Contents 4 Facts & Figures 6 Shareholders’ Letter 8 Strategy & Brand 14 Segment Reporting 16 Switzerland 18 France 20 Germany 22 International 24 Asset Managers 26 Corporate Governance 32 Board of Directors 47 Corporate Executive Board 53 Swiss Life Compensation Report for the Financial Year 2019 70 Report of the Statutory Auditor 76 Risk Management 79 Sustainability Report 81 CEO Foreword 82 Sustainability at Swiss Life 90 Sustainability in Business 109 Sustainabilty in Society 117 Sustainabilty as an Employer 132 Sustainabilty in the Environment – Environmental and Climate Protection in Operational Ecology 136 Swiss Life’s Contribution to the Sustainable Development Goals (SDG) 138 UN Global Compact Progress Report 140 Information on Sustainability Reporting 141 Memberships 142 GRI Content Index 146 Key Sustainability Indicators 150 Consolidated Financial Statements 152 Consolidated Statement of Income 153 Consolidated Statement of Comprehensive Income 154 Consolidated Balance Sheet 156 Consolidated Statement of Cash Flows 158 Consolidated Statement of Changes in Equity 159 Notes to the Consolidated Financial Statements 305 Report of the Statutory Auditor 311 Swiss Life Holding Financial Statements 312 Management Report 313 Statement of Income 314 Balance Sheet 315 Notes to the Financial Statements 322 Appropriation of Profit 323 Report of the Statutory Auditor 327 Share Performance and Historical Comparison
Markets — As a leading European provider of comprehensive life and pensions and financial solutions, the Swiss Life Group enables people to lead a self-determined life. In Switzerland, France and Germany, Swiss Life offers individuals and corporations comprehensive and individual advice plus a broad range of own and partner products through its sales force and distribution partners such as brokers and banks. The Swiss Life Select, Tecis, Horbach, Proventus, Chase de Vere and Fincentrum advisors choose suitable products for customers from the market according to the Best Select approach. Swiss Life Asset Managers offers institutional and private investors access to investment and asset management solutions. Swiss Life provides multinational corporations with employee benefits solutions and high net worth individuals with structured life and pensions products. The subsidiaries Livit, Corpus Sireo, Mayfair Capital, Beos and Fontavis are also part of the Group.
A long-term perspective is one of the keys to success. At Swiss Life, we focus on continuity and financial solidity, and base our work on the corporate objectives that best reflect the company’s strengths. The Swiss Life Group has made continual progress, especially in two areas: consulting and asset management.
Our distribution capacity gives us access to customers that is envied by many of our competitors. And with good reason: according to the results of a survey, more than 80% of people in the markets we serve want personal advice on pension and financial matters. That shows how relevant our advisory expertise is – and that it is also a key to continuous growth. Customer centricity is not just an empty phrase for us.
Our goal is still to achieve a steady and sustainable rise in our fee result, risk result, value of new business and our third-party business. Premiums are important but they are not our principal driver – even though we registered a one-off increase of 22% in premiums in 2019 because a competitor withdrew from full insurance for occupational provisions. For a long time, we have focused successfully on earnings quality and profitability before premium growth.
Swiss Life is very successful today because we did the groundwork early on. Our figures for 2019 once again present a clear picture: year-on-year, we managed to increase fee income by 16% to CHF 1.82 billion. And the fee result came to CHF 553 million, 15% higher than in 2018. We are also making progress in the life business. The risk result improved by 3% to CHF 417 million and the value of new business by 45% to CHF 561 million, with a new business margin of 1.9%.
Success can never be taken for granted. Our employees are fundamental to our very good development. It is their skills and engagement that make the difference. As the Swiss Life Group, we support people in realising their wish to live a self-determined life. We do this by ensuring they receive individual advice, that their money is invested well over decades and by providing pension solutions that meet their need for security. In times of political and economic uncertainty, our sustainable pension solutions are particularly invaluable.
We would like to thank you, dear shareholders, for supporting us in this mission.
Strategy & Brand Swiss Life offers its customers a long-term value proposition – so they can lead their life with self-determination and confidence.
Swiss Life’s environment is heavily influenced by regulatory and political trends as well as socioeconomic changes, such as increasing life expectancy. Results of market research performed by Swiss Life show that people find pensions a stressful topic. And most of them are aware that their financial security is largely up to them. In view of these developments, Swiss Life sees growth opportunities and differentiation potential on the market for pension solutions as well as in consulting.
With its core markets of Switzerland, France and Germany as well as the cross-border business of the International segment and the asset management business of Swiss Life Asset Managers, Swiss Life enjoys a very strong market position. With around 14 000 advisors, Swiss Life has proven advisory expertise and unique customer access.
Specialist expertise in asset and liability management and in risk management via asset management for the insurance business
Swiss Life acts responsibly in business, as an employer, in society and towards the environment.
Capital management – Increase in cash remittance to the holding company to a cumulative value between CHF 2 and 2.25 billion (2019–2021) – SST ambition range of 140 to 190% – Increase in dividend payout ratio for the shareholders to 50–60% of profit – From December 2018 to December 2019, the Group will implement a share buyback programme of CHF 1 billion.
Swiss Life made progress in implementing all strategic thrusts in 2019. With the fee result of CHF 553 million and the risk result of CHF 417 million, Swiss Life is on track in relation to the relevant targets up until 2021. And the value of new business increased last year by 45% to CHF 561 million. Swiss Life is also making good progress with its targets for operational efficiency: the life efficiency ratio stood at 41 basis points and the distribution operating expense ratio in the owned IFAs was 26%. In third-party business, the cost/income ratio improved to 84%. In capital management Swiss Life increased its cash remittance to the holding company by 8% to CHF 752 million. The payout ratio came to 53%. Swiss Life is thus on track to achieve all its financial objectives under the “Swiss Life 2021” Group-wide programme.
The success of the Swiss Life brand results from a consistent brand strategy and management. On the basis of its corporate strategy and positioning as a provider of comprehensive life and pensions and financial solutions, the Swiss Life umbrella brand provides orientation and creates confidence.
While the umbrella and sub-brands are managed centrally, brand management for the level 3 brands Endorsement and 4 Individual brands is performed directly in the relevant divisions. There were no changes in the brand hierarchy in 2019.
Sub-brands emphasise the expertise of the umbrella brand in specific market segments. Swiss Life maintains a deliberately limited portfolio for individual sales channels.
The corporate design is derived from the brand personality and, in addition to ensuring recognisability, contributes to a uniform brand experience. Whether they are browsing the website, reading a brochure or looking at an advert, the stakeholder groups are to receive the same strong impression of Swiss Life at all contact points. The pictorial world is one of the key instruments in making the brand personality tangible for external and internal target groups. It differentiates Swiss Life from the competition and produces its robust recognition effect.
Swiss Life also carries out regular internal studies of brand value, which demonstrate the development of the brand’s value on the basis of a wide range of factors.
Swiss Life generated direct investment income of CHF 4.4 billion, equal to its 2018 level. Reflecting appreciations in the investment portfolio and higher average capital investments, the direct investment yield fell to 2.8% (previous year: 2.9%). After appreciations, the net investment yield came to 2.9% (previous year: 3.0%).
Swiss Life was able to increase its fee income by 13% to CHF 1820 million. This growth was supported by acquisitions in the past year and consolidation effects. Swiss Life posted premiums of CHF 23.0 billion for 2019 (previous year: CHF 19.2 billion). The extraordinary rise is attributable to group life business in Switzerland and the withdrawal of a competitor from full insurance. Insurance reserves for the benefit of the company’s policyholders rose by 8% in local currency.
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 23 008 19 218 20%
According to the Swiss Insurance Association (SIA), life insurance premiums in Switzerland increased to CHF 29.8 billion, up 0.6% on the previous year. In group life business, premiums for the market as a whole remained constant compared to the previous year, while premiums for individual life business increased 2.4% compared to the previous year. Swiss Life further increased its market share of group and individual life business.
The range of provisions products for private clients fully meets their fundamental requirements: predictability and security. The 2018 launch of Swiss Life Dynamic Elements savings insurance again helped to significantly increase the share of capital light solutions in new business in 2019, in line with the offer strategy. In single premium business, new business volume increased by more than 34% compared with 2018, partly due to attractive tranche solutions. A new investment product, the Swiss Life Premium PayoutPlan, was launched in Switzerland in co-operation with Swiss Life Asset Managers. The product is an innovative, actively managed payout plan for private customers.
In 2020 Swiss Life Switzerland will continue the intensive implementation of its “Swiss Life 2021” strategy programme. The strategic thrust of the programme is the digitally supported advisory process, which should improve the customer journey and the effectiveness of consulting as well as leading to more business with existing and new customers.
In the year under review, Swiss Life France posted a segment result of CHF 275 million (previous year: CHF 278 million). The slight decline is due to currency effects; the segment result increased by 3% in local currency. The result is primarily due to an increase in the still high-quality new business, higher fee income due to increased assets as well as an improved financial margin and improved technical margins in property and liability insurance. Health, death and disability insurance, meanwhile, experienced an unfavourable claims experience.
The insurance market grew by 4% in local currency in 2019 despite the ongoing low interest rate environment and in the context of increasing regulation as a result of the pension reform. Savings and retirement business was up 4%, while health, death and disability insurance and property and casualty business grew by 4.6% and 4%, respectively. Swiss Life in France increased premium volume to CHF 5.9 billion, maintaining its focus on profitability and quality of new business over growth. Premiums in savings and retirement provisions rose by 5% at Swiss Life in local currency. The share of premiums from unit-linked contracts was 49%, and thus about twice as high as the market average – thanks to the private insurer strategy and bonus distribution policy for investments in the premium customer segment. The contribution of unit-linked contracts to new business remained stable at a high level at 61%. At the end of 2019, these contracts accounted for 42% of reserves in the life business. In health, death and disability insurance, premium volume increased by 4% as a result of strong sales momentum in both health and death and disability. With its distribution of savings products, Swiss Life Banque Privée also made a positive contribution to business with high net worth individuals in 2019. Fee income rose from CHF 310 million to CHF 326 million in the year under review, due to increased assets and the good quality of new business. In local currency this equates to a 9% increase.
In 2020, Swiss Life in France will continue to focus on existing customer segments, in particular by expanding its pension, health, death and disability offerings. Based on multichannel distribution, the company will drive the further development of its “phygital” model, which best combines the personal, physical customer relationship with digitalisation and services.
Swiss Life Germany posted premiums of CHF 1.4 billion in 2019. This corresponds to an increase of 2% in local currency compared to the previous year. The core product areas of Swiss Life Germany are employee insurance, occupational pensions, long-term care insurance and modern guarantee concepts.
Operating costs increased 6% due to investments under the new Group-wide programme “Swiss Life 2021.”
In the coming three years, Swiss Life Germany will focus on the three strategic thrusts: expansion of position as biometry and occupational pensions specialist, positioning as leading advisor to German Mittelschicht companies and increase of efficiency and service quality. The focus on insurance is on biometric, sector-specific and occupational pensions solutions. Swiss Life Germany wants to leverage its competency in biometry to set insurance market standards in service as well as in the scalable application process. In financial consulting Swiss Life Germany has set its sights on becoming the “financial home” of the German Mittelschicht companies and further increasing its own distribution strength – for example through a scalable distribution platform. In order to achieve this goal, connectivity is being improved and the administration processes are being automated, in step with the systematic advance of digitalisation.
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 1 375 1 395 –1%
The International segment comprises cross-border business for high net worth international individuals (Global Private Wealth Solutions) and multinational companies (Global Employee Benefits Solutions), under the brand “Swiss Life Global Solutions”, as well as the financial services providers Chase de Vere in the United Kingdom, Fincentrum in the Czech Republic and Slovakia, and Swiss Life Select in Austria and the Czech Republic.
In the year under review, the International segment achieved a result of CHF 81 million, a growth rate of 20% over the previous year (2018: CHF 68 million). The rise stems predominantly from higher fee income of CHF 314 million (2018: CHF 260 million).
The Global Employee Benefits Solutions business area concentrates on global provisions solutions for multinational companies. Good risk and volume development leads to attractive profitability in the provisions business. Swiss Life Network, a leading independent provider of global employee benefits solutions, made another strong contribution to the result due to its fee optimisation and thus confirmed its good market position.
Fee income from the financial advisory companies rose by CHF 52 million to CHF 211 million, due to the acquisition of Fincentrum, growth at Chase de Vere, and growth at Swiss Life Select in Austria.
Assets under management by Swiss Life Asset Managers came to CHF 254.4 billion at the end of 2019. Assets from insurance business climbed by around CHF 9.9 billion to CHF 171.4 billion. Due to the long-term nature of its liabilities, Swiss Life invests especially in fixed-income securities, which at the end of 2019 made up 57% of its portfolio. The real estate holding increased further from 20% to 21% and the net equity holding was 4% as at 31 December 2019.
In 2018 Swiss Life Asset Managers signed up to the United Nations-supported Principles for Responsible Investment (PRI) and became a member of the Global Real Estate Sustainability Benchmark (GRESB). With its acquisition of Fontavis AG as of 1 October 2019, Swiss Life Asset Managers enhanced its real estate competency and facilitates access for institutional investors to sustainable investment solutions in the energy and infrastructure sector. Fontavis develops and manages investment solutions in the areas of hydropower, wind parks, power grids, local heat networks and district heating grids, solar installations, recycling plants and other infrastructure facilities.
The expansion of the pan-European real estate funds, investing in real estate in various European countries, was pursued further in 2019. Growth and increasing demand in the competitive real estate business prompted Swiss Life Asset Managers to introduce a new property management solution during the year under review, to further enhance the quality of its European fund and asset administration.
Assets under management for insurance business – breakdown by asset class As at 31.12.2019
Corporate Governance Responsible and sustainable corporate governance is of central importance to the Swiss Life Group.
This report describes the essential features of corporate governance within the Swiss Life Group. The structure below largely follows the Annex to the Directive on Information Relating to Corporate Governance issued by the SIX Swiss Exchange, which came into force on 20 March 2018. The compensation report on pages 53 to 70 takes into consideration the regulations on transparency stipulated in the Compensation Ordinance and FINMA circular 2010/1 on minimum standards for remuneration schemes of financial institutions.
The companies falling within the Group’s scope of consolidation are presented in the Consolidated Financial Statements (note 35) on pages 299 to 304. Information on the listing on the SIX Swiss Exchange and market capitalisation can be found in the section “Share Performance and Historical Comparison” on pages 327 and 328. The organisational structure of the Group shows the key business markets and areas. The resulting operational responsibilities are reflected in the allocation of responsibilities among the Corporate Executive Board. With regard to in surance operations, one person with responsibility for the market and results is assigned to each specific area.
There are no cross participations between Swiss Life Holding or its subsidiaries with other listed companies that exceed the participation threshold of 3%.
The capital structure of Swiss Life Holding was as follows on the balance sheet date: – Ordinary share capital: CHF 171 332 490.60, divided into 33 594 606 fully paid registered shares with a par value of CHF 5.10 each; – Conditional share capital: CHF 19 675 534.80, divided into 3 857 948 registered shares with a par value of CHF 5.10 each; – Authorised share capital: none.
Since the establishment of Swiss Life Holding on 17 September 2002, a number of capital market transactions have been conducted. A detailed description of the transactions carried out up to and including the end of 2016 can be found in the Corporate Governance section of the annual reports for the relevant years. The annual reports can be accessed at www.swisslife.com, “Investors & Shareholders” area, “Results & Reports” section (www.swisslife.com/annualreports).
In the year under review, as part of the share buyback programme announced by Swiss Life on 29 November 2018, the 628 500 registered shares with a par value of CHF 5.10 each that had been repurchased up to and including 8 March 2019 were cancelled on 17 July 2019 in accordance with the resolution of the Annual General Meeting on 30 April 2019. As a result, the ordinary share capital decreased from CHF 174 537 840.60 to CHF 171 332 490.60.
