Swiss Life is synonymous with expertise in life and pensions, security and reliability in all markets. This profile has proven its worth in the crisis. In Switzerland, Swiss Life has maintained its position as market leader. New products, further increases in efficiency and an organisation that is geared even more closely to client needs will continue to improve our competitive position in our home market. In France, we have consistently outperformed the market in recent years, thanks to a well-diversified distribution network, an attractive range of products, and our excellent position in the health insurance business. In Germany, Swiss Life has been a preferred provider in the broker distribution channel for many years. The cooperation with AWD and the launch of the first product in the promising variable annuity family have significantly strengthened our competitive position going forward.
Bruno Pfister has served as Swiss Life’s Group Chief Executive Officer since May 2008. In this interview he explains how the financial market crisis has impacted corporate strategy and results, and why the prevailing market environment also offers opportunities for a focused pension provider such as Swiss Life.
Swiss Life’s mission: “We are committed to helping people create a financially secure future. For life.” has gained in importance with the financial market crisis and its implications for the real economy. In times of uncertainty, clients want professional advice and a partner they can trust for their life insurance and pensions. This is exactly what Swiss Life has to offer. As life expectancy rises and birth rates fall, demand for life insurance and pensions will continue to grow over the long term. Against the backdrop of the challenges facing states and their governments in trying to overcome the current economic crisis, privately funded pension solutions will gain in significance. In a recent study, the management consulting firm Oliver Wyman confirmed its 2004 forecast that the global life insurance industry is poised to generate USD 1600 billion in shareholder value by 2014. As a leading international specialist in life and pensions, Swiss Life is well positioned to benefit significantly from this development.
LEADING SPECIALIST FOR LIFE INSURANCE AND PENSIONS | Swiss Life has become a focused European life insurer in recent years. The company is one of only a few independent enterprises in Switzerland, France and Germany that concentrates on life and pensions.
Ambition | We aim to become a leading international life and pensions specialist.
Equity securities and equity funds 2 335 2.2% 8 967 8.0%
Effects of the increase of the solvency margin to 150% –484
INSURANCE SWITZERLAND | Swiss Life maintained its leading market position in Switzerland in 2008 and made further progress in the implementation of its strategy. Operating costs were reduced by an additional 3%, a number of product innovations were successfully brought to market, the effectiveness of the sales force was enhanced, and the cooperation with AWD got underway. However, the distortions on the financial markets led to high impairments on investments, particularly in the fourth quarter, resulting in a loss of CHF 25 million for the financial result. A positive result of CHF 2556 million was achieved in the previous year. A segment loss of CHF 748 million was posted, vis-à-vis a segment profit of CHF 650 million for the previous year.
Gross written premiums, policy fees and deposits received 8 172 8 413 –2.9%
Klaus G. Leyh held the position of CEO Germany since 1 October 2008. Previously in charge of distribution, he took over from Manfred Behrens, who is now serving on AWD’s Board of Management as Co-CEO.
The underwriting parameters such as mortality, disability and cancellation rates are determined on the basis of in-house historical data and also partly on external statistics. These parameters form the basis for the setting of premium rates and the evaluation of insurance portfolios. There is currently an emphasis on the future development of life expectancy, which poses a great challenge in the area of pension products and, in particular, the occupational pensions business in Switzerland. The fact that the parameters for the evaluation of future business build on historical data gives rise to a parameter risk. In order to assess this risk, various sensitivity analyses deliberately deviate from the best-possible estimates for biometric parameters, to take into account the impact of additional factors on the evaluations. In addition, extreme scenarios and their impact on business activities are simulated. A pandemic, for instance, is not only modelled by adjusting the relevant underwriting parameters, but also by taking into account their possible influence on the capital markets. Considering these factors makes it possible to determine the funding necessary to cover the underwriting risk.
Swiss Life’s success depends on a qualified workforce with an above-average level of commitment. Human capital management measures are thus aimed at finding and retaining the right employees and enabling them to systematically develop their skills. In doing so, Swiss Life consistently applies the corporate strategy and corporate values.
Since 2005, eighteen management talents at senior management level have successfully completed an internal development programme of several years’ duration. In a series of five modules, the participants worked on strategically relevant subjects such as self-management, client orientation, financial management, strategy and cross-border cooperation. They have thus been thoroughly prepared for future management duties. All participants are still employed at the company. 80% have already assumed a new, more responsible, position within the Group.
Clients, partners and employees alike place their trust in Swiss Life. Responsible corporate conduct is part and parcel of the Swiss Life culture and is based on the corporate values of expertise, proximity, openness, clarity and commitment. These are backed up by specific rules of behaviour laid down in the Code of Compliance. Adherence to these rules is a prerequisite for legally and ethically correct business conduct and for economic profitability.
To provide a platform for debate for all those who work intensively in the occupational pensions field, Swiss Life initiated its Munich Specialist Forum series of events in 2007. The second German Swiss Life Pension Day held in October 2008 reached a large audience and featured guests from the world of politics and business leaders, who discussed the issue of increased security through occupational pensions.
