n Operational effectiveness: reduction in IT/logistics and headcount (mostly through natural fluctuations) Others n Corporate centre streamlined staff function n Reduction of external service companie
Slide 42: Cost cutting program - breakdown
Cost cutting program - breakdown In million CHF 2002E 2003E Recurring cost savings, pre-tax Swiss Division, Corporate Centre & Other 69 147 European Division 86 152 Private Banking and Investment Management 46 65 Total recurring cost savings 201 364 As % of 2001 administrative cost base 7% 12% Less:
Slide 43: Group life business in Switzerland
Group life business in Switzerland n Swiss Life, market leader in Switzerland, is committed to maintaining a financially sustainable group life business n Adverse conditions to operate group life business n Persistently low interest rates (< 4%), weak equity markets and longevity n Regulatory constr
Slide 44: Impact of group life measures
Impact of group life measures n First results will be achieved this year n Improved efficiency through the launched cost cutting program n Cost premium already increased on 50% of portfolio n Additional measures will have positive impact: benefits accruing in 2002, break-even of group life business
Slide 45: Our commitments today
Our commitments today n Delivering on operational improvements n Making the most of future opportunities in the strategic review n Maintaining an open dialogue with you 45
Slide 46: Agenda
Agenda Introduction Andres F. Leuenberger, Chairman Highlights 2001 Roland Chlapowski, CEO Full Year Results 2001 • Group and Insurance Roland Chlapowski, CEO • Private Banking and Investment Management Dominique P. Morax, CFO • Investments and Capitalisation Dominique P. Morax, CFO Embedded Value 2
Slide 47: Key priorities moving forward
Key priorities moving forward n Swiss Life will step-up to the challenge and emerge from the current situation as a more focused, profitable company with a strengthened capital base n The following measures will allow us to achieve our goals n Appointment of new senior management n Improved corporat
Slide 48: Contact the Investor Relations Team
Contact the Investor Relations Team Christoph Braschler Tel. +41 (1) 284 47 12 Head Investor Relations E-Mail: christoph.braschler@swisslife.ch Peter Huber Tel. +41 (1) 284 41 99 Deputy Head Investor Relations E-Mail: peter.huber@swisslife.ch Natascha Poli Tel. +41 (1) 284 35 02 Assistant Investor R
Slide 49: Swiss Life Group Annual Results 2001: Supplementary information
Swiss Life Group Annual Results 2001 Supplementary information
Slide 50: Supplementary information
Supplementary information n Swiss Life Group n Insurance and Private Banking n Embedded Value 50
Slide 51: Profit contribution 2001
Profit contribution 2001 5.8% 14.4% 26.5% 9.2% 18.3% 6.3% 70.6% 48.9% 2000 2001 Life Non-Life Private Banking Investment Management * Profit before amortisation of goodwill, taxes and minority interests 51
Slide 52: Adoption of IAS 39 and IAS 40
Adoption of IAS 39 and IAS 40 n Adoption of IAS 39 Financial Instruments: Recognition and Measurement as of 1 January 2001 n Separation of embedded derivatives, if not closely related to host contract n Hedge accounting fully implemented n Adoption of IAS 40 Investment Property as of 1 January 2001
Slide 53: Effect of Adopting IAS 39 and IAS 40
Effect of Adopting IAS 39 and IAS 40 In million CHF Retained Earnings Unrealised Gains/Losses, Net of Taxes 5 638 5 593 45 IAS 39 2 343 2 298 IAS 40 893 3 295 2 402 31.12.2000 01.01.2001 53
Slide 54: Lower shareholders' equity due to a decrease in revaluation reserves
Lower shareholders’ equity due to a decrease in revaluation reserves In million CHF 2000 Change IAS Change 2001 31.12. 39&40 (net) 31.12. Common shares 587 - - 587 Share premium 1 839 - - 59 1 780 Treasury shares - 399 - - 141 - 540 Unrealised gains/losses 3 295 - 893 - 2 358 44 Retained earnings 2
Slide 55: Breakdown of core capital
Breakdown of core capital In million CHF 18'000 15 692 13 258 - 16% 7 667 - 42% 16'000 Def. insur. rel. funds & def. taxes 14'000 rel. to unreal. gains/losses recorded in equity 5 905 12'000 subordinated debt 4 037 10'000 Hybrid capital instruments 1 331 1 279 8'000 869 Minority interest 6'000 1 402
Slide 56: Development of core capital
Development of core capital In million CHF - 2 683 +108 +122 +30 - 5 591 - 3 168 13 258 7 667 31/12/2000 31/12/2001 Change in Change in Change in Change in Change in share- hybrid sub- deferred minority holder’s capital ordinated insurance interest equity instruments debt funds 56
