Swiss Life Holding Ag · SIX:SLHN
Swiss Life — H1 2009 Earnings Presentation
70 slides from Swiss Life's earnings presentation, Aug 26, 2009
Slide 1: Half-year results 2009 Investors' Presentation
Half-year results 2009 Investors’ Presentation Zurich, 26 August 2009
Slide 2: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Buess 3. Group strategy and measures Bruno Pfister 4. Measures in Switzerland Ivo Furrer 5. Outlook Bruno Pfister 2
Slide 3: Key points
Key points z Moderate net profit from continuing operations in difficult market conditions – Net profit from continuing operations of CHF 172 m, up from CHF 152 m in HY 2008 – Strong EPS growth from continuing operations of 22% z Improved operating performance in insurance businesses – Adjusted GWP
Slide 4: Key figures
Key figures Net profit (cont. operations) CHF 172 m + 13% Result from operations CHF 251 m + 11% New business margin (% PVNBP) 1.2% + 0.1 ppts1) GWP incl. PHD, adjusted 2) CHF 10 387 m + 7% Shareholders’ equity CHF 6 752 m + 2% Group solvency 155 % - 3 ppts 1) FY 2008 2) See slide 12 for adjustments
Slide 5: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Buess 3. Group strategy and measures Bruno Pfister 4. Measures in Switzerland Ivo Furrer 5. Outlook Bruno Pfister 5
Slide 6: Income statement
Income statement CHF million (IFRS basis) Continuing operations HY 2009 HY 2008 Gross written premiums, fees and deposits received 10 387 10 888 - 5% Commission income 450 350 Financial result for own risk 2 122 1 215 Net insurance benefits and claims -7 446 -8 459 Policyholder participation -651 -7
Slide 7: Business review Insurance Switzerland
Business review Insurance Switzerland CHF million (IFRS basis, MCEV) HY 2009 HY 2008 Change GWP incl. PHD 5 334 5 907 -10% z GWP -2% adjusted for one-off single premium in HY 2008, in line with market Operating expense -250 -272 -8% z Efficiency improvements on track Segment result 193 120 +61% z Im
Slide 8: Business review Insurance France
Business review Insurance France EUR million (IFRS basis, MCEV) HY 2009 HY 2008 Change z Life -3% excl. one-off partnership. Market GWP incl. PHD 1 676 1 972 -15% +6%. Swiss Life did not participate in competition on promised rates. Health +5% in line with market growth Operating expense -151 -151 0
Slide 9: Business review Insurance Germany
Business review Insurance Germany EUR million (IFRS basis, MCEV) HY 2009 HY 2008 Change z Clearly above market growth of 7%, GWP incl. PHD 645 565 +14% mainly due to capitalisation product. Ongoing shift to non-traditional and risk products Operating expense -57 -63 -10% z Costs remained flat adjust
Slide 10: Business review Insurance Other
Business review Insurance Other PPLI, Corporate Solutions, Swiss Life Products, PPI 1) CHF million (IFRS basis, MCEV) HY 2009 HY 2008 Change z Strong growth of PPLI in Europe, GWP incl. PHD 1 573 928 +70% outperforming market Operating expense 2) -49 -41 +20% z Increase driven by start-up costs for
Slide 11: Business review AWD
Business review AWD AWD Group, stand-alone HY, EUR million (IFRS basis) HY 2009 HY 20081) Change Revenues 258.3 322.9 -20.0% z Austria and UK down on the back of weak demand for unit-linked Germany 164.5 185.9 -11.5% policies and mutual funds. Decline Austria & CEE 35.6 64.6 -44.9% in revenues in Ge
Slide 12: Adjusted premium growth
Adjusted premium growth CHF million (IFRS basis) HY 2009 HY 2008 Change GWP & PHD Continuing 10 387 10 888 -5% Currency effect -261 GWP & PHD Adjusted I 10 387 10 627 -2% Less one-off single premium -485 in group life (Switzerland) Less partnership (France) -456 Currency effect +28 GWP & PHD Adjuste
Slide 13: Overall expense development
Overall expense development CHF million (IFRS basis) Continuing operations HY 2009 HY 2008 Change Total operating expense 1 646 1 456 13% Commissions and DAC amortisation -767 -584 1) AWD -191 -136 Restructuring cost -3 Currency effects -23 Operating expense (adjusted) 688 710 -3% 1) AWD consolidate
Slide 14: Investment result
Investment result CHF million (IFRS basis) – insurance portfolio for own risk HY 2009 HY 2008 Direct investment income 2 119 2 374 Direct investment income in % 1.9% 2.1% Expense -88 -96 Net capital gains/losses on investments and impairments -49 -1 214 Net investment result 1 982 1 064 Net investme