Additional information on the Swiss Life share is available in the section “Share Performance and Historical Comparison” on pages 327 and 328.
The Articles of Association and Organisational Regulations of Swiss Life Holding can be seen at www.swisslife.com, “Investors & Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles).
Other appointments: – Adecco Group AG, Chairman of the Board of Directors (until April 2020) – dormakaba Holding Ltd, Member of the Board of Directors (until October 2020) – Danzer Holding AG, Member of the Supervisory Board – Emil Frey Holding AG, Member of the Board of Directors – Swiss Insurance Association (SIA), Chairman – economiesuisse, Member of the Board Committee
Frank Schnewlin — Born 1951, Swiss national Vice Chairman of the Board of Directors bild Frank Schnewlin studied at the University of St. Gallen (lic. oec. HSG), at the London School of Economics (Master of Science) and Harvard Business School (MBA) before earning his doctorate in economics in 1983 at the University of Lausanne (Dr. ès sc. écon.). From 1983 to 2001 he held various positions at the Zurich Financial Services Group in Switzerland and the USA, including Head of Corporate Center and
Member of the Executive Committee of the Swiss P&C business unit. From 1997 to 1999 he was Chief Financial Officer of all Swiss operations. In 1999 Thomas Buess moved to the USA as Chief Financial Officer of Zurich Financial Services Group’s North American business area. In 2002 he was appointed Group Chief Financial Officer and Member of the Group Management Board before assuming the role of Chief Operating Officer of Zurich Financial Services Global Life in 2004. In January 2009 he moved to Allianz Group as Head of Operational Transformation. In August 2009 Thomas Buess was named Group Chief Financial Officer and Member of the Corporate Executive Board of the Swiss Life Group. After nearly ten years, Thomas Buess handed over his function as Group CFO to his successor at the end of February 2019.
Other appointment: – Sygnum Bank AG, Member of the Board of Directors and Chairman of the Audit and Risk
Adrienne Corboud Fumagalli will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Other appointments: – Sanitas Krankenversicherung and Sanitas Beteiligungen AG, Vice Chairman of the Board of Trustees and Chairman of the Board of Directors – Zuckermühle Rupperswil AG, Member of the Board of Directors – BLS Ltd. and BLS Netz AG, Member of the Board of Directors and President of the
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 (now FINMA) 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).
Frank W. Keuper will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Other appointments: – HanseMerkur Insurance Group, Member of the Supervisory Board – JCK Holding GmbH Textil KG, Chairman of the Advisory Committee – HVP Hanse Vertriebspartner AG, Chairman of the Supervisory Board
Audit Committee – Consitex SA, Member of the Board of Directors – Ermenegildo Zegna Holditalia SpA, Member of the Board of Directors and Chairman of the
Nomination and Compensation Committee – Global Petroprojects Services Ltd, Member of the Board of Directors – Bank Lombard Odier & Co Ltd, Member of the Board of Directors and Chairman of the
Franziska Tschudi Sauber — Born 1959, Swiss national Member of the Board of Directors bild Franziska Tschudi graduated in law at the University of Bern and passed her bar exam there in 1984. She studied law at Georgetown University, Washington, D.C., earning an LL.M. in 1986, and passed the bar exam for the US states of New York and Connecticut in 1987. Franziska Tschudi completed postgraduate studies at the University of St. Gallen (1991 to 1993), receiving an Executive MBA.
After initially working as an Assistant for Media Law at the Institute for Constitutional and Administrative Law at the University of Bern, and practising business and media law in Zurich, Washington, D.C. and Geneva, she served as Secretary General at SIG Holding AG from 1992 to 1995. She then became a Member of the Executive Board of Weidmann Holding AG (“Weidmann Group”), Rapperswil, in 1995, where she was Head of Corporate Development and, from 1998, Head of the Business Area Electrical Technology Asia/Pacific. She has held the positions of Chief Executive Officer and Delegate of the Board of Directors of Weidmann Holding AG since 2001.
Franziska Tschudi will be put forward for re-election as Member of the Board of Directors and as Member of the Compensation Committee at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
No members of the Board of Directors resigned during the reporting period. Thomas Buess was newly elected to the Board of Directors.
During the year under review, the Compensation Committee convened a total of six times. Each session lasted for around one-and-a-half hours on average. There was full attendance at all meetings. The Chairman of the Board of Directors also attended meetings of the Compensation Committee in relation to nomination and succession planning issues in the Board of Directors and Corporate Executive Board.
Nine meetings of the Investment and Risk Committee were held in the year under review. Each session lasted for around two hours on average. All members attended all the meetings. The Chairman of the Board of Directors was also present at all meetings. The Group CEO attended seven meetings, while the Group CFO attended eight and the Group CIO attended all nine meetings of the Investment and Risk Committee. The Group CRO also attended all the meetings.
The Articles of Association of Swiss Life Holding can be seen at www.swisslife.com, “Investors & Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles). The Organisational Regulations can also be found on the Swiss Life website, “Investors & Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles).
Implementation of the measures recommended by Corporate Internal Audit is monitored by Group Compliance and Operational Risk Management. The Audit Committee regularly receives a report on operational risk management within the Swiss Life Group. The Internal Control System (ICS) is another instrument available to the Board of Directors for information and controlling purposes. Further details are available in the “Risk Management” section from page 76.
The following information on the members of the Corporate Executive Board is based on the situation on the balance sheet date. The information on former members of the Corporate Executive Board and information on any previous external mandates can be found in the Corporate Governance section of the relevant previous annual reports, available at www.swisslife.com, “Investors & Shareholders” area, “Results and reports” section (www.swisslife.com/annualreports).
Other appointments: – Palladio Foundation, Member of the Board of Trustees – Swiss Insurance Association (SIA), Member of the Board of Directors – Society for the Promotion of the Institute of Insurance Economics of the
bild Matthias Aellig studied Physics at the University of Bern. After receiving his doctorate in the field of solar wind and completing a research visit at the Massachusetts Institute of Technology (MIT) in Cambridge, USA, he joined McKinsey & Company in Zurich as an advisor in 2000, mainly charged with projects in the banking and insurance area. At the end of 2003, Matthias Aellig joined the then-Winterthur Group (now AXA), initially as Head of Value Management and then, as of 2004, as Chief actuary Life, running the Winterthur Group’s actuarial office. In 2007 he was named Chief actuary Life at Zurich Switzerland, in which role he was notably responsible for reserving, the group life operating account and market-consistent valuation. In 2010 Matthias Aellig became Chief Risk Officer of the Swiss Life Group. In this function he was charged with the Group-wide enterprise risk management framework, which includes, in addition to quantitative and qualitative risk management, the Group’s actuarial office and product and margin management.
Suisse Asset Management. At the same time, he was the driving force behind the foundation of the listed real estate company Swiss Prime Site AG, where he served as Chairman of the Board of Directors until 2005. From 2005 until 2009 he worked for Deutsche Bank, initially assuming responsibility for managing family offices in Switzerland and in the final two years serving as CEO of Privatbank Rüd, Blass & Cie AG. From 2009 until 2014, Stefan Mächler was in charge of asset management at the Swiss Mobiliar Group as Chief Investment Officer and Member of the Group Executive Board.
Nils Frowein has been Chairman of the Swiss Life subsidiary Chase de Vere in the UK since 2010 and since 2011 Chairman of the Supervisory Board of Swiss Life Select Austria and the Czech Republic.
Nils Frowein has been Chief Executive Officer of the International market unit (CEO International ) since 1 January 2013 and Member of the Corporate Executive Board of the Swiss Life Group since 1 January 2015.
On 1 March 2019, Thomas Buess, up until 28 February 2019 Group Chief Financial Officer (Group CFO) handed over his function to Matthias Aellig, who previously served as Group Chief Risk Officer. In his new role as Group CFO, Matthias Aellig has been Member of the Corporate Executive Board since 1 March 2019. Thomas Buess was elected to the Board of Directors of Swiss Life Holding by the General Meeting on 30 April 2019; his CV can therefore be found in the section providing information on Members of the Board of Directors on page 35.
The General Meeting of Shareholders of Swiss Life Holding on 23 April 2014 approved various provisions of the Articles of Association, in response to a proposal by the Board of Directors pertaining to the implementation of the Ordinance against Excessive Compensation in Listed Stock Companies (Compensation Ordinance, VegüV), which take account of the requirements and powers of the General Meeting of Shareholders in relation to corporate governance and compensation.
On the basis of the powers of the General Meeting of Shareholders in relation to compensation under the Articles of Association, which came into effect on 1 January 2015, the General Meeting of Shareholders had approved the compensation for the Board of Directors and the Corporate Executive Board on 24 April 2018 as follows: – For the Board of Directors: The maximum total amount of fixed compensation until the next ordinary General Meeting in 2019 in the amount of CHF 3 200 000 in total.
– For the Corporate Executive Board: The short-term variable compensation component for the 2017 financial year in the amount of CHF 3 698 750 in total (bonus and deferred compensation in cash), determined by the Board of Directors at the beginning of 2018 in view of the 2017 annual results, and the maximum total amount of the fixed compensation and the long-term variable compensation (equity compensation plan) for the 2019 financial year in the amount of CHF 13 800 000 in total.
At the General Meeting of Shareholders of 30 April 2019, the following compensation was approved for the Board of Directors and Corporate Executive Board: – For the Board of Directors: The maximum total amount of fixed compensation until the next ordinary General Meeting in 2020 in the amount of CHF 3 200 000 in total.
The proposed budget/maximum amount for the fixed and long-term variable compensation for the Corporate Executive Board for the 2021 financial year represents an upper limit, which would only be exhausted in the case of exceptional business performance. The Board of Directors will determine the fixed compensation and the long-term variable compensation component for the Corporate Executive Board at the beginning of 2021 and will detail the key underlying factors in the respective compensation report, on which the shareholders can in turn hold an advisory vote.
The information on compensation granted to Corporate Executive Board members also includes the variable compensation, which was determined by the Board of Directors at the beginning of 2020 and is published on an accrual basis as compensation for the 2019 financial year. The members of the Board of Directors are granted exclusively fixed compensation, payable 70% in cash and 30% in Swiss Life Holding shares; the allocated shares are subject to a three-year blocking period.
Personal performance based on the specified quantitative and qualitative objectives is assessed annually in the employee appraisal procedure implemented throughout the Group (Group Performance System, GPS). Two assessment elements/models are used for determining objectives and evaluating performance: the Group Objectives Model (GOM) relating to qualitative and quantitative objectives and the Group Competency Model (GCM) for measuring and assessing individual competencies and behaviour, including the relevant compliance regulations.
Pursuant to the Organisational Regulations, the Board of Directors as a whole is responsible for determining the level and make-up of compensation for its members, whereas the Compen sation Committee is responsible for putting forward appropriate proposals (for the internal organisation of the Board of Directors see “Internal organisational structure”, pages 42 to 45). 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, Zurich Insurance Group and Helvetia.
After expiry of the thee-year period of the RSU plan, the target value for each performance criterion according to the medium-term planning 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 in accordance with the weighting of the performance target concerned or the RSUs expire worthless. After expiry of the equity compensation plan, the number of RSUs available for exercise according to the effective performance and, respectively, the corresponding degree of target achievement and the corresponding share allocation (vesting) will be disclosed. The corresponding information on the vesting of the various equity compensation plans and the shares allocated, is set out in Note 23 of the Consolidated Financial Statements on pages 265 to 267.
The compensation takes into account membership of the Board of Directors of Swiss Life Holding and its subsidiary Swiss Life Ltd, as well as membership of the individual Board Committees, and is commensurate with the individual’s function and workload. According to the regulatory requirements, it consists of basic compensation for serving on the Boards of Directors of Swiss Life Holding and Swiss Life Ltd, and additional compensation depending on membership of one or more Board committees and any chairing of such committees.
There were no contributions to occupational provisions for the members of the Board of Directors.
For the period from the 2018 ordinary General Meeting to the 2019 ordinary General Meeting, the General Meeting of Shareholders of 24 April 2018 approved a maximum amount of fixed compensation for the Board of Directors totalling CHF 3 200 000. Effectively the fixed compensation for the Board of Directors during the period in question (2018 General Meeting to 2019 General Meeting) was CHF 3 044 938 in total.
Swiss Life – Annual Report 2019 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 aspects, namely project targets, risk management and compliance goals, as well as requirements relating to leadership and to supporting and further developing corporate culture.
For the 2019 financial year, the General Meeting of Shareholders of 24 April 2018, as mentioned at the start of the present Compensation Report, had approved a maximum total amount of the fixed compensation and the long-term variable compensation component (equity compensation plan) for the Corporate Executive Board of CHF 13 800 000, based on the Articles of Association applicable on 1 January 2015. In line with this, the Board of Directors accordingly set a fixed compensation at the beginning of 2019 (basic salary incl. ancillary costs and occupational provisions) of CHF 8 568 120 in total for the members of the Corporate Executive Board. It also granted future subscription rights worth CHF 3 896 816, as long-term variable compensation under the 2018 RSU plan, to the members of the Corporate Executive Board, on 1 March 2019, for the extraordinarily good performance in 2018, when Swiss Life again increased its operational effectiveness and achieved profitable growth. The subscription rights allocated under the 2019 RSU plan entitle the holder to receive Swiss Life Holding shares following a three-year vesting period, provided the requirements are satisfied at that point. The approved budget for the 2019 financial year was applied to the sum of CHF 12 464 936, in view of the excellent business development.
In addition to Group CEO Patrick Frost, seven persons were members of the Corporate Executive Board during the 2019 reporting period, as reported in the compensation table below.
The long-term variable compensation component in the form of the equity compensation plan (RSU plan 2020) is also reported in the compensation table for the 2019 financial year, which serves as the basis for the amount of the allocation and the corresponding number of allocated RSUs (accrual method).
Expenditure for occupational provisions for members of the Corporate Executive Board in the period under review amounted to CHF 1 633 465. This includes the ordinary annual employer contribution of CHF 275 470 for the occupational benefits of Patrick Frost, Group CEO.
The stated amounts do not include social security contributions (AHV/IV/ALV/FAK) payable by the employer under the law. The respective expenditure is shown in footnote 6 of the 2019 compensation table.
2 The salary amounts also include tax-equalisation payments and international travel expenses totalling CHF 270 800.
3 The short-term variable compensation component for the 2019 financial year (bonus and deferred compensation in cash) was determined by the Board of Directors at the beginning of 2020 for the 2019 financial year.
4 Child allowances (CHF 12 700), company cars (CHF 11 808), premium contributions to 3rd pillar pension plans (CHF 164 683), other (CHF 40 694) in total amounts.
Other members of Corporate Executive Board 1 357 995 0 9 553 051 5 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%.
Aggregate total compensation incl. deferred compensation in cash and RSUs Amount 7 Number Amount (amount)
Other members of Corporate Executive Board 200 000 7 741 2 946 689 13 443 488 7 The variable deferred compensation in cash is paid out after a deferral period of three years, provided the requirements are satisfied at that point.
9 For the 2019 RSU plan beginning 01.03.2019 the 2018 financial year forms the basis for the amount of the allocation and the corresponding number of allocated RSUs. The allocation of RSUs on 01.03.2019 was effected at a fair value of CHF 380.66 as calculated by an independent consultancy firm.
No loans or credit were granted to members of governing bodies in the year under review; as at the balance sheet date, there are no outstanding loans or credit to members of governing bodies.
Total outstanding deferred compensation 16 052 694 of which cash payment 698 894 of which shares 0 of which options 0 of which others (Restricted Share Units, RSU) 13 343 345
Charges and credits in the financial year from compensation for previous financial years 3 2 110
Total severance payments made in the financial year 5 0 1 The totality of any monetary value which the company distributes to a person directly or indirectly for the work performed for the company, e.g. in the form of cash payments, non-cash benefits, expenditure which establishes or increases entitlements to occupational provisions, pensions, shares or other allocation of shareholding rights as well as the forgiving, extinguishing or renunciation of any claims or debts.
