Swiss Life Holding Ag · SIX:SLHN
Swiss Life — H1 2005 Earnings Presentation
64 slides from Swiss Life's earnings presentation, Sep 5, 2005
Slide 1: Half-year results 2005 Investors' Presentation
Half-year results 2005 Investors’ Presentation Zurich, 5 September 2005
Slide 2: Agenda
Agenda 1. Overview Rolf Dörig 2. Financial results Bruno Pfister 3. Outlook Rolf Dörig 2
Slide 3: Results improving consistently
Results improving consistently l Operating improvements led to net result of CHF 463 million (+29%) l Growth and efficiency achievements encouraging l Financial strength further improved 3
Slide 4: Results improving consistently
Results improving consistently l Operating improvements led to net result of CHF 463 million (+29%) – Supported by positive tax effect – Affected by restructuring costs («La Suisse») l Growth and efficiency achievements encouraging – Organic premium growth of 6% – Adjusted operating expenses continu
Slide 5: Solid business performance
Solid business performance l Switzerland: Progress in profitability improvement – Operating result significantly improved (excl. restructuring costs) – Solution for «La Suisse» strengthens market position and provides further potential for efficiency gains l International: Growth opportunities seize
Slide 6: Promising outlook
Promising outlook l Strategy refined l Growth perspectives attractive l Further efficiency gains Net result of CHF 1 billion by 2008 6
Slide 7: Agenda
Agenda 1. Overview Rolf Dörig 2. Financial results Bruno Pfister 3. Outlook Rolf Dörig 7
Slide 8: Organic premium growth of 6%
Organic premium growth of 6% CHF million (IFRS basis) HY 2005 HY 2004 Change GWP & PHD 11 635 11 899 -2% «La Suisse» 1) -525 United Kingdom -340 Currency effect -24 GWP & PHD (adjusted) 11 635 11 010 +6% 1) One-off impact of BVG contingency fund 8
Slide 9: Strong growth in Europe
Strong growth in Europe GWP & PHD; CHF million (IFRS basis) 5 610 Switzerland 1) -11% 6 317 3 658 +16% Belgium/Luxembourg France 3 165 Netherlands 5% 8% Switzerland 905 +2% Germany Germany 48% 884 8% 925 Netherlands +11% 830 567 +47% Belgium/Lux. 385 11 France Other 2) 352 31% Total reported 11 635
Slide 10: Continued stringent cost management
Continued stringent cost management CHF million (IFRS basis) HY 2005 HY 2004 Change Total operating expenses 1 528 1 469 4.0% Commissions and DAC amortisation -477 -391 22.0% Goodwill amortisation -39 Currency effects -2 Adjustment UK -26 Restructuring cost «La Suisse» -60 Operating expenses (adjust
Slide 11: Net result from operations improved
Net result from operations improved CHF million (IFRS basis) HY 2005 HY 2004 Net result from operations 541 595 Restructuring cost «La Suisse» + 60 PH participation France 1) + 31 Result UK -75 Goodwill amortisation +39 Net result from operations (adjusted) 632 559 + 73 1) In context of tax effect 1
Slide 12: Segment results
Segment results CHF million (IFRS basis) HY 2005 HY2004 Insurance 427 488 Insurance (adjusted) 518 431 Banking 80 76 Investment Management 22 34 Other 22 13 Eliminations -10 -16 Net result from operations 541 595 Net result from operations (adjusted) 632 559 12
Slide 13: Insurance: Strong contribution from Switzerland
Insurance: Strong contribution from Switzerland CHF million (IFRS basis) HY 2005 HY 2004 Switzerland 249 1) 264 France 51 37 Germany 20 43 Netherlands 65 80 Belgium/Luxembourg 50 6 Other 2) -4 71 Eliminations -4 -13 Net result from insurance operations 427 488 Net result from insurance operations (a
Slide 14: Net result increased to CHF 463 million (+29%)