Slide 15: Details of net investment result
Details of net investment result CHF million (IFRS basis) – insurance portfolio for own risk HY 2009 Direct Impair- Gains & losses through Net investment ments income statement investment income result on on underlying derivatives Net Bonds 1 405 -14 620 - 502 118 1 509 Equities 39 -33 9 -113 -104 -
Slide 16: Investment portfolio
Investment portfolio CHF million (fair value basis) insurance portfolio for own risk 108 219 106 327 Equities & equity funds 2.4% 2.2% Alternative investments 2.5% 3.1% Real estate 12.2% 11.9% Mortgages 5.1% 5.3% Loans 11.2% 12.6% Bonds 60.9% 58.6% Cash and other 5.7% 6.3% 30.06.09 31.12.08 Net equi
Slide 17: Insurance reserves and borrowings
Insurance reserves and borrowings CHF million (IFRS basis) 30.06.2009 31.12.2008 Insurance reserves 118 027 113 308 +4% Insurance liabilities 93 491 91 024 Investment contracts 11 649 11 135 Financial liabilities FVPL (unit-linked) 11 174 9 727 Policyholder participation liabilities 1 713 1 422 Borr
Slide 18: Development of shareholders' equity
Development of shareholders' equity CHF million (IFRS basis) +142 6 752 +2% 6 609 -173 +84 +90 31.12.2008 Change in Change in Change in FX Profit 30.06.2009 unrealised treasury translation attributable gains/losses shares, to share- share holders premium 18
Slide 19: Group solvency
Group solvency Based on IFRS equity 162% +3% -5% 158% -1% 155% 31.12.07 31.12.08 Result Change in Accrued 30.06.09 revaluation dividend reserve and HY 2009 other effects 19
Slide 20: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Buess 3. Group strategy and measures Bruno Pfister 4. Measures in Switzerland Ivo Furrer 5. Outlook Bruno Pfister 20
Slide 21: Leadership strategy
Pensions Leadership strategy We are committed to helping people create a Mission financially secure future. For life We aim to become the leading international life Ambition and pensions specialist Values Expertise, proximity, openness, clarity and commitment Focus on retirement Focus on growth Focu
Slide 22: Strategy implementation along four cornerstones
Strategy implementation along four cornerstones Achievements Way forward Increase value to 9 Launched new non- z Improve value to customers customers and traditional products in all z Manage product profitability profitability markets z Optimise tied agent channel CH Leverage 9 Distribution capacity
Slide 23: Negative cost result to be reduced by 2012
Negative cost result to be reduced by 2012 Current situation Overall savings ambition by 2012 z Significant cost deficit in all insurance units Group-wide costs savings by 2012 of CHF 350 to CHF 400 m (basis 2008) z External benchmarks demonstrate insurance cost gap of between z Market Unit Switzerl
Slide 24: AWD: Progress in strategy implementation
AWD: Progress in strategy implementation Strategic rationale Achievements Numerous Swiss Life Swiss Life as one "best select" provider for AWD + products already achieved „best select“ status Access to AWD advisors, Increased distribution capacity in core markets, with access to new markets + with s
Slide 25: AWD: Set of actions initiated to achieve sustainable results
AWD: Set of actions initiated to achieve sustainable results Redimensioning of Completed end 2009 holding functions Improving efficiency and productivity Completed end 2010 of Germany region Repositioning of AWD Austria Completed end 2010 AWD UK – break-even Completed end 2009 Starting 2010 Focused
Slide 26: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Buess 3. Group strategy and measures Bruno Pfister 4. Measures in Switzerland Ivo Furrer 5. Outlook Bruno Pfister 26
Slide 27: Strategy implementation
Strategy implementation Individual life Group life Increase competitiveness Customer value Increase competitiveness Increase customer Leverage distribution Improve efficiency value and profitability New business by 2012 Growth above market Elimination of cost deficit by 2012 100% Indivi- dual life 3
Slide 28: Product strategy: Sticking to plan
