Contents 4 Facts & Figures 6 Shareholders’ Letter 8 Summary of Group Results 12 Segment Reporting 24 Corporate Governance 30 Board of Directors 43 Corporate Executive Board 48 Compensation Report 68 Risk Management 70 Market Consistent Embedded Value (MCEV) 72 Introduction 74 Summary of MCEV Results 83 Information by Market Unit 90 Methodology 97 Assumptions 102 Auditor’s Report on Embedded Value 104 Glossary and List of Abbreviations 108 Consolidated Financial Statements 110 Consolidated Statement of Income 111 Consolidated Statement of Comprehensive Income 112 Consolidated Balance Sheet 114 Consolidated Statement of Cash Flows 116 Consolidated Statement of Changes in Equity 117 Notes to the Consolidated Financial Statements 258 Report of the Statutory Auditor 260 Swiss Life Holding Financial Statements 261 Review of Operations 262 Statement of Income 263 Balance Sheet 264 Notes to the Financial Statements 285 Appropriation of Profit 286 Report of the Statutory Auditor 288 Share Performance and Historical Comparison
The Swiss Life Group’s 2013 financial year at a glance: Course of business — The Swiss Life Group again increased its efficiency and competitiveness and generated adjusted profit from operations of CHF 1143 million. This represents a 13% rise compared with the previous year. Net profit came to CHF 784 million (2012: CHF 99 million). The Group grew its premium income by 4% in local currency to CHF 18 billion. All market units made a contribution to this positive development. Swiss Life maintained its focus on profitability and, thanks to strict margin management, increased the new business margin from 1.4% to 2.2%. The Group-wide programme “Swiss Life 2015” successfully launched in 2013 will continue to improve the resilience of the business model and further diversify profit sources.
Workforce — Around 7000 employees and approximately 4500 certified financial advisors were working for the Swiss Life Group worldwide at the end of 2013.
Dear Shareholders 2013 proved to be a successful financial year for Swiss Life. All our business units contributed to the excellent overall result, achieving further operational advances. We outperformed the market in Switzerland and in France. In Germany we maintained premium income at the prior-year level, generating a good segment result despite strict margin management. Overall we grew total premium volume by a healthy 4% in local currency compared with 2012 to CHF 18 billion. The new business margin, which is important to our future success, expanded from 1.4% to 2.2%. In external customer business we recorded a net new asset inflow of CHF 5.6 billion. Total volume in asset management business with external customers now stands at CHF 27.6 billion (+34%). Costs are also under control: even with substantial investment in our growth initiatives we reduced costs by a further 1% in 2013.
Rolf Dörig Chairman of the Board of Directors to our industry. For instance in Switzerland the “Pensions 2020” reform programme initiated by the Federal Council will spark huge and no doubt controversial debate, the outcome of which is still uncertain. With our experience and expertise, Swiss Life will of course have a role to play in discussions surrounding this undeniably essential reform process. We will do our best to ensure that our proven 3-pillar system in Switzerland can be reformed in a systematic way. We must not inflict massive pension debt onto future generations. It is crucial that our pension system should continue to be based on the principles of social equilibrium and solidarity, as well as economic realism. We are optimistic that this goal will be achieved.
We would like to thank you, our shareholders, for your loyalty and your interest in our work.
Swiss Life again increased its efficiency and competitiveness in 2013, generating adjusted profit from operations of CHF 1143 million (+13%). Net profit came to CHF 784 million – compared to CHF 99 million in the previous year, which was impacted by one-off effects. All market units contributed to the positive development and grew in strategically important business areas: Premium income overall rose by 4% in local currency to CHF 18 billion.
Thanks to the high net investment result of 3.9% (2012: 4.8%) it was again possible to substantially strengthen the insurance reserves. Despite investments and growth initiatives, Swiss Life reduced costs under “Swiss Life 2015” by a further 1% compared with the previous year. The new business margin increased to 2.2% (2012: 1.4%) and the value of new business rose to CHF 289 million (2012: CHF 158 million). Adjusted return on equity came to 10% in 2013 (2012: 8.6%).
In 2013 Swiss Life grew profitably and above the market average in strategically important business areas. Premium volume rose in local currency to CHF 18 billion – 4% up on the previous year (CHF 17 billion). Performance in the home market of Switzerland was very encouraging: In the corporate client sector, where full insurance in 2nd pillar occupational benefits (BVG) has continued to see vigorous demand from Swiss SMEs, Swiss Life posted considerably stronger growth (13%) than the market as a whole (8%). Compared to the previous year total premium income in Swiss Life Switzerland grew by 9% to CHF 9 billion. Swiss Life France also posted strong growth in local currency of 8% to CHF 4.7 billion compared to 5% for the market. With premium income
In external customer business, Swiss Life Asset Managers posted net new assets of CHF 5.6 billion thanks to new mandates and inflows in institutional and retail funds. Total volume in asset management business with external customers now stands at CHF 27.6 billion (+34%). This is a clear sign that customers recognise the expertise and success of Swiss Life Asset Managers and that its expanded portfolio of products and services is in high demand. Together with proprietary assets, total assets under management at Swiss Life Asset Managers stood at CHF 155 billion at the end of December 2013 (2012: CHF 148 billion).
Major advances in implementing “Swiss Life 2015” – return on equity of 10%
Within the context of its Group-wide programme “Swiss Life 2015”, the Group made further significant operational progress in the 2013 financial year. A total of 75% of the planned cost reduction measures have already been implemented. The Group reports a rise in the new business margin from 1.4% in 2012 to 2.2%, while the value of new business went up from CHF 158 million to CHF 289 million. Adjusted for unrealised gains and losses on bonds, Swiss Life generated a return on equity of 10% in 2013 (2012: 8.6% adjusted). As a result of the rise in interest rates over the past year, shareholders’ equity fell from CHF 10.2 billion to CHF 9.0 billion. The Group’s solvency ratio stood at 210% at the end of 2013 (2012: 239%). Excluding unrealised gains and losses on bonds, the Group’s solvency ratio rose to 196% (FY 2012: 186%).
GrOSS wrItteN preMIuMS, pOlICy FeeS ANd depOSItS reCeIved 17 969 17 046 5.4%
Cash and cash equivalents and other 241 0.2% 2 215 1.7%
Segment Reporting In 2013, Swiss Life generated adjusted profit from operations across all segments of CHF 1143 million. The 13% increase compared with the previous year is due to higher premium income and improved margins combined with lower costs. Net profit came to CHF 784 million in the period under review.
The Swiss Life Group maintained its focus on profitable growth in the 2013 financial year. All market units contributed to the positive development and grew in strategically important business areas: Gross written premiums, policy fees and deposits received across all segments grew by 4% in local currency to CHF 18 billion.
The long-term initiatives including risk mitigation on the investment side, a further improvement in the multichannel distribution strategy and renewed sustained cost reduction also contributed to this encouraging result. The financial result at CHF 3.5 billion was 18% below the previous year, while direct investment income of CHF 2.9 billion remained at the prior-year level.
Swiss Life Switzerland reduced its operating expense by 13% in the year under review to CHF 913 million. This reduction was due to lower amortisation of deferred acquisition costs and another reduction in operational administrative costs. The renewed drop in administrative costs comes from a sustained efficiency enhancement programme, which particularly impacted personnel costs.
GroSS wrItten PremIumS, PolICy FeeS And dePoSItS reCeIved 9 020 8 292 8.8%
Swiss Life in France significantly increased its segment result to CHF 194 million (previous year: CHF 161 million). This increase is due to the continual improvement in the quality of new business, higher technical margins in savings and retirement provisions, health, death and disability insurance and property and casualty business, strict cost management, improved operational efficiency and strong finance income.
The French insurance market grew by a total of 4% in 2013. Savings and retirement provisions grew by 6%, health, death and disability insurance by 4% and property and casualty business by 2%. Swiss Life in France’s premium volume again outperformed the market and improved by 8% in local currency to CHF 4.7 billion. The diversification of the business model, performance of the distribution networks and the strong market positioning in life insurance business with high net worth individuals all contributed to this result. Premium income in savings and retirement provisions rose by 15%. The premium share of unit-linked contracts at 35% was well above the market average of 14%, driven mainly by the private insurer strategy and the differentiated bonus distribution policy for customers in the premium segment. Swiss Life remained stable by increasing its focus on group business in an increasingly competitive and changing market for health, death and disability insurance. In property and casualty business (with an unchanged scope of consolidation) the company posted an increase of 1%. These results stem from the rate adjustments and an improved quality of business. Swiss Life Banque Privée achieved a positive result and continued its development through the acquisition of the asset management company Prigest.
In 2014, Swiss Life in France will continue to pursue its strategy of profitable growth. The company will thus maintain its focus on service quality to reinforce its leading position in life insurance for affluent and high net worth individuals.
GroSS wrItten PremIumS, PolICy FeeS And dePoSItS reCeIved 4 685 4 260 10.0%
Swiss Life in Germany generated premium volume of CHF 1.7 billion in 2013, equivalent to an increase of 2% (0% in local currency). Occupational pensions business was again very successful. The changes introduced to occupational disability insurance, one of Swiss Life Germany’s core products, in mid-2013 secured a very good market position for Swiss Life in this product line. Insurance benefits and bonus distribution rose by 5.2% overall in the year under review. This can be mainly attributed to the improved financial result. New business premiums fell by 0.8% (in local currency) to CHF 447.7 million.
In the year under review the segment made a profit of CHF 16 million. In the previous year the segment made a loss of CHF 334 million, due largely to one-off impairments of intangible assets. The pronounced improvement in the segment result in 2013 is attributable to the operating result, particularly the ongoing cost discipline, growth in fee and commission income and another strong risk result. Gross written premiums, policy fees and deposits received came to CHF 2.6 billion in 2013 (2012: CHF 2.9 billion).
Corporate Clients specialises in global life and pensions solutions for multinationals. During the year under review the segment cemented its market leadership as a provider of global employee benefits solutions and consolidated premium volume and profitability on its own balance sheet in Luxembourg.
SeGment reSult 16 –334 n/a number of employees (full-time equivalents) 767 791 –3.1%
The expansion of business with external customers led to a net inflow of assets under management of about CHF 6 billion. This was due principally to the growth of institutional mandates in fixed income and real estate. One notable event in the year under review was another new real estate investment opportunity offered in cooperation with the insurance units. Furthermore, the real estate management subsidiary Livit again won a number of new mandates.
Swiss Life complies with accepted standards of corporate governance and, in the interests of its shareholders, policyholders and staff, attaches great importance to the requirements entailed in terms of the management and organisation of the Swiss Life Group. The corporate governance of Swiss Life Holding Ltd (Swiss Life Holding) is based on the relevant directives issued by the SIX Swiss Exchange and the Swiss Financial Market Supervisory Authority FINMA and is modelled on leading national and international corporate governance standards, in particular the Swiss Code of Best Practice for Corporate Governance issued by the Swiss Business Federation, economiesuisse, as well as the Organization for Economic Cooperation and Development’s (OECD) principles on corporate governance.
This report describes the essential features of corporate governance within the Swiss Life Group. The structure below largely follows the Directive on Information Relating to Corporate Governance issued by the SIX Swiss Exchange, which came into force on 1 July 2002, and was revised on 1 Jan uary 2007 and 1 July 2009. The compensation report on pages 48 to 62 takes into consideration the regulations on transparency stipulated in the Ordinance against Excessive Compensation in Listed Stock Companies (Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften, VegüV) and FINMA circular 2010/1 on minimum standards for remuneration schemes of financial institutions.
The operational management structure as at 31 December 2013 is shown on page 43.
Shareholdings in companies that are domiciled in Switzerland and have their shares listed in Switzerland must be reported to the company in question and the SIX Swiss Exchange if the shareholdings exceed, fall below or reach certain thresholds. The relevant thresholds are 3, 5, 10, 15, 20, 25, 33⅓, 50 and 66⅔% of the voting rights. Details are set out in the Federal Act on Stock Exchanges and Securities Trading (SESTA) and Stock Exchange Ordinance-FINMA (SESTOFINMA ).
Dodge & Cox, 555 California Street, 40th Floor, San Francisco, CA 94104, USA, reported in the publication of 11 March 2008 that it held through the Dodge & Cox International Stock Fund 1 645 000 registered shares, correspond ing at the time to 4.71% of the voting rights of Swiss Life Holding. No new disclosure reports have been received from Dodge & Cox.
Talanx Finanz (Luxemburg) S.A., 25A, Boulevard Royal, 2449 Luxembourg, reported in the publication of 17 April 2013 regarding a change in the composition of the Group subject to reporting requirements that it held 1 614 988 shares of Swiss Life Holding, equivalent to 5.03%
Swiss Life – Annual Report 2013 of the voting rights. Talanx AG, Riet horst 2, 30659 Hanover, Germany is the indirect shareholder. The beneficial owner is HDI Haftpflichtverband der Deutschen Industrie V.a.G, Riethorst 2, 30659 Hanover, Germany (a mutual insurance association with a large membership).
Swiss Life Holding AG, c/o Swiss Life AG, General-Guisan-Quai 40, 8002 Zurich, Switzerland reported in the publication of 16 November 2013 that, besides 123 366 purchase positions on 123 366 Swiss Life Holding shares (equivalent to 0.38% of the voting rights), it held 100 000 sales positions on a total of 2 049 432 Swiss Life Holding shares (equivalent to 6.39% of the voting rights). The sales positions come from a convertible bond placed on 13 November 2013 in the amount of CHF 500 million (denomination: 100 000 units of CHF 5000 each, ISIN: CH0227342232) convertible into 2 049 432 Swiss Life Holding shares.
LSV Asset Management, 155 N. Wacker Drive, Suite 4600, Chicago, USA, reported in a publication of 17 October 2013 that it held 965 009 Swiss Life Holding shares, equivalent to 3.01% of the voting rights, and subsequently in a publication of 14 December 2013 that its shareholding had again fallen below the disclosure threshold of 3%.
On the balance sheet date a total of 167 978 shareholders and nominees were listed in the Swiss Life Holding share register, of which about 3900 were institutional shareholders. Taken together, the shareholders entered in the share register held around 51% of the shares issued. Over half of these shares were owned by shareholders domiciled in Switzerland. Around one third of the registered shares were in private hands.
A table showing the shareholder structure is provided in the section “Share Performance and Historical Comparison” on page 289.
– Conditional share capital: CHF 30 600 000, divided into 6 000 000 registered shares with a par value of CHF 5.10 each
“Investors” area, “Results & Reports” section, “Archive Reports” and “Annual Reports” subsections (www.swisslife.com/annualreports).
Shares 32 081 054 fully paid Swiss Life Holding registered shares with a par value of CHF 5.10 each were outstanding on the balance sheet date. Subject to the ten per cent limit on voting rights set out in the Articles of Association (cf. the section on “Shareholders’ participation rights” on page 63), each share grants the right to one vote at the General Meeting of Shareholders.
Additional information on the Swiss Life share is available in the section “Share Performance and Historical Comparison” on pages 288 and 289.
One convertible bond issue of Swiss Life Holding was outstanding on the balance sheet date: the 0% convertible bond (2013-2020) issued by Swiss Life Holding Ltd in the amount of CHF 500 000 000. The specific conditions attached to this convertible bond and further details on it can be found in the Consolidated Financial Statements, note 20, on page 209 and in the issue prospectus of 13 November 2013.