Net result increased to CHF 463 million (+29%) CHF million (IFRS basis) HY 2005 HY 2004 Premiums, policy fees and PH deposits (gross) 11 635 11 899 Financial result 1) 2 902 2 924 Net insurance benefits and claims -8 529 -8 908 Policyholder participation -870 -864 Operating expenses -1 528 -1 469 Ne
Slide 15: Balance sheet further strengthened
Balance sheet further strengthened CHF million (IFRS basis) 30.6.2005 31.12.2004 Insurance reserves 135 123 131 415 Insurance liabilities 103 462 103 068 Investment contracts with DPF 21 761 19 988 Investment contracts and PH deposits 2 615 2 679 Discretionary participation liabilities 7 285 5 680 B
Slide 16: Shareholders' equity up 19%
Shareholders' equity up 19% CHF million (IFRS basis) 447 7 490 766 10 -14 1 209 19.2% 6 281 31.12.2004 1) Change in Change in Share premium Net result, 30.06.2005 unrealised FX translation and treasury shareholders 2) gains/ differences shares losses and other 1) CHF 6 277 million plus IFRS 3 impact
Slide 17: Asset allocation insurance portfolio
Asset allocation insurance portfolio CHF million (IFRS basis) 142 321 136 876 Equities & equity funds 9.4% 9.2% Alternative investments 2.9% 2.7% Real estate 8.2% 8.4% Mortgages 4.8% 5.1% Loans 11.5% 12.3% Bonds 58.8% 56.4% Cash 3.8% 4.7% 1.3% Other invested assets 1) 0.5% 30.06.05 31.12.04 Net equi
Slide 18: Investment return on insurance portfolio
Investment return on insurance portfolio CHF million (IFRS basis); Not annualised Direct return of 1.9% Total return of 3.9% Bonds 1 578 2.0% 56 054 411 6.3% Equities 98 0.8% 889 6.9% Alternative 2.8% 40 1.0% 111 investments Real estate 343 3.0% 236 2.0% Mortgages 123 1.8% 119 1.7% Loans 347 2.1% 34
Slide 19: Embedded value highlights
Embedded value highlights CHF million (statutory basis) 30.6.2005 31.12.2004 Change Embedded value Switzerland 3 462 3 601 -3.9% Embedded value Europe 2 934 2 819 +4.1% ANAV of Swiss Life Holding 1) 2) 1 981 1 516 Embedded value Swiss Life Group 8 377 7 936 +5.6% of which ANAV 5 762 4 909 PVFP 4 210
Slide 20: Value of new business
Value of new business CHF million (statutory basis) Switzerland 1) France Germany Netherlands Belgium 3) Sum 30 23 14 12 7 7 6 2) 3 3 2 0 -1 APE 4) 195 134 117 50 119 108 218 101 34 11 683 403 New business margin 3.4% 7.4% 1) Including La Suisse Vie 2) Excluding Swiss Life Assurance et Patrimoine; E
Slide 21: Group solvency substantially increased
Group solvency substantially increased 252% +60 ppts 192% 144% 30.06.2004 31.12.2004 1) 30.06.2005 1) Before restatement 195% 21
Slide 22: Agenda
Agenda 1. Overview Rolf Dörig 2. Financial results Bruno Pfister 3. Outlook Rolf Dörig 22
Slide 23: Results improving consistently
Results improving consistently l Net result of CHF 463 million (+29%) l Growth and efficiency achievements encouraging l Financial strength further improved 23
Slide 24: Our ambition: Pensions leadership
Our ambition: Pensions leadership Focus on “pensions” related … to answer and satisfy value proposition… clients’ growing pension needs Growth Develop own and … to reduce third-party channels… single channel dependency Increase basic insurance …to become less dependent profitability substantially… o
Slide 25: Management structure aligned to strategic priorities
Management structure aligned to strategic priorities As of 1 January 2006 CEO Rolf Dörig CFO CTO Thomas Müller Reto Himmel • Drive financial control and • Realise synergies in IT risk management and business operations • Promote strategic • Drive efficiency development Investment Switzerland Interna
