In short: Swiss Life further improved its operational excellence. The Board of Directors will therefore propose to the Annual General Meeting a distribution from the capital contribution reserve of CHF 4.50 per share. Swiss Life will adhere to its dividend policy over the next few years and envisages maintaining a payout ratio of 20% to 40% going forward.
Cash and cash equivalents and other 2 223 1.7% 591 0.5%
New products launched in 2012 were another key driver for premium growth in own distribution channels and intermediaries. In individual insurance Swiss Life launched a further Swiss Life Premium Select tranche, a non-tax-qualified unit-linked life insurance product. The fund products Swiss Life Premium Vitality Duo and Uno, combined tax- and non-tax-qualified savings under the BVG, were introduced in the second quarter. The Home Option was also launched, offering attractive supplementary benefits when purchasing owner-occupied residential property. In the third quarter another two attractive insurance products were brought out in the form of Swiss Life FlexSave, a modern and flexible savings solution combining guarantees and the potential for return, and the real estate tranche Swiss Life Premium Immo. For its Swiss corporate clients, Swiss Life launched Swiss Life Business Profit, an innovative pension solution with a selection of investment strategies for employees.
Under the new Group-wide programme “Swiss Life 2015”, Swiss Life and Swiss Life Select (formerly AWD) in Germany aim to develop into a financial advisory and insurance company under one roof. All production and distribution organisations will be managed from a single source going forward. This will optimise market development and leverage synergies. In insurance the company is aiming to generate premium volume slightly above the market level, in particular with its successful occupational disability insurance, the long-term care insurance solution and products with modern guarantee concepts.
Following the introduction of the new asset management application in France at the start of 2013, Investment Management has a Group-wide uniform solution for managing assets entrusted to it from the insurance business. Investments managed for third parties are scheduled to be transferred to this application in 2013. The launch of the new brand “Swiss Life Asset Managers” is intended to promote the expansion of third-party business as well as to help to further develop existing markets and enter the German market.
Swiss Life is committed to good corporate governance. The corresponding internal principles and guidelines are continually being adapted consistent with nationally and internationally recognised standards of responsible corporate conduct.
Talanx AG, Riethorst 2, 30659 Hanover, Germany, reported in the publication of 23 February 2011 regarding a change in the composition of the Group subject to reporting requirements that it held 2 974 688 shares of Swiss Life Holding, equivalent to 9.27% of the voting rights. The group consists of: Talanx Beteiligungs­GmbH & Co. KG, Riethorst 2, 30659 Hanover and AmpegaGerling Invest­ ment GmbH, Charles­de­Gaulle­Platz 1, 50679 Cologne. Talanx Beteiligungs­GmbH & Co. KG is managed by the beneficial owner (HDI Haftpflichtverband der Deutschen Industrie V.a.G, Riet­ horst 2, 30659 Hanover) as follows: The limited partner is Talanx AG, Riethorst 2, 30659 Hanover. The sole shareholder of Talanx AG is the beneficial owner (HDI V.a.G.). The general partner is Gerling Beteiligungsgesellschaft mbH, Charles­de­Gaulle­Platz 1, 50679 Cologne. Talanx AG is Gerling Beteiligungsgesellschaft mbH’s sole partner. AmpegaGerling Investment GmbH is managed by the beneficial owner as follows: 94.9% is controlled by AmpegaGerling Asset Management GmbH, Charles­de­Gaulle­Platz 1, 50679 Cologne (Talanx AG is AmpegaGerling Asset Management GmbH’s sole partner) and 5.1% by Alstertor Erste Beteiligungs­ und Investitionssteuerungs­GmbH & Co. KG, Hamburg. Alstertor’s sole limited partner is Talanx AG. No disclosure reports were received from Talanx in the year under review.