3 Decrease in expenses affecting net income for variable compensation for the 2019 financial year. 4 Compensation which is agreed on the conclusion of an employment agreement to be paid or be due once. Also deemed to constitute a sign-on payment shall be compensation for benefits foregone vis-à-vis a previous employer. 5 Compensation which is agreed in connection with the termination of an employment relationship.
We have audited the compensation report of Swiss Life Holding Ltd for the year ended 31 December 2019. The audit was limited to the information contained on pages 61 and 65 to 67 of the compensation report.
In 2019 the auditing fees credited to PricewaterhouseCoopers came to around CHF 9.1 million (prior year: CHF 8.6 million). This includes the fees for reviewing the 2019 half-year accounts.
Risk Management A further pillar of Swiss Life’s responsible, sustainable business is its integrated, value-oriented risk management involving both quantitative and qualitative elements. The objective is to protect customers’ funds and ensure the best possible investment of risk capital, while complying with regulatory requirements and taking account of the persistently challenging capital market environment.
Risk management is a key component of Swiss Life’s management process. The responsible committees of the Corporate Executive Board and the Board of Directors continually monitor and manage risks, and their decisions are then incorporated into the annual planning process. On the one hand they conduct qualitative assessments of strategic risks, as well as evaluating operational risks, the internal control system (ICS) and measures to safeguard information and system security. On the other hand, they also cover quantitative elements, such as risk appetite at Group level, risk budgeting for the insurance units and Asset Liability Management’s investment strategy. The Board of Directors employs a limits framework based on solvency ratios and economic capitalisation to determine Swiss Life’s risk appetite. Limits for the financial risks taken by the individual business units are based on local regulatory provisions and risk appetite at Group level, and are used to determine their investment objectives.
The key risk management elements are presented and discussed below. Additional statements on the risk management principles and procedures plus the risk budgeting process, asset liability management and the management of insurance risks (including mortality, disability and longevity) are included in Annex 5 of the consolidated financial statements.
Swiss Life has been systematically obtaining information on ESG ratings and CO2 since 2019. As part of a Group-wide sustainability program, these metrics are integrated into the existing risk framework for the management of the company’s business. Except for uncertainty about new regulatory requirements, the physical and transitory risks of the movement towards a climatecompatible society are not currently seen as strategic risks for a life insurer. Further information can be found in the sustainability report under the heading “Sustainable construction and renovation ”.
Swiss Life depends on its information systems and communication technologies for the attainment of the operational goals derived from its business strategy. Ensuring availability, confidentiality and integrity of systems, data and information is a central component of its internal control system.
Risk Management prepares and maintains directives and minimum requirements for information security. These are based on various internationally recognised standards, such as British Standards ISO/IEC 27001 and 27002, the Control Objectives for Information and Related Technology (CobiT) Framework v5/2019, the Center of Internet Security (CIS) Controls v7.1 and the Cyber Security Framework v1.1 of the National Institute of Standards and Technology (NIST). Line management implements these requirements, and compliance with them is assessed at Group and divisional level in cooperation with information security experts. This includes topics such as vulnerability management, security operations, effective IT risk management and business continuity management. Corporate Internal Audit periodically reviews the area of information security as part of its audit activities, and appropriate measures are taken to deal with any weaknesses.
Monitoring of solvency in accordance with the solvency model and the internal economic model is performed continuously. Calibration is based on the full SST calculations at the beginning of the calendar year.
Economic and regulatory capital requirements and the profit target are the main elements in risk budgeting. Based on the overall risk budget set by the Investment and Risk Committee of the Board of Directors, the Group Risk Committee of the Corporate Executive Board defines the risk limits for the business areas. Adherence to these limits is checked continuously.
Sustainability Report 81 CEO Foreword 82 Sustainability at Swiss Life 84 Materiality Matrix 90 Sustainability in Business 91 Profitability and Growth 92 People Centricity 95 Products, Services and Advice 97 Digitalisation 98 Responsible Investing 103 Compliance at Swiss Life 106 Sustainable Procurement 109 Sustainability in Society 110 Economic Responsibility 111 Political Commitment 113 Corporate Citizenship 117 Sustainability as an Employer 118 Leadership and Employee Communication 121 Employee Development and Retention 122 Training and Development 123 Talent Development 124 Collaboration and Diversity 127 Health and Safety 129 Social Partnership 132 Sustainability in the Environment – Environmen tal and Climate Protection in Operational Ecology 136 Swiss Life’s Contribution to the Sustainable Development Goals (SDG) 138 UN Global Compact Progress Report 140 Information on Sustainability Reporting 141 Memberships 142 GRI Content Index 146 Key Sustainability Indicators
– Based on the goals of the Paris Agreement we also initiated other analyses and measures in the year under review and will continue to develop the climate strategy for the Swiss Life Group in the coming months.
– Swiss Life offers its employees a collaborative working environment in which they can act with personal responsibility. Diversity, an open feedback culture, appreciation and trustworthy cooperation are key in this regard.
In the pursuit of its core business, financial provision and consulting, Swiss Life contributes directly to the sustainability of society and the economy. In addition, the company aims to act responsibly as an employer and in relation to the environment.
Swiss Life’s materiality matrix shows which topics are relevant for Swiss Life and its stakeholders. All of the topics highlighted form the basis for annual sustainability reporting.
By revising its materiality matrix, Swiss Life aims to respond to the changing expectations of the various stakeholder groups, developments in its business environment and the development of the standards.
Swiss Life consulted the following internal and external stakeholder groups in this re-evaluation: – Internal specialists from the areas of Sustainability, Asset Management, Communications, Human Resources, Investor Relations, Finance and Risk Management
Everyone included in the survey rated and prioritised the relevance or impact of potentially significant issues using a four-point scale. This distinguished between “high relevance”, “significant relevance”, “moderate relevance”, and “low relevance”.
Further, compared with the previous matrix, some topics have been renamed and some new topics included: The Corporate Executive Board validated and adopted the revised materiality matrix in November 2019 (GRI 102-46).
Products, services and advice Swiss Life has over 160 years of experience in developing products and services, in consulting and in the life insurance, investment and pensions business. It aims to create optimal customer value and profitability for the company. Its offering is subject to continuous review and refinement.
Data protection and information security There are Group-wide data protection and information security standards. Information security at Swiss Life is closely related to locally applicable data protection provisions, such as the Swiss Federal Act on Data Protection and the European Union’s General Data Protection Regulation (GDPR).
Responsible and sustainable corporate governance is of central importance for Swiss Life. It structures its corporate governance openly and transparently in compliance with the acknowledged national and international standards.
Combating corruption and fair competition Swiss Life does everything in its power to avoid infringing any legal and/or regulatory requirements, and to prevent all forms of corruption and bribery. Therefore, Compliance monitors and assesses the legal and regulatory environment and focuses on training and raising employee awareness.
Swiss Life maintains high standards for its consulting, service and product range. Diligence and responsible action form the basis for successful business operations as well as for long-term, sustainable customer and business relationships.
This section shows how Swiss Life thinks and acts sustainably in its business activities. For this, it has defined the following focus topics:  Profitability and growth
The economic performance and sustainable profitability of Swiss Life are fundamental to the long-term success of its corporate management. Thanks to consistent implementation of its plans, since 2009 Swiss Life has successfully achieved the targets of its last three corporate programmes.
Swiss Life’s business model is aligned to the long term. We must be able to keep the promises made to our customers for decades. That is why long-term investing plays a central role in the life insurance business. Swiss Life has crafted its investment strategy to ensure that the interest margin remains positive even when interest rates stay low for more than three decades. In addition, Swiss Life has continuously developed its business in recent years. With its successful enhancement of asset management for third parties, owned IFA channels, modern products and acquisitions, Swiss Life has over the past years significantly increased the contribution made to its result by so-called fee business, and thus reduced its dependency on investment results. In addition to the focus on profitability, capital efficiency remains a relevant control parameter in new insurance business.
Further information on the Group-wide programme and the Swiss Life Group strategy may be found in the section “Strategy & Brand” from page 8 of the Annual Report.
Since 2014, Swiss Life has been continuously assessing customer satisfaction at the key contact points. Customers are asked about their experience, satisfaction and willingness to recommend Swiss Life at selected contact points. Anyone who gives a negative response is contacted within 48 hours. This allows Swiss Life to ensure it has understood the reasons for a negative review and to offer the customer a solution. Customer satisfaction is surveyed in close collaboration with an independent market research institute.
The NPS at the Service Center contact point has also either developed positively or remained stable. In 2020, Swiss Life wants to make further improvements with the aid of digital tools.
In 2019, the internal perception of customer centricity was measured as part of a Group-wide survey on employee engagement. The survey is held biannually and conducted in cooperation with an independent consulting agency.
The 2019 survey showed that 86% of all employees see Swiss Life as a customer-oriented company. The results were 4 percentage points above the results for the most successful companies worldwide and 10 percentage points above the global average for companies in the financial sector.
In addition to its customer-focused consulting approach, Swiss Life pays great attention to extensive and understandable documentation. In addition to product documents on various insurance and provisions topics on the local websites or customer portals, supporting video sequences are available along with publications for download.
Swiss Life would like to help people acquire financial knowledge so they can make better decisions. That is why Swiss Life has supported the Swiss financial literacy platform fintool.ch for years now. In Germany, by way of the Swiss Life Stiftung für Chancenreichtum und Zukunft (Foundation for opportunities and the future), Swiss Life also advocates projects that promote the growth of financial literacy.
Swiss Life makes sure that it can deliver its value proposition: through mandatory Group-wide regulations that are implemented through corresponding local directives: – The specific structure of products and services is based on Group-wide standards and stringent compliance with local regulatory requirements and local laws. The ability of the local Compliance teams to make adjustments, even to existing products and services, is guaranteed. Group-wide standards for the development of products and services are also adapted to framework conditions as required.
Swiss Life is pursuing digitalisation along the entire value chain. The focus is on initiatives that create sustainable added value for customers and employees.
In this way, Swiss Life meets the needs of its customers, a fact clearly highlighted by a representative survey conducted by the company in 2019 in Switzerland, France and Germany. In this survey, around 80% of respondents said that talking to an advisor is a must for them when signing a contract. People value the flexibility and independence that digital tools give them. At the same time, around 70% trust an advisor more than an algorithm. People want digital aids to help advisors identify the best solution, giving them more time for personal advice.
Among other things, Swiss Life offers its customers online portals, where they can access their documents anytime, anywhere, make appointments, request offers and make changes quickly and unbureaucratically. Customers can use online calculators to simulate scenarios on their own. In this way, customers decide how they interact with Swiss Life and choose their mode of access themselves. Swiss Life applies industry standards and uses digital solutions to prevent discontinuity in the use of media and guarantee high quality.
At the heart of Swiss Life’s mission as an asset manager for its proprietary insurance companies and for third-party clients – such as pension funds, other insurers and private investors via collective investments – are the long-term protection of customer funds and the optimal allocation of risk capital. Invested assets must be secure, profitable and liquid in their entirety. Due to the long-term nature of its liabilities, Swiss Life invests predominantly in fixed-income securities, such as government and corporate bonds, real estate and equity and infrastructure investments. Its investment decisions have always been informed by a long-term assessment of risks and returns.
Swiss Life systematically integrates environmental, social and governance (ESG) factors into its investment process and the risk management of all asset classes. This results in a broader information base and more balanced risk cover.
ESG factors are taken into account in nearly 90% of the total assets under management by Swiss Life. The remaining 10% are investment products such as the replication of share indices or mortgages, where this sustainability approach currently still cannot be used because of their product structure. This sustainability approach is used for third-party assets as well as for proprietary assets.
Swiss Life is a signatory of, among other things, the Principles for Responsible Investment supported by the United Nations (www.unpri.org). The corresponding PRI Transparency Reports are updated annually by Swiss Life and can be viewed on PRI’s website. In the reporting period, Swiss Life became a member of Swiss Sustainable Finance (SSF). In this way, it is continuing to expand its network and is involved in an active exchange on aspects of responsible investing (see also page 141 “Memberships”).
– In the transaction process, a due diligence checklist is used to identify sustainability opportunities and thus highlight potential to increase value. At the same time, this checklist allows early identification of potential risks so that value can be preserved in the long term.
– Sustainability aspects play a central role in real estate development, from the feasibility study to the construction decision and are integrated into the planning process. For example, minimum energy standards are defined, ecological risk profiles are examined, the socio-economic effects of real estate development projects are analysed and decisions are taken on obtaining quality certificates such as Minergie, DGNB, SGNI, LEED, BREEAM and HQE for buildings. These sustainability certificates provide external confirmation of the sustainable quality of buildings.
ESG criteria are a central element in the evaluation of alternative investments such as infrastructure projects, which may involve a combination of a substantial financial investment, a long-term horizon and potential to enhance sustainability. As at year-end 2019, Swiss Life managed assets in infrastructure investments with a value of over CHF 3.3 billion. For classical infrastructure investments, an internal ESG assessment scheme is used to ensure that these investments offer added value from an environmental and social perspective. This internal assessment scheme is based on the European Investment Bank’s ESG benchmarks.
In October 2019, Swiss Life acquired Fontavis AG, a leading investment manager for clean energy and infrastructure funds in Switzerland. Fontavis manages and advises infrastructure funds with total assets of CHF 1.25 billion. The portfolios are broadly diversified, with a special focus on heat and on hydroelectric, solar and wind power. These installations generate 2.6 billion kWh power a year from renewable energy sources. Broken down to the stakes in the respective companies, that corresponds to around 500 million kWh. In addition, the companies in the portfolios generate 200 million kWh ecological heat (68 million kWh based on the stake in each company). This ecological heat generation avoids emissions of 44 500 tonnes CO2, which would result, for example, from oil-fired heating.
Avoidance of conflicts of interest; mandates and secondary commercial activities; pecuniary advantages and invitations; insider information
Identifying and reporting misconduct; reporting investigations or legal proceedings, implementation of the Code of Conduct
Swiss Life maintains high standards for the quality of its consulting and services. That includes values and conduct that form the basis for a trusting relationship with customers and partners. The Code of Conduct contains Swiss Life’s Group-wide values and principles, and rules of conduct, which are binding for all employees.
The Code of Conduct applies Group-wide. The present version was revised in 2018 and published in January 2019. When it was published, all employees in the Swiss Life Group were informed about the changes. The Code of Conduct can be viewed at www.swisslife.com/en/coc.
Swiss Life has extensive directives to make sure the Code of Conduct is put into practice in daily activities. These contain binding Group-wide minimum standards implemented in all business units and included in the regulations for the local offices. Directives are reviewed regularly to ensure they are still correct and up-to-date. They are adapted where necessary to take account of new regulatory and business-specific requirements.
Swiss Life has established processes to ensure adequate identification, management and control of compliance and data protection risks. The roles, responsibilities and competencies of Compliance are defined and documented by Swiss Life within the governance framework.
Data protection has absolute priority at Swiss Life. All legal, regulatory and internal requirements are implemented throughout the Group. Group-wide standards for data protection have been defined. These cover all areas of business and are specified and implemented through divisional directives and data protection undertakings. These cover the processing, storage, deletion, archiving and transfer of data and documents, uniform data classification, handling of personal data and data requiring special protection and trade secrets, and the rights of data subjects, such as the right to information and erasure. When processing personal data, Swiss Life consistently complies with the applicable regulations for Switzerland and the EU, and other local laws.
Infringements of data protection must be reported immediately to Compliance and information security incidents are handled consistently throughout the Group through operational risk manage ment. The compliance framework contains defined processes for dealing with infringements of data protection. These include, for example, informing the data subjects and supervisory authorities.
