The expansion of the fee business offers us strategic opportunities as a company: it is capital-efficient and less exposed to the capital markets than our savings result. Diversifying our profit sources has paid off for us in the low-interest environment and it will remain a key factor in the future because interest rates look set to remain low. Income from our life insurance investments will, however, remain the most important profit source for the Group in the foreseeable future. Here too, we have performed well in recent years and have increased the savings result from our life business despite low or even negative interest rates.
Swiss Life must address changing customer behaviour and consistently implement any findings from such study to actively and profitably exploit market opportunities. Customers are ever better informed; they are able to compare services immediately and demand new products and services. Swiss Life wants to best combine the strengths of its broad distribution networks and advisors with the opportunities of digital change. Swiss Life derives its “phygital approach,” from this targeted combination of personal advice and digital support, which is described in more detail in the “Digitalisation” section on page 97.
Increased earnings quality – Marked increase in the fee result, to between CHF 600 and 650 million by the end of 2021, around 50% more than in the previous Group-wide programme – Increase in the risk result from CHF 400 to 450 million by the end of 2021, 10% more than in “Swiss Life 2018” – Increase in cumulative value of new business (2019–2021) to over CHF 1.2 billion, 60% more than in the previous programme
The following information on the members of the Board of Directors is based on the situation on the balance sheet date. The CVs of former members of the Board of Directors and information on pre vious external mandates of current Board members can be found in the Corporate Governance section of the relevant previous annual reports, available at www.swisslife.com, “Investors & Shareholders” area, “Results and reports” section (www.swisslife.com/annualreports).
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 Director of Product Marketing in Radio Broadcasting Services. In November 2000, Adrienne Corboud Fumagalli joined the Kudelski Group as Corporate Secretary and Member of the Corporate Executive Board. In January 2004, she was appointed Executive Vice President in charge of Business Development. From 2008 to 2016, Adrienne Corboud Fumagalli served as Vice President for Innovation and Technology Transfer at EPF Lausanne. As of July 2017, she is also President of the Board of Directors and Chief Executive Officer of Deeption SA (spinoff of the EPF Lausanne Social Media Lab).
Other appointments: – Sigurd Rück Ltd, Chairman of the Board of Directors – Casino de Montreux SA, Chairman of the Board of Directors and Member of the
The 2016, 2017 and 2018 equity compensation plans are based on the “Swiss Life 2018” Groupwide programme, which was announced at the Swiss Life Group’s Investor Day on 25 November 2015 (see www.swisslife.com/investorsday2015). On that basis and based on the relevant mid-term planning (MTP), the following performance criteria were set for the next three years, in each case cumulatively over the three-year period: IFRS profit (50% weighting), the risk and fee result (25% weighting) and Cash to Swiss Life Holding (25% weighting).
The short-term and long-term components of the variable compensation are allocated in principle in equal amounts (1:1 ratio), whereby the deferred compensation components (RSU plan and deferred compensation in cash) are considered as a whole. The Board of Directors may determine a different ratio for the Corporate Executive Board as a whole or for the Chairman (Group CEO) or individual members of the Corporate Executive Board (discretionary decision).
In April 2019, in the light of Swiss Life’s improved diversification of profit sources and its capital position, which has stabilised at a sound level, Standard & Poor’s raised its rating to “A+”, outlook stable.
In the investment process for securities – for example, shares and corporate and government bonds – Swiss Life uses, among other things, analyses by the independent international ESG research and valuation service provider MSCI ESG Research. ESG information on over 17 000 share and bond issuers worldwide helps Swiss Life identify and anticipate the risks relating to environmental and social issues and governance aspects at an early stage. This should ensure early recognition of risks arising from ESG problems such as infringements of labour law, shortcomings in corporate governance and indications of corruption or environmental risks relating to climate change.
For all of its assets, Swiss Life has defined specific limits for investment in the defence industry. Swiss Life recognises that sovereign states have a right to self-defence, but refrains from investing in companies with a significant involvement in the production of internationally banned controversial weapons such as land mines, cluster ammunition, and chemical, biological and nuclear weapons. For this, Swiss Life uses data from MSCI ESG Research, the exclusion lists for controversial weapons published by PAX, an international non-profit and NGO-type peace organisation, and from SVVK-ASIR, the Swiss association for responsible investments.
