Just over three years ago, when the Swiss National Bank abandoned the exchange rate floor against the euro and interest rates turned negative, we at Swiss Life had to brace ourselves for some difficult years ahead – and not just in Switzerland. Back then, only great optimists would have predicted that we could now be posting such strong results just a few years later. Despite challenging market conditions, the last financial year (2017) again saw Swiss Life perform positively in all units.
We as Swiss Life also generate economic benefit. We create certainty even in uncertain times. Insurers like Swiss Life can help businesses and individuals to take risks without having to put their whole professional or personal survival on the line, thus encouraging innovation and investment. That is in addition to providing people in all life situations – but especially in old age – with financial security.
In the home market of Switzerland, Swiss Life focuses on sports and cultural sponsorship in addition to classical advertising. For example, the company has sponsored the Swiss national football teams for over ten years, while film is the cornerstone of its engagement in the cultural arena: Swiss Life is the main sponsor of the Solothurn Film Festival, for example.
Swiss Life Germany achieved premium volume of CHF 1.3 billion in 2017, which was slightly higher than the previous year (+2%). The core product areas of Swiss Life Germany are employee insurance, occupational pensions, long-term care insurance and modern guarantee concepts. The focus on profitable new business was maintained and led to lower single-premium contributions in individual insurance. New business premiums rose year-on-year in local currency by 17%. The slight increase in premium volume is also due to positive currency effects. Insurance benefits declined significantly compared to the previous year due to lower lump-sum settlements. This is due in particular to the increased expiration of tax-privileged contracts with 12-year maturities in 2016.
Fee income fell by 6% in 2017 to CHF 400 million. The main driver of this development was the expansion of the distribution base and greater productivity by commercial agents. At the end of 2017 the proprietary financial advisory companies in Germany had 3538 trained and registered financial advisors under contract (+8% over the previous year).
Assets under management by Swiss Life Asset Managers came to CHF 223.6 billion at the end of 2017. Assets from insurance business rose by 5% to CHF 162.2 billion. Due to the long-term nature of its liabilities, Swiss Life invests predominantly in fixed-income securities, which accounted for 62% of the portfolio at the end of 2017. The real estate holding increased slightly to 18% and the net equity holding was 3%.
Klaus Tschütscher Member Audit Committee 2013 1 Change since AGM of 23 April 2014 due to the Minder Initiative: in accordance with Articles 3, 4 and 29 of the Ordinance against Excessive Compensation in Listed Stock Companies (VegüV), the General Meeting of Shareholders shall elect the members and the Chairman of the Board of Directors individually every year for a term of office of one year each. Furthermore, in accordance with Articles 7 and 29 of the VegüV, the members of the Compensation Committee are also to be elected individually for a term of office of one year each.
Ueli Dietiker will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 24 April 2018.
Group for nine years before handing over his function as CEO to a successor in 2016. Since October 2016 he has been managing partner of DELOS Management GmbH.
Stefan Loacker will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 24 April 2018.
Additional information on compensation and benefit expenditure for the management and employees of the Swiss Life Group can be found in the Consolidated Financial Statements (notes 23 and 29) on pages 239 to 248 and 262 to 263. The information according to Art. 663c of the Swiss Code of Obligations regarding the shareholdings of members of the Board of Directors and the Corporate Executive Board is shown in the Notes to the Swiss Life Holding Financial Statements on pages 297 to 299.
Finally, the Board of Directors as a whole is responsible for determining the individual compensation of members of the Corporate Executive Board.
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, “Reports” and “Annual Reports” subsection (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.
Swiss Life continuously assesses customer feedback at the key contact points in close collaboration with an independent market research institute. Customers are asked about their experience, satisfaction and willingness to recommend Swiss Life directly following contact with the company. Anyone who gives a negative response is contacted within 48 hours. This allows Swiss Life to ensure it has understood the reason for a negative review and to offer the customer a solution, as well as to identify systemic problems and drive process optimisation measures. All customer feedback is analysed locally by the customer centricity managers and their teams. The processes derived from this analysis are established and anchored in the organisation.
Over the past four years, the NPS at Swiss Life has trended favourably across all contact points, thanks to regular feedback analysis and the measures developed in response.
The development of the NPS at the Service Center contact point in Switzerland
Swiss Life reports regularly on its strategic priorities, its medium-term business goals and associated financial objectives. In November 2015, Swiss Life presented its Group-wide programme “Swiss Life 2018”. The Group-wide programme comprises practical financial objectives for a period of three years. In addition to its further expansion of fee and commission business, Swiss Life aims to consistently focus all business processes on its customers and invest in the continuing development of its business model. The investments are to be primarily in digitalisation, quality of advice and organic growth initiatives. With these measures, Swiss Life is pursuing the further development of its business model and laying the groundwork for the company’s continuing sustainable profitability. Swiss Life also reported regularly on the progress of its “Swiss Life 2018” Group-wide programme during the reporting period and announced that it would disclose its new strategic targets at an Investors’ Day to be held on 29 November 2018.