The individual divisions have their own data protection officers and ensure that their employees are all provided with regular mandatory training in the material. The line implements these requirements and assesses their observance in collaboration with the relevant divisional Compliance teams, as well as at Group level. Compliance regularly assesses the implementation and observance of the applicable provisions. The Board of Director’s Audit Committee and the Corporate Executive Board’s Risk Committee receive continuous information on data protection issues within the framework of compliance reporting. Corporate Internal Audit regularly reviews data protection as part of its auditing activities and addresses any weak spots with the appropriate measures.
Swiss Life also demands compliance with high sustainability standards from its external service providers and suppliers, which extends to their responsibility towards their employees, society and the environment.
Guidelines for suppliers and service providers All companies at all locations that wish to work with Swiss Life must ensure compliance with the standard statutory provisions. Evaluation of key suppliers and service providers is integrated in the Swiss Life Group risk management framework.
When concluding contracts with suppliers and service providers in France and Switzerland, Swiss Life stipulates that they must guarantee the following standards as a rule: – Compliance with applicable environmental and climate protection standards – Compliance with legal regulations on working hours and ensuring working conditions that do not endanger employee health or security.
– Fulfilment of legal regulations relating to salaries, compensating overtime and payouts. – Ensuring that their employees can work in an environment free of discrimination on the basis of race, gender, religion, origin, disability, age, sexual orientation, handicap or other attributes. – Respect for employees’ rights of association and collective bargaining. – Renunciation of child and forced labour
Swiss Life Germany stipulates in its contracts with partners that they must guarantee, for example, compliance with all health and safety regulations and payment of the minimum annual salary. Moreover, Swiss Life Germany checks the sustainability and recyclability of purchased products.
In Switzerland, the insurance sector as a whole generates gross value-added of nearly CHF 30 billion and makes a significant contribution of nearly 5% to the country’s economic output.
– As a taxpayer, Swiss Life makes a contribution to the economy and to society, as well as offering jobs and training opportunities to many people in its role as an employer.
Swiss Life’s operational environment is significantly defined by political and regulatory conditions. For example, they have a direct effect on product design, processes and the manner of reporting to shareholders, supervisory authorities and the public.
Swiss Life monitors politically relevant issues and develops its own positions. It maintains dialogue with the relevant players. A Political Communication Steering Committee defines the strategic focus. Its members are the Group CEO and the Group CFO, the CEOs of divisions headquartered in Switzerland, the General Counsel, the Chief Risk Officer and the head of Group Communications and Strategic Marketing. The steering committee meets four times a year and defines its political communication priorities. The Public Affairs team is responsible for implementing the measures at operational level.
Swiss Life fosters contacts with representatives of the political, administrative and business communities as well as supervisory authorities. In its direct exchanges with political groups, Swiss Life aims to better understand their opinions, expectations and perceptions while at the same time gauging how the enactment or amendment of legal principles could affect its business. In Switzerland, parties of the political centre-right and individual politicians receive financial support mainly for their election campaigns. The total amount of support provided during the year under review was around CHF 500 000. No (significant) support was provided to parties in the markets outside Switzerland. Here, Swiss Life is guided by the rules of its Code of Conduct, as specified in the internal directive “Code of Conduct”. These rules decree, for example, that donations in the home market of Switzerland to political parties are to be free of any obligation.
Swiss Life France is a member of the Fédération française de l’assurance – FFA (French Insurance Federation), France’s largest trade association in the insurance sector. The company is represented through a number of employees who participate in the committees for different insurancerelated themes.
In addition to its other memberships (see “Memberships” page 141), Swiss Life Asset Managers has a seat on the board of Immobilien Schweiz (Real Estate Switzerland). Issues followed at national level in the reporting period included sustainable investing, tenancy law and cantonal implementation of the Spatial Planning Act (value-added levy).
Swiss Life is committed to Switzerland’s militia system (part-time public service). This promotes better understanding among the worlds of politics, society and business and enables valuable knowledge transfer. Swiss Life therefore supports employees who take on a political or public office. Full-time employees can use up to 20% of their working hours for such work. In addition, Swiss Life holds regular events in Switzerland for employees who hold public or political mandates. During the reporting period, Swiss Life organised an event called “Transfer” in conjunction with Avenir Suisse, Swiss Re, Zurich Insurance Group, Helvetia and Axa. At this event, over 60 mandate holders from different companies discussed current political issues. In addition, various activities were organised to mark Switzerland’s “Jahr der Milizarbeit” (year of public service). Swiss Life played a key role in shaping some of these activities and was therefore able to make an important contribution to improving understanding of the militia system.
– In its home market Swiss Life runs a second foundation, the “Anniversary Foundation for Public Health and Medical Research”, which was founded in 1957 to mark the company’s centenary. This foundation supports medical research projects and specific charitable organisations for people with physical and mental disabilities. Swiss Life has made annual donations of around CHF 400 000 to this foundation in recent years.
– Swiss Life Asset Managers has sponsored the “Swiss Life Thesis Award” for the past six years. This award, presented in cooperation with the Institute for Financial Services Zug (IFZ), part of Lucerne University of Applied Sciences and Arts, and the business journal Finanz und Wirtschaft, provides a platform for innovative and practice-oriented research work at Swiss institutes of higher education. The best theses in the fields of financial investments, financial markets, financial services companies, financial instruments and corporate finance are singled out for awards each year. The Swiss Life Thesis Award comes to CHF 20 000 in total.
– In addition, the foundation supports projects and associations in which Swiss Life employees are actively involved. “Fondation Swiss Life” donated a total of EUR 291 000 to all initiatives during 2019.
Fostering self-determination: partner project “KinderHelden” provides support and encouragement for children.
– Corpus Sireo, a German company belonging to Swiss Life Asset Managers, supports the charitable “Cornelius Stiftung für Kinder suchtkranker Eltern” (Foundation for children of parents suffering from addiction). The foundation focuses on the advancement of children from underprivileged homes afflicted by addiction, and thus offers them better perspectives for the future. Its average yearly donation volume is EUR 100 000.
– Swiss Life Select in Austria runs a foundation called “Zuversicht für Kinder” (Giving children confidence). In 2019, this foundation supported 20 local and international aid projects as well as providing medical aid in specific cases. Donations of EUR 65 000 were collected, mainly from Swiss Life Select financial advisors. With their help and the support of customers and private individuals, numerous children were given a new outlook on life. In addition, for the past four years Swiss Life Select in Austria has been the main sponsor of the “Junge Philharmonie Wien” (Vienna young people’s philharmonic orchestra).
– Six years ago, employees of Swiss Life International in Luxembourg initiated “Rock Against Cancer”, a benefit concert sponsored by Swiss Life Global Solutions. This annual event raises money for two foundations: Fondation Cancer Luxembourg and Fondation Kriibskrank Kanner (children with cancer). Both foundations are committed to fighting cancer. Although they were not founded by Swiss Life International, it has supported them through donations for years.
The success of Swiss Life is based on the skills and engagement of its staff. Swiss Life promotes the continuous development of its employees and offers them a working environment where they can take responsibility.
This section outlines Swiss Life’s understanding of sustainability as an employer. For this, it has defined the following focus topics:  Leadership and employee communication
– I build trust by listening and communicating openly. – I pursue continual self-development.
– Performance reviews with all employees – Performance assessments with all employees (setting of objectives and assessment) – Professional development interviews and measures – Decisions on salaries and promotions – Strategy and value-oriented behaviour – as set out in the Group-wide behavioural principles for employees and management – Assessment and management of employee risks
“Actively shaping your career” defines the following success factors and activities: “Ensuring employability through constant development” – Continuous training and development for employees of all ages – Systematic career analyses and situation reviews for employees of all ages – Enabling part-time work in old age
All divisions have a wide range of training offers for managers and for employees who are newly promoted to a management function. These focus on introducing and deepening knowledge of the behavioural principles for managers. In France, Swiss Life offers various management training courses in cooperation with “Grande Ecole de Commerce KEDGE Business School”, leading to a recognised certificate. Other training modules offered by the divisions are an onboarding module for managers joining the company, supervision and peer-to-peer coaching, team development workshops on future-oriented skills, inclusive management coaching and further modules focusing on social and methodological skills.
The continuing development modules offer content through a combination of conventional training formats and a digital platform so that managers and employees can undertake advanced training anytime, anywhere. The learning platform permits quick access to standardised management processes, skills-oriented training and other topics associated with social and methodological skills.
For the training and certification of sales and asset management staff, Swiss Life France has entered into a partnership with KEDGE Business School, EM Normandie Business School and Université Dauphine, Paris.
– Asset Managers offers students employment opportunities while they are studying.
Swiss Life provides targeted support to junior staff with potential. For example, employees displaying a high level of performance and strong potential are nominated for a talent programme. These initiatives support efforts to open up career paths within the company – whether in people leadership, project management or specialist functions. This paves the way for key positions to be filled with qualified young managers from within the company.
Alumni of the Key Persons Programme meet the participants every year at the “Shaping the Future Day”. This conference looks in further detail at strategically relevant issues in the context of implementation of the corporate programme, including discussing them with the Group Executive Board and other key people.
Employees with management functions by gender Total 2 015 as at 31.12.2019
Mutual respect is the precondition for a work environment based on trust, in which employees are comfortable. Personal well-being and equality of opportunity, which includes diversity and inclusion, work-life balance, mutual respect, workload and workplace atmosphere, were also addressed in the 2019 employee survey1. 76% of employees feel they receive support from their manager in achieving an appropriate work-life balance. That is 5 percentage points above the external benchmark comprising “the most successful companies worldwide” and 9 percentage points above the benchmark comprising the “global financial industry”.
Both managers and specialists are of prime importance to the corporate success of Swiss Life. Swiss Life employs many specialists with enormous sector-specific knowledge and ability. By doing so, it aims to achieve a good balance between new career entrants, employees with experience and staff with substantial professional experience. To achieve this goal, Swiss Life offers flexible working models, for example, for employees in Switzerland from the age of 58. These enable employees to continue to work until they are 70. More than 30% of employees aged 58+ use Swiss Life in Switzerland’s flexible working models. Through offers like these, Swiss Life ensures that specialist knowledge is passed on to the next generation.
In accordance with national and international law (such as the ILO conventions), the Swiss Life Group applies fair employment procedures that are free of discrimination. Recruitment and promotion are based exclusively on ability, skills and potential, in line with the requirements of the position in question. Fair and equal compensation for all employees is ensured by the Group Compensation Policy, which is applicable throughout the Group. At all its national companies Swiss Life has used processes and instruments for a number of years to review and ensure equal pay for men and women. In Switzerland, for example, Logib software from the Federal Office for Gender Equality is used to review equal treatment. The review conducted in 2019 with the involvement of the Human Resource Committee did not identify any significant differences in the functional groups analysed. The next review is scheduled for 2020.
The Swiss Life Group aims to offer its employees a safe and healthy working environment. The nature of the work it performs as a service provider means that general health and safety risks are relatively low. The framework conditions for health and security at the workplace are provided by the local regulatory measures governing each Swiss Life company. Furthermore, all companies implement measures and initiatives aimed at preserving employee health.
All employees of the Swiss Life Group have access to online offerings consisting of text content, short videos, checklists and learning programmes on the topic of “Health and well-being”, which they can use anytime and anywhere they like. The topics on the online platform are divided among three groups: meaningfulness, dealing with stress and dealing with others (line managers, colleagues).
In addition, the divisions – in collaboration with their social partners – provide a range of additional services covering exercise and sport, massages and therapy, relaxation rooms and counselling of all types, e.g. nutrition and social counselling, as well as preventive measures (e.g. medical services, flu vaccines, preventing nicotine dependence, protection of non-smokers). Safety in the workplace (fittings, work stations, instructions) is continuously monitored and adapted to changing requirements.
– The agreement concerning recording of working hours, which entered into force on 1 April 2016, was formally confirmed at the annual review and will be continued.
– As part of the 2020 salary review, the staff committee made a formal application to the Executive Board for a salary increase.
– The routine elections for the period 2020–2023 were held in autumn 2019. At the constitutive meeting in December 2019, the chair and the delegates to the European Works Council were decided.
– Based on the extended directive on protection of non-smokers, which came into effect on 1 January 2019, implementation of measures to protect non-smokers at both Zurich locations was monitored.
At Swiss Life, collective bargaining takes place in the following countries and units on the basis of local laws (freedom of association and right to collective bargaining) (GRI 102-41): – Swiss Life Germany – Swiss Life in France – Collective bargaining agreement for insurance companies at Swiss Life Asset Management
Agreements signed Number of Works Council members broken down by full-time and part-time
Elections to the staff council were held electronically in January 2019. A new business and social committee was established. It has four sub-committees: “Occupational health and working conditions”, “Business and strategy”, “Social affairs” and “Workplace learning”.
The following agreements have also been signed: – Adaptation agreement following the merger of 21 June 2019, followed by the employee referendum for implementation of the agreement
– Pre-electoral agreement for the organisation of Works Council elections of 29 July 2019
The Works Council performs its duties through various committees in accordance with the local Works Constitution Act. To meet local requirements, various constructive works agreements have been concluded with management.
– The Works Council Sales Force is responsible for intermediary distribution at the branch office and comprises five people, none of whom has dispensation.
– Interim agreement during the project phase for the introduction of the “Workday” human resources management system
The members of the Works Council representing CORPUS SIREO Real Estate GmbH, Swiss Life Asset Management GmbH and Swiss Life Invest GmbH established a Group Works Council on 29 October 2019. In connection with the establishment of Swiss Life Investment Management Deutschland Holding GmbH, the aim of the Group Works Council is to define cross-company issues.
– Framework agreement on IT – Framework agreement on Office 365 – Agreement on the use of the Rosetta Stone language course
– Regulation concerning working hours at Corpus Sireo – Dealing with working time regulations from old contracts prior to 1 July 2017 – Mobile working – Supplementary framework conditions for employment relationships at Corpus Sireo – Voluntary social security benefits – Spendit Card – MITE project time recording – Deployment and use of “Competence Booster” at Corpus Sireo – Company framework agreement on IT
The staff committee of Swiss Life Asset Managers Luxembourg was reelected in March 2019 and met four times in 2019. The staff committee meets the Executive Board every quarter. No formal agreements were reached between the staff committee and the Executive Board in 2019.
In its operational ecology, Swiss Life focuses on climate protection and aims to continuously reduce its carbon footprint.
In addition to reducing greenhouse gas emissions in its own operations, Swiss Life systematically integrates environmental aspects into asset management and real estate management (see “Responsible Investing” section from page 98).
TOTAL ENERGY CONSUMPTION (IN MWH) 51 694 49 500 47 819 49 075
TOTAL ENERGY CONSUMPTION (IN KWH/FTE) 5 540 5 614 5 823 6 098
RENEWABLE ELECTRICITY (IN KWH/FTE) 2 474 1 802 2 176 1 728
BUSINESS TRAVEL (IN KM/FTE) 6 634 7 804 7 686 7 709
– All printers and copiers use paper from environmentally and socially friendly forestry, certified by the FSC label. Swiss Life also uses paper with the FSC label for larger print-runs, for example for its customer magazine. In the reporting period, all printers at the two locations in Zurich were set to standard double-sided black-and-white printing and separate printers in offices were abolished. The measures implemented in the year under review have already led to a paper reduction of 25 tonnes in the two Zurich office buildings. Moreover, an awareness-raising campaign was run to encourage employees to minimise the use of paper.
– Swiss Life wants to make an active contribution to climate protection through operational ecology, for which reason it set up the Swiss Climate Foundation in 2008 in cooperation with other Swiss companies. The foundation supports SMEs in becoming more energy efficient and reducing their CO2 emissions.
France – Regular theme days are organised in France to raise employee awareness of environmental protection. Recycling stations were introduced at the Roubaix location in 2019 and measures to optimise energy efficiency were introduced at the main buildings in Levallois and Roubaix in the reporting period.