Slide 57: Return on equity
Return on equity Excluding the effect of Including the effect of revaluation reserves revaluation reserves (smoothed) 23.2% 20.3% 19.6% 16.6% 13.1% 13.0% 10.9% 8.7% 2.7% 0.6% 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 based on Swiss GAAP based on IAS based on Swiss GAAP based on IAS 57
Slide 58: Assets under Management
Assets under Management In million CHF Off-balance sheet On-balance sheet (including unit-linked & separate accounts) 53 930 205 944* 203 334 189 345 53 893* 53 930 45 355 116 109 97 088 143 990 152 051 149 404 116 109 97 088 1997 1998 1999 2000* 2001 based on Swiss GAAP based on IAS * Comparable fi
Slide 59: Supplementary information
Supplementary information n Swiss Life Group n Insurance and Private Banking n Embedded Value 59
Slide 60: Gross written premiums & policyholder deposits (I)
Gross written premiums & policyholder deposits (I) Annual gross written premiums & policyholder deposits before eliminations In million CHF 2000 2001 Change (in %) Life 17 099 17 716 3.6% Direct written premiums 12 433 13 366 7.5% Policyholder deposits 4 666 4 350 - 6.7% Non-Life 1 765 1 786 1.2% Ac
Slide 61: Insurance: Clearly a life play
Insurance: Clearly a life play Life insurance Non-Life insurance 19 980* Assumed Fee income 2 209 premiums 19‘318 (unit-linked) 11% 2‘183 Policyholder 11% Other 21% 17 771 non-life deposits 89% Accident 2% Periodical 5% 45% premiums 17‘134 & health 25% 89% Fire and 12% 37% property 17% Motor vehicle
Slide 62: Gross written premiums & policyholder deposits (II)
Gross written premiums & policyholder deposits (II) Annual gross written premiums & policyholder deposits before eliminations In million CHF 2000 2001 Change (in %) Switzerland 9 427 9 647 2.3% France 4 953 5 062 2.2% Germany 1 724 1 706 -1.1% Netherlands 1 412 1 489 5.5% UK 882 903 2.4% Belgium 550
Slide 63: Growth in gross life premiums despite decrease in policyholder deposits
Growth in gross life premiums despite decrease in policyholder deposits 2000 2001 Growth in gross life premiums Total: CHF 17 134 million Total: CHF 17 771 million by line of business 27% 24% Group + 9.8% 47% 50% Individual + 3.2% 26% 26% Policyholder deposits - 6.8% 2% 2% Periodical - 2.6% 27% 25%
Slide 64: Total banking income (net) by type
Total banking income* (net) by type 2000 2001 1% 8% 4% 4% 44% 47% 45% 47% Interest income Income from commissions Income from trading Other income * Income before intersegment eliminations and other consolidation effects 64
Slide 65: Supplementary information
Supplementary information n Swiss Life Group n Insurance and Private Banking n Embedded Value 65
Slide 66: Objectives for Embedded Value reporting
Objectives for Embedded Value reporting n “True and Fair” Performance Measurement of insurance company n Improved management information n Enhanced transparency of life business for financial community n Focus on development of the economic value of the company n Early warning: EV is an anticipating
Slide 67: Components of the Embedded Value
Components of the Embedded Value EV = ANAV + PVFP n ANAV: Adjusted Net Asset Value: ANAV = Equity + Adjustments n PVFP: Present Value of Future Profits: Cash flow projection model n Calculation of the yearly statutory profits and losses n Long-term perspective n Value of the existing portfolio only:
Slide 68: Implementation at Swiss Life
Implementation at Swiss Life Swiss Life n ANAV and PVFP were BE calculated for more than Zelia Swiss Life Swiss Life 95% of the Mathematical NL Reserves UK n For other life insurance Swiss Life entities only the book-value DE has been included Swiss Life CH n The banking and non-life La Suisse insur
Slide 69: Embedded Value 2000 vs. 2001
Embedded Value 2000 vs. 2001 In million CHF 31.12.2000 31.12.2001 Change ANAV 5 686 3 458 -39.2% • Switzerland (CH) 4 384 2 121 -51.6% • Europe (EU) 1 302 1 337 +2.7% PVFP 4 894 4 644 -5.1% • Switzerland (CH) 3 606 3 190 -11.5% • Europe (EU) 1 288 1454 +12.8% ANAV + PVFP 10 580 8 102 -23.4% • Switze
Slide 70: Sensitivities
Sensitivities In million CHF CH EU Group Embedded Value 31/12/2001 5 311 2 791 8 102 • ∆ Risk discount rate - 1% 480 170 650 • ∆ Investment returns + 1% 786 441 1227 • ∆ Market Values +10% 1 932 120 2 051 Embedded Value 31/12/2001 100% 100% 100% • ∆ Risk discount rate - 1% 9.0% 6.1% 8.0% • ∆ Investm
Slide 71: Disclaimer
Disclaimer This presentation is made by Swiss Life/Rentenanstalt and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Swiss Life/Rentenanstalt. Although all reasonable effort has been made to ensure the facts stated herein