Brand Management | The brand underscores Swiss Life’s image as a specialist in life insurance and pension solutions and as a trustworthy partner for private individuals and companies. Since 2004 Swiss Life has presented a uniform corporate identity across the Group, which has now become firmly entrenched in the public’s mind. By revising the brand strategy, the brand is made even more attractive and thereby contributes to the company’s attainment of its growth target.
The conditional share capital is at the disposal of the holders of conversion or option rights granted by the company or by companies belonging to the Group in connection with existing and new loan debentures or similar bonds issued by Swiss Life Holding or companies belonging to the Group. The shareholders are excluded from subscription rights, but their preemptive subscription rights remain safeguarded. The Board of Directors sets the terms of conversion and option conditions.
Since the establishment of Swiss Life Holding on 17 September 2002, a number of capital market transactions have been conducted. A detailed description of the transactions carried out up to and including the end of 2005 can be found in the Corporate Governance section of the annual reports for the relevant years. The annual reports can be accessed at www.swisslife.com, “Shareholders & Analysts” area, “Archive Reports” section (www.swisslife. com/en/annualreports).
The Board of Directors may refuse to recognise an acquirer as a shareholder with voting rights, if, upon request, the acquirer does not expressly declare that he has acquired the registered shares in his own name and for his own account.
Henry Peter completed his studies in law at the University of Geneva in 1979, and in 1981 he was called to the Geneva bar. Following a pupillage in Geneva, a period of study as a visiting scholar at the University of California in Berkeley and legal work in Lugano, he obtained his PhD at the University of Geneva in 1988. Since 1988 he has been a partner in a law firm in Lugano, currently Peter & Partners. In addition, he has been Professor of Business Law at the University of Geneva since 1997. He became a Member of the Swiss Takeover Board in 2004 and a Member of the Sanction Commission of the SIX Swiss Exchange in 2007.
INTERNAL ORGANISATIONAL STRUCTURE | In accordance with the Articles of Association, the Board of Directors issued the Organisational Regulations setting forth the internal organisational structure and the duties and competencies of the Board of Directors, the Board of Directors’ committees, the Chairman of the Board of Directors, the Delegate of the Board of Directors and the Corporate Executive Board. The Regulations are reviewed regularly and adjusted where necessary. The Organisational Regulations are available on the internet at www.swisslife.com, “About Swiss Life” area, “Organisation” section
The Chairman’s Committee held ten (ordinary and extraordinary) meetings during the year under review. The average duration of an ordinary meeting was around two hours. There was full attendance at all meetings, and the Group CEO was also present on each occasion.
The Corporate Executive Board is vested with the authority to rule on business referred to it by the Board of Directors, the Board of Directors committees and the Delegate of the Board of Directors, insofar as decision or approval is not reserved exclusively to one of these.
Other appointments: – Aareal Bank, Wiesbaden, Member of the Supervisory Board – Commerzbank, Member of the Federal State Advisory Committee – German Insurance Association, Member of the Main Committee Life Insurance and
In view of the fact that Rolf Dörig held the positions of Group CEO until the Annual General Meeting of Swiss Life Holding on 8 May 2008 and Delegate of the Board following his election to the Board of Directors, his compensation in the period under review is shown in its entirety under the compensation to the Corporate Executive Board.
Corporate Executive Board 7724 shares, allocated at a value of CHF 231.743. They are subject to a three-year blocking period.
As a result of his transfer from the Corporate Executive Board to the Board of Directors following his election by the Annual General Meeting on 8 May 2008, Rolf Dörig was not allocated any future subscription rights on Swiss Life Holding shares in the form of Performance Share Units (PSUs) from the 2008 equity compensation programme in accordance with the compensation regulations pertaining to the Board of Directors.
2 The shares allocated in 2008 as variable compensation relate to the 2007 financial year. They are subject to a blocking period of three years. The share price at the time of allocation was CHF 276; the allocation was effected at an economic value of CHF 231.735, which is equal to the tax value, taking the blocking period into account.
DURATION OF THE MANDATES AND TERM OF OFFICE OF THE LEAD AUDITOR | The Articles of Association stipulate that the external auditor is to be elected by the General Meeting of Shareholders for one financial year at a time. When Swiss Life Holding was established in 2002, PwC was named as statutory auditor and Group auditor. Since then PwC has been re-elected without fail. PwC has also acted as statutory auditor and Group auditor for Swiss Life/Rentenanstalt since 1994.
The Swiss Life Group is one of Europe’s leading providers of life insurance and pension solutions. In Switzerland, France and Germany, the Group offers individuals and corporations comprehensive advice and a broad range of products through its own sales force as well as brokers and banks. Swiss Life provides international corporations with employee benefits solutions from a single source, and is one of the global leaders in structured life and pension products for international high net worth individuals. Swiss Life is the majority shareholder of the Hanover-based AWD Group, one of Europe’s top financial services providers for the medium- and high-income client segments. AWD offers its clients independent financial advisory services.