As at 31 December 2013, Swiss Life Holding and its Group companies had not granted any options on rights to participate in Swiss Life Holding.
On the balance sheet date of 31 December 2013, the Board of Directors was composed of the following members: Year appointed/ Name Main function Additional functions re-elected 1
Gerold Bührer 1st Vice Chairman Nomination and Compensation Committee 2002/2003/2005/2008/2011 2
Rolf Dörig — Born 1957, Swiss national Chairman of the Board of Directors bild Rolf Dörig laid the groundwork for his professional career by obtaining a doctorate in law (Dr. iur.) from the University of Zurich before being called to the bar in Zurich. Joining Credit Suisse in 1986, he assumed a number of executive responsibilities in various areas of banking and in different geographical markets. As a Member of the Executive Board, he was assigned responsibility for Swiss
Corporate and Retail Banking from 2000 onwards. In 2002 he assumed the role of Chairman Switzerland of Credit Suisse. Following his move to Swiss Life, Rolf Dörig held the positions of Chairman of the Corporate Executive Board from November 2002 to May 2008 and Delegate of the Board of Directors from May 2008 to May 2009.
Other appointments: – Adecco S.A., Chairman of the Board of Directors – Kaba Holding Ltd, Vice Chairman of the Board of Directors – Danzer AG, Member of the Board of Directors (Chairman until 11 April 2014) – Walter Frey Holding AG, Member of the Board of Directors – economiesuisse, Member of the Executive Committee
Ueli Dietiker — Born 1953, Swiss national Member of the Board of Directors bild Certified accountant Ueli Dietiker started his career at Ernst & Young. He later assumed management responsibility in the finance division at Motor-Columbus Ltd. From 1995 to 2001 he worked at Cablecom Holdings Ltd, most recently as CEO. In 2001 he switched to the Swiss telecommunications company Swisscom Ltd where he held several positions of responsibility. From 2002 until 2006 he was CFO and deputy CEO of the Swisscom Group. In 2006 and the first half of 2007 he was CEO of Swisscom Fixnet Ltd and afterwards became CFO and deputy CEO of the Swisscom Group until the end of 2012 and, from 1 January 2013, the Head of Group Related Businesses.
The following mandates in the Swisscom Group: – Fastweb AG, Member of the Board of Directors – Swisscom Energy Solutions Ltd, Chairman of the Board of Directors – Belgacom International Carrier Services Ltd, Member of the Board of Directors – Cinetrade Group, Chairman of the Board of Directors
Damir Filipovic — Born 1970, Swiss national Member of the Board of Directors bild Damir Filipovic studied mathematics at the Swiss Federal Institute of Technology in Zurich (ETHZ), where he qualified in 1995 and gained a doctorate in financial mathematics in 2000. He then held research posts at various universities abroad, including the US universities of Stanford, Columbia and Princeton. He was appointed assistant professor at the University of Princeton in 2002, and then from 2003 to 2004 he worked on the development of the Swiss Solvency Test at the Federal Office of Private Insurance in Switzerland. Damir Filipovic went on to hold the chair of financial and actuarial mathematics at the Ludwig Maximilian University of Munich from 2004 to 2007. From 2007 to 2009 he was head of the Vienna Institute of Finance, a research institute affiliated to the University of Vienna and the Vienna University of Economics and Business. In 2010 he was appointed Swissquote Chair in Quantitative Finance and Swiss Finance Institute Professor at the Swiss Federal Institute of Technology in Lausanne (EPFL).
Damir Filipovic will be put forward for re-election at the General Meeting of Shareholders of Swiss Life Holding on 23 April 2014.
Other appointments: – HanseMerkur Lebensversicherung AG, Member of the Supervisory Board – HanseMerkur Allgemeine Versicherung AG, Member of the Supervisory Board – JCK Holding GmbH Textil KG, Chairman of the Advisory Committee
Henry Peter will be put forward for re-election at the General Meeting of Shareholders of Swiss Life Holding on 23 April 2014.
Peter Quadri will be resigning from the Board of Directors after eleven years of service with effect from the General Meeting of Shareholders of Swiss Life Holding on 23 April 2014.
Franziska Tschudi will be put forward for re-election at the General Meeting of Shareholders of Swiss Life Holding on 23 April 2014.
Klaus Tschütscher will be put forward for re-election at the General Meeting of Shareholders of Swiss Life Holding on 23 April 2014.
Changes in the Board of Directors with effect from the 2014 General Meeting of Shareholders
Nomination and Compensation Committee The Nomination and Compensation Committee (NCC) (to be renamed the “Compensation Committee” as of the 2014 General Meeting of Shareholders) supports the Board of Directors with regard to setting the compensation policy and in key personnel decisions regarding appointments to the highest levels of management and related performance-based and market consistent compensation.
The NCC may invite the Group CEO to part or all of its meetings in an advisory capacity. Other members of the Corporate Executive Board and in-house or external specialists may also be invited. The NCC meets at least three times a year.
During the year under review the NCC convened a total of eight times. Each session lasted for around two hours on average. There was full attendance at all meetings. In the year under review, the Chairman of the Board of Directors attended seven meetings of the NCC in relation to nomination and succession planning issues in the Board of Directors and Corporate Executive Board.
Generally, the Group CIO, the Group CFO and the Group CRO attend the Investment and Risk Committee meetings or parts of meetings in an advisory capacity. The Group CEO may attend the meetings of the Investment and Risk Committee (without voting rights). Further members of the Corporate Executive Board and in-house specialists may also be invited to attend. The Investment and Risk Committee meets at least four times a year.
In the year under review, the Audit Committee convened five times, with a meeting lasting around three hours on average. There was full attendance at all meetings, with the exception of one meeting, which one member was unable to attend. The Chairman of the Board of Directors was present at four meetings of the Audit Committee. The Group CEO and the Group CFO, the Head
Swiss Life – Annual Report 2013 of Corporate Internal Audit and representatives from the external audit services attended all meetings. To prepare for the meetings relating to the annual and half-year reports, the Audit Committee regularly calls on the services of an independent financial and business expert.
Information and control instruments of the Board of Directors vis-à-vis the Corporate Executive Board
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 & Operational Risk Management. The Audit Committee regularly receives a report on operational risk management within the Swiss Life Group. Swiss Life’s Internal Control System (ICS) also serves the Board of Directors for information and controlling purposes. Further details on this system are available in the “Risk Management” section on page 68.
On 31 December 2013 the Corporate Executive Board of Swiss Life Holding was composed of the following members: Member of the Corporate Executive Name Function Board since
bild Ivo Furrer graduated in law from the universities of Zurich and Fribourg and earned his PhD with a thesis on employee benefits in Switzerland. After joining Winterthur Life in 1982, he worked for several years in international industrial insurance in Switzerland, the UK and the USA. In 1998 he was appointed Chief Underwriting Officer at Winterthur International. He subsequently moved to
In September 2008 Ivo Furrer joined the Swiss Life Group as Member of the Corporate Executive Board and Chief Executive Officer Switzerland (CEO Switzerland).
Other appointments: – French Insurance Association (FFSA), Paris, Member of the Board of Directors
Patrick Frost — Born 1968, Swiss national Group Chief Investment Officer (Group CIO)
Other appointments: – PostFinance Ltd, Berne, Member of the Board of Directors and Chairman of the Risk Committee
Manfred Behrens — Born 1955, German national Chief Executive Officer Germany (CEO Germany)
bild After graduating in law, Manfred Behrens initially worked as an attorney in a Hamburg-based law firm. In 1984 he moved to Hamburg Mann heimer AG, where he assumed various leading positions in the areas of legal protection and sales and went on to become regional manager. He joined Volksfürsorge Deutsche Lebensversicherungs -AG in May 1996 and, in 1998, was appointed Member of the Board of Management with responsibility for sales and marketing. Manfred Behrens moved to Swiss Life in January 2004, where he held the position of Chief Executive Officer of Swiss Life in Germany (CEO Germany) until August 2008. He was appointed Co-Chief Executive Officer of AWD in September 2008. From April 2009 until December 2012 he was responsible for all activities of the AWD Group as Chairman of the Executive Board of AWD (CEO AWD). As part of the joining together of Swiss Life and AWD, Manfred Behrens was appointed Chief Executive Officer of Swiss Life Germany (CEO Germany) from 1 January 2013.
As announced in the media release of 12 November 2013, the Group CEO Bruno Pfister will be leaving Swiss Life after 12 years to follow a new career path. He will hand over to Patrick Frost, Group CIO, with effect from 1 July 2014. In addition, Manfred Behrens, CEO Germany, will be retiring in 2014 and will be succeeded on 1 April 2014 by Markus Leibundgut, the current Chief Operating Officer of Swiss Life Germany.
To implement the “Minder Initiative”, approved in the popular vote of 3 March 2013, the Ordinance against Excessive Compensation in Listed Stock Companies (Verordnung gegen übermässige Vergütungen bei börsenkotierten Aktiengesellschaften, VegüV), hereinafter “Compensation Ordinance”, was adopted by the Federal Council on 20 November 2013 and came into force on 1 January 2014. Against this background the Board of Directors will propose a revision of the Articles of Association to the General Meeting of Swiss Life Holding Ltd of 23 April 2014, which takes account of the new requirements and responsibilities of the General Meeting of Shareholders in the area of corporate governance and compensation. The Nomination and Compensation Committee of the Board of Directors will be renamed the Compensation Committee.
The variable compensation components are linked to the strategic objectives of the Group and the individual divisions, and the associated financial and HR-related targets. They are based on the achievement of annual objectives defined in advance for a period of three years as part of medium-term planning and determined on the basis of the actual performance of individuals or teams in relation to the objectives set (performance-linked payment) and on the degree of achievement of the Swiss Life Group targets as reflected in its annual result (share in the company ’s success). Quantitative and qualitative performance is assessed also on the basis of the competencies required for the function held, such as professional expertise, entrepreneurship, task fulfilment, cooperation and leadership. The percentage weighting between the individual and/or team performance and the share in the company’s success depends on the position and responsibilities of the function holder.
The Board of Directors as a whole also establishes the guidelines for the company’s compensation policy. In doing so, it takes into consideration the compensation policies of other companies in the financial services industry, drawing its findings from publicly available information and studies by independent external experts. Comparable companies in the insurance sector in Switzerland used for the purposes of providing relevant information for the current compensation policy included Allianz, AXA, Baloise Insurance, Swiss Re and Zurich Insurance Group.
Finally the Board of Directors as a whole is responsible for determining the individual compensation of members of the Corporate Executive Board. From 2015, as part of the implementation of the Compensation Ordinance, the General Meeting of Shareholders will, on the basis of a proposal by the Board of Directors, determine the maximum total amount for fixed compensation and long-term variable compensation for the Corporate Executive Board for the following financial year. This prospective approval excludes the short-term variable compensation component for the Corporate Executive Board, which is determined by the General Meeting of Shareholders retrospectively for the previous financial year.
Within the framework of the compensation arrangements for members of the Corporate Executive Board, “deferred compensation in cash” was introduced as a new compensation component on 1 January 2012. On the basis of the corresponding regulations, a portion of the variable cash compensation determined by the Board of Directors is not paid immediately but after a period of three years has elapsed and provided that the regulatory requirements are satisfied at that point. The allocated deferred compensation in cash represents an entitlement during the threeyear deferral period. The underlying “deferred cash plan” also provides for adjustment and reclaiming mechanisms (clawback). A full or partial reduction of the deferred compensation is provided for in the following cases: negative impact of the key figures applying to the allocation of deferred compensation due to a restatement of the annual accounts or damage to Swiss Life as a result of a violation of statutory, regulatory or compliance standards by participants in the plan. If the employment relationship is terminated by a participant during the three-year deferral period for deferred compensation in cash, the entitlements expire worthless (retention component ). For the 2013 financial year, the Board of Directors has determined that, as in the previous year, as from a variable compensation amount in cash of CHF 500 000, 23% of the total variable compensation in cash is to be allocated as deferred compensation in cash.
As Chairman of the Board, Rolf Dörig is affiliated to the employee benefits institutions of Swiss Life for the purpose of occupational provisions. No such affiliation exists for other members of the Board of Directors and no contributions have been made on their behalf.
For the period from the 2014 Annual General Meeting of Shareholders to the 2015 General Meeting, the Board of Directors will determine the compensation for the members of the Board of Directors, with the exception of the Chairman, at the same level as for the 2012 and 2013 financial years. For the Chairman of the Board of Directors the fixed compensation in cash and in blocked shares will be reduced by CHF 240 000 to CHF 1 200 000. The corresponding compensation is shown in footnote 6 of the 2013 compensation table below.
From 2015, as part of the implementation of the Compensation Ordinance, the General Meeting of Shareholders will bindingly determine the fixed overall compensation for the Board of Directors for the period until the next Annual General Meeting on the basis of a proposal by the Board of Directors.
The compensation paid to members of the Board of Directors in the 2013 financial year is shown on an individual basis in the following table. For comparison purposes, the compensation for the 2012 financial year is also stated in a separate table following the 2013 compensation table. Compensation paid to the Board of Directors in the 2013 financial year was at the same level as in the previous year. Compensation in blocked shares is reported in both tables on the basis of the respective stock exchange closing prices on the day of allocation. The economic value at allocation, which is equal to the tax value, is indicated in footnote 3.
4 All contributions are gross contributions, i.e. they include employee contributions to AHV/IV/ALV. Employer contributions to AHV/IV/ALV/FAK amounted to a total of CHF 190 715 in the year under review.
5 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%.
6 For the period from the 2014 Annual General Meeting to the 2015 Annual General Meeting, compensation for members of the Board of Directors will remain unchanged. For the Chairman of the Board of Directors, the fixed compensation in cash and in blocked shares will be reduced by CHF 240 000 to CHF 1 200 000. Accordingly compensation for the Chairman for the period AGM 2014 – AGM 2015 is reported as follows in the compensation table: Rolf Dörig, Chairman of the Board of Directors 840 000 360 000 1 200 000 286 416 – 1 486 416
Total compen- sation Extra- Amount (at in cash ordinary Aggregate closing price and shares Regular contri- total Amount Number on allocation) (amount) 3 contributions 4 butions (amount)
4 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%.
Compensation remitted to members of the Corporate Executive Board comprises the basic salary, variable compensation in cash and other compensation (child allowances, company cars, premium contributions to 3rd pillar pension plans). The variable compensation in cash is allocated as a bonus and as deferred compensation in cash. The deferred compensation in cash is paid out after a period of three years has elapsed and provided that the regulatory requirements have been satisfied. In addition, a long-term variable compensation component is in place in the form of an equity compensation plan linked to the performance of the Swiss Life Holding share price, respectively to medium-term planning and corresponding target achievement (RSU plan). As mentioned above, participants are entitled to Swiss Life Holding shares after a period of three years has elapsed and provided that the relevant requirements are satisfied at the time of allocation.
