Swiss Life Holding AG · SIX:SLHN
Swiss Life — FY2014 Earnings Presentation
71 slides from Swiss Life's earnings presentation, Feb 27, 2015
Slide 1: Full-year results 2014 Investors' presentation
Full-year results 2014 Investors' presentation 27.02.2015
Slide 2: Agenda
Agenda Overview Patrick Frost Financial results and Thomas Buess Swiss Life 2015 2 | Investors' presentation | Full-year results 2014
Slide 3: Highlights FY 2014 results
Highlights FY 2014 results FY 2014 vs. FY 2013 Net profit increased by 4% to CHF 818 m Adjusted profit from operations improved by 4% to CHF 1 182 m Premiums grew 7% in local currency to CHF 19.1 bn Fee and commission income up by 15% in local currency to CHF 1 317 m Asset Managers’ extern
Slide 4: Key figures FY 2014 results
Key figures FY 2014 results FY 2014 vs. FY 2013 Net profit CHF 818 m +4% Adjusted profit from operations CHF 1 182 m +4% GWP incl. PHD (in local currency) CHF 19.1 bn +7% Fee and commission income (in local currency) CHF 1 317 m +15% New business margin (% PVNBP) 1.8% -0.4 ppts Shareholders’ equity
Slide 5: Agenda
Agenda Overview Patrick Frost Financial results and Thomas Buess Swiss Life 2015 5 | Investors' presentation | Full-year results 2014
Slide 6: Income statement
Income statement CHF million (IFRS basis) FY 2013 FY 2014 Gross written premiums, fees and deposits received 17 969 19 102 Commission income 840 998 Financial result for own risk 5 379 5 354 Net investment result insurance portfolio for own risk 4 949 5 136 Net insurance benefits and claims -13 920
Slide 7: Profit from operations excluding major one-off effects
Profit from operations excluding major one-off effects CHF million (IFRS basis) +4% 1 169 +13 1 182 1 149 +54 1 143 1 139 -4 -60 Profit IFRS 13 Restruc- Profit FX Profit Profit Restruc- Profit from effect turing from effect from from turing from operations in CH costs operations operations operation
Slide 8: Business review Switzerland
Business review Switzerland CHF million (IFRS basis, MCEV) FY 2013 FY 2014 Change GWP incl. PHD 9 020 10 038 +11% • GL: +11% (market +1%); strong new business and low lapses • IL: +12% (market +2%); strong new business in single premium products Fee and commission 166 182 +10% • Higher revenues from
Slide 9: Business review France
Business review France EUR million (IFRS basis, MCEV) FY 2013 FY 2014 Change GWP incl. PHD 3 806 4 167 +10% • Quality and volume above personal insurance market (+7%) • Life: +17% (market +8%); very high UL share of 41% (market 17%) • Health & disability: +0% (market +2%), focus on group health +5%
Slide 10: Business review Germany
Business review Germany EUR million (IFRS basis, MCEV) FY 2013 FY 2014 Change GWP incl. PHD 1 401 1 330 -5% • Focus on profit before growth led to declining volumes of traditional single premium products, especially in IL • Overall market +3% Fee and commission 311 349 +12% • Rising revenues from ow
Slide 11: Business review International
Business review International CHF million (IFRS basis, MCEV) FY 2013 FY 2014 Change GWP incl. PHD 2 643 2 451 -7% • Lower policyholder deposits and premiums in HNWI and corporate client business Fee and commission 231 240 +4% • Increase of revenues at owned IFAs income1) • Policy fees from HNWI up d
Slide 12: Business review Asset Managers
Business review Asset Managers CHF million (IFRS basis, AuM fair value basis) FY 2013 FY 2014 Change Total income 377 459 +22% • Strong fee growth particularly with external customers – Insurance mandates 228 235 +3% due to higher asset base and first time inclusion of Corpus Sireo for last quarter
Slide 13: Expense development
