We have improved the quality of our service. Ongoing customer surveys, expert evaluations, and awards and distinctions underscore the success we have had in appreciably improving the quality of our customer service. The quality initiatives implemented in all markets have had the desired impact. Various reports from the customer side do, however, make it clear that there is additional room for improvement in this area. We are working on it.
We want to achieve a position of pensions leadership. Swiss Life wants to set the standards in both the private and occupational benefits business. We intend to be a leader in our business – not simply in size, but by leading in the quality of our advice, products and service. We want people to think of Swiss Life first when they think about safeguarding their retirement income or the financial security of their business or their family. We are in a very promising position to achieve this.
Proximity. Only those who are close to people can really meet their needs. That’s why we at Swiss Life attach great importance to cultivating personal contact with our clients. And offering them customised solutions that take their individual goals into account. In partnership with our clients – also especially appreciated by Hinda Ansas.
Individual life experienced a further decline in premiums, down 4% to CHF 1601 million, reflecting the stubbornly low level of interest rates. Single premiums (–7%) took a harder hit than periodic premiums (–2%).
The sales organisation introduced at the beginning of the reporting period is thus already paying off. Swiss Life products continued to prove their merit as various pension solutions were once again given top marks by the trade press. In addition, a pension-savings plan was introduced in June 2004 based on the introduction in April 2004 of tax incentives for individual saving (Plan d’épargne-retraite populaire, PERP). Swiss Life has thereby expanded its very good position in the self-employed segment. In health insurance Swiss Life played a pioneering role by launching a new range of products which, among other things, encourage customers to shoulder greater responsibility.
France The focus on profitability also led to a slight decline in premiums of 2% to CHF 587 million. The combination of a decrease in insurance benefits paid and the reduction of administrative expenses resulted in a considerable increase in the operating result. The combined ratio improved slightly, from 107.9% to 107.1%.
Non-Life Swiss Life’s operating income in the Non-Life segment came to CHF 46 million in 2004. Gross premium income totalled CHF 1067 million for the period, while the combined ratio improved from 108.4% to 104.6%.
The significantly lower financial result primarily reflects adverse developments in the biotechnology sector, which affected Adamed Investments Ltd.’s performance.
Key figures as of 31 Decenber in CHF 2004 2003 +/–%
Paul Embrechts will be put forward for re-election at the Swiss Life Holding Annual General Meeting of Shareholders on 10 May 2005.
Other appointments: – Employee benefits foundations for Swiss Life/Rentenanstalt ’s internal services and external sales staff in Switzerland, Member of the Board of Trustees
– SCRJ Sport AG, Rapperswil, Vice Chairperson – BIOMED AG, Dübendorf, Member of the Board of Directors – Swiss-Chinese Chamber of Commerce, Member of the
Internal organisational structure In line with the Articles of Association, and in observance of local and international standards for corporate governance, the Board of Directors decided to introduce a revision of the Organisational Regulations, effective 1 December 2003. These regulations apply to the internal organisation and delineate the tasks and competencies of the Board of Directors’ committees, the Chairman of the Board of Directors and the Corporate
Control instruments vis-à-vis the Corporate Executive Board The Board of Directors is kept continually and comprehensively informed regarding the activities of the Corporate Executive Board. The CEO, as chairman of the Corporate Executive Board, keeps the Chairman of the Board of Directors and the Board of Directors and its committees regularly informed about the conduct of business, new business activities and significant projects. The CEO informs the Chairman of the Board of Directors immediately about extraordinary matters. The Chairman of the Board of Directors may participate in the meetings of the Corporate Executive Board in an advisory role and receives all the minutes of the meetings of the Corporate Executive Board. Internal auditing procedures represent an efficient means of independent monitoring and information gathering for the Board of Directors, whereby the Corporate Internal Audit department reports directly to the Chairman of the Board.
The share option programme for Swiss Life Group management, which was introduced in 2000, was discontinued at the end of 2002. Accordingly, no more share options were allocated in 2003 or 2004. The share options issued in the year 2000 expired worthless at the end of March 2004.