In the same way the allocation of future subscription rights to Swiss Life Holding shares (equity compensation plan, RSU plan) is dependent on the respective target achievement. The cash bonus thereby serves as a reference value, whereby the deferred compensation components (RSU plan and deferred compensation in cash) are considered as a whole. The allocation of future subscription rights to Swiss Life Holding shares according to Swiss Life’s compensation policy is also limited in value to 117% of the fixed basic salary or, if deferred compensation in cash is simultaneously allocated, to 64% of the fixed basic salary. Variable compensation for members of the Corporate Executive Board is thus limited to a maximum of 181% of the fixed basic salary.
At Corporate Executive Board level, variable compensation depends 60% directly on the company’s success. The Key Performance Indicators (KPIs) used to assess company success include, as mentioned above, key figures relating to annual profit, cost savings, the risk and fee result, new business profitability, return on equity and solvency (Swiss Solvency Test, SST).
In the following compensation table the short-term variable compensation in cash which was determined by the Board of Directors at the beginning of 2014 is disclosed, as in previous years, on an accrual basis as compensation for the 2013 financial year (accrual method). The members of the Corporate Executive Board did not receive any compensation in shares for the 2013 financial year; they are participating in the current equity compensation plan that provides for the allocation of so-called Restricted Share Units (RSUs).
2 The bonus paid in 2014 relates to the 2013 financial year result. 3 Child allowances (CHF 4300), allowance for years of service (CHF 7032), company cars (CHF 68 056), premium contributions to 3rd pillar pension plans (CHF 99 092), other (CHF 10 919), each in total.
Aggregate total Aggregate total compensation compensation Variable incl. deferred incl. deferred deferred compensation compensation compensation in cash and RSUs in cash and RSUs in cash 6 Number Amount (amount) Number Amount (amount)
Other members of Corporate Executive Board 767 000 10 206 2 077 329 11 963 575 15 230 1 939 389 11 825 635 6 The variable deferred compensation in cash is paid out after a deferral period of three years, provided the requirements are satisfied at that point. 7 The RSUs represent future subscription rights that entitle the individuals concerned to receive Swiss Life Holding shares after a period of three years, provided the requirements are satisfied at that point.
8 For the 2014 RSU plan beginning 01.03.2014 the 2013 financial year forms the basis for the amount of the allocation and the corresponding number of allocated RSUs.
Other members of Corporate Executive Board 1 4 238 541 2 916 400 137 555 7 292 496 0 0 7 292 496 1 Six individuals were taken into account in the period under review.
Other members of Corporate Executive Board 697 000 21 360 2 002 927 11 200 694 6 The deferred compensation in cash is paid out after a deferral period of three years, provided the requirements are satisfied at that point. 7 The RSUs represent future subscription rights that entitle the individuals concerned to receive Swiss Life Holding shares after a period of three years, provided the requirements are satisfied at that point.
On the balance sheet date of 31 December 2013, acting members of the Board of Directors and the Corporate Executive Board (including closely linked parties) held the following number of Swiss Life Holding registered shares and future subscription rights to Swiss Life Holding shares in the form of Restricted Share Units (RSUs): Board of Directors
SLH shares 1 Total number of RSUs allocated in the years 2011, 2012 and 2013 in connection with the relevant equity compensation plan. The RSUs represent future subscription rights that entitle the individuals concerned to receive SLH shares after a period of three years, provided that the relevant conditions are met at that point.
Shareholdings as well as future subscription rights to Swiss Life Holding shares as at 31 December 2012 are shown in the Notes to the Swiss Life Holding Financial Statements on page 284.
of which total variable compensation (total pool) 2 118 693 473
Charges and credits in the financial year from compensation for previous financial years 3 –2 010 657
Based on a corresponding authorisation in the Articles of Association, the presiding officer at Swiss Life Holding’s General Meeting of Shareholders generally requests that votes be taken electron ically. Swiss Life Holding uses a certified electronic voting system which permits balloting with remote-controlled handsets and records the exact number of voting shares represented.
In 2013 the auditing fees credited to PwC came to CHF 8.0 million (2012: CHF 7.7 million). This includes the fees for reviewing the 2013 half-year accounts.
In 2013 PwC received additional fees totalling around CHF 1.4 million for advisory services (2012: CHF 1.5 million), approximately CHF 0.5 million of which was for financial advisory services and CHF 0.4 million for fiscal advisory services. The remainder consists of fees for the audit of the Market Consistent Embedded Value (MCEV) report, as well as actuarial, strategic, legal and other advisory services. All advisory services were performed in compliance with the relevant independency regulations set forth in the Swiss Code of Obligations and the Audit Supervision Act.
Contact details are available at the end of this Annual Report.
Standard & Poor’s rating capital Swiss Life has defined a target capitalisation in line with its rating ambition. In Standard & Poor’s risk-based insurance capital model the total adjusted capital (TAC) is the measure used for available capital. TAC is set against the capital required given the company’s target rating category (target capital). The factor-based model takes into account, among other factors, insurance risks, asset value volatility and credit risks. Within the capital analysis, in addition to assessing capital adequacy, Standard & Poor’s also assesses the quality of capital in its various dimensions including debt, hybrid and reinsurance. In April 2012 Standard & Poor’s acknowledged the operational progress made by Swiss Life and increased the rating of Swiss Life Ltd to A– with stable outlook.
Market Consistent Embedded Value (MCEV) The Group MCEV is a measure of the consolidated value of shareholders ’ interest in the in-force business of the Swiss Life Group. It includes the insurance business covered by the MCEV methodology and all other businesses valued by its IFRS net asset value.
Contents 72 1.1 Basis of preparation 72 1.2 Covered business and non-covered business 74 2 Summary of MCEV Results 74 2.1 Key results 75 2.2 MCEV of covered business 76 2.3 Value of new business 77 2.4 Group MCEV — analysis of earnings 78 2.5 Covered business — analysis of earnings 81 2.7 Reconciliation of IFRS net asset value to Group MCEV 83 3 Information by Market Unit 83 3.1 Market units 84 3.2 Results by market unit 90 4.1 MCEV components for covered business 93 4.2 New business 93 4.3 Asset and liability data 94 4.4 Economic scenario generator 95 4.5 Dynamic management actions and policyholder behaviour 95 4.6 Look-through principle 96 4.8 Employee pension schemes and share-based payment programmes 97 5.1 Economic assumptions 101 5.2 Taxation and legislation 101 5.3 Operating assumptions 102 6 Auditor’s Report on Embedded Value 104 7 Glossary and List of Abbreviations
Market consistent embedded value (MCEV) is a measure of the consolidated value of shareholders’ interests in the in-force covered business of the Swiss Life Group. Covered business includes life, health and pension business of the company. The Group MCEV is a measure of the consolidated value of shareholders’ interest in the covered and non-covered business in force of the company. Business in force includes business written as at 31 December 2013; future new business is not included. The notion of market consistent embedded value (MCEV) will alternatively refer within the course of this report to the MCEV of Swiss Life’s covered business, of one of its market units, or to Swiss Life’s Group MCEV.
Covered business includes all of Swiss Life’s life, health and pension business as well as assumed external reinsurance, with the exception of Swiss Life Insurance Solutions AG, which is not material for MCEV purposes. MCEV (and Group MCEV) are net of ceded external reinsurance. Included are namely insurance operations in Switzerland, France, Germany, Luxembourg, Liechtenstein and Singapore. All other businesses such as investment management and Swiss Life Select are generally included in the non-covered business at their IFRS net asset values, with the exception of France, where they are included in the covered business.
Swiss Life – Annual Report 2013 2 Summary of MCEV Results 2.1 Key results
The following tables show key results as at 31 December 2013 compared to the results as at 31 December 2012: In CHF million
The value of covered business increased by a strong 23%. Operating MCEV earnings contributed to this increase by profitable new business and a high operating return on the in-force business enhanced by positive persistency experience and expense reductions.
The value of in-force business increased by 26%. This improvement is due to a higher certainty equivalent value and a notably lower TVOG, especially in Switzerland.
PrESENT ValuE OF NEw BuSINESS PrEMIuMS (PVNBP) 12 929 11 276 average annual premium multiplier 11.9 10.5
Both the value of new business and the new business margin increased considerably due to pricing discipline, an improved business mix and new products. Overall, the new business volume measured in PVNBP increased by 15%, predominantly from the Swiss business.
The following commentaries refer mainly to the non-covered business as the analysis of earnings for the covered business is commented in sections 2.5 and 3.2 in detail.
The non-operating MCEV earnings relate to borrowing costs and tax effects for the non-covered business. For Group MCEV, the change in non-operating MCEV earnings compared to 2012 originates almost entirely from the covered business.
Expected existing business contribution (reference rate) 10 –4 15 21 30
Value of new business Value of new business contributions from free surplus and required capital sum up to the new business strain of CHF –106 million (2012: CHF –99 million). This represents the shareholders’ share in acquisition expenses for new business. The VIF-component of CHF 394 million (2012: CHF 257 million) is the value of future profits from new business.
Expected existing business contribution (reference rate) Expected existing business contribution (reference rate) shows the unwinding of discount on all value of in-force components with reference rates as at start of year. Additionally the notional interest on the net asset value is included.
Expected existing business contribution (in excess of reference rate) Expected existing business contribution (in excess of reference rate) represents the additional contribution to MCEV by taking into account investment returns for the reporting period expected at the beginning of the period over and above the initial reference rates for the period. Also, releases from the period’s contribution to the time value of financial options and guarantees and cost of residual non-hedgeable risks are included. Due to the reduction of the time value of options and guarantees, this positive contribution was lower in 2013 compared to the prior year. The expected existing business contribution is explained to a large extent by spreads expected to be earned on the corporate bond and real estate portfolio.
Swiss Life – Annual Report 2013 line is zero. In the context of a life insurer’s business model, this should be seen in combination with effects from new business which partly reverses this effect by an increase of required capital and a reduction of net asset value.
Experience variances Experience variances aggregate the impact of actual development versus expectations regarding non-economic assumptions such as mortality, expenses, lapses, as well as the deviations in handling of additional reserves. A variety of effects such as better overall persistency and reserve strengthening resulted in a MCEV increase. The latter had a negative impact on free surplus and a positive effect on value of in-force business; the largest contribution originates from the Swiss business.
Assumption changes Assumption changes refer to the impact of the change on assumptions such as future expense, surrender, mortality, morbidity, longevity rates. The positive contribution is driven by a very favourable persistency experience in Swiss group life business, while in France the effects from the French health reform had a minor negative impact. The further reduced expense base contributed positively as well.
Other non-operating variances Other non-operating variances encompass effects relating to government-set parameters, such as taxes.
100 bp decrease of interest rates (reference rates) –700 –7% –33 –12%
25% increase in equity / property implied volatilities –245 –3% –4 –1%
5% proportionate decrease in mortality rates (annuities) –83 –1% –12 –4%
1 not available 2.7 Reconciliation of IFRS net asset value to Group MCEV
Swiss Life’s MCEV for covered business reflects the value of the shareholders’ interest in the life, health and pension business as well as assumed external reinsurance of the Swiss Life Group. This value includes the determination of best estimate liabilities for policyholder bonuses and tax payments, which are derived from results based on local statutory accounting rather than on IFRS. Therefore local balance sheets and profit and loss accounts are the starting point for the projections. The net asset value (of assets not backing liabilities) is based on the local balance sheet, and adjusted to market value.
Reconciliation of IFRS net assets to Group MCEV as at 31 December 2013
Swiss Life’s covered business is subdivided according to market units as follows: – Life, pension and assumed external reinsurance business in Switzerland – All businesses in France, mainly life, health and pension business – Life and pension business in Germany – Life and pension business in Luxembourg, Liechtenstein, and Singapore (together referred to as
This breakdown by market unit essentially coincides with the IFRS insurance segments in the annual report. There are differences since the MCEV classification generally follows the legal structure in order to ensure a correct modelling of the profit sharing. A divergence from the IFRS insurance segment reporting is the treatment of distribution units such as Swiss Life Select, which are reported for MCEV purposes under non-covered business, and Swiss Life Asset Management in France, which is reported for MCEV purposes under France.
Switzerland Swiss Life’s main business in the Swiss market is group life business with a full range of offerings. The individual business includes traditional savings, risk and annuity products, as well as modern savings and retirement products with flexible and lower guarantees. Swiss Life’s own sales force plays the major role in distribution, followed by brokers and Swiss Life Select. The business for assumed external reinsurance is included here.
France Insurance products include savings, annuity, and risk products as well as health insurance products. New business for life insurance focuses on multi-support products, combining traditional savings and unit-linked components. The main distribution channels are brokers, tied agents and own sales force. Additionally, Swiss Life in France has developed strong relations with independent financial advisors and private banks.
Germany Swiss Life sells traditional and modern products within individual and group life business. Disability insurance plays an important role. The main distribution channels are independent brokers, followed by financial advisors such as Swiss Life Select.
International Swiss Life offers private placement life insurance (PPLI) through its carriers in Liechtenstein, Singapore and Luxembourg. In Luxembourg, Swiss Life also provides group insurance solutions for international and local corporate clients through Corporate Clients.
The net asset value increased due to a capital transfer and a good annual profit, and the value of in-force business improved due to the value of new business.
Value of new business by market unit – premiums and margins for the year 2012 amounts in CHF million
Value of new business before new business strain 120 101 10 27 257
New business annual premium equivalent (aPE) 301 441 91 268 1 100 1 New business strain represents the effect on the net asset value from writing new business.
New business volume increased significantly overall due to strong demand for Swiss Life’s group life solutions and a high contribution from assumed reinsurance.
France Ongoing margin management more than compensated for the negative effects of the French health reform.
Germany The value of new business increased considerably due to disciplined margin management and pricing. The increasing volume of risk products including long-term care, the discontinuation of less profitable products as well as the sustainable surplus sharing paid off.
International The PPLI business is the main contributor to International’s value of new business. The effect of substantially lower new business volume was compensated by strict cost management and a focused new business offering leading to a stable margin.
Because of the weight of PPLI within International, by far the biggest share of new business premiums consists of single premiums.
Expected existing business contribution (reference rate) 13 5 2 1 21
All market units contributed to the value creation with a positive value of new business.
Switzerland Opening adjustments reflect dividend payments from France, Germany and Swiss Life Asset Managers.
Strong operating earnings of CHF 1320 million correspond to a return of 25% on MCEV.
The positive experience variances relate to improved persistency in group life business and effects from the balance sheet-strengthening measures, such as a reduction of technical interest rates, and other impacts.
Favourable persistency experience in group life, a positive demographic experience and a further reduced expense base drive the assumption changes.
Switzerland shows negative economic variances. Referring to section 2.6, the decrease in Swiss franc interest rate volatilities led to a negative variance in 2013.
Strong operating returns of 11% were driven by new business and the expected existing business contribution.
Achieved expense efficiency gains were offset in the assumption changes by the negative effects of the French health reform.
Strong operating returns of 25% were driven by new business production, expected existing business contribution, and other operating improvements such as a disciplined surplus sharing and tax benefits due to relocation.
International The value of new business contributed strongly to the MCEV earnings with CHF 23 million or 10% of the opening MCEV of International. Combined with negative true-up effects on the in-force business and its expected existing business contribution, operating MCEV earnings of CHF 12 million resulted.
Net asset value (NAV) The net asset value is the market value of assets allocated to the covered business, which are not backing liabilities from the covered business.