Product strategy: Sticking to plan Individual Life Products Increase solution flexibility z Maintain continuous product solutions development pro- cess already started in 2009 z Enhance product range by introducing more flexible products Boost shift-to non-traditional Group Life Products products z
Slide 29: Individual life: Customer orientation towards life-cycle
Individual life: Customer orientation towards life-cycle Customer Couples Families Pre-retirees Retirees segments (Customer life-cycle) w ne Theme Dream Partner Family Real estate Assets Retirement packages security fulfillment check check check planning check & services Savings Champion Invest new
Slide 30: Group life: Offering standard and customised solutions
Group life: Offering standard and customised solutions Company Small Mid-sized Large Founda- size companies companies companies tion type ( < 50 employees ) ( 50 to 200 employees ) ( >200 employees ) Collective foundation Association sSolutions Company-owned sol. Standard Customised Solution Solutio
Slide 31: Tied agents: Optimising sales structure
Tied agents: Optimising sales structure Adapt organisational Market management Processes & competence structure Network resizing Indivi- dual life General agent new up to ~10 Group life Sales manager Sales up to 6 agents • Streamline general • Improve systematic sales • Enhance customer expe- agenci
Slide 32: Multi-channel management
Multi-channel management: Boosting cooperation with brokers and AWD Sales Broker segmentation Growth • Streamline broker segmentation for potential specific products and service levels Multi-channel management • Strengthen overall quality of contact and support services Tied agents • Monitor existin
Slide 33: Cost situation: Balanced cost result by 2012
Cost situation: Balanced cost result by 2012 Administration costs Impact on cost structure Impact on FTEs incl. IT, in CHF m CHF m FTE 560 Σ 188 Σ 480 28 -34% 25 200 71 372 220 64 60 2008 2012 2009 2010 2011 2012 Total Vacancies Redun- Natural Total cost dancies fluctu- FTE savings ation reduction C
Slide 34: Agenda
Agenda 1. Overview Bruno Pfister 2. Financial results Thomas Buess 3. Group strategy and measures Bruno Pfister 4. Measures in Switzerland Ivo Furrer 5. Outlook Bruno Pfister 34
Slide 35: Outlook
Outlook z Improving operating performance z Resilient capitalisation after second year of financial crisis z Issues being addressed – Optimise distribution in Switzerland – Continue substantial cost reductions – AWD to exploit its potential and reach targets z Embarking on group-wide implementation
Slide 36: Supplementary information
Half-year results 2009 Investors’ Presentation Supplementary information
Slide 37: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Investments 4. Market consistent embedded value (MCEV) 5. Contact details and financial calendar 37
Slide 38: Premium growth
Premium growth GWP & PHD; CHF million (IFRS basis) Local currency 5 334 Switzerland -10% -10% 5 907 2 524 France -20% -15% 3 168 971 Germany +7% +14% 908 1 573 Other 1) +70% +74% 928 2) 10 387 Continuing -5% -2% 10 888 HY 2009 HY 2008 1) Includes PPLI, Corporate Solutions, Swiss Life Products and Pa
Slide 39: Switzerland: Life insurance premiums
Switzerland: Life insurance premiums CHF million (IFRS basis) HY 2009 HY 2008 Change Total life GWP incl. PHD 5 334 5 907 -9.7% Single premiums 2 225 2 737 -18.7% Periodic premiums 3 063 3 121 -1.9% Reinsurance premiums assumed 46 49 -5.1% Group life 4 578 5 147 -11.1% Single premiums 1 948 2 465 -2
Slide 40: Operating result
Operating result Segment results; CHF million (IFRS basis) HY 2009 HY 2008 Insurance (Continuing) 280 218 of which - Switzerland 193 120 - France 70 100 - Germany 31 19 - Other -14 -21 Investment Management 35 48 AWD -28 5 Insurance & Banking (Discontinued) -33 1 693 Other & eliminations -4 -7 Unall
Slide 41: Reconciliation AWD segment result to AWD EBIT
Reconciliation AWD segment result to AWD EBIT CHF million (IFRS basis), AWD stand-alone AWD segment result HY 2009 - 28-28 + Amortisation customer relationship asset +14 - Financial result AWD HY 2009 -2 EBIT AWD HY 2009 1) - 16 1) EBIT AWD HY 2009: EUR -10.3 million 41