Compliance monitors and assesses the legal and regulatory environment, taking account of relevant local legislation. The aim is not to infringe any legal and/or regulatory requirements, and to prevent all forms of corruption and bribery. Swiss Life also considers it very important to comply with sanctions and embargos. Regular risk assessments as well as permanent and comprehensive compliance reporting to the top echelons provide support for the implementation of all requisite measures at Group level and within the business units. The compliance framework is subject to periodic review and is reworked and adapted to new prerequisites as necessary.
Insurance companies are an important pillar of the economy, both as providers of products and services and as employers, taxpayers and investors. Furthermore, the insurance sector offers young people an attractive starting point for a career.
Swiss Life performs a Group-wide employee survey every two years in cooperation with an independent research institute1. The participation rate in the 2019 survey was 89% (+2 percentage points compared with the 2017 survey). The engagement score for the Swiss Life Group shows the extent to which employees are prepared to go the extra mile for Swiss Life. It is above the average at 73%. That is 6 percentage points higher than the score for the peer group comprising the “global financial industry” and only 1 percentage point below the external benchmark comprising “the most successful companies worldwide”. In the 2019 employee survey, Swiss Life refined the questions and specifically included enablement for the first time. Enablement describes the extent to which employees feel they are able to do an interesting job that reflects their abilities and the extent to which working conditions facilitate productive work. The score was 78% (4 percentage points above the external benchmark comprising “the most successful companies worldwide” and 10 percentage points above the external benchmark comprising the “global financial industry”).
– At Swiss Life Germany, talented youngsters are offered a choice of training courses. In addition, there is a partnership with Hannover Center of Finance e.V., an initiative of Leibniz University in Hanover and various companies.
The Adaptation Agreement (works agreement) which was signed unanimously following the merger, contains: – Amendment of working time regulations – Implementation of Home Office – Harmonisation of bonus and fringe benefits, profit sharing and employee savings plans, etc.
– Employee referendum for the implementation of the agreement – Expansion of the Works Council
– Supplement to the profit sharing agreement of 28 June 2019 – Supplement to the company savings plan in addition to the employer’s contribution of 16 April 2019
– Works agreement on whistleblowing (supplementary agreement to the Code of Conduct of the Swiss Life Group)
– The new staff committee is continuing to concentrate on its key role in facilitating the flow of information between staff and the management in order to avoid potential conflicts.
The staff committee of Swiss Life Asset Managers Luxembourg consists of two active delegates, two deputy delegates and one security delegate. All delegates work without dispensation.
TOTAL GREENHOUSE GAS EMISSIONS (IN T) 23 657 24 436 22 788 26 647
Switzerland – In Switzerland, Swiss Life is a member of the Zurich Energy Model and has been drawing all its electricity from renewable energy sources for over ten years. This has enabled the company to reduce its annual greenhouse gas emissions by over 1300 tonnes. Under its energy model, Swiss Life has pledged to improve energy efficiency at its Zurich location by 1.76 % every year up to 2020.
Germany – In Germany, the two main Swiss Life branch offices, in Garching near Munich and in Hanover, have repeatedly been awarded the ECOPROFIT seal for their outstanding commitment to corporate environmental protection. The seal rewards efforts to reduce CO2 emissions and save resources. At both locations, Swiss Life sources electricity from renewable sources.
GRI 102-53 Contact point for questions regarding the report Media Relations, p. 331
GRI 403-4 Health and safety topics covered in formal agreements with trade unions p. 127
GRI 404-3 Percentage of employees receiving regular performance and career development reviews p. 119
Consumption of renewable energy (in KWh/FTE) 2 474 1 802 2 176 1 728 2 AR, p. 133
Due diligence in advising and how to deal with complaints yes yes yes yes AR, p. 103, p. 125
Number of women on the Board 2 2 2 2 AR, p. 33
Share of profit or loss of associates 5, 15 6 0
TOTAL NET CASH FLOWS FROM OPERATING ACTIVITIES 2 161 2 693
Distribution out of capital contribution reserve 26 – –460 – – – –460 – – –460
The bonuses which are allocated to the policyholders in the participating insurance business (insurance and investment contracts) in Switzerland, France, Germany, Luxembourg and Liechten stein generally follow the definition of DPF as set out in IFRS 4 Insurance Contracts.
Liabilities relating to private placement life insurance are measured at fair value through profit and loss and are included in investment and unit-linked contracts.
Since 1 January 2019, applying IFRS 16, future lease payments that are fixed or variable based on an index or rate are discounted and recorded on the balance sheet as lease liability. The lease liability is amortised by the payments made to the lessor, less the interest expense.