Swiss Life International – The locations in Liechtenstein, Luxembourg, the UK, Austria, the Czech Republic, Singapore and Slovakia are in modern, energy-efficient office buildings. Environmental impact is steadily being reduced in all areas through progressive digitalisation and optimised use of workplaces. The most important measures include reducing paper consumption and waste and encouraging the use of public transport.
See also “Products, Services and Advice” (pages 95–96), “Corporate Citizenship” (pages 113–116) and “Sustainability as an Employer” (pages 117–131).
Swiss Life promotes projects from the worlds of research and science. In Switzerland, Swiss Life has supported medical research projects through its own foundation, the “Anniversary Foundation for Public Health and Medical Research”, since 1957. In addition, Swiss Life supports Technopark Zurich, which brings together representatives of science, technology and business, and the NEST research and innovation platform, which tests and develops new materials, technologies, products, energy concepts and usage concepts for the construction sector. In addition, Swiss Life is Member of the Foundation Board and of the Business Council of Swiss Innovation Park.
As a builder and in its own operations, Swiss Life supports the sparing use of resources. Swiss Life publishes current developments in greenhouse gas emissions and its use of paper and energy, its production of waste, and other indicators on operational ecology on an annual basis. Furthermore, Swiss Life uses Group-wide targets to ensure that the company is able to continue developing in the realm of operational ecology.
See also “Responsible Real Estate Management” (pages 101–102), “Sustainable Procurement” (pages 106–108) and “Sustainability in the Environment” (pages 132–135).
As a signatory of the UN Global Compact, Swiss Life supports its ten principles of sustainability and makes a contribution to making globalisation socially and ecologically compatible.
Human rights Principles 1 and 2: – Businesses should support and respect the protection of internationally proclaimed human rights in their area of influence and make sure that they are not complicit in human rights abuses
 “CEO Foreword” (page 81)  “Sustainability at Swiss Life” (pages 82–89)  “Responsible Investing” (pages 98–102)  “Compliance at Swiss Life” (pages 103–105)  “Sustainable Procurement” (pages 106–108)
 “Sustainable Procurement” (pages 106–108)  “Sustainability as an Employer” (pages 117–131)
The Swiss Life Group’s Sustainability Report conforms with the EU’s CSR Directive. In this Sustainability Report, Swiss Life reports on environmental matters (pages 81–82, 85–89, 95, 99–103, 106–108, 132–135), employee-related matters (pages 87–89, 117–131), social issues (pages 81, 85–89, 98–102, 109–112, 141), reports and the observance of human rights pages 85– 86, 89, 98, 103–108, 138, 141) and anti-corruption and bribery (pages 85–86, 89, 99, 101–105, 138–139). The pages cited also provide information on the concepts and associated results, as well as on due diligence process and risk management. The determination of the material topics performed in the reporting period takes account of the requirements of the CSR Directive on the non-financial content of the report through two dimensions: “relevance for Swiss Life” and “impact on sustainable development”.
The annual reporting on sustainability creates transparency and strengthens communication with stakeholder groups. Swiss Life’s stakeholders include employees, customers, investors, and representatives of the media, politics, and associations. Swiss Life is in regular dialogue with relevant stakeholder groups. This ensures that it is aware of their requirements and expectations and is able to react to challenges or changes (Global Reporting Initiative, GRI 102-40, 102-42, 102-43, 102-44). Further information on our dialogue with stakeholder groups is available on the Swiss Life website at www.swisslife.com/en/stakeholdercommunication.
The Swiss Life Group is a member of all sorts of organisations and networks in the area of sustainability, as well as co-signatory of initiatives. These include the following: – Principles for Responsible Investment (PRI): unpri.org – UN Global Compact (UNGC): unglobalcompact.org – Global Real Estate Sustainability Benchmark (GRESB): gresb.com – CDP (formerly Carbon Disclosure Project): cdp.net – Task Force on Climate-related Financial Disclosure (TCFD): fsb-tcfd.org – Institutional Investors Group on Climate Change (IIGCC): iigcc.org – Forum Nachhaltige Geldanlagen (Sustainable Investment Forum): forum-ng.org – International Corporate Governance Network (ICGN): icgn.org
Swiss Life’s local locations are active, among others, in the following organisations: – Swiss Sustainable Finance (SSF): sustainablefinance.ch – Swiss Climate Foundation: klimastiftung.ch – Energy Model Zurich: energiemodell-zuerich.ch – Observatoire de l’immobilier durable (Green Building Observatory): o-immobilierdurable.fr – Plan Bâtiment Durable (Sustainable Building Plan): planbatimentdurable.fr – Netzwerk der Klima-Allianz der Stadt Hannover (Network of the Climate Alliance of the
GRI 102-54 Claims of reporting in accordance with the GRI standards p. 140
GRI 203-1 Infrastructure investments and services supported p. 113–116, p. 136–137
GRI 203-2 Significant indirect economic impacts p. 88 SELF-DETERMINATION IN TIMES OF DEMOGRAPHIC CHANGE
GRI 206-1 Legal actions for anti-competitive behaviour, anti-trust and monopoly practices None RISK MANAGEMENT
GRI 405-1 Diversity of governance bodies and employees p. 119, p. 124
GRI 405-2 Ratio of basic salary and remuneration of women to men p. 126
GRI 412-3 Significant investment agreements and contracts that include human rights clauses p. 107–108 or that underwent human rights screening
GRI 414-1 New supplier that were screened using social criteria p. 106–108
Targets to reduce GHG emissions yes yes yes yes AR, p. 132
Total energy consumption (in KWh/FTE) 5 540 5 614 5 823 6 098 2 AR, p. 133
Electricity consumption (in KWh/FTE) 3 491 3 631 3 843 4 163 2 AR, p. 133
Targets to reduce energy consumption yes yes yes yes AR, p. 101–102, p. 132
Total water consumption (in m3/FTE) 11 11 10 9 2 AR, p. 133
Total waste (in kg/FTE) 120 114 138 125 2 AR, p. 133
Share of paper with FSC label 68% 66% 63% 60% 2 AR, p. 133
Energy efficiency policy yes yes yes yes AR, p. 101–102, p. 132–135
Participation CDP (formerly Carbon Disclosure Project) yes yes yes yes AR, p. 132, p. 135, p. 141
1 The key figures for the 2019 financial year refer to VfU 2018, the previous key figures to VfU 2013.
Health and safety policy is Group-wide yes yes yes yes AR, p. 127–128
Workforce absences per segment yes yes yes yes AR, p. 128
Number of part-time employees 1 953 1 528 1 380 1 285 AR, p. 126
Formal talent pipeline development strategy yes yes yes yes AR, p. 123 (forecasts hiring needs, actively develops new pools of talent)
Leadership training and skills development yes yes yes yes AR, p. 122–123
Human rights policy yes yes yes yes AR, p. 85–86, p. 89, p. 98, p. 103–108, p. 138, p. 141
Inclusion of ESG criteria in supplier contracts yes yes yes yes AR, p. 106–108
Total Group-wide spending on foundations 3.0 2.6 2.5 1 yes AR, p. 113–116 (in CHF million)
Business ethics policy incl. anti-corruption and yes yes yes yes Code of Conduct conflict of interest guidelines
Anti-bribery / pecuniary policy yes yes yes yes Anti-bribery policy: Code of Conduct
Board oversight of anti-corruption measures / ethics yes yes yes yes AR, p. 33 and Swiss Life Holding Ltd, Articles of Association, Article 11
Employee training on anti-corruption/ethics yes yes yes yes AR, p. 89, p. 105
Equality policy and promotion of diversity yes yes yes yes AR, p. 126
Principles for Responsible Investment (PRI) yes yes no no AR, p. 82, p. 98, p. 141
Data privacy policy yes yes yes yes AR, p. 76–78, p. 87, p. 103–105
Possibility to review, correct and delete personal data yes yes yes yes Applicable law and internal guidelines
1 A detailed survey now includes the expenses for a total of seven foundations. As a result, the 2017 value had to be corrected upwards.
Former CEO or equivalent on Board yes yes yes yes AR, p. 34–35
CEO total summary compensation (in CHF million) 4.3 4.3 3.4 3.8 AR, p. 65–66
Clawback policy yes yes yes yes AR, p. 57–60, p. 273–274
Deviation from one share one vote yes yes yes yes AR, p. 30, p. 71
Risk management system covers market conduct risks yes yes yes yes AR, p. 76–78
Board oversight of risk management yes yes yes yes AR, p. 195
Swiss Life – Annual Report 2019 198 5.3 Contracts for the account and risk of the Swiss Life Group’s customers 199 5.4 Financial risk management objectives and policies 215 5.5 Insurance risk management objectives and policies 220 5.6 Strategic risk management 220 5.7 Operational risk management and internal control system 221 5.8 Risk concentrations 221 5.9 Applied instruments for risk minimisation 221 5.10 Sensitivity analysis 223 6 Earnings per Share 224 7 Premiums, Policy Fees and Deposits Received 226 8 Details of Certain Items in the Consolidated Statement of Income 230 9 Derivatives and Hedge Accounting 235 10 Financial Assets at Fair Value through Profit or Loss 235 11 Financial Assets Available for Sale 236 12 Financial Assets Pledged as Collateral 237 13 Loans and Receivables 239 14 Investment Property 240 15 Investments in Associates 241 16 Property and Equipment 243 17 Intangible Assets including Intangible Insurance Assets 248 18 Other Assets and Liabilities 249 19 Investment and Unit-Linked Contracts 254 21 Other Financial Liabilities 255 22 Insurance Liabilities 257 23 Employee Benefits 268 24 Income Taxes 277 27 Capital Management 279 28 Acquisitions and Disposals of Subsidiaries 281 29 Related Party Transactions 283 30 Fair Value Measurements 295 31 Offsetting Financial Assets and Liabilities 296 32 Guarantees and Commitments 298 34 Events after the Reporting Period 299 35 Scope of Consolidation 305 Report of the Statutory Auditor
Net gains/losses on financial instruments at fair value through profit or loss 5, 8 –1 620 415
Benefits and claims under investment contracts with discretionary participation –898 –665
Financial assets pledged as collateral 12, 31, 33 2 438 4 767
Intangible assets including intangible insurance assets 17 3 074 3 135
Premiums, policy fees and deposits received, net of reinsurance 18 702 16 613
financial instruments at fair value through profit or loss –219 –1 169
Acquisitions of subsidiaries, net of cash and cash equivalents 28 –886 –243
Cash and cash equivalents as at 1 January 8 410 6 611
CASH AND CASH EQUIVALENTS AS AT END OF PERIOD 8 247 8 410
Cash and cash equivalents for the account and risk of the Swiss Life Group’s customers 2 944 2 817
Distribution out of capital contribution reserve 1 – –83 – – – –83 – – –83
Equity-settled share-based payments – 12 – – – 12 – – 12
Accumulated other Total Non- Share Share Treasury comprehen- Retained shareholders’ Hybrid controlling Notes capital premium shares sive income earnings equity equity interests Total equity
Swiss Life Select, Tecis, Horbach, Proventus and Chase de Vere advisors choose suitable products for customers from the market according to the Best Select approach. Swiss Life Asset Managers offers institutional and private investors access to investment and asset management solutions. Swiss Life provides multinational corporations with employee benefits solutions and high net worth individuals with structured life and pensions products.
In September 2016, the IASB amended IFRS 4 (applying IFRS 9 financial instruments with IFRS 4 insurance contracts) by introducing an optional temporary exemption from applying IFRS 9 for companies whose activities are predominantly connected with insurance. In the exposure draft ED/2019/4, dated 27 June 2019, the IASB proposes to defer the effective date of IFRS 17 by one year and consequently extend the use of the deferral approach to IFRS 9, so that qualifying insurance entities would only be required to apply IFRS 9 for annual periods beginning on or after 1 January 2022.
Other new or amended standards and interpretations did not have an impact on the consolidated financial statements.
Non-controlling interest is the part of profit or loss and net assets of a subsidiary attributable to equity interest that is not controlled, directly or indirectly, through subsidiaries by the parent. The amount of non-controlling interest comprises the proportion of the net fair value of the identifiable assets, liabilities and contingent liabilities not attributable, directly or indirectly, to the parent at the date of the original acquisition, goodwill attributable to non-controlling interest, if any, and the proportion of changes in equity not attributable, directly or indirectly, to the parent since the date of acquisition. Summarised financial information of subsidiaries with material non-controlling interests is set out in note 26.
Swiss Life – Annual Report 2019 2.4 Foreign currency translation and transactions
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for administrative purposes. If these portions could be sold separately, they are accounted for separately. If these portions could not be sold separately, the portion is investment property only if an insignificant portion is held for administrative purposes.
If an item of property and equipment becomes an investment property because its use has changed, the positive difference resulting between the carrying amount and the fair value of this item at the date of transfer is recognised in other comprehensive income as a revaluation surplus. However, to the extent a fair value gain reverses a previous impairment loss, the gain is recognised in profit or loss. Any resulting decrease in the carrying amount of the property is recognised in net profit or loss for the period. Upon the disposal of such investment property, any revaluation surplus included in other comprehensive income is transferred to retained earnings; the transfer is not made through profit or loss.
Recognition and measurement principles Subject to certain limitations, the Group uses its existing accounting policies for the recognition and measurement of insurance contracts and investment contracts with discretionary participation features that it issues (including related deferred acquisition costs and related intangible assets) and reinsurance contracts that it holds. The existing accounting policies for recognition and measurement have primarily been based on the requirements of the Generally Accepted Accounting Principles in the United States (status of US GAAP as of the first application of IFRS 4).
Because there is a direct effect on the measurement of DPF liabilities when asset gains or losses are realised, changes in these liabilities are recognised in other comprehensive income when, and
Swiss Life – Annual Report 2019 only when, the valuation differences on the assets arise from gains or losses recognised in other comprehensive income (“shadow accounting”).
Policyholder deposits For investment-type contracts, savings premiums collected are reported as deposits (deposit accounting). The liabilities relating to these contracts comprise the accumulation of deposits received plus interest credited less expenses, insurance charges and withdrawals.
Embedded options and guarantees in insurance contracts Insurance contracts often contain embedded derivatives. Embedded derivatives which are not closely related to their host insurance contracts are separated and measured separately at fair value. Exposure to embedded options and guarantees in insurance contracts which are closely related or which are insurance contracts themselves, such as guaranteed annuity options or guaranteed interest rates, is reflected in the measurement of the insurance liabilities.
Inventory property is measured at the lower of cost and net realisable value. Acquisition costs comprise the purchase price and other costs directly attributable to the acquisition of the property (notary fees etc.). Construction costs include costs directly related to the process of construction of a property. Construction and other related costs are included in inventory property until disposal.
Until 31 December 2018, under the application of IAS17, the Group primarily entered into operating leases for the rental of equipment and property. The total payments made under operating leases were charged to the income statement on a straight-line basis over the period of the lease. When an operating lease was terminated before the lease period had expired, any payment required to be made to the lessor by way of penalty was recognised as an expense in the period the lease became onerous.
At inception of the lease contract, the leased asset is capitalised (right-of-use asset), measured at the initial amount of the lease liability plus any additional initial payments made before the initial capitalisation and any payments for restoring the leased asset at the end of the lease term. The right-of-use asset is depreciated on a straight-line basis over the useful life of the underlying asset, if the ownership of the underlying asset will be transferred to the lessee by the end of the lease term or a purchase option is reasonably certain to be exercised. Otherwise, the right-of-use asset is depreciated over the useful life of the underlying asset, or the lease term, whichever is shorter. The rightof -use assets are included in property and equipment.
Deferred acquisition costs (DAC) Costs that vary with and are directly related to the acquisition of new and renewed insurance contracts and investment contracts with discretionary participation features, in cluding commissions, underwriting costs, agency and policy issue expenses, are deferred. Deferred acquisition costs are periodically reviewed to ensure that they are recoverable from future revenues.
Financial liabilities arising from third party-interest in consolidated investment funds are irrevocably designated as at fair value through profit or loss, as the related assets are managed and their performance is evaluated on a fair value basis.