Slide 26: Basic insurance result best reflects operational performance
Basic insurance result best reflects operational performance Main components Issues Target Drivers of profitability l Volume Risk result l Pricing l Today Basic unsatisfying CHF 500 million l Risk selection insurance basic insurance by 2008 l Reserves result result Cost l Costs & fee result l Strate
Slide 27: Ambitious goals
Ambitious goals Above market Growth > 1% growth Net result by 2008 CHF 1 billion Basic insurance Efficiency CHF 500m result by 2008 Sustainable ROE > 10% Leadership Employee > 80% commitment 27
Slide 28: Supplementary information
as SwissLife Supplementary information
Slide 29: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Swiss business 5. Banca del Gottardo 6. Contact details 29
Slide 30: Net result from insurance operations
Net result from insurance operations CHF million (IFRS basis) HY 2005 HY 2004 Net result from insurance operations 427 488 Restructuring cost «La Suisse» + 60 PH participation France 1) +31 Result UK -75 Goodwill amortisation +18 Net result from insurance operations (adjusted) 518 431 + 87 1) In con
Slide 31: Non-Life key figures
Non-Life key figures CHF million (IFRS basis) HY 2005 HY 2004 Change Net earned premiums 472 479 -1.5% Net claims & claims settlement costs -310 -330 -6.1% Operating expenses -181 -184 -1.6% Combined ratio net 104.0% 107.3% -3.3ppt 31
Slide 32: Basic insurance result: Definitions
Basic insurance result: Definitions Main components Definition (IFRS Basis) of profitability + Net earned premiums + Fees 1) Risk result - Claims and benefits paid BASIC Cost and fee = -/+ Change in reserves INSURANCE RESULT result + Technical interest - Acquisition costs 2) - Adjusted operating exp
Slide 33: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 30.06.05 31.12.04 30.06.04 1.1.-30.06.05 1.1.-30.06.04 EUR 1.547 1.543 1.524 1.547 1.553 GBP 2.313 2.182 2.272 2.255 2.307 USD 1.280 1.131 1.253 1.204 1.266 Interest rates 1) 30.06.05 31.12.04 30.06.04 CHF 1.961 2.314 2.878 EUR 3.127 3.682 4.3
Slide 34: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Swiss business 5. Banca del Gottardo 6. Contact details 34
Slide 35: Duration of bond portfolio
Duration of bond portfolio Group 1) effective duration 30.6.2005 31.12.2004 30.6.2004 CHF 8.9 8.4 7.9 EUR 10.0 9.1 8.1 GBP 10.1 6.3 6.5 USD 12.1 9.5 9.1 Average 9.8 8.9 8.0 1) Including SL Zurich, SL Germany, SLAR (France), SL Netherlands, La Suisse Vie, SL Belgium 35
Slide 36: Bond portfolio: Ratings
Bond portfolio: Ratings Insurance portfolio (IFRS basis) Investments: CHF 83.7 billion (2004: CHF 77.1 billion) Breakdown by rating CHF million BBB Not rated 142 321 A 1% 3% 7% AA 12% Government 55% Bonds 58.8% AAA 22% 36
Slide 37: Bond portfolio: Currency exposure
Bond portfolio: Currency exposure Insurance portfolio (IFRS basis) Investments: CHF 83.7 billion (2004: CHF 77.1 billion) Before hedges USD 6% GBP 1% CHF million 142 321 CHF EUR 25% 68% After hedges Bonds 58.8% GBP 1% CHF 42% EUR 57% 37
Slide 38: Loan and mortgage portfolio
Loan and mortgage portfolio Insurance portfolio (IFRS basis) Investments: CHF 23.2 billion (2004: CHF 23.8 billion) Breakdown by type CHF million 142 321 Policyholder Due from loans 4% banks 7% Loans & 16.3% mortgages Originated Mortgages loans 59% 30% 38
Slide 39: Real estate portfolio
Real estate portfolio Insurance portfolio (IFRS basis) Investments: CHF 11.6 billion (2004: CHF 11.5 billion) Breakdown by country Belgium 2% Germany 5% Netherlands 1% CHF million 142 321 France 9% Real 8.2% estate Switzerland 83% Breakdown by type Others 1% Centers 10% Commercial Residential 23% 45