Expense development CHF million (IFRS basis) FY 2013 FY 2014 Change Total operating expense 2 809 2 735 -3% Commissions and DAC amortisation -1 357 - 1 264 Operating expense (before FX) 1 451 1 470 +1% Restructuring costs and one-offs -71 -47 Scope changes +3 -35 FX effect -8 Operating expense adjus
Slide 14: Investment result
Investment result CHF million (IFRS basis), insurance portfolio for own risk FY 2013 FY 2014 Direct investment income 4 296 4 467 Direct investment income in % 3.4% 3.3% Expense -276 -278 Net capital gains/losses on investments and impairments1) 930 947 Net investment result 4 949 5 136 Net investme
Slide 15: Investment portfolio
Investment portfolio CHF million (fair value basis), insurance portfolio for own risk1) Equities & equity funds 129 649 149 957 Alternative investments 1.9% 2.7% Real estate 0.6% 14.9% 13.8% 0.7% Mortgages 4.7% 4.4% Loans 7.4% 8.5% Government & supranational bonds 28.8% 30.7% 68.7% 67.9% Corporate b
Slide 16: Insurance reserves and borrowings
Insurance reserves and borrowings CHF million (IFRS basis) Local 31.12.2013 31.12.2014 currency Insurance reserves 142 479 156 684 +10% +11% Policyholder participation liabilities 5 481 12 152 Insurance reserves w/o PHP liabilities 136 998 144 531 +5% +6% Insurance liabilities 101 432 106 136 Invest
Slide 17: Shareholders' equity and group solvency
Shareholders’ equity and group solvency CHF million (IFRS basis) Shareholders’ equity +814 12 755 +43% -47 -176 -7 +3 226 8 945 Group solvency • 269% (FY 2013: 210%) • 196% excl. unrealised gains/losses on bonds (FY 2013: 196%) 31.12.2013 Change in Change in Distribution Change in Profit 31.12.2014
Slide 18: Group MCEV
Group MCEV CHF million 12 901 11 378 • Group MCEV increased by 13% • Value of covered business up 14% as a 7 315 result of strong operating earnings of VIF 6 356 +15% Covered CHF 1.1 bn Covered business • Value of non-covered business business 11 071 increased by 7% as operating earnings 9 669 more
Slide 19: MCEV covered business
MCEV covered business CHF million, MCEV covered business Operating earnings of 12% +433 11 071 +534 +255 +327 -26 9 669 -121 Volume growth and cost Excess returns over Lower surplus sharing; efficiency gains; reference rate and favourable biometric and challenging capital release from risk cost expe
Slide 20: Swiss Life 2015: Increase earnings and improve resilience through disciplined execution
Swiss Life 2015: Increase earnings and improve resilience through disciplined execution Strategic thrust Objective Target Focus own solutions • New business margin: >1.5% on profitable and 2 • New business shift: ~85% of Offering flexible products NBP from risk, modern and and expand modern-traditio
Slide 21: Further achievements of our customer centricity programme
Further achievements of our customer 1. Customer promise centricity programme Customer base segmented according to current and potential individual perspective Customer e.g. Customer Value Model in Switzerland: Equity • Increase service efficiency • Exploit the potential of each customer Swiss Life’
Slide 22: Continued pricing discipline and margin management
Continued pricing discipline and margin 2. Offering management New business margin development (VNB as % of PVNBP) 2.2% Economic variances 0.1% 0.0% 1.8% • Challenging capital market environment with 1.5% substantially lower interest rates -0.5% Expense and other variances • Continued positive cost
Slide 23: Steady progress in new business mix excl. traditional group life in Switzerland