Financial liabilities at fair value through profit or loss 1 345 385 355
Total assets for the account and risk of the Swiss Life Group’s customers 12 425 15 574
Approximately 2.2% of insurance in force from continuing operations in terms of earned insurance premiums was ceded as at 31 December 2008 (2007: 1.8%).
At 31 December 2008, if the investment returns for equity securities and property had been 100 basis points higher, the embedded value would have been CHF 171 million higher in Switzerland (2007: CHF 181 million higher) and CHF 65 million higher in the other countries (2007: CHF 119 million higher).
Total net gains/losses on financial instruments designated as at fair value through profit or loss –897 348
On 20 November 2008, the Swiss Life Group completed the acquisition of the 24.3% stake in MLP, Wiesloch. The published price quotation for the investment in MLP as at 31 December 2008 was CHF 383 million. The impairment losses of CHF 159 million relate to MLP, Wiesloch. No other investments in associates had published price quotations as at 31 December 2007. As at 31 December 2008 and 2007, no contingent liabilities arose from the Group’s investments in associates.
Classification as assets held for sale and other disposals –42 – 0 –9 –5 –56
Additions from internal development – – – – – 0 – 0
Foreign currency translation differences – – 0 0 14 –4 14 –4
Claims incurred, benefits paid and surrenders –11 665 –8 806 –27 –45 –11 638 –8 761
Changes from currency Balance as at Recognised Recognised discontinued translation Balance as at
In 2005, a provision totalling CHF 72 million relating to the restructuring programme of «La Suisse» in Switzerland was set up. As at 31 December 2008 the remaining provision amounted to CHF 4 million (2007: CHF 16 million) and CHF 12 million was used during the period (2007: CHF 7 million). The provision primarily relates to redundancy programmes and onerous contracts. The outflow of the remaining amounts is expected within the following one to two years.
Balance as at 31 December 12 –812 – –918 –1 730
Deferred Group-related funds 678 1 324 29 Acquisitions and Disposals of Subsidiaries
The following table summarises the carrying amounts and fair values of those financial assets and liabilities not presented in the Group’s balance sheet at fair value: In CHF million Notes 31.12.2008 31.12.2007 31.12.2008 31.12.2007
Carte Blanche Partenaires, Paris Ins. FR 94.6% 95.1% full EUR 2 300
Allgemeiner Wirtschaftsdienst Gesellschaft für Wirtschaftsberatung und Finanzbetreuung mbH, Hannover AWD from 19.03.2008 96.7% 100.0% full EUR 2 700
AWD Gruppe Deutschland GmbH, Hannover AWD from 19.03.2008 96.7% 100.0% full EUR 1 500
ProVentus Akademie- und Vertriebs GmbH, Bremen AWD from 06.05.2008 96.7% 100.0% full EUR 25
SL Beteiligungs-GmbH & Co. Immobilien I KG, München Ins. DE from 22.10.2007 100.0% 100.0% full EUR 10
Swiss Life Vermittlungs GmbH, München Ins. DE from 29.10.2007 100.0% 100.0% full EUR 50 tecis Asset Management AG, Hamburg AWD 19.03.08–05.12.08 – – full tecis Finanzdienstleistungen AG, Hamburg AWD from 19.03.2008 96.7% 100.0% full EUR 500
Verwaltung SLP Swiss Life Partner Vertriebs GmbH, Hamburg – – 50.0% equity EUR 26
Alpine Services Ltd., Nassau Bank. Dis. until 07.03.2008 – – full
AWD Romania Broker de Asigurare SRL, Târgu Mureş AWD from 19.03.2008 96.7% 100.0% full RON 50
Swiss Life (Liechtenstein) AG, Singapore Branch, Singapore Ins. Other from 17.12.2007 100.0% 100.0% full – –
ISSUANCE OF CONVERTIBLE DEBT IN 2004 | On 10 June 2004 Swiss Life Holding issued CHF 317 million in 0.625% convertible bonds (2004 to 2010) convertible into Swiss Life Holding registered shares. The conversion price is currently CHF 200.20.
PERSONNEL CHANGES TO THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE BOARD IN 2008 | There were no resignations from the Board of Directors in the period under review. Within the context of succession planning at Board of Director and Corporate Executive Board level, Rolf Dörig was elected to the Board of Directors of Swiss Life Holding as an additional member on 8 May 2008.
5 All contributions are gross contributions, i.e. they include employee contributions to AHV/IV/ALV. Employer contributions to AHV/IV/ALV amounted to a total of CHF 579 310 in the year under review.
Rolf Dörig 28 607 Group CEO until 08.05.2008, BoD Delegate from 09.05.2008
Balance carried forward from previous year 3 047 818 3 403 418