Contents 4 Facts & Figures 6 Shareholders’ Letter 8 Strategy & Brand 14 Segment Reporting 16 Switzerland 18 France 20 Germany 22 International 24 Asset Managers 26 Corporate Governance 32 Board of Directors 46 Corporate Executive Board 53 Swiss Life Compensation Report for the Financial Year 2018 70 Report of the Statutory Auditor 76 Risk Management 79 Corporate Responsibility 80 CEO Foreword 81 Corporate Responsibility at Swiss Life 90 Sustainable Development Goals 92 Responsibility in Business 108 Responsibility in Society 116 Responsibility for Employees 130 Environmental Responsibility 134 GRI Content Index 137 Key Sustainability Indicators 140 Consolidated Financial Statements 142 Consolidated Statement of Income 143 Consolidated Statement of Comprehensive Income 144 Consolidated Balance Sheet 146 Consolidated Statement of Cash Flows 148 Consolidated Statement of Changes in Equity 149 Notes to the Consolidated Financial Statements 298 Report of the Statutory Auditor 305 Swiss Life Holding Financial Statements 306 Management Report 307 Statement of Income 308 Balance Sheet 309 Notes to the Financial Statements 315 Appropriation of Profit 316 Report of the Statutory Auditor 320 Share Performance and Historical Comparison
Net profit In CHF million 1 equity excl. unrealised gains/losses on bonds
Around 30% of profit from operations stems from the fee business
The success of the Swiss Life brand results from a consistent brand strategy and management. On the basis of its corporate strategy and positioning as a provider of comprehensive life and pensions and financial solutions, the Swiss Life umbrella brand, flanked by its sub-brands, provides orientation and creates confidence. The brands are assigned to various levels in a clear brand hierarchy. The strategic management of the entire brand portfolio is an element of corporate communication. The brand hierarchy is under permanent review and adjustments are made regularly as needed.
Swiss Life is positioning itself in Germany as a leading provider of pensions and financial solutions under one roof by managing all production and distribution organisations from a single source. The segment reporting comprises local insurance activities and the financial advisory companies Swiss Life Select, Tecis, Horbach and Proventus operating in Germany.
The companies falling within the Group’s scope of consolidation are presented in the Consolidated Financial Statements (note 35). Information on the listing on the SIX Swiss Exchange and market capitalisation can be found in the section “Share Performance and Historical Comparison” on pages 320 and 321. The organisational structure of the Group shows the key business markets and areas. The resulting operational responsibilities are reflected in the allocation of responsibilities among the Corporate Executive Board. With regard to insurance operations, one person with responsibility for the market and results is assigned to each specific area.
At the end of November 2018 the Board of Directors of Swiss Life Holding approved the repurchase of proprietary registered shares up to an acquisition cost of CHF 1 billion at most as part of a share buyback programme with the aim of reducing share capital. The share buy-back programme in question began in December 2018 and will run until 31 December 2019 at the latest. Additional information on the share buyback programme is available at www.swisslife.com, “Investors & Shareholders” area, “Share” section (www.swisslife.com/share).
Adrienne Corboud Fumagalli — Born 1958, Swiss and Italian national Member of the Board of Directors bild Adrienne Corboud Fumagalli is a Doctor of Economics and Social Sciences and a graduate of the University of Fribourg. In 1996 she joined the PTT in the management team of Radiocom (radio, TV, mobile) in charge of New Business Development and the international market. The PTT then became Swisscom and Adrienne Corboud Fumagalli held various positions from 1997 to 2000, ultimately becoming
Other appointment: – Evooq SA, Member of the Board of Directors
Franziska Tschudi will be put forward for re-election as Member of the Board of Directors and as Member of the Compensation Committee at the General Meeting of Shareholders of Swiss Life Holding on 30 April 2019.
Nine meetings of the Investment and Risk Committee were held in the year under review. Each session lasted for around two hours on average. All members attended all the meetings, with the exception of three meetings, where one member was excused each time. The Chairman of the Board of Directors was present at seven meetings. The Group CEO and Group CIO attended all the meetings and the Group CFO attended eight meetings of the Investment and Risk Committee. The Group CRO attended all meetings.