Slide 42: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Investments 4. Market consistent embedded value (MCEV) 5. Contact details and financial calendar 42
Slide 43: Allocation of unrealised gains/losses on bonds
Allocation of unrealised gains/losses on bonds CHF million (IFRS basis) -454 147 0 42 889 -1 532 Unrealised Deferred Shadow Deferred Non-controlling Allocated to gains/losses policyholder DAC taxes interests shareholders’ on bonds bonuses adjustment equity 43
Slide 44: Insurance reserves by country
Insurance reserves by country CHF million (IFRS basis) - comparable basis 1) Local currency 65 671 Switzer- +2% +2% land 64 462 21 970 Germany Other France +6% +4% 8% 20 716 17% 19 891 Germany +4% +2% 19 098 France 19% 10 559 Other 2) +16% +16% 9 101 Switzerland 56% 118 027 Total +4% +3% 113 308 HY
Slide 45: 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 30.06.2009; CHF billion (IFRS basis) Non-life (1 billion) 29 Investment contracts & PH deposits Europe 26 Continued operations Traditional 118 business 88 Individual 20.1 Guaran
Slide 46: Average technical interest rate
Average technical interest rate CHF / EUR / USD / GBP million (statutory basis) CHF EUR USD GBP Total reserves 63 709 22 833 96 8 Average technical interest rate 2.51% 2.93% 4.01% 3.58% Overall: 2.66% (31.12.2008: 2.66%) 46
Slide 47: Duration gap
Duration gap Total weighted duration gap 1) in % 0.9 0.9 0.7 0.7 0.6 30 June 2007 31 Dec 2007 30 June 2008 31 Dec 2008 2) 30 June 2009 (Estimate) 1) Explains the relative change in economic net worth due to an interest rate increase of 100 basis points in percentage of the present value of the liabi
Slide 48: Group solvency
Group solvency CHF million (IFRS basis) 30.06.2009 31.12.2008 Available solvency margin IFRS equity (incl. minority interests) 6 792 6 652 Eligible part of hybrid capital 1) 2 406 2 323 Unattributed surplus 801 811 Goodwill and other intangible assets -2 245 -2 205 DAC non-life -53 -55 Dividends and
Slide 49: Statutory solvency 30.06.2009
Statutory solvency 30.06.2009 CHF million (statutory basis) Available solvency margin Statutory solvency Parent company statutory equity 1 870 Intangibles -5 6 739 190% Eligible part of hybrid capital 1) 1 771 Fund for future appropriation 151 3 542 Additional Zillmerisation 451 Unrealised capital g
Slide 50: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Investments 4. Market consistent embedded value (MCEV) 5. Contact details and financial calendar 50
Slide 51: Bond portfolio: Ratings and classification
Bond portfolio: Ratings and classification Insurance portfolio (fair value basis) Breakdown by rating Below BBB BBB 6% 12% CHF million 108 219 AAA A 51% 20% AA 11% Breakdown by classification Others Bonds 60.9% 1% Government and Supranationals 47% Corporate bonds 52% 51
Slide 52: Bond portfolio
Bond portfolio Insurance portfolio (fair value basis) Ratings Below BBB CHF million 11% 108 219 AAA BBB 23% 20% AA 13% Others 1) 0.5% Corporate 32.0% A 33% bonds Below BBB Government A BBB 1% and supra- 6% 3% 28.4% AA nationals 8% AAA 82% 1) Exposure to CDO/CLO, ABS, MBS, etc. 52
Slide 53: Government and supranational bond portfolio: Ratings and currency
Government and supranational bond portfolio: Ratings and currency Insurance portfolio (fair value basis) Breakdown by rating BBB Below BBB A 3% 1% 6% AA CHF million 8% 108 219 AAA 82% Breakdown by currency USD 2% Government and supra- 28.4% nationals CHF 43% EUR 55% 53
Slide 54: Corporate bond portfolio: Ratings and currency
Corporate bond portfolio: Ratings and currency Insurance portfolio (fair value basis) Breakdown by rating Below BBB 11% CHF million AAA 23% 108 219 BBB 20% AA 13% A Corporate 33% bonds 32.0% Breakdown by currency USD 22% EUR CHF 61% 17% 54
Slide 55: Corporate bond portfolio: Characteristics
Corporate bond portfolio: Characteristics 30 June 2009 Loans (Duration: 6.1) Available for sale (Duration: 5.6) IFRS Book Value: CHF 15 322 million IFRS Book Value: CHF 18 742 million Fair Value: CHF 14 363 million Fair Value: CHF 18 742 million of which Tier 1-Bank Bonds: CHF 764 million (5.3%) of
Slide 56: Exposure to CDO/CLO, ABS, MBS, etc.