Slide 40: Equity portfolio: Currency exposure
Equity portfolio: Currency exposure Insurance portfolio (IFRS basis) Investments: CHF 13.4 billion (2004: CHF 12.5 billion) Breakdown by currency CHF million GBP JPY Equities 142 321 USD 2% 2% & equity 9.4% 5% funds CHF 10% EUR 81% 40
Slide 41: Alternative investment portfolio
Alternative investment portfolio Insurance portfolio (IFRS basis) Hedge funds: CHF 3.9 billion (2004: CHF 3.4 billion) Managed Fund of funds 1% futures 10% Relative value 20% Leveraged finances 13% CHF million 142 321 Alternative Global macro investments 2.9% Equity hedged 19% 18% Event driven 19% P
Slide 42: Currency exposure
Currency exposure Insurance portfolio (economic view) Net: 2.1% of total insurance portfolio assets Other 81 million 3% GBP 747 million 24% EUR 1 241 million 41% USD 987 million 32% Gross currency exposure CHF 25 434 million Hedged currency exposure CHF 22 378 million Net currency exposure CHF 3 056
Slide 43: Goodwill development
Goodwill development CHF million (IFRS basis) 2 427 1 353 -1 074 1 044 -309 801 4 805 -80 -163 Goodwill Total Goodwill Total Goodwill Ordinary Impair- Goodwill Impact Goodwill 31.12.01 amorti- 31.12.02 amorti- 31.12.03 amorti- ments 31.12.04 IFRS 3 30.6.05 sation sation sation Goodwill as % of: SH e
Slide 44: Allocation of unrealised gains on bonds
Allocation of unrealised gains on bonds CHF million (IFRS basis) 6 466 -3 852 -478 1 577 -546 -13 Unrealised Deferred Shadow Deferred Minority Allocated to gains on policyholder DAC taxes interest shareholders’ bonds bonuses adjustment equity 44
Slide 45: Insurance reserves by country
Insurance reserves by country CHF million (IFRS basis) 64 914 1% Switzerland 64 307 33 446 Belgium/Lux. France 7% Netherlands 31 169 3% 11% 18 362 Germany 2% 17 972 Germany 14% 14 683 Netherlands 14 455 2% Switzer- 3 850 land Belgium/Lux. 6% France 48% 3 620 25% 135 123 Total 1) 3% 131 415 30.06.200
Slide 46: Average technical interest rate of 3.10%
Average technical interest rate of 3.10% CHF / EUR / USD / GBP million (statutory basis) CHF EUR USD GBP Total reserves 61 203 31 073 507 9 Mean technical 2.81% 3.48% 4.11% 3.58% interest rate Overall: 3.10% (-4 bps) 46
Slide 47: Statutory solvency improved to 295%
Statutory solvency improved to 295% CHF million (statutory basis) Solvency capital Statutory solvency Rentenanstalt stat.equity capital 2 441 Intangibles -72 295% 12 303 Hybrid capital 1 300 Fund for future appropriation 652 Additional Zillmerisation 380 4 177 Unrealised capital gains 7 084 Unattrib
Slide 48: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Swiss business 5. Banca del Gottardo 6. Contact details 48
Slide 49: Implementation of embedded value at Swiss Life
Implementation of embedded value at Swiss Life l ANAV and PVFP have been calculated for more than 95% of the mathematical reserves . Swiss Life BE Swiss Life NL l For other life insurance entities only the NAV has been included Swiss Life DE Swiss Life l The banking 1) and non-life insurance FR 2) b
Slide 50: Key assumptions for embedded value calculation
Key assumptions for embedded value calculation l Weighted new money 30.06.2005 31.12.2004 CH EU CH EU return based on asset allocation Risk discount 7.0% 8.0% 7.0% 8.0% l Weighted returns are rate lower due to reduced assumed future Equity return 6.5% 7.5% 5.0% 6.0% investment returns l Long-term bo