Required capital (RC) The required capital is the market value of assets, attributed to the covered business – over and above that required to back liabilities for covered business – whose distribution to shareholders is restricted. Swiss Life bases the amount of required capital on 150% of the statutory solvency level according to Solvency I, except for assumed external reinsurance where an economic approach is used instead.
Free surplus (FS) The free surplus is the market value of assets allocated to, but not required to support, the in-force covered business at the valuation date. The free surplus is calculated as the difference between the net asset value and the required capital.
Certainty equivalent value (CEV) The certainty equivalent value is defined as the present value of the future shareholders’ statutory profits (net of tax) under the certainty equivalent scenario.
Time value of financial options and guarantees (TVOG) The certainty equivalent value does not allow for the risk that the financial outcome for shareholders could differ from the one implied by the certainty equivalent scenario. This is of particular relevance when products or funds include guarantees or options for the policyholder such as: – guaranteed interest rates – discretionary profit sharing and regulatory constraints, e.g. “legal quotes” – maturity guarantees – guaranteed minimum death benefits – guaranteed annuity options – surrender options
For such products or funds, a stochastic projection has been run allowing for the range of possible scenarios for financial markets. The TVOG is calculated as the difference between the average present value of shareholder cash flows (profits or losses) and the certainty equivalent value, plus the cost for credit risk (see remarks on credit risk below). The TVOG therefore represents the additional market consistent value of those financial options and guarantees in excess of the intrinsic value which are already allowed for in the certainty equivalent value.
The MCEV is calculated using a risk-neutral valuation, based on market consistent and arbitragefree stochastic economic scenarios. Under this approach, the key economic assumptions are: – the reference rates – interest rate and equity-type volatilities – correlations between the economic risk factors – inflation rates
Swiss Life – Annual Report 2013 4.5 Dynamic management actions and policyholder behaviour
Swiss Life – Annual Report 2013 3 Copyright © 2011 Markit Group limited 5 Assumptions 5.1 Economic assumptions
5.1.1 Reference rates The reference rates used for the calculation of the MCEV 2013 are based on the swap rates as at 31 December 2013 and include, where appropriate, a liquidity premium. Extrapolation of the interest curves and determination of liquidity premiums closely follow the QIS 5 framework.
We apply no liquidity premium to PPLI, unit-linked, and variable annuities business, 50% of the underlying liquidity premium to health insurance and assumed external reinsurance, and 75% to all participating and other businesses, including traditional annuities. Liquidity premiums are applied over a term of 10 years for Swiss franc, 15 years for euro and 30 years for US dollar, and phased out over the following five years.
The spread (over swap rates) applied for valuation of the hybrid debt as at 31 December 2013 is 96 bp. For the opening MCEV the spread amounted to 185 bp.
Economy 1 year 2 year 5 year 10 year 15 year 30 year 5.1.1.2 Swap rates as at 31 december 2012
5.1.1.3 100% liquidity premium, relative to swap rates, as at 31 december 2013 and 31 december 2012
Volatility 5.1.3 Correlation assumptions The correlation assumptions between different asset classes are based on historical market data. The correlations between returns on equities and on 10-year zero coupon bonds are assumed to be 17% for 2013 and for 2012.
Swiss Life – Annual Report 2013 5.1.4 Inflation assumptions The inflation assump tions have been derived from inflation-linked bond prices, where inflationlinked bonds are traded. For the Swiss economy, the real interest rate model is calibrated on the inflation forecast by Consensus Economics, an international economic survey organisation.
Economy 1 year 2 year 5 year 10 year 15 year 30 year 5.1.4.2 Forward inflation rates used for the calculation as at 31 december 2012
5.1.5.1 Equity and property assumptions for real world projection risk premiums by asset class 2013 2012
5.2.1 Tax assumptions 1 Following French legislation the tax rate assumption applied for 2014 is 38.0%. 2 Following French legislation the tax rate assumption applied for 2013 and 2014 is 36.1%.
We have audited the Market Consistent Embedded Value Report (“MCEV Report”) of Swiss Life Holding Ltd for the year ended 31 December 2013. The embedded value information included in the MCEV Report has been prepared in accordance with the Market Consistent Embedded Value (“MCEV”) Principles issued by the European Insurance CFO Forum, as described in sections 1 and 4 of the MCEV Report.
Auditor’s responsibility Our responsibility is to express an opinion on whether the MCEV Report has been properly prepared in accordance with the MCEV Principles. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the MCEV Report is free from material misstatement.
Opinion In our opinion, the MCEV Report of Swiss Life Holding Ltd for the year ended 31 December 2013 is prepared, in all material respects, in accordance with the MCEV Principles.
Certainty equivalent value (CEV) Certainty equivalent value is defined as the present value of the future shareholders’ statutory profits (net of tax) under the certainty equivalent scenario.
Free surplus (FS) The free surplus is the market value of any assets allocated to, but not required to support, the inforce covered business at the valuation date.
Look-through principle Method by which profits or losses from service companies within the Swiss Life Group, which are directly related to managing the covered business, are included in the MCEV and in the value of new business.
Present value of new business premiums (PVNBP) Volume measure for new business. It represents the present value of premiums from new business. It is the sum of single premiums and the present value of periodic premiums from new business.
Share of profit or loss of associates 5, 15 7 8 exPeNSeS
Commission expense 8 –870 –871 employee benefits expense 8 –862 –853
Impairment of property and equipment and intangible assets 16, 17 –6 –604 other expenses 8 –533 –521
equity holders of Swiss life Holding 781 98 earnings per share attributable to equity holders of Swiss life Holding
revaluation surplus on investment property 6 61 remeasurements on defined benefit liability –2 75 adjustments relating to items that will not be reclassified:
equity holders of Swiss life Holding –1 075 1 312 total Net CompreheNsive iNCome –1 072 1 313
Financial assets at fair value through profit or loss 10 31 486 28 153 24 366
Financial assets pledged as collateral 12, 33 1 999 964 969
Intangible assets including intangible insurance assets 17 2 937 2 893 3 722
Premiums, policy fees and deposits received, net of reinsurance 14 385 13 169
Benefits and claims paid, net of reinsurance –12 223 –12 192
financial instruments at fair value through profit or loss 833 359
Cash and cash equivalents as at 1 January 6 480 5 084
CaSH aND CaSH equIvaleNTS aS aT eND oF PerIoD 6 088 6 480
Share Share Treasury comprehen- retained shareholders’ controlling Notes capital premium shares sive income earnings equity interests Total equity
Changes in accounting policies – – – –181 – –181 0 –181
Balance as at 1 January restated 164 1 651 –25 530 6 626 8 946 35 8 981
Purchases of treasury shares – – –1 – – –1 – –1 allocation of treasury shares under equity
BalaNCe aS aT eND oF PerIoD 164 1 507 –17 1 745 6 724 10 122 33 10 155
For the 2012 financial year, a distribution was made to the shareholders of Swiss Life Holding Ltd (hereinafter referred to as “Swiss Life Holding”) from the capital contribution reserve instead of a dividend payment from profit. This amounted to CHF 144 million (CHF 4.50 per registered share) and was paid in the first half of 2013.
– The new provision on risk sharing between the employees and the employer has an impact on the calculation of the defined benefit obligation and the allocation of service costs.
As a result of these changes, the net defined benefit liability increased by CHF 406 million as at 31 December 2012 and by CHF 499 million as at 1 January 2012. Defined benefit expense for 2012 decreased by CHF 18 million.
The net impact of these changes on shareholders’ equity was a decrease of CHF 131 million as at 31 December 2012 and CHF 181 million as at 1 January 2012. Net profit for 2012 increased by CHF 6 million.
Swiss Life – Annual Report 2013 ias 36 impairment of assets (revised) In May 2013, the International Accounting Standards Board modified some of the disclosure requirements in IAS 36 Impairment of Assets regarding the recoverable amount of impaired assets as a consequential amendment to IFRS 13 Fair Value Measurement. However, one of the amendments potentially resulted in the disclosure requirements being different than originally intended. The International Accounting Standards Board has rectified this through the issue of Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36).
The disclosures required by IFRS 12 Disclosure of Interests in Other Entities have been integrated in these consolidated financial statements.
ifrs 13 fair value measurement In May 2011, the International Accounting Standards Board issued IFRS 13 Fair Value Measurement which contains new guidance on fair value measurement and disclosure requirements for International Financial Reporting Standards. The requirements do not extend the use of fair value accounting, but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. The new guidance is effective for annual periods beginning on 1 January 2013 without retrospective application. As a result of the new requirements, the Swiss Life Group adjusted the fair value measurement of certain investment properties taking into account highest and best use. The impact of these adjustments to fair value was an increase of CHF 176 million (before policyholder participation and income tax expense) which was recognised in profit or loss in 2013. The increase in the fair value measurement of these investment properties was primarily due to the potential conversion of rented property into owner-occupied property.
Swiss Life – Annual Report 2013 2.3 reclassifications in the consolidated statement of income, consolidated statement of comprehensive income and consolidated balance sheet
Swiss Life – Annual Report 2013 restatement and reclassification effects on the consolidated statement of comprehensive income for 2012
Financial assets available for sale – 3 816 – 3 816
Swiss Life – Annual Report 2013 restatement and reclassification effects on the consolidated balance sheet as at 31 December 2012
Financial assets at fair value through profit or loss 27 183 –132 1 102 28 153
Financial liabilities at fair value through profit or loss 21 162 – 1 102 22 264 equITy
Swiss Life – Annual Report 2013 restatement and reclassification effects on the consolidated balance sheet as at 1 January 2012
Deferred income tax assets 153 – 0 153 liabilities aND equity
The following amended Standards and Interpretations are not relevant to the Swiss Life Group: – IAS 27 Separate Financial Statements – Government Loans (Amendments to IFRS 1) – IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine – Annual Improvements 2009-2011 Cycle
The Group’s consolidated financial statements include the assets, liabilities, income and expenses of Swiss Life Holding and its subsidiaries. A subsidiary is an entity over which Swiss Life Holding has control. Control is achieved if Swiss Life Holding has the power over the subsidiary, is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to use its power to affect its returns. Subsidiaries are consolidated from the date on which effective control is obtained. All intercompany balances, transactions and unrealised gains and losses on such transactions have been eliminated. A listing of the Group’s subsidiaries is set out in note 35. The financial effect of acquisitions and disposals of subsidiaries is shown in note 28. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions.
Associates for which the Group has significant influence are accounted for using the equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those decisions. The Group’s share of net income for the year is recognised as a share of profit or loss of associates and the ownership interest in the investment is recorded in the balance sheet at an amount that reflects its share of the net assets. The Group’s share of net income is included from the date on which significant influence begins until the date on which significant influence ceases. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group’s interest. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. The carrying amount includes goodwill on the acquisition. A listing of the Group’s principal associates is shown in note 15.
2.5 foreign currency translation and transactions functional and presentation currency Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group’s entities operate (the “functional currency”). The consolidated financial statements are presented in millions of Swiss francs (CHF), which is the Group’s presentation currency.
“Regular way” purchases and sales of financial assets are recorded on the trade date. The amortisation of premiums and discounts on investments is computed using the effective interest method and is recognised in income as an adjustment of yield. Dividends are recorded as revenue on the ex-dividend date. Interest income is recognised on an accrual basis.
loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments. Loans include loans originated by the Group and investments in debt instruments which are not quoted in an active market and for which no intention of sale in the near term exists. Loans are
Swiss Life – Annual Report 2013 initially recognised at fair value, net of transaction costs, or direct origination costs. Subsequent measurement is at amortised cost using the effective interest method.
financial assets carried at fair value (available for sale) At each balance sheet date, an assessment is made whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of an equity instrument classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered objective evidence of impairment. In this respect, a decline of 30% or more is regarded as significant, and a period of 12 months or longer is considered to be prolonged. In such a situation, the impairment loss – measured as the difference between the acquisition cost and the current fair value – is removed from equity and recognised in the income statement. After recognition of an impairment loss, any further declines in fair value are recognised in the income statement, and subsequent increases in fair value are recognised in other comprehensive income.
Investment property under construction is also measured at fair value with changes in fair value being recognised in the income statement. However, where the fair value is not reliably deter minable, the property is measured at cost until either its fair value becomes reliably measurable or construction is completed.
investment contracts with and without discretionary participation features For investment contracts that contain discretionary participation features (see below) the same recognition and measurement principles as for insurance contracts apply. For investment contracts without discretionary participation features the recognition and measurement rules for financial instruments apply.
Swiss Life – Annual Report 2013 allocation of policyholder bonuses. When ratified by management, a corresponding liability is set up. To the extent discretion with regard to amount and/or timing is involved, these amounts are included within policyholder participation liabilities. In that respect the policyholder bonus reserve set up in the statutory accounts for these contracts is regarded as discretionary. For these contracts the entire DPF is classified as a liability.
France In life insurance business, 85% of the investment result and 90% of any other results are allocated to the policyholders as a minimum.
germany A minimum of 90% of the total investment result less 100% of the minimum guaranteed interest on the policyholder account, a minimum of 75% of the risk result and a minimum of 50% of the positive expense result is allocated to the policyholder.
insurance liabilities and liabilities from investment contracts with discretionary participation features Future life policyholder benefit liabilities These liabilities are determined by using the net-level-premium method. Depending on the type of profit participation, the calculations are based on various actuarial assumptions as to mortality, interest rates, investment returns, expenses and persistency, including a margin for adverse deviation. The assumptions are initially set at contract issue and are locked in except for deficiency.
Swiss Life – Annual Report 2013 policyholder deposits For investment contracts with discretionary participation, savings premiums collected are reported as deposits (deposit accounting). The liabilities relating to these contracts are not calculated actuarially; they move in line with premiums paid by the policyholders plus interest credited less expenses and mortality charges and withdrawals.
reinsurance The Group assumes and/or cedes insurance in the normal course of business. Reinsurance assets principally include receivables due from both insurance and reinsurance companies for ceded insurance liabilities. Amounts recoverable or due under reinsurance contracts are recognised in a manner consistent with the reinsured risks and in accordance with the terms of the reinsurance contract. Reinsurance is presented in the consolidated balance sheet and income statement on a gross basis unless a right and the intention to offset exist.
Swiss Life – Annual Report 2013 2.13 leases operating lease The Group primarily enters into operating leases for the rental of equipment. The total payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
Incremental costs that are directly attributable to securing an investment management contract are recognised as an asset if they can be identified separately and mea sured reliably and if it is probable that they will be recovered. Such deferred origination costs are included in intangible assets. Deferred investment management fees are included in other liabilities.
PVP is amortised in proportion to gross profits or gross margins over the effective life of the acquired contracts, which generally ranges from 20 to 30 years. Realised gains/losses are thereby taken into account as well as gains/losses recognised in other comprehensive income (unrealised gains/losses). If these unrealised gains/losses were to be realised, the gross profits or gross margins used to amortise PVP would be affected. Therefore, an adjustment relating to these unrealised gains/losses is recognised in equity and is also reflected in the amount of PVP in the balance sheet (“shadow accounting”).
PVP is subject to impairment tests. The effect of changes in estimated gross profits or margins on unamortised PVP is reflected as an expense in the period in which such estimates of expected future profits or margins are revised.