Swiss and foreign banks, securities brokers and companies acting on their behalf may be entered in the share register as nominees if they are holding shares of Swiss Life Holding in their custody for the account of the beneficial owners. Professional asset managers may also be registered as nominees if, in a fiduciary capacity, they have deposited Swiss Life Holding shares for the account of third parties with Swiss or foreign banks or securities brokers in their own name. Nominees are required to be
Swiss Life – Annual Report 2012 each member of the Board of Directors may request information about the course of business from the Corporate Executive Board subject to the prior notification of the Chairman of the Board of Directors. Requests for information on individual transactions require the prior approval of the Chairman of the Board of Directors.
Corporate Internal Audit, which reports directly to the Chairman of the Board, represents a suitable means of independent monitoring and information gathering for the Board of Directors. Regular meetings take place between the Chairman of the Board of Directors and the Head of Corporate Internal Audit, as well as between the Chairman of the Audit Committee and the Head of Corporate Internal Audit. Implementation of the measures recommended by Corporate Internal Audit is moni­ tored by Group Compliance & Operational Risk Management. The Audit Committee regularly receives a report on operational risk management within the Swiss Life Group. Swiss Life’s Internal Control System (ICS) also serves the Board of Directors for information and controlling purposes. Further details on this system are available in the “Risk Management” section on page 64.
In the same way the allocation of future subscription rights to Swiss Life Holding shares (equity com­ pensation plan, RSU plan) is dependent on the respective target achievement. The cash bonus thereby serves as a reference value, whereby the deferred compensation components (RSU plan and deferred compensation in cash) are considered as a whole. The allocation of future subscription rights to Swiss Life Holding shares is also limited in value to 117% of the fixed basic salary or, if deferred com­ pensation in cash is simultaneously allocated, to 64% of the fixed basic salary.
In the 2012 financial year, Bruno Pfister was allocated the following amounts in the form of salary, cash bonus, contributions to occupational provisions, deferred compensation in cash and deferred compensation in shares (RSU plan): In CHF
including deferred compensation in shares 5 4 160 328 1 Including cash bonus of CHF 700 000 for the 2012 financial year, determined and paid at the beginning of 2013, and other compensation (child allowances, premium contribution) totalling CHF 67 745.
Total outstanding deferred compensation 9 194 770 of which cash payment 1 159 007 of which shares 0 of which options 0 of which others (Restricted Share Units, RSUs / Performance Share Units, PSUs) 8 035 763
Swiss Life – Annual Report 2012 1 Copyright © Stichting CFO Forum Foundation 2008
Overall profitability of new business improved due to pricing measures taken, particularly in Switzerland, while the change in the economic conditions had a minor negative effect. As a consequence, the value of new business increased despite lower volume.
Time value of financial options and guarantees –1 172 –2 601
The value of in-force business increased by 78%. This improvement is due to a higher certainty equivalent value and a notably lower TVOG. The reduction in TVOG is related to lower capital market volatilities and diversification effects from the inclusion of additional currencies in the economic scenarios as well as operating effects. The TVOG includes the cost of credit risk related to investments in bonds. The cost of credit risk amounts to CHF –653 million for 2012 compared to CHF –517 million for 2011.
Additional explanations about new business calculations are given in section 4.2 of this report.
25% increase in equity / property implied volatilities –261 –3% –6 –4%
gerMany Although the drop in reference rates generally has a strong effect in the German life insurance market with its long-term guarantees, the decrease of MCEV was contained.
switZerland Opening adjustments reflect dividend payments from Germany and Swiss Life Investment Management.
Swiss Life – Annual Report 2012 5.1.2.2 SwaPTION IMPlIEd VOlaTIlITIES aS aT 31 dECEMBEr 2011
tiMe value of finanCial oPtions and guarantees (tvog) The TVOG represents the additional market price of those financial options and guarantees in excess of the intrinsic value of options and guarantees which is already allowed for in the certainty equivalent value.
value of in-forCe Business (vif) The value of in-force business represents the net present value of future profits emerging from operations and assets backing liabilities, after accounting for TVOG, CNHR and FC.