Steady progress in new business mix excl. 2. Offering traditional group life in Switzerland New business production (NBP) Risk, health and P&C • FR: Strongly increased production of group health, partly offset by lower sales of 30% 25% 27% 24% ~30% individual health in anticipation of ANI • DE: Lowe
Slide 24: Strong fee and commission growth across all areas
Strong fee and commission growth across 3. Distribution all areas Fee and commission income1), CHF million +14% +15% LC 1 317 50 Corpus Sireo 1 157 • Higher AuM driven by strong net new assets in (Q4 only) Swiss Life Asset 400 +21% external customer business, strong performance in 373 Managers insur
Slide 25: Targeted cost savings already implemented by 2014
Targeted cost savings already implemented 4. Efficiency by 2014 CHF million (project view), vs. cost base FY 2011 Operating cost savings1) Operating cost savings exceeding target range • CH: Staff reduction, mainly in IT; facility and 9 90-110 infrastructure optimisations; lower professional fees 25
Slide 26: Further improved efficiency ratios
Further improved efficiency ratios 4. Efficiency Adjusted IFRS basis Adjusted operating expense in % of average technical reserves (excl. deferred PHP) Owned IFAs expense excluded Change vs. FY 2008 FY 2012 FY 2013 FY 2014 FY 2013 FY 2015P Switzerland 0.81% 0.54% 0.51% 0.47% -4 bps France 1.96% 1.57
Slide 27: Continued strong returns in a low interest rate environment
Continued strong returns in a low interest 5. Financial strength rate environment Direct and net investment yield (IFRS basis, in %) 5 4.8% 4.5 4.1% 4.1% 4.1% 3.9% 3.8% 3.9% 3.8% 4 3.8% 3.8% 3.8% 3.5 3.7% 3.5% 3.4% 3.3% 3 2.5 2 1.5 1 0.3% 0.5 0 31.12.2007 31.12.2008 31.12.2009 31.12.2010 31.12.2011
Slide 28: Average technical interest rate further decreased
Average technical interest rate further 5. Financial strength decreased Statutory basis • Reserve strengthening -7 bps • Business mix -4 bps 3.00% 2.90% Total -11 bps 2.66% 2.60% 2.55% 2.35% 2.12% 2.04% 1.93% 01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011 01.01.2012 01.01.2013 01.01.2014 01.
Slide 29: Capital structure and debt maturity profile well balanced
Capital structure and debt maturity profile 5. Financial strength well balanced IFRS basis, as per 31.12.2014 Capital structure1) 7% 7% 0-5% 21% 25% Senior 23% Hybrid • Capital structure close to target 70% 72% 70-75% SH equity 2) (slightly higher senior debt following 2013 transactions) FY 2013 FY
Slide 30: Profit by source driven by improved risk and fee result
Profit by source driven by improved Profit by source risk and fee result CHF million (IFRS basis) FY 2013 FY 2014 adjusted adjusted Savings result 835 69% 689 55% Risk result 270 22% 395 32% Cost result -142 -12% -151 -12% - Thereof admin cost result gross1) 67 +6% 73 +6% Fee result 190 16% 269 22%
Slide 31: Majority of Swiss Life 2015 targets achieved one year in advance
Majority of Swiss Life 2015 targets Wrap-up achieved one year in advance Strategic thrust Target Status • New business margin: >1.5% 2 Offering • New business shift: ~85% of NBP from risk, modern and modern-traditional products Customer • Fee and commission income: Profit by source: 3 Distribution I
Slide 32: Proven resilience of Swiss Life's business model with limited impact of SNB decisions
Proven resilience of Swiss Life’s business model with limited impact of SNB decisions Right measures in place • Fully hedged foreign currency exposure on the insurance portfolio • Disciplined asset and liability management to preserve the interest rate margin Conclusion • Ongoing disciplined product
Slide 33: Supplementary information
Full-year results 2014 Investors’ presentation Supplementary information