Exposure to CDO/CLO, ABS, MBS, etc. Insurance portfolio (fair value basis), as of 30.06.2009 Fair Ratings Year of maturity, percent value Below BBB 2010– After Category CHF m AAA AA A BBB or unrated 2009 2012 2012 CDO/CLO 1) 144 84% 0% 0% 0% 16% 71% 22% 7% With ABS collateral 30 65% 0% 0% 0% 35% 0%
Slide 57: Loan and mortgage portfolio
Loan and mortgage portfolio Insurance portfolio (fair value basis) Breakdown by country France 1% CHF million 108 219 Switzerland Germany 67% 32% Mortgages 5.1% 11.2% 16.3% Loans Breakdown by type Other loans 5% Mortgages 31% Purchased loans 61% Policyholder loans 3% 57
Slide 58: Real estate portfolio
Real estate portfolio Insurance portfolio (fair value basis) Breakdown by country Germany 6% CHF million France 11% 108 219 Real 12.2% estate Switzerland 83% Breakdown by type Others 2% Centres 8% Mixed 25% Residential 43% Commercial 22% 58
Slide 59: Equity portfolio (gross)
Equity portfolio (gross) Insurance portfolio (fair value basis) CHF million 108 219 Breakdown by country Equities 2.4% Luxembourg & equity 1% Switzerland 16% funds Germany 47% France 36% 59
Slide 60: Alternative investment portfolio (gross)
Alternative investment portfolio (gross) Insurance portfolio (fair value basis) Hedge funds: CHF 2.4 billion Commodities related Others 7% CHF million strategies 6% Tactical trading 108 219 17% Alternative 2.5% Equity hedged 13% investments Event driven 21% Relative value 36% Private equity: CHF 263
Slide 61: Hedge funds movements
Hedge funds movements CHF million (fair value basis) 2 999 -681 -83 +224 -30 2 429 31.12.08 Cash Impairments Realised/ FX gains 30.06.09 redemptions unrealised & losses gains/losses 61
Slide 62: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 30.06.09 31.12.08 30.06.08 1.1.-30.06.09 1.1.-30.06.08 EUR 1.5255 1.4915 1.6054 1.5061 1.6060 GBP 1.7927 1.5413 2.0265 1.6841 2.0745 USD 1.0799 1.0608 1.0156 1.1293 1.0506 Interest rates 1) 30.06.09 31.12.08 30.06.08 CHF 2.319 2.095 3.288 EUR
Slide 63: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Investments 4. Market consistent embedded value (MCEV) 5. Contact details and financial calendar 63
Slide 64: Value of new business
Value of new business CHF million (MCEV) Switzerland France Germany Other Total operations 119 76 48 47 39 20 12 9 12 8 PVNBP 2 583 3 824 1 942 3 767 635 1 356 1 430 1 987 6 589 10 935 New business margin 1.5 1.2 1.0 1.3 1.3 0.9 0.6 0.6 1.2 1.1 (% PVNBP) HY 2009 FY 2008 64
Slide 65: Value New Business for HY2009
Value New Business for HY2009 CHF million (MCEV) Switzerland France Germany Other Total Value of new business 39 20 8 9 76 Annual premiums 105 175 69 2 350 Single premiums 733 883 55 1 416 3 088 Present value of new premiums (PVNBP) 2 583 1 942 635 1 430 6 589 Average annual premium multiplier 17.6
Slide 66: Value of new business: Economic assumptions
Value of new business: Economic assumptions Liquidity premiums Business unit HY 2009 Switzerland 50 bp France, Germany and Luxembourg 50 bp Liechtenstein 0 bp Swap rates Expected forward inflation rates Economy 1 year 2 year 5 year 10 year 15 year 30 year Year 1 Year 2 Year 5 Year 10 Year 15 Year 30
Slide 67: 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 68: Supplementary information
Supplementary information 1. Profit and loss 2. Balance sheet 3. Investments 4. Market consistent embedded value (MCEV) 5. Contact details and financial calendar 68
Slide 69: 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 2009 11 N
Slide 70: SwissLife
be SwissLife Prepared for the future.