Consolidated statement of Changes in equity for the year ended 31 deCember 2012
loans and reCeivables Loans and receivables are non-derivative financial assets with fixed or determinable payments. Loans include loans originated by the Group and investments in debt instruments which are not quoted in an active market and for which no intention of sale in the near term exists. Loans are initially recognised at fair value, net of transaction costs, or direct origination costs. Subsequent measurement is at amortised cost using the effective interest method.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Swiss Life – Annual Report 2012 2.25 forthComing Changes in aCCounting poliCies In December 2011, the International Accounting Standards Board issued amendments to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures. The amendments clarify the requirements for offsetting financial instruments. The new disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position. The amendments are effective for annual periods beginning on or after 1 January 2014 and 2013, respectively. The effect due to derivative transactions that does not qualify for offsetting in the balance sheet as at 31 December 2012 amounted to approx. CHF 800 million. Additionally, net cash collateral received for derivative transactions amounted to approx. CHF 700 million as at 31 December 2012.
Because of the inherent valuation uncertainty, those estimated fair values may differ significantly from the values that would be used if a ready market for the financial assets existed, and those differences could be material. The fair values are determined by the general partner in the partnership and reviewed by management. In determining the fair value of fund investments, the partnership considers the funds as transparent holding vehicles. The fair values of the underlying investments are determined using the general partner valuation. These fair value measurements are generally categorised as level 3 within the fair value hierarchy.
Net gains/losses on financial assets 515 12 169 85 0 –2 –3 776 – 776
ToTal lIaBIlITIes lINKeD To asseTs For THe aCCouNT aND rIsK oF THe swIss lIFe GrouP’s CusTomers 25 167 22 152
CreDIT rIsK mITIGaTIoN – CollaTeral HelD aND oTHer CreDIT eNHaNCemeNTs as aT 31 DeCemBer 2011
Swiss Life – Annual Report 2012 exPosure To lIquIDITy rIsK as aT 31 DeCemBer 2011
Disability lump-sum payment 23 20 lIFe BeNeFITs INsureD By TyPe oF INsuraNCe – GrouP lIFe
Swiss Life – Annual Report 2012 1 Copyright © stichting CFo Forum Foundation 2008 and their modification. To ensure that the Group’s principles are observed, guidelines on reinsurance have been introduced.
Net result attributable to equity holders of swiss life Holding 92 605 weighted average number of shares outstanding 31 902 670 31 893 573
ToTal NeT GaINs/losses oN FINaNCIal asseTs 5 776 550 net gains/losses on finanCial instruments at fair value through profit or loss
In CHF million realised gains/losses on sales of subsidiaries and other assets 2 –1 other foreign currency gains/losses 17 40
Depreciation of property and equipment 17 28 30 amortisation of present value of future profits (PvP) 18 1 1 amortisation of deferred acquisition costs (DaC) 18 565 461 amortisation of deferred origination costs (DoC) 18 53 27 amortisation of other intangible assets 18 39 35
Information technology and systems 72 65 rental, maintenance and repair 67 72
The Swiss Life Group uses interest rate swaps to hedge available-for-sale fixed-rate bonds in USD against changes in the fair value attributable to interest rate risk. The nominal amount of these bonds as at 31 December 2012 was USD 2 billion.
deferred origination Costs (doC) These costs are recoverable and are directly attributable to securing the right for investment management services within investment contract policies. They relate to contracts in Luxembourg and Switzerland.
In 2012, CHF 386 million impairment losses were recognised on the goodwill relating to the “AWD” segment. Therefore, any adverse movement in a key assumption would lead to a further impairment. The impairment losses under the old management structure would not have been significantly different.