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 profit or loss 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.
In response to the IBOR reform, the International Accounting Standards Board amended the IFRS Standards IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures in September 2019. The amendments modify some specific hedge accounting requirements to provide relief from potential effects of the uncertainty caused by the IBOR reform. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties, if applicable. The amendments will be effective on 1 January 2020. Since the effectiveness of the Swiss Life Group’s hedging relationships is typically not impaired by the IBOR reform, the amendments will not be applicable.
Swiss Life – Annual Report 2019 are adequate in the light of these latest estimates (liability adequacy test). If the valuation of the liabilities is deemed adequate, the assumptions are not altered. However, if the valuation of the liabilities is deemed inadequate, the assumptions underlying the valuation of the liabilities are altered (“unlocked”) to reflect the latest estimates; no margin is added to the assumptions in this event.
In France, life annuities in payment are reserved using the regulatory tables TGH05/TGF05 and non-life annuities in payment are reserved with the regulatory table TD 88/90.
Swiss Life – Annual Report 2019 records and occupation classes are considered. Similar to the disability insurance products for the individual life business, assumptions for pricing and valuation of nursing care insurance products are acquired in cooperation with reinsurance companies. In particular, best estimate assumptions are considered with respect to claims experience.
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.
Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by management (Corporate Executive Board) in deciding how to allocate resources and in assessing performance.
Non-life operations involve operations in the segment “France” and mainly include property and casualty, liability and motor insurance, accident and health insurance and payment protection insurance.
Policy fees earned on insurance contracts 5 5 16 0 – – 26 – 26
Net gains/losses on investment property 579 119 77 0 – – 776 – 776
Benefits and claims recovered from reinsurers 3 77 20 4 – – 104 –6 98
Premiums ceded to reinsurers –9 –135 –44 –8 – – –196 18 –177
Benefits and claims under insurance contracts –9 868 –2 225 –1 287 –13 – 0 –13 393 5 –13 388
Benefits and claims under investment contracts with discretionary participation –665 – – – – – –665 – –665
Benefits and claims recovered from reinsurers 2 70 24 1 – – 97 –5 92
Depreciation and amortisation expense –210 –176 –103 –8 –15 0 –512 – –512
Additions to non-current assets 2 527 410 751 69 257 – 4 014 – 4 014
Financial assets available for sale 75 105 21 125 9 739 1 623 0 794 108 386 – 108 386
Intangible assets including intangible insurance assets 651 363 1 320 337 404 – 3 074 – 3 074
Financial assets at fair value through profit or loss 7 093 13 279 1 707 17 057 20 – 39 155 – 39 155
Financial assets pledged as collateral 3 086 1 576 – – – 105 4 767 – 4 767
Intangible assets including intangible insurance assets 662 366 1 410 320 377 – 3 135 – 3 135
Investment and unit-linked contracts 6 648 11 324 867 20 901 – – 39 739 –1 39 738
No revenue from transactions with a single external customer amounted to more than 10% of the Group’s revenue.
Swiss Life – Annual Report 2019 5 Risk Management Policies and Procedures
Group risk management is responsible for the definition of the Group-wide methodology for the measurement of the risks and produces a consolidated risk report which aggregates the main quantitative elements of the risk management of the Swiss Life Group’s operations. Furthermore, Group risk management also produces consolidated views on the strategic and operational risks of the Swiss Life Group.
Swiss Life – Annual Report 2019 5.1 Risk budgeting and limit setting
Based on the risk appetite determined by the Board of Directors and using the same frameworks, the Group Risk Committee of the Corporate Executive Board sets risk budgets for the relevant units in the insurance business under consideration of local regulatory constraints. This process ensures a consistent and efficient use of the risk capacity of Swiss Life.
To control and steer exposure to risks, capital and exposure limits are defined in addition. They include capital limits for market and credit risk and, more specifically, capital limits for interest rate and credit spread risk as well as exposure limits for net equity and foreign currency.
The ALM process is centrally coordinated and steered at Group level by means of local asset and liability management committees with representatives from local senior management and representatives from the Group. The local units are in charge of implementing the decisions. The process requires the involvement of investment management, finance, actuarial and risk functions.
External constraints must be considered in the definition of the distribution policy. Important elements influencing such policy are minimum guaranteed interest rates and the statutory minimum distribution ratio (“legal quote”), which depend on the regulatory environments of the Swiss Life Group’s insurance operations.
Swiss Life – Annual Report 2019 5.3 Contracts for the account and risk of the Swiss Life Group’s customers
TOTAL ASSETS FOR THE ACCOUNT AND RISK OF THE SWISS LIFE GROUP’S CUSTOMERS 38 193 34 414
Net gains/losses on financial assets 8 1 680 –511 –2 2 1 678 –509
Net gains/losses on financial instruments at fair value through profit or loss 8 –1 636 420 16 –5 –1 620 415
Net gains/losses on investment property 776 725 – – 776 725
The Group is exposed to financial risk through its financial assets, financial liabilities (primarily investment contracts and borrowings), reinsurance assets and insurance liabilities. In particular, the key financial risk is that the proceeds from the financial assets are not sufficient to fund the obligations arising from the insurance and investment contracts, as well as from borrowings and other liabilities. The most important components of the financial risk are interest rate risk, equity and real estate price risk, credit risk, currency risk and liquidity risk.
Insurance liabilities linked to assets for the account and risk of the Swiss Life Group’s customers 7 109
Insurance liabilities linked to assets for the account and risk of the Swiss Life Group’s customers 5 905
In certain businesses, a large part of the impact of interest rate changes is taken by the policyholders based on the specific profit-sharing systems.
Debt securities classified as loans 1 127 1 344 – – 1 127 1 344
Senior secured loans available for sale 3 144 3 010 – – 3 144 3 010
To mitigate specific credit risk, the Group purchases credit risk protection in the form of credit default swaps and credit default swap indices. As at 31 December 2019, these derivative contracts provided a notional principal protection of CHF 821 million (2018: CHF 5271 million).
TOTAL OTHER LOANS AND RECEIVABLES 2 796 2 317 1 192 5 621 2 446 –20 14 352
Exposure to credit risk of debt instruments that meet the SPPI criterion as at 31 December 2018 in CHF million
Derivatives designated as cash flow hedges – – 137 715 – 225 1 077 21
Financial assets at fair value through profit or loss 3 670 3 139 4 772 4 420 35 250 31 597 43 692 39 155
Financial assets available for sale 8 270 9 447 100 116 90 990 – – 108 386 100 437
Financial assets pledged as collateral 13 92 2 425 4 676 – – 2 438 4 767
Investment and unit-linked contracts 293 296 10 801 11 125 31 209 28 316 42 303 39 738
Nature of insurance risk When designing a new product or reviewing an existing one, care has to be taken that the product neither includes systemic risk nor provides incentives for adverse selection. The Swiss Life Group favours transparent and simple product designs with a reliable pricing basis with sufficient statistical data available. Insurance risk arises when biometric parameters deviate adversely from expectations. The uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts is due to the unpredictability of long-term changes in overall levels of mortality and disability, for instance. Furthermore, deviations from the expected outcome of a portfolio can also arise because of random fluctuations. The impact of random fluctuations depends on the extent of diversification within a portfolio of contracts.
Mortality and longevity Mortality and longevity risks reflect the financial consequences of insured people dying sooner or living longer than expected, respectively. 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.
Disability income and other annuities – deferred 7 438 7 569
Disability income and other annuities – deferred 17 921 15 906
Embedded options The ability of a policyholder to pay reduced or no future premiums under a contract, to terminate the contract completely or to exercise a guaranteed annuity option means that the insurer’s liability is also subject to policyholder behaviour to a certain extent. On the assumption that a certain group of policyholders will make decisions rationally, overall insurance risk can be aggravated by such behaviour. For example, it is conceivable that policyholders whose health has deteriorated significantly will be less inclined to terminate contracts insuring disability or death benefits than those policyholders remaining in good health, thus contributing to an increasing trend in the expected mortality of policyholders, as the portfolio of insurance contracts is reduced due to surrender.
Underwriting strategy Underwriting is the process of selecting and classifying insurable risks. The underwriting strategy attempts to ensure that the risks underwritten are profitable and well diversified in terms of type of risk and level of insured benefits. Life insurance underwriting is performed to ensure that the premiums and the general conditions of the insurance policies are adequate for the risks to be insured. The first step in the underwriting process is to determine which individual risks can be accepted. The second step is to place the accepted risks into groups of similar levels of risk. Both processes must be conducted objectively and consistently. The Group sets limits for the acceptance of insurance coverage arising from new and renewal business. Medical selection is part of the Group’s underwriting procedures, whereby premiums are charged to reflect the health condition and family medical history of the applicants. The limits relate to sums at risk, maximum insured losses or present value of premiums at the contract or insured person level. Depending on the type of business and the limit exceeded, the new or renewed contract must be approved by the corresponding risk committee or senior management. Contracts exceeding the set limits are tested individually for profitability according to predefined procedures and compliance assessments are performed before approval. Certain contracts which include specific risks relating to derivatives or demographic risk factors for which no reliable data is available must be submitted for approval irrespective of the amount of coverage offered. Insurance coverage exceeding set limits is subject to regular internal reporting requirements. Additionally, the underwriting practices must be in line with local laws.
Claims arising from the accident and health business primarily cover refunds for medical treatment, daily allowances in the case of sick leave, annuities and long-term medical care. The factors that could increase the overall liabilities in health insurance are the increase in the claim frequency due to an increase in the average age of the insured persons and negative economic and social factors. The insurance liabilities arising from accident and health insurance contracts must consider outstanding claims and claims incurred but not reported (IBNR). A large part of the insurance liabilities arising from these contracts relates to IBNR, and experience shows that health insurance contracts are sensitive to late reporting of claims in both number of claims and amounts.
Cumulative payments to date –236 –241 –232 –234 –231 –217 –201 –200 –198 –124 –2 116
Management reviews reinsurance programmes covering treaty, type, risks covered and retention on a regular basis. A process, competencies and limits are set up for the approval of reinsurance programmes and their modification. To ensure that the Group’s principles are observed, guidelines on reinsurance are in place.
Approximately 1.0% in terms of earned insurance premiums was ceded as at 31 December 2019 (2018: 1.3%).
Asset allocation shows a concentration of bonds. The remaining investments are mainly distributed among property, equities and mortgages.
At 31 December 2019, if interest rates had been 50 basis points higher, profit or loss would have been CHF 20 million lower (2018: CHF 8 million higher) and other comprehensive income would have been CHF 1540 million lower (2018: CHF 1236 million lower). If interest rates had been 50 basis points lower, profit or loss would have been CHF 13 million higher (2018: CHF 11 million lower) and other comprehensive income would have been CHF 1740 million higher (2018: CHF 1383 million higher). These impacts are net after policyholder and tax. The sensitivity includes financial assets as well as insurance liabilities. “Investment funds – debt” and investment funds with substantial investment in debt instruments are included in the analysis. This sensitivity measures the impact of a parallel shift of the bond interest rates at the closing date.
At 31 December 2019, if equity prices had been higher by 10%, profit or loss would have been CHF 347 million lower (2018: CHF 329 million lower) and other comprehensive income would have been CHF 701 million higher (2018: CHF 703 million higher). If equity prices had been lower by 10%, profit or loss would have been CHF 246 million higher (2018: CHF 217 million higher) and other comprehensive income would have been CHF 690 million lower (2018: CHF 680 million lower). These impacts are gross before policyholder and tax. This sensitivity measures the impact of an increase/decrease in the market value of equities (incl. hedge funds and private equity) at the closing date. Investment funds with substantial investment in equities are included in the analysis, as are hedging effects.
At 31 December 2019, if mortality rates for life assurance had been higher by 5%, profit or loss would have been CHF 1 million lower (2018: CHF 1 million lower). This sensitivity measures the impact of an increase in the mortality rates in life assurance, e.g. endowments and term life insurance products where the net amount at risk is positive. If mortality rates for the annuity business had been lower by 5%, profit or loss would have been CHF 5 million lower (2018: CHF 4 million lower). This sensitivity concerns annuities in payment and future annuities. Whether policies are affected already during the savings accumulation period might depend on technical implementation issues, e.g. whether the accumulation and annuity phases are driven by the same mortality table. These impacts are net after policyholder and tax.
At 31 December 2019, if morbidity rates had been higher by 5%, profit or loss would have been CHF 27 million lower (2018: CHF 21 million lower). If morbidity rates would have been lower by 5%, profit or loss would have been CHF 27 million higher (2018: CHF 21 million higher). These impacts are net after policyholder and tax.
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING FOR DILUTED EARNINGS PER SHARE 32 861 834 34 158 467
Swiss Life – Annual Report 2019 7 Premiums, Policy Fees and Deposits Received
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 23 008 19 218
Interest income on financial assets available for sale 2 356 2 445
Liabilities linked to assets for the account and risk of the Swiss Life Group’s customers –3 891 2 164
TOTAL NET GAINS/LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS 5 –1 620 415
1 includes interest and dividend income of CHF 199 million (2018: CHF 150 million)
Realised gains/losses on sales of subsidiaries and other assets 19 21
Net benefits and claims under insurance contracts 16 939 13 296
Derivatives designated as cash flow hedges 420 72 16 21 3 489 1 358
Interest rate swaps to hedge bond portfolios 18 9 3 545 11 –43 43 –11
Currency forwards to hedge non-monetary investments 42 4 5 824 672 –616 616 –672
TOTAL DERIVATIVES DESIGNATED AS FAIR VALUE HEDGES 149 26 11 650 867 –654 654 –867
The Swiss Life Group used interest rate swaps to hedge available-for-sale fixed-rate bonds and bonds classified as loans in Swiss francs, euro, British pounds and US dollars against changes in the fair value attributable to interest rate risk. The nominal amount of these bonds as at 31 December 2019 was CHF 3.3 billion (2018: CHF 5.6 billion).
Forward contracts are used as hedging instruments to protect non-monetary investments against adverse movements in euro, British pound, US dollar and Japanese yen exchange rates. Such investments include equity securities, hedge funds and investment funds (equity funds and corporate loan funds).
In 2019 and 2018, hybrid debt denominated in euro was used to protect non-monetary investments (hedge funds, equity securities and investment funds) against adverse movements in euro exchange rates.
TOTAL DERIVATIVES DESIGNATED AS NET INVESTMENT HEDGES 40 5 4 217 9 –
Effective portion Ineffective recognised in other portion comprehensive recognised EUR income in profit or loss
Foreign currency borrowing to hedge net investments in foreign entities 203 188 6 –
Swiss Life – Annual Report 2019 10 Financial Assets at Fair Value through Profit or Loss
Financial assets for the account and risk of the Swiss Life Group’s customers 5 35 250 31 597
TOTAL FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS 43 692 39 155 11 Financial Assets Available for Sale
Debt securities previously classified as available for sale 968 1 133 – – 968 1 133
BALANCE AS AT END OF PERIOD 16 16 12 15 28 31
Gains (+)/losses (–) recognised in profit or loss (including impairment) 2 18
BALANCE AS AT END OF PERIOD 34 866 31 381 of which pledged as security for mortgage loans 1 054 1 522
In CHF million 1 Under IAS 17 payments for perpetual lease contracts with a termination option were not included
Current liabilities –14 –15 –1 –3 –1 – –52 – –64 –205
Non-current liabilities –37 –38 –40 –39 –177 – –209 – –47 –45
Other comprehensive income – – – – – – – – – –
No borrowing costs were capitalised in property and equipment in 2019 and 2018.
Swiss Life – Annual Report 2019 17 Intangible Assets including Intangible Insurance Assets
BALANCE AS AT END OF PERIOD 1 461 105 41 46 1 653
The acquisition of Fontavis AG, Baar, in September 2019 resulted in the recognition of goodwill of CHF 25 million. The goodwill has been allocated to the “Asset Managers” segment. The goodwill resulting from the acquisition of in total eight property entities in Geneva and Vaud was nil. A goodwill of CHF 5 million was recognised in the segment “International” in connection with the acquisition of Ferguson Oliver Limited in Angus, United Kingdom.