Slide 34: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 34 | Investors' presentation | Full-year results 2014
Slide 35: Net profit excluding major one-off effects
Net profit excluding major one-off effects CHF million (IFRS basis) +7% 818 +10 828 784 +41 777 775 -2 -48 Net IFRS 13 Restruc- Net FX Net Net Restruc- Net profit effect turing profit effect profit profit turing profit in CH costs excl. comparable costs excl. one-offs basis one-offs FY 2013 FY 2014
Slide 36: Premium development
Premium development CHF million (IFRS basis); GWP, fees and deposits Local currency 10 038 Switzerland +11% +11% 9 020 5 069 France +8% +10% 4 685 1 618 Germany -6% -5% 1 724 2 451 International -7% -6% 2 643 19 102 Total Group1) +6% +7% 17 969 FY 2014 FY 2013 1) Total includes Other and intersegmen
Slide 37: Switzerland: Premium development
Switzerland: Premium development CHF million (IFRS basis) FY 2013 FY 2014 Change Total life GWP incl. PHD 9 020 10 038 +11% Single premiums 4 862 5 724 +18% Periodic premiums 4 158 4 314 +4% Group life 7 573 8 411 +11% Single premiums 4 372 5 049 +15% Periodic premiums 3 201 3 362 +5% Individual lif
Slide 38: Switzerland: Statutory distribution ratio in BVG business
Switzerland: Statutory distribution ratio in BVG business CHF million (statutory basis) FY 2011 FY 2012 FY 2013 FY 2014 Gross revenue 2 227 100% 2 718 100% 2 387 100% 2 477 100% Total insurance benefits 2 049 92.0% 2 537 93.3% 2 206 92.4% 2 294 92.6% paid (incl. bonuses) Operating income 178 181 181
Slide 39: Details of net investment result
Details of net investment result CHF million (IFRS basis), insurance portfolio for own risk FY 2014 Direct Net Impair- Gains and losses through investment investment ments income statement income result On On Net underlying derivatives Bonds 3 215 -19 272 149 421 3 617 Equities 73 47 -18 29 102 Loan
Slide 40: Profit from operations
Profit from operations CHF million (IFRS basis), segment results Segments FY 2013 FY 2014 Change Switzerland 716 657 -8% France 194 216 +12% Germany 96 92 -4% International 16 34 +116% Asset Managers 166 188 +13% Other and eliminations 28 49 +77% Unallocated corporate costs -65 -66 +2% Profit from o
Slide 41: Adjusted profit from operations
Adjusted profit from operations CHF million (IFRS basis), segment results adjusted1) Segments FY 2013 FY 2014 Change Switzerland 657 657 -0% France 191 216 +13% Germany 123 97 -21% International 16 34 +116% Asset Managers 166 192 +15% Other and eliminations 51 52 +3% Unallocated corporate costs -65
Slide 42: 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 Group Life + Income from risk premiums – Expense
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 2014
Slide 44: Allocation of unrealised gains/losses on bonds
Allocation of unrealised gains/losses on bonds CHF million (IFRS basis), as per 31.12.2014 13 223 -7 814 -253 -1 199 3 957 0 Unrealised Deferred Shadow Deferred Non-controlling Allocated to gains/losses policyholder DAC taxes interests shareholders’ on bonds1) bonuses adjustment equity 1) Including
Slide 45: Return on equity
Return on equity CHF million (IFRS basis) FY 2013 FY 2014 FY 2014 RoE calculation Net profit FY 2014 Shareholders’ equity 8 945 12 755 814 (shareholder part) Unrealised gains/losses on bonds Average adjusted -732 -3 957 8 506 allocated to shareholders’ equity shareholders’ equity Adjusted shareholde
Slide 46: Insurance reserves excluding policyholder participation liabilities
Insurance reserves excluding policyholder participation liabilities CHF million (IFRS basis) Local currency 79 527 Switzerland +6% +6% 74 877 International 15% 25 174 France +6% +8% 23 726 Germany 13% 55% 18 125 Germany +1% +3% 17 994 17% France 21 805 Switzerland International +6% +7% 20 480 144 53