Deferred charges and prepaid expenses 179 317 employee benefit assets 128 134
swiss life aG CHF 300 CHF 300 5.500% 2012 2018 297 –
Gross claims under non-life insurance contracts 960 998 less: reinsurance recoverable –196 –203
Financial assets available for sale – 2 loans and receivables 0 2
Debt securities available for sale 61 517 3 364 2 64 883 equity securities at fair value through profit or loss 2 147 139 28 2 314 equity securities available for sale 1 139 484 758 2 381
net gains/losses on financial assets – – 1 – 39 –
Not later than 1 year 276 295 later than 1 year and not later than 5 years 884 921
adroit Private equity aG, Zürich Ins. CH 100.0% 100.0% CHF 5 000 awD allgemeiner wirtschaftsdienst aG, Zug awD 100.0% 100.0% CHF 5 600 axenta aG, Baden-Dättwil Ins. CH from 01.05.2012 100.0% 100.0% CHF 150
swiss life Invest luxembourg s.a., strassen other 100.0% 100.0% eur 60 211 swiss life Participations luxembourg s.a., strassen other 100.0% 100.0% eur 75 198 swiss life Products (luxembourg) s.a., strassen Ins. Int. 100.0% 100.0% eur 79 031 swiss life reIm (luxembourg) s.a., strassen Im from 22.08.2012 100.0% 100.0% eur 1 500 swiss life solutions s.a., strassen other until 24.04.2012 – –
swiss life Private Placement (middle east) limited, Dubai Ins. Int. 100.0% 100.0% usD 8 100 1 segment (Ins. CH = Insurance switzerland, Im = Investment management, Ins. Int. = Insurance International, Ins. Fr = Insurance France, Ins. De = Insurance Germany)
As statutory auditor, we have audited the consolidated financial statements of Swiss Life Holding Ltd, which comprise the consolidated statement of income, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of cash flows, consolidated statement of changes in equity and notes to the consolidated financial statements (pages 106 to 223), for the year ended 31 December 2012.
Since 2011 participants in the equity compensation plan have been allocated Restricted Share Units (RSUs) instead of PSUs. As with PSUs, RSUs grant the holder future subscription rights, entitling them to receive Swiss Life Holding shares free of charge after a three-year period has elapsed, but without any additional leverage effect. The attribution of shares after the expiry of the three-year deferral period is effected on a 1:1 basis (1 RSU = 1 share): the plan is therefore very simple, transparent throughout the whole term and directly linked to the performance of the Swiss Life Holding share price. The value of RSUs during the three-year term develops linear with the Swiss Life Holding share price and thus symmetrically corresponds with shareholder interests. The value of the RSUs allocated equals the fair value as at 1 April of the year of allocation and is determined by an independent consultancy company. 62 members of Swiss Life Group senior management participated in the 2011 equity compensation plan, in which a total of 68 370 RSUs were allocated; 23 630 in total to the Corporate Executive Board, of which 6350 to Bruno Pfister in his capacity as Group CEO. During the period under review, 55 members of Swiss Life Group senior management participated in the 2012 equity compensation plan. A total of 94 040 RSUs were allocated; 28 460 in total to the members of the Corporate Executive Board, of which 7100 RSUs to Bruno Pfister as Group CEO.
Total dividend payout to shareholders (in CHF million) 27.04. 144 144 77 160 596
CaUtion RegaRDing foRwaRD-Looking statements This document may contain projections or other forward-looking statements related to Swiss Life that are subject to known and unknown risks, uncertainties and other important factors. The reader should be aware that these statements are only projections which could differ materially from the actual results, financial situation, development, performance or expectations and that therefore no undue reliance should be placed on such forward-looking statements. Neither Swiss Life nor any of its directors, officers, employees or advisors, nor any other person connected or otherwise associated with Swiss Life, makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document. Neither Swiss Life nor any of its directors, officers, employees or advisors, nor any other person connected or otherwise associated with Swiss Life, shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this document. All forward-looking statements are based on the data available to Swiss Life at the time the present document was compiled. Unless otherwise required by applicable law, Swiss Life assumes no responsibility to publicly update or alter its forward-looking statements or to adapt them, whether as a result of new information, future events or developments or any other reason.