Total compensation CHF 3 183 773 1) Including bonus in cash.
Embedded value serves as an indicator of the value of the existing insurance portfolio. It consists of two components: the present value of future profits (PVFP) and the adjusted net asset value attributable to shareholders (ANAV). Future new business is not included. All calculations relating to embedded value are based on the statutory accounts. The information published here has been reviewed and checked by Deloitte & Touche LLP.
Equity securities and equity funds 8 443 6.3% 7 780 6.0%
Swiss Life Group . Review of Operations 2004 . Asset and Liability Management more to policyholders does not automatically lead to the desired increase in business volume. However, if bonus payments were pitched below the average, this could lead to a clear drop in volume.
To ensure these principles are observed, Group-wide guidelines on underwriting and reinsurance have been introduced to coordinate the local guidelines. In writing business, the responsibility no longer exclusively lies with the local business unit, and Head Office must instead also be involved in individual cases.
The process is designed to add value with the support of these areas. In the case of investment decisions, the contractual (and non-contractual) obligations towards policyholders must be heeded. Products and their prices should be in line with the investment returns that can actually be achieved, so that the promises to policyholders can be fulfilled and the expectations of shareholders met. The approaches adopted by the competition must also be taken into account.
Swiss Life Group . Financial Statements 2004 . Consolidated Balance Sheet
Deposits under investment contracts, other policyholder funds and reinsurance contracts 5 168 3 282
Withdrawals under investment contracts, other policyholder funds and reinsurance contracts –3 708 –2 699
The Group’s consolidated financial statements include the assets, liabilities, revenues and expenses of Swiss Life Holding and its subsidiaries. A subsidiary is an entity in which Swiss Life Holding owns directly or indirectly more than 50% of the voting rights, or in which it otherwise has the power to exercise control over operations. Subsidiaries are consolidated from the date on which effective control is transferred. All intercompany balances, transactions and unrealised gains and losses on transactions have been eliminated. A listing of the Group’s principal subsidiaries is set out in note 44. The financial effect of acquisitions and disposals of subsidiaries is shown in note 5. Associates, partnerships and certain joint ventures for which the Group has between 20% and 50% of the voting rights and/or exercises significant influence are accounted for using the equity method. The Group’s share of net income for the year is recognised as investment income and the ownership interest in the investment is recorded in the balance sheet at an amount that reflects its share of the net assets and includes goodwill on the acquisition. A listing of the Group’s principal associates, partnerships and joint ventures is shown in note 44.
Future life policy benefit liabilities for other traditional life insurance contracts are calculated using the net-levelpremium method based on actuarial assumptions as to mortality, persistency, expenses and investment return, including a margin for adverse deviation. These assumptions are based on figures at the time the policy is issued.
The accounting policies for the impairment of goodwill relating to business combinations for which the agreement date is on or after 31 March 2004 are as follows: Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is allocated to the cashgenerating unit or groups of cash-generating units that are expected to benefit from the synergies of the business combination. A cash-generating unit to which goodwill has been allocated is tested for impairment by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit.
Total benefits, losses and interest expenses –8 429 –2 806 –2 452 –2 017 –337 18 –16 023
Income on other investments 55 51 9 Details for Certain Items in the Statement of Income 8 Earnings per Share
Total equity and equity-index instruments 221 244 71 168 6 661 5 968
Later than 1 year and not later than 5 years 327 378
Total gross reserves for losses and loss adjustment expenses 2 088 2 040
Other long-term employee benefits The liability for longterm employee benefits amounted to CHF 12 million as of 31 December 2004 (2003: CHF 12 million). It relates to part-time employment contracts prior to retirement and to profit-sharing arrangements for certain employees.
Other benefits The Swiss Life Group maintains incentive programmes for certain management and other employees. Related expenses in 2004 were CHF 10 million (2003: CHF 15 million).