Artemis Acquisition Germany S.à r.l., Luxembourg, a company that was acquired in March 2018, is now accounted for as an investment in associates due to loss of control in the second half of 2018. Its goodwill, which was allocated to the “Switzerland” segment, amounted to CHF 1 million and was fully impaired.
The acquisition of Fincentrum a.s., Prague and Bratislava, in October 2018 led to the recognition of customer relationships of CHF 9 million.
Swiss Life – Annual Report 2019 19 Investment and Unit-Linked Contracts
Investment contracts with discretionary participation features (DPF) 15 395 15 102 114 110 15 281 14 992
TOTAL INVESTMENT AND UNIT-LINKED CONTRACTS 42 303 39 738 114 110 42 188 39 628 of which for the account and risk of the Swiss Life Group’s customers
Effect of changes in actuarial assumptions and other movements 1 415 –1 044
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.
Acquisitions and disposals of subsidiaries – – – – 0 – 0 –
BALANCE AS AT END OF PERIOD 2 902 2 960 1 049 424 152 0 4 104 3 385
On 27 September 2016, ELM B.V., a Dutch repackaging vehicle, issued EUR 600 million in fixed to floating rate subordinated perpetual notes (at an issue price of 99.707%) secured by 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 19 May 2027 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The interest has been fixed at 4.50% p.a. until 19 May 2027. If the notes are not redeemed on 19 May 2027, the interest will be the aggregate of the three-month Euribor and a margin of 5.10% p.a.
On 24 March 2016, Swiss Life Ltd issued subordinated dated callable bonds in the amount of CHF 150 million. The bonds are guaranteed by Swiss Life Holding, have their maturity date on 24 September 2046 and are first callable on 24 September 2026 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 4.375% p.a. until 24 September 2026. If the bonds are not redeemed on 24 September 2026, 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 4.538% p.a.
On 24 March 2016, Swiss Life Ltd issued subordinated perpetual callable bonds in the amount of CHF 450 million. The bonds are guaranteed by Swiss Life Holding and are first callable on 24 September 2021 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 3.75% p.a. until 24 September 2021. If the bonds are not redeemed on 24 September 2021, 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 4.392% p.a.
In March 1999, Swiss Life Ltd privately placed a subordinated perpetual step-up loan comprising three simultaneous advances of EUR 443 million (at a rate of interest of Euribor plus a margin of 1.05% p.a., increased by 100 basis points as from April 2009), CHF 290 million (at a rate of interest of Libor plus a margin of 1.05% p.a., increased by 100 basis points as from April 2009) and EUR 215 million (at a rate of interest of Euribor plus a margin of 1.05% p.a., increased by 100 basis points as from October 2009). In 2009, Swiss Life Ltd renounced the right to call the loan on its first call date. Following the purchase offer by Swiss Life Insurance Finance Ltd. in 2012, EUR 193 million remain outstanding. Swiss Life Ltd renounced the right to call the loan on the call dates falling in April 2014 and 2019, and can next call it in 2024, or at five-year intervals thereafter, at its discretion, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority.
Swiss Life AG EUR 600 EUR 600 4.500% 2016 2027 646 669
Swiss Life Holding AG CHF 250 0.250% 2019 2023 250 –
Swiss Life Holding AG CHF 150 0.350% 2019 2029 150 –
Swiss Life Holding AG CHF 200 3m CHF Libor 1 2019 2021 201 –
Claims under non-life insurance contracts 896 917 173 174 722 743
Claims under life insurance contracts 6 366 6 203 101 90 6 265 6 113 of which for the account and risk of the Swiss Life Group’s customers 7 109 5 905 – – 7 109 5 905
Effect of changes in actuarial assumptions and other movements 856 938
The primary benefit of Swiss Life’s plans is an old-age pension after reaching retirement age. The level of the old-age pension is determined by the plan’s conversion rate applied to the employee’s individual pension account accumulated at retirement age. There are options for early retirement (with actuarially determined reduction of the conversion rate) and for choosing to receive a lump-sum payment instead of a pension. This old-age pension is funded by monthly contributions from the employer and the employee (deducted from salary) to an individual pension account, which in addition is increased by a yearly interest accrual. The contributions are based on age and on a percentage of the contributory salary. Further funding of an individual pension account comprises mandatory transfers of funds made by new employees from plans of their former employers and discretionary contributions from the employees (with restrictions to maximum amounts). As a consequence of plan amendments in the past, certain age groups are granted guarantees of a minimum level of old-age pensions in case of early retirement. The cost with respect to early retirement of members from these age groups is borne by the employer.
As a result of the effects of the continuing low interest rate environment, reduced investment return expectations on the plan assets and increasing life expectancy, the board of trustees announced measures to support the long-term financial stability of the Swiss pension plan. As of 2021, the pension plan will operate with lower conversion rates. To mitigate the effects of such a plan change, the employees’ individual pension assets will be increased. The respective contribution of the foundation will be defined by the board of trustees in 2020. Additionally, the pension plan will increase savings contributions as of 1 January 2021.
For some plans, the level of old-age pensions is determined by yearly amounts. Contributions are made in the form of premiums to an individual insurance contract with Swiss Life Germany. The premium is a fixed amount, determined by the rules of the pension plan, and depends on the employee’s status. Every three years there is an adjustment of the contribution amount due to the general development of salaries in the German insurance industry. There is a risk that the employer has to make additional payments in case the benefits of the individual insurance contract do not cover the benefits promised by the plan. Other benefits comprise lump-sum payments in case of death as well as disability pensions (if disabled before retirement age). The levels of these benefits are determined as fixed amounts by the plan depending on the employee’s status. This part of the plan is also covered by insurance contracts with Swiss Life Germany.
For some plans, a lump-sum benefit is provided when reaching retirement age. The capital benefit amount depends on the contributions and the performance of an underlying portfolio of assets. The benefit payable is the amount originally paid in plus interest.
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, is borne by the company.
Insurance contracts not eligible as plan assets under IFRS 1 346 1 319
BALANCE AS AT END OF PERIOD –3 989 –3 554 of which amounts owing to
Average life expectation at ordinary retirement age (men) 22.6–23.1 22.5–23.4 22.0–28.0 19.8–27.0
A sensitivity analysis was performed for each significant actuarial assumption showing the impact on the defined benefit obligation of changes in the respective actuarial assumptions 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 assumptions may well be correlated. In addition, the net effect in the consolidated balance sheet would also be driven by the change in the value of the plan assets.
At 31 December 2019, if the future expected salary growth had increased (decreased) by 50 basis points, the defined benefit obligation would have increased by CHF 24 million (decrease CHF 23 million). At 31 December 2018, if the future expected salary growth had increased (decreased) by 50 basis points, the defined benefit obligation would have increased by CHF 19 million (decrease CHF 19 million).
The contributions expected to be paid for the year ending 31 December 2020 are CHF 71 million. These contributions include amounts payable under insurance contracts issued to defined benefit plans covering own employees.
Certain subsidiaries sponsor various defined contribution plans. Participation in the various plans is based either on completion of a specific period of continuous service or on the date of hire. The plans stipulate contributions by both employers and employees. The expenses under these plans amounted to CHF 2 million in 2019 (2018: CHF 2 million).
For 2019, 2018, 2017, 2016 and 2015 participants in the share-based payment programme are allocated restricted share units (RSUs). RSUs grant the holder future subscription rights, entitling him or her to receive Swiss Life Holding shares free of charge after a three-year period has elapsed and if certain conditions are fulfilled.
The 2019 equity compensation plan is based on the new Group-wide programme “Swiss Life 2021”, which was announced on 29 November 2018. The 2016, 2017 and 2018 equity compensation plans are based on the Group-wide programme “Swiss Life 2018”. For the purpose of supporting the achievement of the respective corporate goals, performance criteria have been determined by the Board of Directors analogously to the previous year’s objectives: IFRS profit (50% weighting), the risk and fee result (25% weighting) and cash to Swiss Life Holding for further strengthening of the financial substance and payout capacity (25% weighting).
In 2016, the number of RSUs granted under this programme amounted to 51 270. The fair value at the mea surement date amounted to CHF 215.66. The date of grant was 1 March 2016.
In 2018, the number of RSUs granted under this programme amounted to 43 649. The fair value at the mea surement date amounted to CHF 300.66. The date of grant was 1 March 2018.
In 2019, the number of RSUs granted under this programme amounted to 40 840. The fair value at the mea surement date amounted to CHF 380.66. The date of grant was 1 March 2019.
The expected weighted-average tax rate for the Group in 2019 was 19.0% (2018: 21.1%). This rate was derived by obtaining a weighted average of the expected income tax rates in the various jurisdictions in which the Group operates. The change of the weighted-average tax rate is due to the geographical allocation of the profits and the different tax rates in these jurisdictions. The actual income tax expense differs from the expected amount as follows.
The enactment of the federal law on tax reform and AHV (Swiss old-age and survivors’ insurance) financing as of 1 January 2019, combined with cantonal tax law revisions led to a revaluation of the deferred tax assets and liabilities in Switzerland. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority.
Foreign Other currency Balance as at comprehensive Acquisitions translation Balance as at 1 January Profit or loss income and disposals differences end of period
Unwinding of discount and effect of change in discount rate – – 0 0 – – 0 0
– Gains and losses from fair value changes of financial assets available for sale. – Effective portion of gains and losses on hedging instruments in qualifying cash flow hedges. – Other items consisting of unrealised losses on financial assets reclassified from “available for sale” to “loans” in 2008 due to the disappearance of an active market, and the Group’s share of other comprehensive income of investments in associates accounted for using the equity method.
NET BALANCE AS AT END OF PERIOD –1 150 4 574 451 –2 3 873 67 –397 –330 3 542
Net investment hedges – gross 107 – – – 107 – – – 107
Reclassification to retained earnings – – – – – –25 – –25 –25
NET BALANCE AS AT END OF PERIOD –1 012 2 791 348 –10 2 117 68 –301 –232 1 885
Net other comprehensive income before non-controlling interests –125 –1 336 –62 13 –1 510 21 24 45 –1 465
Retained earnings comprise accumulated retained earnings of the Group entities which have not been distributed to the shareholders. The distribution of profit is subject to restrictions in the various jurisdictions where the Group entities are located.
Asset management and other commission income 1 – – 1 0
The details regarding key management compensation in accordance with Article 663bbis of the Swiss Code of Obligations or the Ordinance against Excessive Compensation in Listed Stock Companies (Compensation Ordinance, VegüV), respectively, are set out in the Compensation Report, which forms part of the Corporate Governance section of the Annual Report 2019 of the Swiss Life Group. The information according to Article 663c of the Swiss Code of Obligations is shown in the Notes to the Swiss Life Holding Financial Statements.
Assets for the account and risk of the Swiss Life Group’s customers 29 920 26 917 1 055 1 297 4 275 3 383 35 250 31 597
Alternative investments: Alternative investments classified as level 2 assets comprise hedge funds of funds and leveraged loan funds based on third-party quotes substantiated by observable market data, such as recent transactions or valuation techniques that reflect the market participant’s assumptions. The level 2 classification is chosen because those funds maintain an irregular basis of price and are evaluated with some time lag.
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 well-known data providers as inputs. The fair value measurement is based on acknowledged, well-established 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.
– The fair value of foreign currency forwards is derived from the foreign exchange spot rate and actively traded foreign exchange ticks.
In the exceptional case that a theoretical valuation of an OTC derivative is not available in Swiss Life’s asset management system, the fair value is provided by counterparties. The appropriate ness of such quotes is validated by Swiss Life based on established models using observable market data as input.
Equity securities: The fair values of equity securities, which are not traded in an active market and are determined using unobservable inputs, classify as level 3 within the fair value hierarchy. These fair values are based on generally accepted valuation techniques. Valuation techniques aim at using a maximum of market inputs and include discounted cash flow analysis (e.g. profit situation, investment plans, investment property) and other valuation techniques commonly used by market participants.
Investment funds: Level 3 fair values of investment funds are primarily related to real estate funds. The valuation of the underlying property investments is done by independent appraisers using generally accepted valuation techniques (mainly discounted cash flow). The appraisers consider the general economic situation and the individual condition of the property investments. Main input factors applied in the discounted cash flow method are estimates on rental income and vacancies, projections of non-recoverable running costs (e.g. property taxes), maintenance costs and risk-adjusted discount rates, which are determined individually for each property.
Financial assets that on a specific date give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding meet the SPPI criterion. The fair value of such assets and those that do not meet the SPPI criterion as well as the change in fair value are disclosed in the following table.
Debt instruments managed on a fair value basis 28 –11 622 340
Assets measured at fair value based on level 3 for the year 2019
Total gains/losses recognised in profit or loss – 0 –2 145 33 –128 776 823
Total gains/losses recognised in other comprehensive income – – 10 – 4 – – 14
BALANCE AS AT END OF PERIOD – – 238 4 537 1 032 4 275 34 866 44 948
Foreign currency translation differences – –1 –9 –45 –30 –92 –290 –465
BALANCE AS AT END OF PERIOD – 12 225 3 236 1 051 3 383 31 381 39 289
Total gains/losses recognised in profit or loss – – 1 0 504 60 505 60
Foreign currency translation differences – – 0 0 –43 –21 –43 –21
BALANCE AS AT END OF PERIOD – – 136 161 2 582 1 611 2 719 1 772
at the end of the period –21 –28 17 468 748 711
Swiss Life – Annual Report 2019 30.2 Fair value of financial instruments carried at amortised cost
Swiss Life – Annual Report 2019 31 Offsetting Financial Assets and Liabilities
Gross amounts of recognised financial assets before offsetting 2 090 2 140 – – 9 19 2 099 2 159
Gross amounts of recognised financial liabilities before offsetting 1 311 1 048 2 495 4 625 0 15 3 806 5 688
NET AMOUNTS PRESENTED IN THE BALANCE SHEET 1 311 1 048 2 495 4 625 – 14 3 806 5 688
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 2019, committed principal amounts totalled EUR 1 million and CHF 651 million (2018: EUR 5 million and CHF 223 million). The range of committed interest rates is 1.54% to 5.09% for commitments in euro and 0.75% to 1.89% for commitments in Swiss francs.
Contractual obligations for repairs and maintenance of investment property amounted to CHF 357 million as at 31 December 2019, which are included in this line item (2018: CHF 179 million ).
According to the media release of 14 September 2017 Swiss Life is in dialogue with the US Department of Justice regarding its cross-border business with US clients. Swiss Life is using the opportunity for dialogue and explaining its past cross-border business in cooperation with the US authorities. At this stage of the dialogue it cannot be predicted if in this context possible financial charges for the Group will result.