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 monitored by Group Compliance and Operational Risk Management. The Audit Committee regularly receives a report on operational risk management within the Swiss Life Group. The Internal Control System (ICS) is another instrument available to the Board of Directors for information and controlling purposes. Further details are available in the “Risk Management” section on page 76.
The stated amounts do not include social security contributions (AHV/IV/ALV/FAK) payable by the employer under the law. The respective expenditure is shown in footnote 6 of the 2018 compensation table.
In addition to its comprehensive Annual Report and Financial Statements, Swiss Life Holding also publishes its half-year results. Furthermore, in May and November of each year, it publishes specific details on the previous quarter. All Swiss Life’s annual reports since 1998 and all half-year reports since 2001 can be accessed on the internet at www.swisslife.com, “Investors & Shareholders” area, “Results & Reports” section (www.swisslife.com/annualreports). A report detailing the key facts and figures on business operations is sent out on an annual basis to all the shareholders listed in the share register.
As an investor, Swiss Life also strategically supports infrastructure projects that benefit the general public. For instance, Swiss Life participates in a company that finances, builds and operates fibre optic networks and makes them available for use by internet providers.
Swiss Life Switzerland, for instance, has repeatedly determined in recent years that willingness to recommend dropped at the turn of the year. Special focus placed during this period on personnel capacity has proved successful in counteracting this effect.
Swiss Life has over 160 years of experience in consulting and developing products and services in its life insurance and pensions business. In this endeavour, Swiss Life’s activities are always based on its customers and their needs. Swiss Life aims for its customers to lead their lives in an assured and self-determined way.
In 2018, Swiss Life signed the Principles for Responsible Investment (PRI) supported by the United Nations. As a result, Swiss Life is publishing its first publicly accessible PRI Transparency Report in the first quarter of 2019. During the year under review, Swiss Life also joined the Institutional Investors Group on Climate Change (IIGCC) and the European Sustainable Investment Forum (EuroSIF).
Swiss Life promotes projects and institutions in the fields of culture, science, education and the environment and research that promote self-determination and confidence. Swiss Life also observes its socio-political responsibility through exchange with politicians and associations.
Swiss Life Germany also sponsors an event venue in Hanover, the Swiss Life Hall, where since 2005 there have been up to 100 concerts, sporting and corporate events held every year. The Swiss Life Hall has become a popular venue over the years and its reputation extends beyond Hanover.
Swiss Life Switzerland has been a partner of the Swiss Football Association since 2004 and supports the men’s national teams (all teams from U-15s to the A-team) as well as the national women’s teams (all teams from U-16s to the A-team). As of the 2015/16 season, Swiss Life is also the general sponsor of ZSC Lions ice hockey club. The Lions are one of the biggest ice hockey clubs in Europe with a well-respected youth development programme.
Swiss Life revised its behavioural principles in 2018. One of their focuses is self-determination and personal responsibility on the part of employees – qualities expected by the employees of themselves. Management give their employees confidence, provide them with competencies and responsibilities and encourage independent work and activities. The resulting autonomy has a positive effect on employee engagement and promotes innovation.
In France, for example, all employees have received training on the topic of “digitalisation”. The initiative, the brainchild of the “Fédération française de l’assurance”, intends to train employees in the use of digital communication and teach them tips and tricks for their work in the digital age. Since the so-called “Digital Passport” received by participants is recognised in the industry, this measure also serves to maintain employability.