Slide 51: Asset allocation assumptions by region
Asset allocation assumptions by region 30.06.2005 31.12.2004 CH EU CH EU Cash and cash equivalents 3% 1% 3% 2% Bonds and loans 58% 83% 58% 82% Mortgages 9% 3% 9% 3% Real estate 13% 5% 13% 5% Equities 7% 6% 7% 6% Participations 3% 0% 3% 1% Alternative investments 7% 2% 7% 1% 51
Slide 52: Embedded value: Analysis of change
Embedded value: Analysis of change CHF million (statutory basis) Swiss Life Group 31.12.2004 7 936 Unwind +280 Actual investment return +371 Future investment return -81 Persistency -62 Reserve strengthening -42 Value of new business +23 Various -48 Swiss Life Group 30.06.2005 8 377 52
Slide 53: Sensitivities of embedded value
Sensitivities of embedded value CHF million (statutory basis) Switzerland Europe Total EV 30.06.2005 (base case) 3 462 2 934 8 377 1) ∆ Risk discount rate -50 bps 159 96 255 ∆ Investment returns +50 bps 322 307 629 ∆ Investment returns -50 bps -636 -318 -954 ∆ Bond returns +50 bps 103 153 256 ∆ Bond
Slide 54: IAS equity to embedded value bridge
IAS equity to embedded value bridge CHF million (statutory basis) 4 210 8 377 7 490 -1 595 -830 -898 IFRS Difference in Goodwill & PVFP Cost of capital Embedded value shareholders’ tangible/net other equity assets intangible assets 1) 1) Including goodwill CHF 805 million, customer relationship CHF
Slide 55: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Swiss business 5. Banca del Gottardo 6. Contact details 55
Slide 56: Insurance premiums Switzerland excl. one-offs
Insurance premiums Switzerland excl. one-offs CHF million (IFRS basis) HY 2005 HY 2004 Change Total GWP incl. PH deposits 1) 5 610 5 792 -3.2% Single premiums 2 064 2 257 2) -8.5% Periodic premiums 2 966 3 165 -6.3% Investment contract prem. & policy fees 291 80 n.m. Non-Life premiums 289 290 -0.4%
Slide 57: Breakdown of technical reserves
Breakdown of technical reserves CHF million (IFRS basis); 30.06.2005 Total: 135 1) Non-life (2 billion) Investment contracts & PH deposits 29 Europe (+ other Only 10 billion is subject to CH) Traditional BVG minimum interest rate 49 in group business business Switzerland (2.5% as of 104 Individual 2
Slide 58: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Swiss business 5. Banca del Gottardo 6. Contact details 58
Slide 59: Banca del Gottardo: Overview of key financials
Banca del Gottardo: Overview of key financials CHF million (statutory basis) HY 2005 HY 2004 Change Results from interest activities 71 74 -4.1% Results from commission and service act. 126 129 -2.3% Results from trading operations 37 33 +12.1% Other 3 4 -25.0% Net revenues 237 240 -1.3% Personnel e
Slide 60: Banca del Gottardo: Key ratios
Banca del Gottardo: Key ratios CHF million (statutory basis) 30.6.2005 31.12.2004 Change Return on equity 8.9% 7.4% +1.5 ppts Cost/income ratio 65.7% 68.7% -3.0 ppts BIS ratio (Tier 1) 11.7% 13.2% -1.5 ppts BIS ratio (Tier 2) 12.4% 13.9% -1.5 ppts Assets under management 37 112 34 414 +7.8% Assets u
Slide 61: 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 62: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Embedded value 4. Swiss business 5. Banca del Gottardo 6. Contact details 62
Slide 63: Contact details
Contact details Iris Welten Tel. +41 (43) 284 67 67 Head Investor Relations E-mail: iris.welten@swisslife.ch Fabrizio Croce Tel. +41 (43) 284 49 19 Deputy Head Investor Relations E-mail: fabrizio.croce@swisslife.ch Visit our website for up-to-date information www.swisslife.com 63
Slide 64: SwissLife
te SwissLife Prepared for the future.