Further information on the Group-wide programme and strategy of the Swiss Life Group may be found in the Annual Report pages 8 to 11.
In its dealings with politicians, it is guided by the rules of the Swiss Life Group Code of Conduct, as specified in the internal directive ”Code of Conduct”. These rules decree, for example, that donations in the home market of Switzerland to political parties are to be free of any obligation.
Swiss Life Germany is represented on all the major committees of the German Insurance Association (GDV) and is a member of various associations of intermediaries. It maintains regular contact with the Bundesverband der Verischerungs kaufleute (BVK, a German association for self-employed insurance brokers) and the Verband unabhängiger FinanzdienstleistungsUnternehmen in Europa (Votum, an association representing the interests of financial service providers operating throughout Europe).
Luxembourg In the Luxembourg financial sector as well as in the insurance sector, salary agreements are signed at sector level. The most recent agreement was concluded in June 2015 between employee and employer representatives for a period of three years. Renewal negotiations began in 2017. Swiss Life plays an active role in these negotiations, seeking to reconcile the rights of employees with those of the employer. The aim is to maintain stipulations that allow employees to shape a self-determined future, both financially and in terms of employability, while expanding the employer’s cost control and further developing performance-based compensation.
G4-19 Material aspects Economic Performance, Indirect Economic Performance, Energ, Emissions, Employment, Labour/Management Relations, Occupational Health and Safety, Training and Education, Diversity and Equal Opportunity, Equal Remuneration, Grievance Mechanisms, Non-discrimination, Public Policy, Compliance, Customer Health and Safety, Product and Service Labelling, Product Compliance, Active Ownership
G4-EC4 Financial assistance received from the public sector Indirect Economic Performance p. 103
G4-LA4 Notice periods regarding significant operational changes p. 71 Occupational Health and Safety p. 118
G4-SO6 Donations to politicians and political parties p. 104 Compliance p. 82, p. 94–95
Green building policy yes yes yes yes AR, p. 82, p. 98–100, p. 123–125
Company has customer privacy policy yes yes yes yes Code of Conduct and further directives
Voting shares held by largest shareholders or block >5% >5% >5% >5% AR, p. 25–26
Benefits and claims under investment contracts with discretionary participation –867 –1 009
In-kind contributions from non-controlling interests – – – – – – 11 11
The Swiss Life Group adopted the amendments to IAS 7 Statement of Cash Flows as at 1 January 2017. The amendments improve the information provided to users of financial statements about an entity’s financing activities. A reconciliation between the opening and closing balances of liabilities arising from financing is provided in Note 20.
Investment property being redeveloped for continuing use as investment property, or for which the market has become less active, continues to be measured at fair value.
The statutory minimum distribution ratios (“legal quote”) relating to the Swiss Life Group’s operations are as follows: Switzerland Group business subject to “legal quote”: At least 90 % of the calculated income on the savings, risk and cost components minus the expenses thereof must be allocated to the policyholders. All other business: no “legal quote”.
The estimated net realisable value is the proceeds expected to be realised from the sale in the ordinary course of business, less estimated costs to be incurred for renovation, refurbishment and disposal.
Deferred origination costs (DOC) Incremental costs directly attributable to securing rights to receive fees for asset management services sold with investment contracts without DPF are recognised as an asset if they can be identified separately and measured reliably and if it is probable that they will be recovered. These incremental costs are costs that would not have been incurred if the Group had not secured the investment contracts. All other origination costs are recognised as an expense when incurred.
Swiss Life – Annual Report 2017 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies
Net insurance benefits and claims –9 911 –2 171 –1 095 –12 – 0 –13 189 0 –13 189
Benefits and claims recovered from reinsurers 4 77 20 7 – 0 108 –14 94
The liabilities are largely predefined in terms of amount and timing of the payments and the associated assumptions are regularly reviewed. The corresponding asset portfolios mainly comprise fixed-income instruments. This way, the impact of interest rate fluctuations and the risk capital consumption are strategically optimised under a risk/return point of view, thus ensuring that the policyholders receive the benefits consistent with their products. Policyholders may benefit from the ensuing investment returns in the form of discretionary participation, while shareholders may benefit from an increase in the value of their investment in the Swiss Life Group.
Financial assets pledged as collateral – 16 3 601 2 926 – – 3 601 2 942
Nature of insurance risk When designing a new product or reviewing an existing one, care has to be taken that the product neither includes systemic risk nor provides incentives for adverse selection. The product should meet the market’s needs. The Swiss Life Group favours transparent and simple product designs with a reliable pricing basis with sufficient statistical data available. Insurance risk arises when biometric parameters deviate adversely from expectations. The uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts is due to the unpredictability of long-term changes in overall levels of mortality and disability, for instance. Furthermore, deviations from the expected outcome of a portfolio can also arise because of random fluctuations. The impact of random fluctuations depends on the extent of diversification within a portfolio of contracts: that is, on the size of the portfolio.