Slide 47: Insurance reserves roll-forward 2014 excluding policyholder participation liabilities
Insurance reserves roll-forward 2014 excluding policyholder participation liabilities CHF billion (IFRS basis) +6% +2.5 +1.6 144.5 137.0 136.2 +17.7 -13.4 -0.8 01.01.2014 Foreign 01.01.2014 Premiums/ Withdrawals/ Interest Market 31.12.2014 currency excl. FX deposits benefits accrued movements effect
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 per 31.12.2014 1.0 Non-life (1 billion) 45.6 Investment contracts & PH deposits Europe 30.0 Total Group Individual 156.7 20.1 Traditional business Annui- Gu
Slide 49: Average technical interest rate
Average technical interest rate CHF / EUR / USD / GBP million (statutory basis), as per 31.12.2014 CHF EUR USD GBP Total reserves 76 615 27 978 139 10 Average technical interest rate 1.71% 2.44% 2.50% 3.01% Overall: 1.93% (01.01.2014: 2.04%) 49 | Investors' presentation | Full-year results 2014
Slide 50: Group solvency
Group solvency Based on IFRS equity 269%1) +59 ppts -4% +60% 210% +0% +16% -13% 31.12.2013 FX effect Result Business Change in Proposed 31.12.2014 growth revaluation dividend reserves and other effects 1) Group solvency excluding unrealised gains/losses on bonds: 196% (196% per FY13) 50 | Investors'
Slide 51: Group solvency
Group solvency CHF million (IFRS basis) 31.12.2013 31.12.2014 Available solvency margin IFRS equity (incl. non-controlling interests) 9 018 12 831 Eligible part of hybrid capital1) 2 587 2 612 Unattributed surplus 816 829 Goodwill and other intangible assets -1 319 -1 475 DAC non-life -48 -44 Divide
Slide 52: Total weighted duration gap
Total weighted duration gap1) In % 0.9 0.7 0.6 0.5 0.5 0.5 0.6 0.4 0.4 31.12.2010 30.06.2011 31.12.2011 30.06.2012 31.12.2012 30.06.2013 31.12.2013 30.06.2014 31.12.2014 1) Explains the linear change in risk-bearing capital due to a parallel shift of the underlying interest rate curve in percentage
Slide 53: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 53 | Investors' presentation | Full-year results 2014
Slide 54: 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 2013 FY 2014 Change Total beginning of period 148.5 155.1 +6.6 Net new assets Insurance mandates 0.9 2.3 +1.4 External customer business 5.6 4.5 -1.1 Market performanc
Slide 55: Real estate under management and administration
Real estate under management and administration CHF billion, as per 31.12.2014 Real estate under AuM administration1) Total 183.0 31.5 Real estate 30.1 (excluding Corpus Sireo, Livit) Total real estate under management and Corpus Sireo 2.4 14.8 administration CHF 63.9 bn Livit 16.7 1) Not included i
Slide 56: Bond portfolio: Ratings and classification
Bond portfolio: Ratings and classification Insurance portfolio for own risk (fair value basis) Breakdown by rating CHF million BB 149 957 BBB 3% AAA 20% 28% 22% A 27% AA Breakdown by classification Bonds 67.9% Governments & 45% supranationals Corporate 55% 31.12.2014 56 | Investors' presentation | F
Slide 57: Government and supranational bond portfolio: Ratings and currency
Government and supranational bond portfolio: Ratings and currency Insurance portfolio for own risk (fair value basis) Breakdown by rating CHF million BBB BB 149 957 A 6% 7% 1% AAA 40% 46% AA Governments & 30.7% supranationals Breakdown by currency CAD GBP 4% EUR USD 6% 26% 14% 50% CHF 31.12.2014 57
Slide 58: Government and supranational bond portfolio: Country split