CHF 304 610 000 301 292 1.00% 20 May 2005 100.00% CHF 10 000 = 86.95653 UBS AG
SwAFE B.V. - Mezzanine Class B mortgage-backed notes EUR +0.650% 2002 2079 – 23
Bank loans Bank loans outstanding as of 31 December are repayable as follows: In CHF million 2004 2003
Share premium Share premium comprises additional paidin capital in excess of the nominal value (net of transaction costs), gains/losses on own equity instruments, equity compensation benefits and equity elements of convertible debt.
Issuance of convertible debt in 2004 On 10 June 2004, SLH issued CHF 317 million in 0.625% Convertible Bonds 2004–2010 convertible into SLH registered shares. The conversion price was set at CHF 209.625. The equity element (embedded conversion options) recognised in share premium amounted to CHF 57 million less costs of CHF 1 million at inception.
Issuance of mandatory convertible securities (MCS II) in 2003 The simplification of the shareholder structure was financed through the issuance of mandatory convertible securities (MCS II, 2003–2004) totalling CHF 341 million on 30 December 2003. 341011 MCS IIs were issued in denominations of CHF 1000 each with a maturity date of 30 December 2004. The MCS IIs could at the option of the holder or at the option of the issuer be converted into SLH shares at any time between 9 February 2004 and 15 December 2004. Unless converted by 15 December 2004, or purchased by the issuer and cancelled, each MCS II was mandatorily converted on 30 December 2004 into such number of shares as was equal to the maturity conversion ratio (4.65116 SLH shares per MCS II, subject to adjustment ). The holders of the MCS II were entitled to annual interest payments per MCS II at 1.0% of the nominal value and certain payments in the event of any dividends or other cash distributions made by SLH to its shareholders. The MCS IIs were accounted for as equity, as they represented a forward sale of SLH shares, except for the present value of the interest payments totalling CHF 3.4 million, which was deferred and recognised as a liability. Share premium increased by CHF 240 million due to the issuance of the MCS II. Subsequently, 1586098 SLH shares equal to the number of SLH shares required under the conversion ratio were created from the SLH conditional capital and transferred to the MCS Share Trust. These SLH shares were accounted for as treasury shares acquired for no consideration. With the issuance of these SLH shares, the ordinary share capital of SLH increased by CHF 79304900 and amounted to CHF 1251702050 as of 31 December 2003.
Swiss Life Group . Financial Statements 2004 . Notes to the Consolidated Financial Statements 31 Equity (continued)
Losses reclassified to the income statement 9, 38 222 9 – 231 261
Impairment losses reclassified to the income statement 9 59 – – 59 601
SLH shares issued to key management under equity compensation plan (number) 14 912 42 492
Dreieck Equipment Leasing, Zürich PB ° 43.0% 43.0% full CHF 100
Oscar Weber AG, Zürich Life l 99.8% 100.0% full CHF 5 000
STG Management Services, Basel PB ° until 25.06.2003 – – full CHF 250
Swissville Europe Holding, Zürich Life l 99.8% 100.0% full CHF 11 500
Crédit et services financiers (CRESERFI), Paris – – 33.3% 33.4% equity EUR 56 407
Swiss Life Prévoyance et Santé, Paris Life l 99.0% 99.2% full EUR 150 000
Renum, München Other l from 18.10.2004 94.8% 94.9% full EUR 250
Swiss Life Pensionsfonds, München Life l 99.8% 100.0% full EUR 3 000
Swiss Life Immo-Techno Center II, Bruxelles Other l until 01.01.2004 – – full EUR 285
Banca del Gottardo Italia, Bergamo PB ° 71.0% 71.0% full EUR 50 000
Swiss Life Finance, Tortola Life l 99.8% 100.0% full USD 50
Swiss Life Holding . Financial Statements 2004 . Notes to the Financial Statements
In our opinion, the accounting records and financial statements and the proposed appropriation of the net result comply with Swiss law and the company’s articles of incorporation.