Cumulative payments to date –224 –254 –253 –255 –242 –247 –244 –223 –195 –126 –2 264
At 31 December 2017, if mortality rates for life assurance had been higher by 5 %, profit or loss would have been CHF 1 million lower (2016: CHF 1 million). This sensitivity measures the impact of an increase in the mortality rates in life assurance, e.g. endowments and term life insurance products where the net amount at risk is positive. If mortality rates for the annuity business had been lower by 5 %, profit or loss would have been CHF 4 million lower (2016: CHF 4 million). This sensitivity concerns annuities in payment and future annuities. Whether policies are affected already during the savings accumulation period might depend on technical implementation issues, e.g. whether the accumulation and annuity phases are driven by the same mortality table. These impacts are net after policyholder and tax.
Realised gains/losses on sales of subsidiaries and other assets 47 0
Swiss Life – Annual Report 2017 9 Derivatives and Hedge Accounting
TOTAL DERIVATIVES DESIGNATED AS FAIR VALUE HEDGES 162 101 14 103 379 428 428 379
TOTAL DERIVATIVES DESIGNATED AS FAIR VALUE HEDGES 97 113 11 746 462 304 307 462
In 2017 and 2016, the Group used forward starting swaps and forward starting bonds to hedge the exposure to variability in interest cash flows arising on the highly probable purchase of bonds in order to achieve an adequate yield level for reinvestments.
At 31 December 2017, if the future expected salary growth had increased (decreased) by 50 basis points, the defined benefit obligation would have increased by CHF 20 million (decrease CHF 19 million). At 31 December 2016, if the future expected salary growth had increased (decreased) by 50 basis points, the defined benefit obligation would have increased by CHF 20 million (decrease CHF 19 million).
In 2015, the number of RSUs granted under this programme amounted to 51 660. The fair value at the mea surement date amounted to CHF 205.87. The date of grant was 1 March 2015.
Reclassifications and other disposals – – – – 0 – 0 –
In 2017, a distribution to shareholders out of the capital contribution reserve of CHF 356 million (CHF 11.00 per registered share) was made (2016: CHF 271 million, CHF 8.50 per registered share).
Net investment hedges – gross –85 – – – –85 – – – – –85
Swiss Life Holding is the ultimate parent of all of the Group’s legal entities. Capital and cash held at Swiss Life Holding have the highest fungibility. Therefore, the Group aims to hold an appropriate capital buffer at the holding level. Under consideration of legal and regulatory restrictions, internal limits and local capital buffers, the legal entities of the Group transfer cash and capital to Swiss Life Holding, in the form of dividends, interest on loans and fees (cash remittance). Capital at Swiss Life Holding is used as a buffer to ensure financial flexibility of the Group, to pay dividends to shareholders and to finance growth.
Non-controlling interests in investment funds – – 2 349 2 418 933 877 3 282 3 295
– Swaptions are theoretically valued with the Black model. Main inputs are the current par swap rate that is calculated out of the standard yield curve and the implied volatility that is derived from observable at-the-money swaption volatility curves.
Total gains/losses recognised in profit or loss – 0 –1 67 28 –105 651 640
Borrowings Level 1: This category consists of hybrid debt listed on the stock exchange.
NET AMOUNTS PRESENTED IN THE BALANCE SHEET 1 619 1 648 3 662 2 970 5 281 4 618
CORPUS SIREO Real Estate GmbH (formerly CORPUS SIREO Holding GmbH), Köln AM 100.0% 100.0% Holding
(formerly CORPUS SIREO Projektentwicklung Adlershof GmbH & Co. KG), Köln CH until 29.06.2017 – –
The international stock markets were positively influenced by a synchronous global economic upswing. In the US, the Federal Reserve raised its key interest rate three times in 2017. Despite monetary policy normalisation, the US economy continued to expand and created a robust number of new jobs, while the unemployment rate remained low. Economic growth was also reflected in the development of the US stock markets. European stock markets also developed strongly, albeit not to the same extent as in the US. The reason for a somewhat weaker performance is related to the continuing uncertainty surrounding Brexit and the ongoing political challenges in Germany. The European markets were well prepared for the Federal Reserve’s measures and for the European Central Bank measure to keep its benchmark interest rate unchanged. In this environment, the Swiss Life share price developed very well: with an increase of 20% through 2017, the share outperformed the Swiss Market Index (+14%) and the European Dow Jones STOXX 600 insurance index (+7%). At the Annual General Meeting in April 2017, shareholders approved a withholding tax-free distribution from the capital contribution reserve of CHF 11.00 per share.
Publishing details Publisher — Swiss Life Holding Ltd, Zurich Editorial responsibility — Swiss Life, Group Communications and Strategic Marketing, Zurich Concept, design and technical realisation — EQS Group, Munich Production — Management Digital Data AG, Lenzburg © Swiss Life Holding Ltd, 2018