Current and deferred income taxes are recognised in profit or loss except when they relate to items recognised directly in equity. Income taxes are calculated using the tax rates enacted or substantively enacted as of the balance sheet date.
Swiss Life – Annual Report 2019 2.22 Provisions and contingent liabilities
In May 2017, IFRS 17 Insurance Contracts was published and replaces IFRS 4 insurance contracts, which currently permits a wide variety of practices. IFRS 17 will fundamentally change the accounting by entities that issue insurance contracts, reinsurance contracts and investment contracts with discretionary participation features. IFRS 17 requires a current measurement model, where estimates are remeasured in each reporting period. The measurement is based on the building blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin (“CSM”) representing the unearned profit of the contract. The standard provides a simplified accounting approach for certain short-duration contracts. At initial recognition, insurance contracts are grouped into contracts of similar risks which are managed together and further into three groups of profitability, whereby each group is limited to contracts written in one year. Changes in cash flows related to future services should be re cognised against the CSM, which cannot be negative, so any excess is recognised in profit or loss. The CSM is released to profit or loss based on the transfer of services in each period. IFRS 17 provides an accounting policy choice to recognise the impact of changes in discount rates and other assumptions that relate to financial risks either in profit or loss or in other comprehensive income. The variable fee approach is required for insurance contracts that specify a link between payments to the policyholder and the returns on underlying items. Requirements in IFRS 17 align the presentation of revenue with other industries. Revenue is allocated to periods in proportion to the value of expected coverage and other services that the insurer provides in the period, and claims are presented when incurred. The disclosure requirements are more detailed than currently required under IFRS 4. On transition to IFRS 17, an entity applies the standard fully retrospectively to groups of insurance contracts, unless it is impracticable, in which case there is a choice between a modified retrospective approach and the fair value approach. In the exposure draft ED/2019/4, dated 27 June 2019, the IASB proposes to defer the effective date of IFRS 17 by one year to reporting periods beginning on or after 1 January 2022. The Swiss Life Group is currently assessing the impact on its financial statements, which will be significant.
Some life insurance products with a savings component and investment contracts are subject to minimum guaranteed interest rates. The guaranteed rate differs according to the type of contract. In Switzerland for instance the minimum guaranteed interest rate for the occupational pensions segment (mandatory BVG savings account) stood at 1.00% in 2019 (2018: 1.00%).
Exposure to credit risk of debt instruments– credit rating by class as at 31 December 2018
Financial assets individually determined as impaired – impairment loss allowance for the year 2019
CURRENT ESTIMATE OF CUMULATIVE CLAIMS 253 277 260 264 279 273 259 282 352 304 2 802
Change in liability for future life policyholder benefits, gross 5 864 2 489
Net benefits and claims under investment contracts with discretionary participation 898 665
TOTAL DERIVATIVES DESIGNATED AS FAIR VALUE HEDGES 106 12 12 354 660 –627 627 –660
Agrippa Quartier GmbH & Co, Heusenstamm 37.5% 49 1 n/a n/a n/a
Swiss Life AG CHF 450 CHF 450 3.750% 2016 2021 449 448
Duration of the defined benefit obligation (weighted average no. of years) 16.2 15.3
Additions from business combinations 28 – – – – – 0 – 0
Debt instruments for the account and risk of the Swiss Life Group’s customers 773 –652 6 934 6 378
Total gains/losses recognised in profit or loss – – –505 –60 – –
Segment 1 Consolidation period Group share Direct share Principal activity Currency Subscribed Capital
Opinion We have audited the consolidated financial statements of Swiss Life Holding Ltd and its subsidiaries (the Group), which comprise the consolidated statement of income, consolidated statement of comprehensive income, consolidated balance sheet as at 31 December 2019, the consolidated statement of cash flows, consolidated statement of changes in equity for the year then ended and notes to the consolidated financial statements, including a summary of significant accounting policies.
We chose profit before tax and policyholder participation as the benchmark because, in our view, it is a prevailing indicator for the performance of the Group as it is free from management's decisions regarding profit allocation.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance conclusion thereon.
Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
The annual profit of Swiss Life Holding in 2019 mainly consisted of dividends, investment income and revenues from guaranteed benefits and commissions. During the year under review, dividend payments from subsidiaries to the holding company increased from CHF 623 million to CHF 670 million, while there was a slight decrease in investment income from CHF 74 million to CHF 72 million and in income from guaranteed benefits and commissions from CHF 47 million to CHF 46 million.
Market capitalisation (in CHF million) 30.12. 16 320 12 957 11 807 9 246 8 704