Government and supranational bond portfolio: Country split Government and supranational bond portfolio (fair value basis), as per 31.12.2014, 30.7% of insurance portfolio for own risk (CHF 46.0 bn) % of total government and supranational bond portfolio In CHF million1) Switzerland 37% France 11% FY
Slide 59: Corporate bond portfolio: Ratings and currency
Corporate bond portfolio: Ratings and currency Insurance portfolio for own risk (fair value basis) Breakdown by rating CHF million BB AAA 149 957 4% 17% BBB 33% 11% AA 35% A Breakdown by currency Other 4% USD EUR 30% 39% Corporate 37.2% bonds CHF 27% 31.12.2014 59 | Investors' presentation | Full-ye
Slide 60: Corporate bond portfolio: Industry split
Corporate bond portfolio: Industry split Corporate bond portfolio (fair value basis), as per 31.12.2014, 37.2% of insurance portfolio for own risk (CHF 55.8 bn) Breakdown by rating Breakdown by industry BB BBB % of total 1% corporate bond portfolio 15% Banks 37% AAA 40% Other financials 5% Utilities
Slide 61: Loan and mortgage portfolio
Loan and mortgage portfolio Insurance portfolio for own risk (fair value basis) Breakdown by country CHF million 149 957 Switzerland 38% Mortgages 4.4% Loans 8.5% Germany 57% 5% France Breakdown by type Others loans Policyholder loans 12% 2% 34% Mortgages 52% Purchased 31.12.2014 loans 61 | Investor
Slide 62: Real estate portfolio
Real estate portfolio Insurance portfolio for own risk (fair value basis) Breakdown by country CHF million Germany 149 957 France 6% 11% Real estate 13.8% 83% Switzerland Breakdown by type Commercial Residential 34% 37% 29% 31.12.2014 Mixed-use 62 | Investors' presentation | Full-year results 2014
Slide 63: Equities and alternative investment portfolio: Gross exposure
Equities and alternative investment portfolio: Gross exposure Insurance portfolio for own risk (fair value basis) Breakdown by country Germany CHF million 149 957 12% Equities & 2.7% France equity funds 0.7% Alternative 30% Investment 58% Switzerland Net equity exposure 1.9% Breakdown by investment
Slide 64: Forex and interest rates
Forex and interest rates Foreign currency exchange rates 31.12.13 30.06.14 31.12.14 01.01.-31.12.13 01.01.-31.12.14 EUR 1.2253 1.2145 1.2026 1.2311 1.2163 GBP 1.4721 1.5172 1.5485 1.4503 1.5082 USD 0.8886 0.8871 0.9939 0.9268 0.9155 Interest rates1) 31.12.13 30.06.14 31.12.14 CHF 1.073 0.658 0.319 E
Slide 65: Supplementary information
Supplementary information Profit and loss Balance sheet Investments Market consistent embedded value (MCEV) Contact details and financial calendar 65 | Investors' presentation | Full-year results 2014
Slide 66: Value of new business
Value of new business CHF million (MCEV) Switzerland France Germany International Total 289 255 172 155 64 62 29 23 26 12 PVNBP 5 791 6 939 3 709 4 326 1 081 938 2 348 2 211 12 929 14 414 NBM1) in % PVNBP 3.0% 2.2% 1.7% 1.4% 2.7% 1.2% 1.0% 1.2% 2.2% 1.8% in % APE 41.0% 31.8% 14.7% 11.9% 33.2% 16.3%
Slide 67: Value of new business
Value of new business CHF million (MCEV), as per FY 2014 Switzerland France Germany International Total Value of new business 155 62 12 26 255 New business strain -71 -50 -3 -10 -133 VNB before new business strain 225 113 14 36 388 Annual premiums 237 315 52 8 612 Single premiums 2 499 2 079 199 2 1
Slide 68: Economic assumptions
Economic assumptions As per FY 2014 Swap rates 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 Switzerland -0.11% -0.13% 0.06% 0.52% 0.79% 1.16% 0.1% -0.1% -0.2% 0.5% 0.7% 0.4% Euro-zone 0.16% 0.18% 0.36% 0.82% 1.15% 1.47% 0.1
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 2014
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 Publication of annual r