Deferred acquisition costs for investment-type contracts such as universal life contracts are amortised over the life of the contract based on the present value of the estimated gross profits or gross margins expected to be realised. The estimated gross profits are made up of margins available from mortality charges and contract-administration costs, investment earnings spreads, surrender charges and other expected assessments and credits.
When DAC is amortised in proportion to gross profits or gross margins on the acquired contracts, realised gains/ losses are taken into account as well as gains/losses recognised in other comprehensive income (unrealised gains/losses). If these gains/losses were to be realised, the gross profits or gross margins used to amortise DAC would be affected. Therefore, an adjustment relating to these unrealised gains/losses is recognised in equity and is also reflected in the amount of DAC in the balance sheet (“shadow accounting”).
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.
goodwill The Group’s acquisitions of other companies are accounted for under the acquisition method. Goodwill acquired prior to 1995 was charged directly to equity.
Goodwill represents the excess of the fair value of the consideration transferred and the amount of any non-controlling interest recognised, if applicable, over the fair value of the assets and liabilities recognised at the date of acquisition. The Group has the option for each business combination, in which control is achieved without buying all of the equity of the acquiree, to recognise 100% of the goodwill in business combinations, not just the acquirer’s portion of the goodwill (“full goodwill method”). Goodwill on acquisitions of subsidiaries is included in intangible assets. Acquisition-related costs are expensed. Goodwill on associates is included in the carrying amount of the investment.
financial liabilities at fair value through profit or loss Financial liabilities at fair value are irrevocably designated as at fair value at initial recognition. Financial liabilities are designated as at fair value through profit or loss in the following instances: – Financial liabilities for the account and risk of the Swiss Life Group’s customers where the insurance benefits are linked to unit values of investment funds or relate to private placement life insurance.
borrowings Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.
Remeasurements, comprising actuarial gains and losses, the effect of the changes of the asset ceiling and the return on plan assets (excluding interest) are reflected immediately in the consolidated balance sheet and in other comprehensive income in the period in which they occur. Such remeasurements recognised in other comprehensive income will subsequently not be reclassified in profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit asset or liability. Defined benefit costs comprise service costs and net interest expense which are presented in the income statement under employee benefits expense.
Swiss Life – Annual Report 2013 healthcare benefits Some Group companies provide healthcare benefits to their retirees. The entitlement to these benefits is usually based on the employee remaining in service up to the retirement age and the completion of a minimum service period. The expected costs of these benefits are accounted for in the same manner as for defined benefit plans.
share-based payments The Group operates equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the shares is recognised in income with a correspond ing increase in equity. As the fair value of the services received cannot reliably be measured, the value is measured by reference to the fair value of the equity instruments granted and the price the employees are required to pay.
Swiss Life – Annual Report 2013 2.26 forthcoming changes in accounting policies
In November 2013, an amendment to IAS 19 Employee Benefits was issued. The amendment covers the treatment of contributions from employees or third parties and should simplify the accounting for contributions that are independent of the number of years of employee service. The amendment is effective from 1 July 2014. The Swiss Life Group is currently analysing the effect of the amendment on its financial statements.
In June 2013, Novation of Derivatives and Continuation of Hedge Accounting (Amendment to IAS 39 Financial Instruments: Recognition and Measurement) was issued in order to provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The amendment is applicable for annual periods beginning on or after 1 January 2014. The Swiss Life Group does not expect a significant impact from the amendment on its consolidated financial statements.
In May 2013, the International Accounting Standards Board issued IFRIC 21 Levies. This Interpretation addresses the accounting for a liability to pay a levy if that liability is within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. It also addresses the accounting for a liability to pay a levy whose timing and amount is certain. The Interpretation is applicable for annual periods beginning on or after 1 January 2014. The Swiss Life Group does not expect a significant impact from the Interpretation on its consolidated financial statements.
In October 2010, the International Accounting Standards Board issued requirements on the accounting for financial liabilities. These requirements are part of IFRS 9 Financial Instruments. The new requirements address the problem of volatility in profit or loss arising from an issuer choosing to measure its own debt at fair value. An entity choosing to measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income. The Swiss Life Group is currently analysing the impact of these new requirements.
In November 2009, IFRS 9 Financial Instruments was issued by the International Accounting Standards Board. The Standard represents the first part of a three-part project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 Financial Instruments covers classification and measurement of financial assets. The classification and measurement approach in IFRS 9 Financial Instruments is based on how an entity manages its financial instruments (business model) and the contractual cash flow characteristics of the financial assets. A financial
morbidity and disability For the individual and group life business in Switzerland internal tables are in place. In the individual life business, the internal disability rates are based on the Swiss Insurance Association statistics and reflect the average situation of the past in the Swiss market. In the individual life business, only reactivation is considered, whereas increased mortality is also taken into account in group life business. In the individual life business, disability tables are usually reviewed every five years when new statistics from the Swiss Insurance Association become available.
policyholder options Policyholders are typically offered products which include options such as the right to terminate the contract early or to convert the accumulated funds into a life annuity at maturity. In case of early termination the policyholder receives a specified surrender value or a value which varies in response to the change in financial variables such as an equity price or an index. In the case of the conversion option, the policyholder has the right to convert an assured sum into a fixed life annuity. The option values typically depend on both biometric assumptions and market vari ables such as interest rates or the value of the assets backing the liabilities. In certain countries and markets policyholder behavioural assumptions are based on own company records. The assumptions vary by product type and policy duration.
expenses and inflation In Switzerland, expenses are taken into account in the pricing of the contracts using internal statistics. Such calculated amounts are allocated to the different lines of business. Inflation is reflected in these calculations.
In certain markets, expense allocation is based on an activity-based cost methodology. Recurrent costs are subdivided into the following main cost categories: acquisition costs, administration costs and asset management costs.
investment returns Assumptions relating to investment returns are based on the strategic asset allocation. From this gross investment return, projected asset management fees are deducted to obtain a net investment return.
“International” comprises the cross-border insurance operations in Liechtenstein, Luxembourg and Singapore, the Swiss Life Select units operating in Austria, Czech Republic and Poland as well as Chase de Vere operating in the United Kingdom.
Swiss Life – Annual Report 2013 statement of income for the year ended 31 December 2013
Net gains/losses on investment property 439 43 23 – – 0 505 – 505
Benefits and claims under investment contracts with discretionary participation –826 – – – – – –826 – –826
Depreciation and amortisation expense –134 –235 –157 –6 –2 –3 –537 – –537
Impairment of property and equipment and intangible assets –1 – –6 0 – – –6 – –6 of which inter-segment –299 38 –38 –8 –21 –8 –336 336 unallocated corporate costs –65 reSulT From oPeraTIoNS 1 149
Swiss Life – Annual Report 2013 statement of income for the year ended 31 December 2012 (restated)
Net gains/losses on financial assets 514 12 169 84 0 –3 776 – 776
Share of profit or loss of associates 3 3 0 – 1 1 8 – 8 exPeNSeS
Benefits and claims under investment contracts with discretionary participation –685 – – – – – –685 – –685
Net insurance benefits and claims –10 048 –2 035 –1 709 –18 – –9 –13 819 –1 –13 819 employee benefits expense –282 –191 –145 –77 –113 –6 –814 1 –813
Depreciation and amortisation expense –254 –269 –140 –17 –2 –3 –685 – –685
Intangible assets including intangible insurance assets 702 463 1 512 238 16 5 2 937 – 2 937
Financial liabilities at fair value through profit or loss 2 809 1 784 713 19 488 – – 24 794 – 24 794
Income tax liabilities 1 077 total liabilities aND equity 170 530
Swiss Life – Annual Report 2013 balance sheet as at 31 December 2012 (restated)
Financial assets at fair value through profit or loss 3 293 8 479 891 15 438 – 53 28 153 – 28 153
Income tax liabilities 1 495 total liabilities aND equity 164 461
Swiss Life – Annual Report 2013 premiums and policy fees from external customers
Risks must be identified, assessed, managed and monitored locally and aggregated at Group level. Monthly reports covering interest rate risk, equity price risk, currency risk, credit risk and insurance risk are prepared on a consolidated basis. Additionally, market risks and financial risk limits are reported for the largest operations in the insurance business. Strategic and operational risks are assessed and reported on an annual basis.
The risk appetite for the largest operations in the insurance business is defined with the help of local risk bud gets which are used as a basis for the determination of the individual risk limits. These limits are used as a framework for the asset and liability management process, the objective of which is to define a strategic asset allocation. From this strategic asset allocation a scenariobased expected return is calculated which forms the basis for the mid-term planning of the Group.
assets for the account and risk of the swiss life group’s customers
Swiss Life – Annual Report 2013 strategic asset allocation Defining the strategic asset allocation is the first major task of the ALM process and aims at achieving an efficient risk capital allocation, i.e. optimising the returns on the asset portfolio for the available risk capital defined within the risk budgeting process, taking into account all known constraints.
hedging The Swiss Life Group uses derivatives within the strict limits set by the applicable insurance legislation and by internal guidelines. Derivatives are primarily used to manage the exposure to equity securities, interest rates, counterparties and foreign exchange rates. The main instruments include index futures and option structures in stock markets, bond futures and swaps in order to manage duration, currency forwards in order to manage currency risk and credit default swaps in order to manage counterparty risk. Within certain limits, derivatives are used to enhance returns on the existing portfolio. The types of derivatives generally permitted for usage within the Swiss Life Group as well as the list of allowed over-the-counter trading partners have been approved by the Group Risk Committee.
Insurance liabilities linked to assets for the account and risk of the Swiss life group’s customers 2 200
Many 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 1.5% in 2013 and will be increased to 1.75% for 2014 (2012: 1.5%).
The Group manages interest rate and interest rate volatility risk by managing the interest rate and volatility sensitivity of its investment portfolio against the corresponding sensitivity of liabilities issued. The interest rate and volatility exposure of the liabilities is determined by projecting the expected cash flows from the contracts using best estimates of mortality, disability, expenses, surrender and exercise of policyholder options in combination with interest rate and volatility scenarios. The ALM process defines the strategic asset allocation optimising the net interest rate sensitivity of the investment and liability portfolios. Where this is not practicable, swap contracts and other instruments are used to hedge interest rate risk. In certain markets payer swaptions are used to hedge the risk of fair value changes of interest-sensitive financial assets. Strategically, a minimum interest rate risk is accepted, since a perfect interest rate hedge can either not be achieved or may not be targeted.
A portion of Swiss Life’s investment portfolio comprises investments in funds which hold securities issued by non-public companies (private equity). These investments may be illiquid or may only be disposed of over time or at a loss, and they may not produce adequate returns or capital gains. If Swiss Life were required to liquidate some or all of the investments in its private equity portfolio, the proceeds of such liquidation may be significantly less than the amount paid for, or the carrying amount of, such investments.
To reduce the credit exposure relating to derivatives a collateral management process is in place. Contractually all outstanding positions must be fully collateralised if they reach a very low agreed minimum transfer amount. The collateral is called at least weekly, but in times of turbulent markets the frequency is increased. As leverage is not permitted, certain coverage rules apply with regard to cash or long positions. Counterparties for derivative transactions, over-the-counter and
Swiss Life – Annual Report 2013 exchange-traded, have to be approved by both the Group Chief Risk Officer and the Group Chief Investment Officer. The minimum rating for a counterparty is A– (Standard & Poor’s or equivalent ) for the Swiss Life Group’s insurance operations. During periods of market turmoil reliance on ratings is of limited value; therefore an additional qualitative and quantitative counterparty monitoring process has been established to allow for immediate proactive measures.
Debt securities available for sale 76 845 78 670 – – 76 845 78 670
Debt securities pledged as collateral 1 999 964 – – 1 999 964
total exposure to CreDit risk 110 717 111 737 8 106 8 293 118 823 120 030
ToTal oTHer loaNS aND reCeIvaBleS 3 883 3 582 1 097 508 105 4 026 48 13 249 exposure to credit risk of debt instruments – credit rating by class as at 31 December 2012
Past due or aaa aa a BBB Below BBB Not rated impaired Total
ToTal oTHer loaNS aND reCeIvaBleS 4 149 2 920 1 294 544 100 4 026 60 13 092
Financial assets past due (not impaired) – age analysis as at 31 December 2013
Financial assets past due (not impaired) – age analysis as at 31 December 2012
Financial assets individually determined as impaired – impairment loss allowance for the year 2013
Foreign Impairment currency Balance as at losses/ write-offs translation Balance as at 1 January reversals and disposals differences end of period
Financial assets individually determined as impaired – impairment loss allowance for the year 2012
Currency risk The Swiss Life Group operates internationally and its exposures to currency risk primarily arise with respect to the euro, US dollar and British pound. Most of the investments and liabilities are denominated in Swiss francs, euros and US dollars, the values of which are subject to exchange rate fluctuations. The Group operates with various functional currencies (predominantly Swiss francs and euros). Its financial position and earnings could be significantly affected by a weakening of said foreign currencies against the Swiss franc.
The balance sheet currency exposure is to a large extent hedged using foreign currency derivatives. The following table shows the Group’s foreign currency exposure against the major functional currencies Swiss franc and euro: Currency exposure as at 31 December 2013
entities with functional currency CHF – –6 342 –13 596 –2 642 –80 –2 936 entities with functional currency eur – – –2 190 –289 – –20
Swiss Life – Annual Report 2013 liquidity risk Liquidity risk is the risk that not enough cash resources may be available to pay obligations when due (primarily obligations arising from the insurance business and debt) at a reasonable cost. The Swiss Life Group is exposed to liquidity risk which primarily arises on calls on its cash resources from claims, amounts payable at maturity and surrenders arising from insurance and investment contracts. The Swiss Life Group faces the risk of not being able to refinance its debt obligations due to unexpected long-term market disruptions.
Investment contracts without discretionary participation 90 3 4 29 6 1 47
Financial assets at fair value through profit or loss 3 534 4 845 1 892 679 26 059 22 629 31 486 28 153
Financial assets available for sale 5 293 3 568 75 777 77 608 – – 81 071 81 176
Financial assets pledged as collateral 74 – 1 925 964 – – 1 999 964
Intangible assets including intangible insurance assets – – 2 937 2 893 – – 2 937 2 893 lIaBIlITIeS
The nature of insurance risk can be summarised as follows: mortality and longevity Mortality and longevity risks respectively reflect the financial consequences of insured people dying sooner or living longer than expected. For example, a life insurer with an annuity portfolio making payments to the policyholders until their death is financially exposed to those individuals who live longer than expected. Conversely, an insurer writing life insurance business that pays out amounts contingent on death of the policyholders is exposed to increases in mortality levels.
The Swiss occupational pensions (BVG) segment of the group life insurance business in Switzerland is a significant part of the Group’s overall life insurance business. The BVG business provides an example of a minimum return guarantee. The guarantee takes the form of the right to convert an assured sum into a life annuity at a guaranteed conversion rate: The prevalent annuity conversion rate for the mandatory part of the BVG business is set at 6.8% for men (retirement age 65) and 6.8% for women (retirement age 64) for retirements in 2014 (6.85% for men and 6.8% for women for retirements in 2013). Under an amendment to the BVG legislation, which took effect on 1 January 2005, the rate for men will be reduced to 6.8% by 2014.