Luxembourg Swiss Life Luxembourg In the Luxembourg financial sector as well as in the insurance sector, salary agreements are agreed at sector level. A new agreement was signed between employee and employer representatives in June 2018. The most recent negotiations concerned two objectives, supported by both parties: – Maintaining the competitive position enjoyed by the Luxembourg insurance sector on the labour market, especially in times in which financial institutions have decided, owing to Brexit, to move their activities to Luxembourg or to expand into Luxembourg
TOTAL ENERGY CONSUMPTION (IN KWH/FTE) 5 614 5 823 6 098
Voting shares held by largest shareholders or block >5% >5% >5% >5% AR, p. 27–28
Board oversight of risk management yes yes yes yes AR, p. 189
Other new or amended standards or interpretations did not have an impact on the consolidated financial statements.
Swiss Life – Annual Report 2018 insurance component, and the policy for deferred origination costs applies to the other portion (see 2.16 Intangible assets).
Premiums earned on investment contracts with discretionary participation 795 – – – – – 795 – 795
Premiums earned on investment contracts with discretionary participation 849 – – – – – 849 – 849
Swiss Life – Annual Report 2018 5.3 Contracts for the account and risk of the Swiss Life Group’s customers
Financial assets pledged as collateral 92 – 4 676 3 601 – – 4 767 3 601
Swiss Life Holding redeemed the convertible bonds at par on 27 December 2017. In 2018, diluted earnings per share solely include the dilutive effect of share options issued. In 2017, diluted earnings per share include the dilutive effect of convertible bonds and share options issued. In the diluted EPS calculation, the convertible debt is assumed to have been converted into shares and the profit attributable to shareholders is adjusted for the applicable interest expense minus the related taxes. Share options are dilutive when they would result in the issuance of shares for less than the average market price during the period. Dilutive share options are assumed to have been exercised. The assumed proceeds are regarded as having been received from the issuance of shares at the average market price during the period. The difference between the number of shares issued and the number of shares that would have been issued at the average market price during the period is considered an issuance of shares for no consideration.
Net gains/losses on financial instruments at fair value through profit or loss
The acquisition of BEOS AG, Berlin, the leading investment manager of corporate real estate in Germany, in August 2018 led to the recognition of goodwill of CHF 138 million. The goodwill has been allocated to the “Asset Managers” segment.
In October 2017, the Swiss Life Group acquired Medical Money Management Ltd., domiciled in Liverpool. The goodwill relating to this acquisition amounted to CHF 23 million and has been allocated to the “International” segment.
The 2016, 2017 and 2018 equity compensation plans are based on the new Group-wide programme “Swiss Life 2018”. For the purpose of supporting the achievement of the respective corporate goals, performance criteria have been determined by the Board of Directors analogously to the previous year’s objectives: IFRS profit (50% weighting), the risk and fee result (25% weighting ) and cash to Swiss Life Holding for further strengthening of the financial substance and payout capacity (25% weighting).
Asset management and other commission income 0 – – 0 1
Assets measured at fair value based on level 3 for the year 2018
at the end of the period –28 –8 468 –42 711 601
Gross amounts of recognised financial assets set off – – – – 0 – 0 –
MAYFAIR CAPITAL TGF GENERAL PARTNER LLP, London AM from 18.08.2017 100.0% 100.0% Asset management
MAYFAIR CAPITAL TRUST MANAGER (JERSEY) LIMITED, St. Helier AM 100.0% 100.0% Asset management
In addition, with the support of our valuation experts, we assessed the main parameters used in the calculation of the weighted average cost of capital, from which the discount rate is derived. In particular, we identified the market data inputs used by the Group and tested these against independent data. As for the long-term growth rate used at the end of the mid-term planning period, we compared it to the economic environment and industry trends.
As set out in note 14 - Investment Property - property held for investment amount to CHF 31’381 million.
Share capital As at 31 December 2018, the share capital of Swiss Life Holding (SLH) consisted of 34 223 106 fully-paid shares with a par value of CHF 5.10 each. In exercising voting rights, no shareholder can collect more than 10% of the total share capital directly or indirectly in respect of his own shares and those he represents. As at 31 December 2017, Swiss Life Holding had 34 223 106 registered shares outstanding with a par value of CHF 5.10 per share. Conditional share capital was CHF 19 675 534.80 as at 31 December 2018 (previous year: CHF 19 675 534.80).