Disability lump-sum payment 33 23 life benefits insured by type of insurance – group life
estimate of ultimate claim costs by year of loss occurrence at end of year of loss occurrence 416 384 447 416 345 392 323 311 303 335 n/a
CurreNT eSTImaTe oF CumulaTIve ClaImS 225 238 231 239 242 276 286 324 330 335 2 727
Cumulative payments to date –205 –214 –203 –203 –201 –223 –226 –208 –189 –130 –2 001 effect of discounting – – – – – – – – – – –
lIaBIlITIeS For THe CurreNT aND 9 PrevIouS yearS 20 24 28 36 41 54 61 116 141 205 726 liabilities for prior years 253
reinsurance Reinsurance is used to limit the Group’s exposure to insurance risk. This does not, however, discharge the Group’s liability as a primary insurer, and, if a reinsurer fails to pay a claim, the Group remains liable for the payments to the policyholder. A loss allowance would be recognised for any estimated unrecoverable reinsurance.
At 31 December 2013, if morbidity had been 5% higher, the embedded value would have been CHF 48 million lower (2012: CHF 61 million lower).
At 31 December 2013, if morbidity had been 5% lower, the embedded value would have been CHF 47 million higher (2012: CHF 54 million higher).
At 31 December 2013, if the interest rates had been 100 basis points higher, the embedded value would have been CHF 413 million higher (2012: CHF 166 million higher).
At 31 December 2013, if the market value of equity securities and property had been 10% higher, the embedded value would have been CHF 624 million higher (2012: CHF 653 million higher).
Net result attributable to equity holders of Swiss life Holding 781 98 weighted average number of shares outstanding 31 947 309 31 902 670
Net result attributable to equity holders of Swiss life Holding 781 98 elimination of interest expense on convertible bonds 1 –
reSulT uSeD To DeTermINe DIluTeD earNINgS Per SHare 782 98 weighted average number of shares outstanding 31 947 309 31 902 670 adjustments (number of shares)
weIgHTeD average NumBer oF SHareS ouTSTaNDINg For DIluTeD earNINgS Per SHare 32 274 253 32 044 682
Swiss Life – Annual Report 2013 7 Premiums, Policy Fees and Deposits Received
Deposits received under insurance and investment contracts 4 518 4 695 groSS wrITTeN PremIumS, PolICy FeeS aND DePoSITS reCeIveD 17 969 17 046 8 Details of Certain Items in the Consolidated Statement of Income
In CHF million realised gains/losses on sales of subsidiaries and other assets 17 2 other foreign currency gains/losses –16 17
Change in liability for future life policyholder benefits, gross 3 207 3 495
Net benefits and claims under investment contracts with discretionary participation 826 685
Insurance agent and broker commissions 783 790 asset management and banking commissions 65 61 other commissions and fees 22 21
Depreciation of property and equipment 16 25 28 amortisation of present value of future profits (PvP) 17 1 1 amortisation of deferred acquisition costs (DaC) 17 474 565 amortisation of deferred origination costs (DoC) 17 11 53 amortisation of other intangible assets 17 27 39
Information technology and systems 76 72 rental, maintenance and repair 65 67
SwISS lIFe grouP’S CuSTomerS 5 0 – – – 0 –
Derivatives designated as cash flow hedges 76 589 144 5 4 284 9 045
Derivatives designated as net investment hedges – 0 – – – 299
The Swiss Life Group uses interest rate swaps to hedge available-for-sale fixed-rate bonds in USD against changes in the fair value attributable to interest rate risk. The nominal amount of these bonds as at 31 December 2013 was USD 1.6 billion (2012: USD 2.0 billion).
total Derivatives DesigNateD as Cash floW heDges 76 144 –658 0 0 4 284 n/a n/a
Derivatives designated as cash flow hedges as at 31 December 2012
In 2013 and 2012, 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.
Swiss Life – Annual Report 2013 10 Financial Assets and Liabilities at Fair Value through Profit or Loss
Swiss Life – Annual Report 2013 11 Financial Assets Available for Sale
ToTal FINaNCIal aSSeTS avaIlaBle For Sale 78 242 73 038 2 829 8 138 81 071 81 176
Financial assets that have been sold under a repurchase agreement or lent under an agreement to return them, are not derecognised when substantially all the risks and rewards of ownership are retained by the Swiss Life Group. If the transferee has the right to sell or repledge the financial assets given as collateral, they are reclassified in the balance sheet as financial assets pledged at their respective carrying amounts.
Debt securities designated as loans 508 529 – – 508 529 reCeIvaBleS
BalaNCe aS aT eND oF PerIoD 8 54 10 9 18 63 reCeIvaBleS
BalaNCe aS aT eND oF PerIoD 7 5 16 14 23 20 total alloWaNCe for impairmeNt losses 15 59 26 23 41 82
Fair value as at 31 December 6 711 7 647 gains (+)/losses (–) that would have been recognised in other comprehensive income if the assets had not been reclassified
Classification as assets held for sale and other disposals –805 –731 gains/losses from fair value adjustments 505 390
TeCHNoParK real estate lTD, Zurich 33.3% 15 1 1 – 1 –
DePFa Holding verwaltungsgesellschaft mbH, Düsseldorf 20.4% 121 1 n/a n/a n/a n/a
Classification as assets held for sale and other disposals –6 –2 –1 0 –9
Transfers to investment property 14 –11 – – – –11 revaluation in respect of transfers to investment property 4 – – – 4
Classification as assets held for sale and other disposals 2 2 1 0 4
BalaNCe aS aT eND oF PerIoD 576 53 54 25 708 aCCumulaTeD DePreCIaTIoN aND ImPaIrmeNT
BalaNCe aS aT eND oF PerIoD –189 –37 –39 –10 –275 total property aND equipmeNt as at eND of perioD 386 17 15 15 433 of which assets held under a finance lease – – 2 – 2 of which buildings in the course of construction 25
No borrowing costs were capitalised in property and equipment in 2013 and 2012.
BalaNCe aS aT eND oF PerIoD 16 15 1 567 1 554 35 36 1 618 1 605 present value of future profits (pvp) The present value of future profits relates to portfolios of insurance contracts and investment contracts with discretionary participation acquired in a business combination or transfer of portfolios. It relates to contracts acquired in Germany and France and is amortised in proportion to gross profits or margins over the effective life of the acquired insurance and investment contracts.
Deferred origination costs (DoC) These costs are recoverable and are directly attributable to securing the right for investment management services within investment contract policies. They relate to contracts in Luxembourg and Switzerland.
Classification as assets held for sale and other disposals –7 0 –107 – –98 –3 –212 –3
BalaNCe aS aT eND oF PerIoD 1 743 1 726 223 309 186 258 2 151 2 293 aCCumulaTeD amorTISaTIoN aND ImPaIrmeNT
Balance as at 1 January –550 –157 –255 –112 –200 –100 –1 005 –369
Classification as assets held for sale and other disposals 7 – 107 – 98 3 212 3
BalaNCe aS aT eND oF PerIoD –550 –550 –164 –255 –120 –200 –833 –1 005 total other iNtaNgible assets as at eND of perioD 1 193 1 176 59 54 67 58 1 319 1 288 goodwill Goodwill represents the excess of the fair value of the consideration transferred and the amount of any non-controlling interest recognised, if applicable, over the fair value of the assets and liabilities recognised at the date of acquisition. Goodwill includes amounts relating to both the Swiss Life Group’s interest and the non-controlling interest in the business acquired in the case where non-controlling interest is measured at fair value. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on associates is included in the carrying amount of the investment.
Goodwill relating to Lloyd Continental has been allocated to the “France” segment. Goodwill relating to CapitalLeben has been allocated to the “International” segment. Of the goodwill relating to other acquisitions, CHF 21 million (2012: CHF 12 million) has been allocated to the “France” segment and CHF 9 million (2012: CHF 9 million) to the “Asset Managers” segment as at 31 December 2013.
The calculations relating to the recoverable amounts, which have been determined on a value-inuse basis, use cash flow projections based on financial budgets approved by management. The projection covers four-year and five-year periods for Lloyd Continental. Due to the duration of
In the light of the current health reform and economic development in France, the Group monitors very closely whether the actual performance is in line with the business plans, and is prepared to take certain actions, if needed.
Net carrying amount of goodwill 287 287 149 149 30 21
The growth rates reflect the long-term inflation expectations of the International Monetary Fund for the respective markets.
Net carrying amount of goodwill 152 152 494 487 81 80 727 719
The headroom on the “Swiss Life Select” goodwill relating to “Switzerland” was CHF 2.0 billion as at 31 December 2013. It would not be removed if the discount rate were to be increased by 0.5 percentage points and the growth rate were to be decreased by 1 percentage point. The headroom on the “Swiss Life Select” goodwill relating to “Germany” amounted to CHF 45 million as at 31 December 2013. It would be removed if the discount rate were to be increased by 0.5 percentage points. The headroom on the “Swiss Life Select” goodwill relating to “International” was CHF 128 million as at 31 December 2013. It would not be removed if the discount rate were to be increased by 0.5 percentage points and the growth rate were to be decreased by 1 percentage point.
As at 31 December 2013, customer relationships comprise customer relationships relating to “Swiss Life Select” CHF 6 million (2012: CHF 6 million) which were allocated to the “Switzerland ” segment and CHF 21 million (2012: CHF 29 million) which were allocated to the “Germany ” segment. The “France” segment comprises customer relationships of CHF 31 million (2012: CHF 18 million) and the “Asset Managers” segment CHF 1 million (2012: CHF 1 million).
Investment contracts with discretionary participation with deposit accounting 10 728 9 694
Investment contracts with discretionary participation with actuarial valuation 2 173 1 678
Investment contracts without discretionary participation at fair value through profit or loss 193 138 of which for the account and risk of the Swiss life group’s customers
investment contracts without discretionary participation 182 91 investment contracts with discretionary participation with deposit accounting
In the case of traditional contracts in the life insurance business, future life policy benefit liabilities are determined by using the net-level-premium method on the basis of actuarial assumptions as to mortality, persistency, expenses and investment return, including a margin for adverse deviation. For participating contracts where the contribution prin ciple applies to the allocation of the policyholder bonus, future life policy benefit liabilities are determined by using the net-level-premium method on the basis of appropriate mortality and interest rate assumptions. These amounts relate to contracts issued in Switzerland and France.
On 22 October 2012, Swiss Life Ltd issued subordinated perpetual callable bonds in the amount of CHF 300 million. The bonds are guaranteed by Swiss Life Holding, have no fixed maturity date and are first callable on 22 August 2018 or at each interest payment date thereafter at the option of the issuer, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The interest has been fixed at 5.50% p.a. until 22 August 2018. If the bonds are
Swiss Life – Annual Report 2013 not redeemed on 22 August 2018, the interest resets at a rate fixed for the subsequent five years, consisting of the aggregate of the then prevailing five-year CHF swap rate and the initial margin of 5.091%.
On 12 April 2007, ELM B.V., a Dutch repackaging vehicle, issued EUR 700 million in fixed/floating rate subordinated perpetual notes at a price of par to finance loan notes granted to Swiss Life Ltd, which are guaranteed by Swiss Life Holding. Swiss Life Ltd may repay the loan notes in full on 12 April 2017 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 12 April 2007 to 12 April 2017 at a rate of 5.849% p.a. If the notes are not redeemed on 12 April 2017, the interest will be the aggregate of Euribor 3-month deposits and a margin of 2.5%.
On 16 November 2005, J.P. Morgan Bank Luxembourg S.A. issued on a fiduciary basis EUR 350 million fixed/floating rate subordinated perpetual notes at a price of 99.423% to fund a loan made by it to Swiss Life Ltd. Swiss Life Ltd may repay the loan in full on 16 November 2015 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 16 November 2005 to 16 November 2015 at a rate of 5% p.a. If the notes are not redeemed on 16 November 2015, the interest rate will be the aggregate of Euribor for 3-month deposits and a margin of 2.43%.
Swiss life ag CHF 300 CHF 300 5.500% 2012 2018 298 297
Swiss life ag 1 eur 700 eur 590 5.849% 2007 2017 721 710
Swiss life ag 2 eur 350 eur 343 5.000% 2005 2015 417 410
Swiss life ag eur 443 eur 192 +2.050% 1999 2014 236 232 1 Hybrid loan notes granted by elm B.v. 2 Hybrid bank loan originally granted by J.P. morgan Bank luxembourg S.a.
Swiss Life – Annual Report 2013 22 Insurance Liabilities and Reinsurance Assets
Claims under non-life insurance contracts 979 954 197 191 782 763
Claims under life insurance contracts 6 270 6 414 90 87 6 180 6 328
BalaNCe aS aT eND oF PerIoD 87 890 84 177 108 91 87 781 84 085
Insurance liabilities linked to assets for the account and risk of the Swiss life group’s customers 2 200 1 603 23 Employee Benefits employee benefit liabilities
Generally, the level of benefits is based on years of service and average compensation preceding retirement, and the main benefit is a pension after retirement or a lump-sum payment at the time of retirement. Most plans are funded and the funding is governed by local requirements and with respect to the liability (determined based on actuarial methods) based on the plans’ benefit promises. For several plans, contributions are not only made by the employer, but also by the employee (generally as a part of gross salaries).
With respect to funded plans, the Group faces investment risk. In general, the return of plan assets – together with contributions – must be sufficient to cover the plan’s benefit promises. In particular, if the return is below the discount rate, an actuarial loss would be created with negative impact on the net benefit liability/asset and other comprehensive income. The mitigation of this risk depends on the nature of the benefit promises and the regulatory/legal framework of the plan, and is therefore country-specific.
France The investment risk inherent in achieving an adequate return on the plan assets in order to pay the promised benefits to employees as well as the mortality risk are borne by the company.
Swiss Life – Annual Report 2013 restatement effects for 2012 IAS 19 Employee Benefits (revised) has been applied retrospectively from 1 January 2013. The deferral of recognising gains/losses, known as the “corridor method”, has been eliminated. Gains/losses are now recognised immediately in other comprehensive income. The application of the risk-sharing provision in IAS 19 Employee Benefits (revised) led to a decrease of the defined benefit liability as contributions from employees are attributed to periods of service as a negative benefit in the calculation of the defined benefit obligation. These two effects led to a net increase of the net defined benefit liability of CHF 406 million as at 31 December 2012 and CHF 499 million as at 1 January 2012.
Expected returns on plan assets are no longer recognised in profit or loss. Instead, interest on the defined benefit liability is calculated using the discount rate used to measure the defined benefit obligation. Due to the elimination of the above-mentioned “corridor method”, amortisation of gains/losses no longer impacts profit or loss, as these gains/losses are immediately recognised in other comprehensive income. Defined benefit expense was CHF 18 million lower for 2012 due to these effects.
Insurance contracts not eligible as plan assets under IFrS 1 424 1 389
To assess the funding situation of the defined benefit plans in total, plan assets as well as insurance contracts not eligible as plan assets under IFRS must be set off against the present value of the defined benefit obligation. The total surplus taking into consideration insurance contracts not eligible as plan assets under IFRS amounted to CHF 85 million as at 31 December 2013 (2012: deficit of CHF 13 million).
Swiss Life – Annual Report 2013 amounts recognised in other comprehensive income
In CHF million actuarial gains and losses on the defined benefit obligation –25 –7 return on plan assets excluding interest income 23 82
principal actuarial assumptions other countries average life expectation at ordinary retirement age-women (number of years) 24.7 24.6 23.0-28.8 22.7-28.8 average life expectation at ordinary retirement age-men (number of years) 21.3 21.2 19.3-25.3 18.6-25.3
A sensitivity analysis was performed for each significant actuarial assumption that shows the impact on the defined benefit obligation of changes in the respective actuarial assumption that were reasonably possible at the balance sheet date. The calculation is done by leaving all other assumptions unchanged (i.e. at their value used in the calculation of the defined benefit obligation implicit in the net defined benefit asset/liability in the consolidated balance sheet as at end of period). In reality, it is unlikely that a change in assumption would happen in isolation. Some
expected benefit payments amounts in CHF million (if not noted otherwise)
Swiss Life – Annual Report 2013 possible factor of 2.0 applies. No minimum possible factor is applied so that the number of PSUs could drop to zero after three years.
The RSUs granted in 2013 are based on the Group-wide programme “Swiss Life 2015”. On the basis of the medium-term planning 2013-2015, performance criteria relating to cost efficiency (50% weighting), risk and fee result (25% weighting) and IFRS profit (25% weighting) have been determined by the Board of Directors. After expiry of the three-year period of the RSU plan, the target value for each performance criterion according to the medium-term planning 2013-2015 is compared with the actual result achieved. The share allocation corresponds to the number of allocated RSUs (1 RSU = 1 share) if all three performance criteria have been achieved or exceeded after the three-year period has elapsed; overperformance does not lead to a higher share allocation. If the targets are only partly achieved, the share allocation is correspondingly reduced based on the weighting of the performance target concerned or the RSUs expire worthless.
The RSUs granted under the programmes in 2012 and 2011 are without additional performance leverage. The attribution of shares after the expiry of the three-year deferral period will be effected, if certain conditions are fulfilled, on a 1:1 basis (1 RSU = 1 share). The value of the RSUs during the three-year term develops linearly with the Swiss Life Holding share price and systematically corresponds with shareholder interests. The plan also provides for adjustment and reclaiming mechanisms (clawback).
The fair value of the PSUs and RSUs granted for each programme is determined at the grant date. The fair value was determined by an independent consulting company using the BlackScholes formula and Monte Carlo simulations. The associated expense during the vesting period is recognised under employee benefits expense with a corresponding increase in share premium.
The expense recognised for share-based payment amounted to CHF 11 million in 2013 (2012: CHF 10 million).
Swiss Life – Annual Report 2013 24 Income Taxes income tax expense
Income tax calculated using the expected weighted-average tax rate 245 26
In 2012, non-deductible expenses include CHF 123 million relating to the impairment loss on the “Swiss Life Select” goodwill (acquisitions of AWD Holding AG and Deutsche Proventus AG).
recognised Foreign in other currency Balance as at recognised in comprehensive recognised in acquisitions translation Balance as at 1 January profit or loss income share premium 1 and disposals differences end of period movemeNTS By TyPe oF TemPorary DIFFereNCe
NeT DeFerreD INCome Tax aSSeTS/lIaBIlITIeS –1 336 –48 538 –3 –29 –1 –877 movemeNTS By TyPe oF TemPorary DIFFereNCe
Deferred tax liabilities have not been recognised on the aggregate amount of temporary differences with consolidated investments in subsidiaries to the extent the Group considers such undistributed earnings as being indefinitely reinvested. The foreign entities are controlled by the Group and these earnings are not expected to be repatriated in the foreseeable future. The amount of such temporary differences was approximately CHF 4.4 billion as at 31 December 2013 (2012: CHF 5.6 billion). If such earnings are ever repatriated, no material tax liabilities would be incurred due to participation exemption rules, unrecognised tax loss carryforwards and applicable double taxation treaties.
Under the “Swiss Life 2015” programme, provisions for restructuring were set up in Switzerland, Liechtenstein and Luxembourg in 2013 and 2012. The outflow of the amounts is expected within the following one to two years.
Other provisions were primarily set up for warranties and litigation. Also included in other provisions are customer claims mainly relating to Swiss Life Select (formerly AWD).
In 2013, a distribution to shareholders out of the capital contribution reserve of CHF 144 million (CHF 4.50 per registered share) was made (2012: CHF 144 million, CHF 4.50 per registered share).
In December 2013, Swiss Life Holding placed CHF 500 million senior unsecured convertible bonds due in 2020, convertible into registered shares of Swiss Life Holding at any time at the option of the holder. The initial conversion price was set at CHF 243.97. The equity component (embedded conversion option) recognised in share premium amounted to CHF 50 million less transaction costs of CHF 1 million and deferred income tax of CHF 3 million.
Net balance as at 1 January –853 2 494 299 –127 1 813 71 –139 – –68 1 745
gains/losses arising during the period 9 34 –4 956 –658 – –5 580 4 –2 – 1 –5 579
Swiss Life – Annual Report 2013 accumulated other comprehensive income for the year 2012 (restated)
Foreign financial gains/ uation net currency assets losses surplus defined translation available cash flow other investment benefit other Notes differences for sale hedges items Total property liability items Total
gains/losses arising during the period 9 –19 4 567 408 – 4 956 62 75 – 136 5 092
Net other comprehensive income before non-controlling interests –19 972 153 62 1 167 6 42 – 48 1 215 1 amount relates to debt securities reclassified to loans in 2008.
Profit or loss allocated to non-controlling interests 0 0 2 –
Swiss Life – Annual Report 2013 28 Acquisitions and Disposals of Subsidiaries assets and liabilities from acquisitions
There have been no guarantees provided or received for any related party receivables. For the years ended 31 December 2013 and 2012, no impairment allowance has been made for doubtful debts in respect of the amounts owed by related parties. This assessment is undertaken each financial year by examining the financial position of the related party and the market in which the related party operates.
The details regarding key management compensation in accordance with the Swiss Code of Obligations, Article 663bbis and Article 663c, are set out in the Swiss Life Holding financial statements.
Investment contracts without discretionary participation – – 193 138 – – 193 138
Debt instruments: Debt instruments categorised as level 2 of the fair value hierarchy comprise government, supranational, and corporate bonds for which prices are only available on an irregular basis or with a significant time lag. The price for such assets is obtained from an independent, acknowledged market data provider, which refers to quotes of recent transactions with the same or similar, actively traded bonds and systematically derives a comparable price for those less liquid securities. Alternatively, if such a derived price is missing, level 2 fair values of debt instruments are measured on a discounted cash flow basis using risk-adjusted discount factors. Main inputs to determine the discount factor are zero coupon yield curves and observable, ratingimplied flat spreads to account for credit risk.
Over-the-counter derivatives: Level 2 fair values of over-the-counter derivatives on currencies, interest rates, and equities are based on theoretical valuations with observable market data from wellknown data providers as inputs. The fair value measurement is based on acknowledged, wellestablished models. In certain cases, the market quotes used in those models may be slightly adjusted to better reflect specific market behaviour, e.g. volatility smiles.
Debt instruments: Debt instruments categorised as level 3 of the fair value hierarchy mainly comprise instruments with embedded derivatives to guarantee the participation on a defined underlying (hedge fund of fund or equity basket). The valuation, which is provided by banks, is derived from valuation techniques that take into account the market value of the underlying assets, transaction prices and other information such as market participants’ assumptions.
valuation valuation technique – technique – observable unobservable quoted prices inputs inputs (level 1) (level 2) (level 3) Total
Significant increases or decreases in estimated rental value and rent growth per annum would result in a higher or lower fair value of the properties. Significant decreases or increases in longterm vacancy rate and discount rate would result in a higher or lower fair value.
Total gains/losses recognised in profit or loss – 5 1 0 39 53 1 – 98
Due to the adoption of IFRS 13 Fair Value Measurement in 2013 the fair value hierarchy for equity instruments was subject to a review. This resulted in the transfers of equity securities of CHF 67 million from level 2 into level 3, and transfers of investment funds of CHF 480 million from levels 1 and 2 into level 3. In addition, assets for the account and risk of the Swiss Life Group’s customers of CHF 2416 million were transferred from level 2 into level 3. Debt securities of CHF 20 million were transferred from level 2 into level 3 as the predominant inputs are no longer derived from market observable inputs. The transfers between the levels of the fair value hierarchy have been made at the end of the reporting period.
Investment contracts without discretionary participation 36 43 36 43 1 Carrying amount approximates fair value fair value hierarchy as at 31 December 2013
valuation valuation technique – technique – observable unobservable quoted prices inputs inputs (level 1) (level 2) (level 3) Total fair value aSSeTS
investment contracts without discretionary participation Level 2: The fair value of investment contracts without discretionary participation is estimated using discounted cash flow calculations based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. The fair values of deposits are equal to the amount payable on demand or the carrying amount. The carrying amounts of variable-rate deposits approximate their fair values at the reporting date.
borrowings Level 2: Privately placed hybrid debt, the liability component of the convertible debt and bank loans are categorised as level 2. The fair value of Swiss Life’s privately placed hybrid debt (subordinated step-up loans) is calculated as the present value of the prospective cash flows to the lenders. The discount rate used for the calculation consists of a relevant government bond rate plus a credit spread. The fair value of the liability component of the convertible debt is calculated as the present value of the prospective cash flows to the bondholders. The discount rate used for the calculation is based on the yield-to-maturity of outstanding straight senior bonds issued by Swiss Life Holding. The fair value of the bank loans secured by mortgage is estimated using discounted cash flow calculations based upon the Group’s current borrowing rates for similar borrowings with remaining maturities consistent with the debt being valued.
Financial Cash collateral instruments received amouNTS aS aT 31 DeCemBer 2013
Financial Cash collateral instruments pledged amouNTS aS aT 31 DeCemBer 2013
Contractual obligations to purchase or construct investment property 210 173 other contingent liabilities and commitments 437 353 future minimum lease payments under non-cancellable operating leases – lessee
The total amount of credit commitments includes commitments to lend at fixed rates, which expose the Group to interest rate risk. These commitments are entered into for restricted periods of time. As at 31 December 2013, committed principal amounts stood at EUR 57 million and CHF 72 million (2012: EUR 15 million and CHF 105 million). The range of committed interest rates is 2.3% to 5.9% for commitments in euro and 1.0% to 3% for commitments in Swiss francs.
Other capital commitments include commitments to make investments (capital calls) and agreements to provide liquidity to protection funds in the insurance industry.
The Group has entered into various operating leases as a lessee. Rental expenses recognised in income for these items totalled CHF 39 million for the year ended 31 December 2013 (2012: CHF 40 million). Minimum lease payments totalled CHF 39 million in 2013 (2012: CHF 40 million ).
The Group is involved in various legal proceedings, claims and litigation generally relating to its insurance operations. The outcome of such current legal proceedings, claims and litigation could have a material effect on operating results or cash flows when resolved in a future period. However, in the opinion of the management these matters are adequately provided for as at the balance sheet date.
Securities lent in exchange for securities received 3 624 – 3 624 –
Securities under derivative and other transactions 2 041 1 815 2 041 1 815 1) of which can be sold or repledged by transferee 1 999 964 1 999 964
Securities received as collateral in exchange for securities lent 3 840 –
Swiss Life – Annual Report 2013 34 Future Minimum Lease Payments under Non-Cancellable Operating Leases – Lessor
Segment 1 Consolidation period group share Direct share Principal activity sWitzerlaND
Swiss life asset management ag, Zürich am 100.0% 100.0% asset management
Swiss life Intellectual Property management ag, Zürich other 100.0% 100.0% Services
Swiss life Property management ag, Zürich am 100.0% 100.0% asset management
TeCHNoParK Immobilien ag, Zürich CH from 23.07.2013 66.7% 66.7% real estate 1 Segment (CH = Switzerland, am = asset managers, IN = International, Fr = France, De = germany)
Segment 1 Consolidation period group share Direct share Principal activity lieChteNsteiN
agamI, levallois-Perret Fr 100.0% 100.0% Services and broker aTIm université SCI, levallois-Perret Fr from 20.06.2012 100.0% 100.0% real estate axyalIS PaTrImoINe, montbonnot-Saint-martin Fr 76.8% 96.0% Services
Swiss life asset management (France), levallois-Perret am 100.0% 100.0% asset management
Financial Solutions ag Service & vermittlung, münchen other 100.0% 100.0% Services
Segment 1 Consolidation period group share Direct share Principal activity germaNy (CoNtiNueD)
Sl Beteiligungs-gmbH & Co. Immobilien I Kg, münchen De 100.0% 100.0% real estate
Sl Beteiligungs-gmbH & Co. Immobilien II Kg, münchen De 100.0% 100.0% real estate
Sl Beteiligungs-gmbH & Co. Immobilien III Kg, münchen De 100.0% 100.0% real estate
Sl Beteiligungs-gmbH & Co. Immobilien ost Kg, münchen De 100.0% 100.0% real estate
Swiss life assurance Solutions S.a., Branch germany, münchen other 100.0% 100.0% Non-life insurance
(formerly Swiss life Deutschland Holding gmbH), münchen De 100.0% 100.0% Holding
(formerly awD gruppe Deutschland gmbH), Hannover De until 12.11.2013 – –
Swiss life gastronomie gmbH (formerly awD gastronomie gmbH), Hannover De 100.0% 100.0% Staff restaurant/Canteen
Swiss life Products (luxembourg) S.a. Branch germany, münchen IN 100.0% 100.0% life insurance/reinsurance
gesellschaft für wirtschaftsberatung und Finanzbetreuung mbH), Hannover De 100.0% 100.0% Services
Segment 1 Consolidation period group share Direct share Principal activity luxembourg
(formerly awD Chase de vere limited), london IN 100.0% 100.0% life insurance/reinsurance
(formerly awD Private Client Trustees limited), london IN 100.0% 100.0% Dormant
Swiss life International Services ag, Branch austria, wien CH from 19.12.2012 100.0% 100.0% Services
Swiss life Products (luxembourg) S.a., Branch austria, wien IN 100.0% 100.0% life insurance/reinsurance
Swiss life Select Cee Holding gmbH (formerly awD Cee Holding gmbH), wien IN 100.0% 100.0% Holding
reNaISSaNCe oFFICe SPrl, Bruxelles Fr 100.0% 100.0% real estate reNaISSaNCe reSIDeNTIal, Bruxelles Fr 99.9% 99.9% real estate
Swiss life Insurance Finance ltd., grand Cayman other 100.0% 100.0% Finance 1 Segment (CH = Switzerland, am = asset managers, IN = International, Fr = France, De = germany)
eCg oktatási Korlátolt Felelősségű Társaság, Budapest awD until 23.07.2012 – –
Swiss life Network (asia) Pte.ltd., Singapore IN 100.0% 100.0% Services slovakia
As statutory auditor, we have audited the consolidated financial statements of Swiss Life Holding Ltd, which comprise the consolidated statement of income, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of cash flows, consolidated statement of changes in equity and notes to the consolidated financial statements (pages 110 to 257), for the year ended 31 December 2013.
auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
Swiss Life – Annual Report 2013 opinion In our opinion, the consolidated financial statements for the year ended 31 December 2013 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.
Swiss Life Holding Financial Statements 261 Review of Operations 262 Statement of Income 263 Balance Sheet 264 Notes to the Financial Statements 267 Disclosure of compensation to the Board of Directors and the Corporate Executive Board in accordance with the Swiss Code of Obligations (CO) Art. 663bbis and Art. 663c 285 Appropriation of Profit 286 Report of the Statutory Auditor
The annual profit consisted mainly of guarantee fees, interest income and dividends within the Group, as well as investment income. Income rose from CHF 35 million to CHF 45 million on the back of new guarantees granted to subsidiary companies in June of the previous year. As a result of debt repayment or conversion of debt capital into equity capital, the volume of loans to Group companies fell from CHF 713 million to CHF 426 million, while the total value of participations grew from CHF 3658 million to CHF 3918 million. Interest earned on internal loans amounted to CHF 43 million (2012: CHF 50 million). Dividend payments received by the holding company from subsidiaries came to CHF 19 million (2012: CHF 24 million). Investment income totalled CHF 7 million (2012: CHF 8 million).
Cash and cash equivalents 503 88 time deposits and similar investments 260 –
Receivables from third parties 0 0 tOtal CURReNt assets 845 146
liabilities towards third parties 63 50 total short-term liabilities 63 50
Swiss Life – Annual Report 2013 legal reserves Legal reserves comprise the general reserves (plus the additional paid-in capital in excess of the par value, net of transaction costs), the reserve for treasury shares (equivalent in value to own Swiss Life Holding shares held by the Swiss Life Group) and the capital contribution reserve of CHF 1246 million. Following the distribution of CHF 4.50 per share, the capital contribution reserve was reduced by CHF 144 million during the year under review from CHF 1389 million to CHF 1246 million as at 31 December 2013. Of this amount CHF 1075 million is recognised by the Federal Tax Administration, while the legal qualification of CHF 171 million is still open and is to be reassessed according to future legal developments.
issue of a convertible bond in 2013 On 2 December 2013, Swiss Life Holding launched a bond issue in the amount of CHF 500 million with a coupon of 0%, due in 2020. The bonds may be converted into registered Swiss Life Holding shares. The conversion price is set at CHF 243.97.
Swiss Life Holding further provides capital guarantees for a maximum net asset value of CHF 1100 million to Swiss Life Ltd, CHF 150 million to Swiss Life Funds, CHF 150 million to Swiss Life Funds (Lux) Management Company, CHF 7 million to Swiss Life (Liechtenstein) Ltd and CHF 98 million to Swiss Life Products.
balance as at 1 January 17 26 allocation to reserve for treasury shares 9 –8 total reserve for treasury shares 26 17
Reserve for treasury shares –9 8 pROFIt sHOwN IN tHe balaNCe sHeet
balance as at 1 January 107 242 allocation to free reserves –105 –240 tOtal pROFIt sHOwN IN tHe balaNCe sHeet 91 107 risk assessment For information on risk assessment, please refer to note 5 of the Swiss Life Group’s Consolidated Financial Statements.
Disclosure of compensation to the Board of Directors and the Corporate executive Board in accordance with the Swiss Code of obligations (Co) Art. 663bbis and Art. 663c
Compensation policy principles The Board of Directors as a whole is responsible for establishing the compensation policy guidelines within the Group (incl. variable compensation and equity compensation plans) and for the employee benefit institutions.
Compensation component based on achievement of annual objectives (Bonus in cash and possibly in shares)
Permanent employment contracts in Switzerland contain notice periods of between three and twelve months, depending on position and seniority. All current employment contracts with members of the Corporate Executive Board specify a notice period of twelve months. Members of the Corporate Executive Board have no contractual entitlements to severance payments. Likewise members of the Board of Directors have no such entitlements.
The Board of Directors as a whole sets the level and distribution of the variable compensation pool for all employees on the basis of its compensation policy guidelines and a proposal by the Nomination and Compensation Committee. When determining the level of the allocation to the compensation pool, it takes into consideration the annual result, as well as medium-term planning and the degree of target achievement. The Board of Directors as a whole is also responsible for determining the individual compensation of members of the Corporate Executive Board. It carries out an annual performance assessment of all members of the Corporate Executive Board, based on preparatory work by the Nomination and Compensation Committee. In addition, current aspects of HR policy and, in particular, succession planning are regularly discussed at meetings of the Nomination and Compensation Committee and the Board of Directors as a whole.
Salary is determined annually by the Board of Directors, on the basis of a proposal by the Nomination and Compensation Committee, taking into account the individual member’s function-related responsibility and the current market conditions.
At Corporate Executive Board level, the amount of the variable compensation depends 60% directly on the company’s success. The Key Performance Indicators (KPIs) used to assess company success include, as mentioned above, key figures relating to annual profit, cost savings, the risk and fee result, new business profitability, return on equity and solvency (Swiss Solvency Test, SST).
40% of the variable compensation is based on Corporate Executive Board members’ achievement of specified personal goals. On the one hand, these personal goals are linked back to the company ’s success, in that each Corporate Executive Board member has to meet personal quantitative objectives contributing to the company’s success in relation to his division. On the other hand, the personal goals cover qualitative factors, namely project targets, risk management and compliance goals, as well as requirements relating to leadership and to supporting and further developing corporate culture.
In the year under review, Swiss Life again made significant operational progress. Adjusted profit from operations increased from the previous year’s high level by a further 13% to approximately CHF 1.14 billion. In an ongoing challenging economic, regulatory and political environment, net profit exceeded the medium-term planning target by more than 35%. In addition, despite investments, an above-target reduction in costs was achieved under the Group-wide programme “Swiss Life 2015” of over CHF 10 million compared with 2012. The risk and fee result was in line with expectations; the solvency and the insurance reserves were substantially strengthened and the targets relating to new business margin, value of new business, profitability and return on equity were significantly exceeded.
Within the framework of the compensation arrangements for members of the Corporate Executive Board, “deferred compensation in cash” was introduced as a new compensation component on 1 January 2012. On the basis of the corresponding regulations, the Board of Directors determines every year from what amount and, if applicable, what portion of the variable cash compensation is not paid immediately but is allocated in the form of “deferred compensation in cash”. For the 2013 financial year, the Board of Directors determined that, as in the previous year, as from a variable compensation amount in cash of CHF 500 000, 23% of the total variable compensation in cash is to be allocated as deferred compensation in cash.
Swiss Life – Annual Report 2013 a violation of statutory, regulatory or compliance standards by participants in the plan. If the employment relationship is terminated by a participant during the three-year deferral period for deferred compensation in cash, the entitlements expire worthless (retention component).
personnel changes to the Board of Directors and the Corporate executive Board in 2013 After serving for 10 years on Swiss Life Holding’s Board of Directors, Volker Bremkamp stepped down from the Board of Directors with effect from the General Meeting of Shareholders on 23 April 2013 due to his reaching the statutory age limit. Frank W. Keuper, Ueli Dietiker and Klaus Tschütscher were newly elected to the Board of Directors.
Klaus G. Leyh resigned from the Corporate Executive Board with effect from 30 June 2013.
Compensation to the Board of Directors Compensation paid to the Board of Directors in the 2013 financial year was at the same level as in the previous year.
Compensation for the 2012 financial year, as disclosed in the 2012 annual report, is also shown in a separate table following the 2013 compensation table.
For comparison purposes the 2013 compensation table is presented twice: firstly, compensation in blocked shares is reported on the basis of the respective stock exchange closing prices on the day of allocation, and secondly, it is presented analogous to the compensation table 2012, taking into account the economic value at allocation, which is equal to the tax value.
5 pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%.
total compen- sation extra- in cash ordinary aggregate and shares Regular contri- total amount Number amount (amount) 4 contributions 5 butions (amount) 6
Compensation to the board of Directors in 2012 amounts in CHF
total compen- sation extra- in cash ordinary aggregate and shares Regular contri- total amount Number amount (amount) 3 contributions 4 butions (amount)
CHF 185 520 in the year under review. 4 pursuant to the fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%.
Compensation to the board of Directors in 2012 taking into account the respective stock exchange closing prices on the day of allocation amounts in CHF
total compen- sation extra- amount (at in cash ordinary aggregate closing price and shares Regular contri- total amount Number on allocation) (amount) 3 contributions 4 butions (amount)
3 all contributions are gross contributions, i.e. they include employee contributions to aHv/Iv/alv. employer contributions to aHv/Iv/alv/FaK amounted to a total of CHF 185 520 in the year under review.
Compensation to the Corporate executive Board In the compensation table below, the short-term variable compensation in cash, which was determined by the Board of Directors at the beginning of 2014, is disclosed as in previous years, on an accrual basis as compensation for 2013 (accrual method). The members of the Corporate Executive Board did not receive any compensation in shares for the 2013 financial year; they are participating in the current equity compensation plan, which provides for the allocation of Restricted Share Units (RSUs).
The long-term variable compensation component in the form of the equity compensation plan (RSU plan) was hitherto reported in the year of allocation of the RSUs, since the three-year period of the 2011–2013 RSU plans began on 1 April of each year. For the 2014 RSU plan the key date for allocation has been brought forward to 1 March, which is why the long-term variable compensation component is now also reported in the 2013 compensation table for the 2013 financial year, which serves as the basis for the amount of the allocation and the corresponding number of allocated RSUs (accrual method).
Compensation to the Corporate executive board in 2013 amounts in CHF
Other members of Corporate executive board 767 000 10 206 2 077 329 11 963 575 6 the variable deferred compensation in cash is paid out after a deferral period of three years, provided the requirements are satisfied at that point. 7 the RsUs represent future subscription rights that entitle the individuals concerned to receive swiss life Holding shares after a period of three years, provided the requirements are satisfied at that point.
8 For the 2014 RsU plan beginning 01.03.2014 the 2013 financial year forms the basis for the amount of the allocation and/or the number of allocated RsUs. the allocation of RsUs on 01.03.2014 was effected at a fair value of CHF 203.54, as calculated by an independent consultancy firm.
Compensation to the Corporate executive board in 2013 taking into account the RsUs allocated on 1 april 2013, presented analogous to the compensation table 2012 within this reporting period amounts in CHF
total total compensation bonus for 2013 Other compensation in cash and salary paid in 2014 2 compensation 3 in cash Number amount shares (amount)
Other members of Corporate executive board 1 4 447 814 3 365 677 137 279 7 950 770 0 0 7 950 770 1 six individuals were taken into account in the period under review.
Other members of Corporate executive board 767 000 15 230 1 939 389 11 825 635 6 the variable deferred compensation in cash is paid out after a deferral period of three years, provided the requirements are satisfied at that point. 7 the RsUs represent future subscription rights that entitle the individuals concerned to receive swiss life Holding shares after a period of three years, provided the requirements are satisfied at that point.
Other members of Corporate executive board 1 4 238 541 2 916 400 137 555 7 292 496 0 0 7 292 496 1 six individuals were taken into account in the period under review.
8 the allocation of RsUs as at 01.04.2012 was effected at a fair value of CHF 93.77, as calculated by an independent consultancy firm.
Compensation to the Corporate executive board in 2012 taking into account the RsUs allocated on 1 april 2013 for the 2012 financial year (accrual method)
total total compensation bonus for 2012 Other compensation in cash and shares salary paid in 2013 2 compensation 3 in cash Number amount (amount)
2 the bonus paid in 2013 relates to the 2012 financial year result. 3 Child allowances (CHF 2400), allowance for years of service (CHF 15 625), company cars (CHF 83 391), premium contributions to 3rd pillar pension plans (CHF 99 056), other (CHF 4828), each in total.
aggregate total compensation in cash and in shares and occupational Regular extraordinary provisions expense contributions 4 contributions (amount) 5
Other members of Corporate executive board 697 000 15 230 1 939 389 11 137 156 6 the variable deferred compensation in cash is paid out after a deferral period of three years, provided the requirements are satisfied at that point. 7 the RsUs represent future subscription rights that entitle the individuals concerned to receive swiss life Holding shares after a period of three years, provided the requirements are satisfied at that point.
8 the allocation of RsUs on 01.04.2013 was effected at a fair value of CHF 127.34, as calculated by an independent consultancy firm.
Corporate executive board slH shares bruno pfister, group CeO 3 540 manfred behrens 900
bruno pfister, group CeO 16 810 tOtal CORpORate exeCUtIve bOaRD 63 150 1 total number of RsUs allocated in the years 2011, 2012 and 2013 in connection with the relevant equity compensation plan. the RsUs represent future subscription rights that entitle the individuals concerned to receive slH shares after a period of three years, provided that the relevant conditions are met at that point.
Share ownership/participation rights as at 31 December 2012 As at 31 December 2012, acting members of the Board of Directors and the Corporate Executive Board (including closely related parties) held the following number of registered Swiss Life Holding shares and future subscription rights to Swiss Life Holding shares in the form of Restricted Share Units (RSUs) and Performance Share Units (PSUs).
1 total number of psUs allocated in the year 2010 in connection with the relevant equity compensation plan. the psUs represent future subscription rights that entitle the individuals concerned to receive slH shares after a period of three years, provided that the relevant conditions are met at that point.
2 total number of RsUs allocated in the years 2011 and 2012 in connection with the relevant equity compensation plan. the RsUs represent future subscription rights that entitle the individuals concerned to receive slH shares after a period of three years, provided that the relevant conditions are met at that point.
The net profit for the year amounts to CHF 88 893 651. The Board of Directors proposes to the General Meeting of Shareholders that the profit be appropriated in accordance with the table below. If this proposal is adopted, a distribution of CHF 5.50 per share will be made from the capital contribution reserve.
balance carried forward from previous year 2 197 310 1 650 317 tOtal pROFIt sHOwN IN tHe balaNCe sHeet 91 090 961 107 197 310
Report of the Statutory Auditor to the General Meeting of Swiss Life Holding Ltd Zurich report of the Statutory Auditor on the financial Statements
Global equity markets recorded solid gains during 2013. This trend was supported by the expansionary monetary policy of central banks and an improved macroeconomic environment. Interest rates also recovered slightly from their record lows. This positive environment benefited the Swiss Life share price, which gained in all four quarters. The strong performance of 53% is well above the Swiss Market Index performance (+20%) and the European insurance index Dow Jones STOXX 600 Insurance (+29%). At the Annual General Meeting in April 2013, the shareholders approved a withholding tax-free distribution out of the capital contribution reserves of CHF 4.50 per share.
Performance Dow Jones STOXX 600 Insurance Index (in %) +29 +33 –14 +2 +13
Equity holders of Swiss Life Holding 781 98 605 557 278
Annual Report 2013 The Annual Report is published in German and English and contains additional information on risk management, market consistent embedded value (in English only), corporate governance and the annual accounts. The English text is definitive for the Consolidated Financial Statements.
Publishing details Publisher — Swiss Life Holding Ltd, Zurich Editorial responsibility — Swiss Life, Group Communications, Zurich Production — Management Digital Data AG, Lenzburg, Canton of Aargau © Swiss Life Holding Ltd, 2014
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