Other securities received 21 49 34 Events after the Reporting Period
Neue Warenhaus AG, Zürich CH 100.0% 100.0% Real estate CHF 5 000 000
Oscar Weber AG, Zürich CH 100.0% 100.0% Real estate CHF 5 000 000
Swiss Life AG, Zürich CH 100.0% 100.0% Life insurance CHF 587 350 000
Swiss Life Capital Holding AG, Zürich Other 100.0% 100.0% Holding CHF 5 514 000
Swiss Life Holding AG, Zürich Other – – Holding CHF 171 332 491
Swiss Life Intellectual Property Management AG, Zürich Other 100.0% 100.0% Services CHF 250 000
Swiss Life REF (CH) European Properties , Zürich CH 53.5% 53.5% Investment funds EUR 400 000 000
SwissFEX AG, Zürich CH from 01.10.2019 100.0% 100.0% Information technology CHF 300 000
Swissville Centers Holding AG, Zürich CH 100.0% 100.0% Holding CHF 7 100 000
TECHNOPARK Immobilien AG, Zürich CH 66.7% 66.7% Real estate CHF 40 000 000
CLUB PRIME HOSPITALITY, Paris CH/FR 100.0% 100.0% Real estate EUR 191 328 396
DYNACAPITALE, Paris FR from 15.07.2019 82.1% 100.0% Real estate EUR 407 846
DYNAPTIM, Paris FR from 15.07.2019 81.3% 100.0% Real estate EUR 1 758 937
Financière du Patrimoine, Balma (formerly Toulouse) FR until 31.10.2019 – –
MA Santé Facile, Levallois-Perret FR 100.0% 100.0% Services and broker EUR 600 000
PARIS PRIME OFFICE 1, Paris CH from 04.04.2019 55.4% 100.0% Real estate EUR 76 096 000
SAS Placement Direct, Levallois-Perret FR 100.0% 100.0% Services and broker EUR 250 000
SL RETAIL FRANCE 1, Paris FR/DE 51.4% 100.0% Real estate EUR 22 035 000
(formerly SWISS LIFE REIM (France)), Marseille AM 100.0% 100.0% Asset management EUR 671 167
SwissLife Assurances de Biens, Levallois-Perret FR 100.0% 100.0% Non-life insurance EUR 80 000 000
SwissLife Dynapierre, Levallois-Perret FR/INT 73.3% 73.3% Real estate EUR 219 162 716
SwissLife France, Levallois-Perret FR 100.0% 100.0% Holding EUR 267 767 057
BCP GP GmbH, Berlin AM from 12.12.2018 100.0% 100.0% Asset management & Real estate EUR 25 000
BEOS AG, Berlin AM from 30.08.2018 100.0% 100.0% Asset management & Real estate EUR 500 000
BEREM Property Management GmbH, Berlin AM from 30.08.2018 100.0% 100.0% Asset management & Real estate EUR 25 300
BVIFG I Management GmbH, Berlin AM from 30.08.2018 100.0% 100.0% Asset management & Real estate EUR 25 000
CORPUS SIREO Aurum GmbH & Co. KG, Köln CH 100.0% 100.0% Asset management & Real estate EUR 100 000
CORPUS SIREO Investment Residential No. 2 GmbH, Köln AM 100.0% 100.0% Asset management & Real estate EUR 25 000
GmbH & Co. KG, Köln AM 99.0% 100.0% Asset management & Real estate EUR 101 000
Köln AM 99.9% 100.0% Asset management & Real estate EUR 25 000
CORPUS SIREO Real Estate GmbH, Köln AM 100.0% 100.0% Holding EUR 49 230 768
FRECOR Projektentwicklung und Wohnbau GmbH, Köln AM until 23.08.2019 – –
Horbach Wirtschaftsberatung GmbH, Hannover DE 100.0% 100.0% Services EUR 260 000
IC Investment Commercial No. 5 GmbH, Köln AM 100.0% 100.0% Asset management & Real estate EUR 250 100
Garching b. München DE 100.0% 100.0% Real estate EUR 50 000
Garching b. München DE 100.0% 100.0% Real estate EUR 10 000 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
Swiss Compare GmbH, Hannover DE 100.0% 100.0% Services EUR 100 000
Swiss Life Deutschland Operations GmbH, Hannover DE 100.0% 100.0% Services EUR 25 000
Swiss Life Gastronomie GmbH, Hannover DE 100.0% 100.0% Staff restaurant/Canteen EUR 25 000
Holding GmbH, Frankfurt am Main AM from 23.08.2019 100.0% 100.0% Holding EUR 25 000
Swiss Life Select Deutschland GmbH, Hannover DE 100.0% 100.0% Services EUR 2 700 000
SICAV-FIS (in Liquidation), Luxembourg DE 57.0% 57.0% Asset management & Real estate EUR 92 631 568
EVER.S. München S.C.S., Munsbach DE from 15.02.2019 100.0% 100.0% Asset management & Real estate EUR 1 000
SchwabenGalerie Stuttgart S.C.S., Munsbach DE 100.0% 100.0% Asset management & Real estate EUR 1 000
SL Place de Paris S.à r.l., Luxembourg FR 100.0% 100.0% Real estate EUR 12 500
Swiss Life Assurance Solutions S.A., Luxembourg Other until 23.09.2019 – –
Opportunities Management S.à r.l., Luxembourg AM 100.0% 100.0% Asset management EUR 12 500
Swiss Life Invest Luxembourg S.A., Luxembourg IN 100.0% 100.0% Holding EUR 60 211 000
Swiss Life Participations Luxembourg S.A., Luxembourg IN 100.0% 100.0% Holding EUR 67 496 000
Swiss Life Products (Luxembourg) S.A., Luxembourg CH 100.0% 100.0% Life insurance/Reinsurance EUR 86 538 000
Luxembourg CH from 15.04.2019 100.0% 100.0% Real estate EUR 500 000
SwissLife LuxCo S.à r.l., Luxembourg FR 100.0% 100.0% Holding EUR 12 000
Chase de Vere Consulting Limited, Manchester IN 100.0% 100.0% n/a GBP 15 000
Chase de Vere IFA Services Limited, Manchester IN 100.0% 100.0% n/a GBP 1
Chase de Vere Private Client Trustees Limited, London IN 100.0% 100.0% n/a GBP 1
Ferguson Oliver Limited, Angus IN from 18.10.2019 100.0% 100.0% Services GBP 23 000
MAYFAIR CAPITAL TGF GENERAL PARTNER LLP, London AM 100.0% 100.0% Asset management GBP 1
MCIM CORPORATE TRUSTEES LIMITED, London AM 100.0% 100.0% n/a GBP 1
Select INVESTMENT GmbH, Wien IN from 30.05.2019 100.0% 100.0% Services EUR 127 000
MONTOYER 51 LEASEHOLD, Etterbeek FR 100.0% 100.0% Real estate EUR 7 787 081
Adroit Investment (Offshore) Ltd., Grand Cayman CH 100.0% 100.0% Private equity CHF 192
Swiss Life Insurance Finance Ltd., Grand Cayman Other 100.0% 100.0% Finance EUR 5 000
(formerly Fincentrum a.s.), Praha IN from 19.10.2018 100.0% 100.0% Services CZK 700 700 000
Fincentrum Reality s.r.o., Praha IN from 19.10.2018 100.0% 100.0% Services CZK 200 000
Swiss Life (Singapore) Pte. Ltd., Singapore IN 100.0% 100.0% Life insurance SGD 23 000 000
Fincentrum a.s., Bratislava IN from 19.10.2018 100.0% 100.0% Services EUR 33 200
Fincentrum Reality s.r.o., Bratislava IN from 19.10.2018 100.0% 100.0% n/a EUR 5 000 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
We concluded full scope audit work at 10 reporting units in 5 countries. Our audit scope addressed over 89% of the Group's total assets and 99% of the Group's total net earned premiums. In addition, specified procedures were performed on a further six reporting units.
Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Policyholders’ benefits represent the estimated future benefit liability for traditional life insurance policies and include the value of accumulated declared bonuses or dividends that have vested to policyholders. The reserves for life benefits for participating traditional life insurance policies are calculated using a net level premium valuation model. The actuarially determined liabilities depend on the type of profit participation and are based on actuarial assumptions, such as
Our audit procedures relating to actuarially determined liabilities primarily consist of testing the models used in developing these balances, reviewing management’s assumptions in light of current economic conditions, industry developments and policyholder behaviour and performing procedures over the completeness and accuracy of underlying data used in the calculations. We were supported by actuaries in our audit work.
As the future life policyholder benefits are calculated using a discount rate, we have assessed significant assumption changes made during the year with a focus on the interest
Swiss Life Holding Ltd | Report of the statutory auditor to the General Meeting guaranteed mortality benefits, interest rates, persistency, expenses and investment return, plus a margin for adverse deviations.
Management assesses the appropriateness of the main assumptions used for the calculation of these liabilities at each reporting date. Management’s process for updating assumptions varies by territory and product.
We focused our audit on these liabilities due to their significance to the consolidated financial statements, the sensitivity to changes in the economic conditions, and the level of judgment involved in setting assumptions.
• Comparison of the allocation of the major asset classes to the strategic asset allocation as determined by management
The existing goodwill amounts to CHF 1’461 million as a result of various business combinations, mainly Swiss Life Select, Lloyd Continental, CapitalLeben, Corpus Sireo and Beos. Goodwill is subject to management testing, at least annually, for impairment at the cash generating unit level.
As set out in note 14 Investment Property - property held for investment amount to CHF 34’866 million for the Swiss Life Group.
We assessed the overall portfolio structure, compared the current portfolio to the prior year, and assessed the overall process of determining the fair values.
• Amongst other procedures, we examined the valuation assumptions for expected rental income, with regards to reasonableness and market conformity
• Test of the mathematical correctness of fundamental calculation steps through the reperformance of such calculations
Swiss Life Holding Financial Statements 312 Management Report 313 Statement of Income 314 Balance Sheet 315 Notes to the Financial Statements 319 Disclosure of compensation to the Board of Directors and the Corporate Executive
Board in accordance with Art. 663bbis of the Swiss Code of Obligations (CO) and Art. 14–16 of the Federal Ordinance against Excessive Compensation in Listed Stock Companies, and disclosure of the shareholdings of members of the Board of Directors and the Corporate Executive Board in accordance with Art. 663c of the CO
Swiss Life Holding increased its profit in the 2019 financial year from CHF 460 million to CHF 758 million
Swiss Life Holding’s distribution to shareholders in the period under review came to CHF 547 million, or CHF 16.50 per share, of which CHF 83 million (CHF 2.50 per share) was made from the capital contribution reserve and CHF 464 million (CHF 14.00 per share) as an ordinary dividend. The par value of the share remains unchanged at CHF 5.10. The nominal share capital of Swiss Life Holding decreased slightly to CHF 171 million (previous year: CHF 175 million) due to the shares cancelled as part of the share buyback programme.
Long-term debt capital increased by CHF 625 million to CHF 1049 million. Short-term debt capital mainly consists of repo transactions. As of the end of the year, it amounted to CHF 190 million (previous year: CHF 100 million). In the year under review, interest on long-term bonds totalled CHF 6 million. With short-term repo transactions, Swiss Life Holding generated interest income of CHF 2 million.
Loans to Group companies CHF 703 million of the loans to Group companies is classified as subordinated.
In publications dated 23 April 2019, 20 July 2019, 6 August 2019 and 28 November 2019 in the context of a share buyback programme on a scale of around CHF 1 billion (CHF 999 995 716.25) launched at the end of 2018 and completed on 5 December 2019, Swiss Life Holding Ltd, General Guisan-Quai 40, 8002 Zurich, Switzerland, reported several instances in which figures exceeded or fell short of thresholds. According to the last report dated 28 November 2019, at this point in time Swiss Life Holding Ltd held 1 685 005 treasury shares, corresponding to 5.02% of voting rights. As at 31 December 2019, Swiss Life Holding Ltd held a total of 1 721 351 treasury shares, corresponding to 5.12% of voting rights
Share capital As at 31 December 2019, the share capital of Swiss Life Holding (SLH) consisted of 33 594 606 fully-paid shares with a par value of CHF 5.10 each. In exercising voting rights, no shareholder can collect more than 10% of the total share capital directly or indirectly in respect of his own shares and those he represents. As at 31 December 2018, Swiss Life Holding had 34 223 106 registered shares outstanding with a par value of CHF 5.10 per share. Conditional share capital was CHF 19 675 534.80 as at 31 December 2019 (previous year: CHF 19 675 534.80).
Statutory capital reserve The statutory capital reserve consists of the capital contribution reserve of CHF 181 mil- lion (previous year: CHF 263 million). The capital contribution reserve fell by CHF 2.50 per share or CHF 83 million due to the distribution of profit during the year under review. As at 31 December 2019, the capital contribution reserve came to CHF 181 million. Of this amount, CHF 4 million is recognised by the Federal Tax Administration, while the legal qualification of CHF 177 million is still open and is to be reassessed according to future legal developments.
Free reserves This post comprises accumulated retained earnings which have not been distributed to the shareholders. In order to pay the ordinary dividend of CHF 464 million, CHF 3 million was withdrawn from the free reserve in the year under review. In addition, the free reserve was reduced by CHF 249 million due to the cancellation of 628 500 shares, which took place on 15 July 2019.
Issue of four senior bonds in 2019 On 6 December 2019, Swiss Life Holding placed three senior green bond tranches totalling CHF 600 million: a tranche of CHF 200 million with a tenor of two years and variable coupon (floor at 0.00%, cap at 0.05%), a tranche of CHF 250 million with a tenor of 5.5 years and a coupon of 0% and a tranche of CHF 150 million with a tenor of 9.25 years and a coupon of 0.35% p.a.
Contingent liabilities Swiss Life Holding acts as warrantor for all Swiss Life Ltd liabilities with regard to the various tranches of the subordinated perpetual step-up loans (hybrid debt), which amounted to an equivalent value of CHF 4139 million at the balance sheet date. The guarantees are classified as subordinated at Swiss Life Holding.
Swiss Life Holding further provides capital guarantees for a maximum net asset value of CHF 1100 million to Swiss Life Ltd, CHF 141 million to Swiss Life Products, CHF 6 million to Swiss Life Liechtenstein, CHF 9 million to Corpus Sireo and CHF 100 million to cover regulatory requirements at the level of subsidiaries.
In addition, under drawn credit lines Swiss Life Holding held liabilities totalling CHF 25 million for Swiss Life Products and credit lines totalling CHF 63 million for Corpus Sireo companies.
Balance as at 1 January 175 175 cancellation of treasury shares –3 –
Compensation in 2019 The Board of Directors is responsible for drawing up a written compensation report each year to include the information required by Articles 14–16 of the Federal Ordinance against Excessive Compensation in Listed Stock Companies (Compensation Ordinance). This compensation report supersedes the details in the notes to the balance sheet according to Art. 663bbis CO. Swiss Life’s compensation report for the 2018 financial year is provided on pages 53 to 70.
Share ownership/participation rights as at 31 December 2019 As at 31 December 2018, acting members of the Board of Directors and the Corporate Executive Board (including closely linked 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).
TOTAL CORPORATE EXECUTIVE BOARD 33 006 1 Total number of RSUs allocated in the years 2017, 2018 and 2019 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. In addition to the reported shareholding, Thomas Buess held a total of 4512 RSUs as at the balance sheet date of 31 December 2019, which were allocated to him in 2017, 2018 and 2019 in the context of his former function as Group CFO and Member of the Corporate Executive Board of Swiss Life.
Share ownership/participation rights as at 31 December 2018 As at 31 December 2017, acting members of the Board of Directors and the Corporate Executive Board (including closely linked 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).
Annual profit amounts to CHF 758 292 876. 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, an ordinary dividend of CHF 15.00 per share will be made from profit. In addition, if this proposal is adopted, a distribution of CHF 5.00 per share will be made in the form of a reduction in par value. This amounts to a total distribution of CHF 20.00 per share.
The proposal of the Board of Directors to the General Meeting of Shareholders on 28 April 2020 is based on shares entitled to a dividend as at 31 December 2019. The actual total amount of dis tri bution depends on the number of shares entitled to a dividend on 2 May 2019. Swiss Life Holding Ltd waives a corresponding dividend in respect of treasury shares it holds at the time of distribution.
Opinion We have audited the financial statements of Swiss Life Holding Ltd, which comprise the statement of income, balance sheet as at 31 December 2019, and notes for the year then ended, including a summary of significant accounting policies.
In our opinion, the financial statements (pages 313 - 321) as at 31 December 2019 comply with Swiss law and the company ’s articles of incorporation.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We tested the financial budgets approved by management and the board of directors. The financial budgets include details on certain planned activities supporting the expected business development. In particular, we challenged
management as to the feasibility of reaching the planned cash flow projections.
An element of placing trust in planned cash flow projections is the extend they were reached in the past. Where actual results varied from planned results, we inquired as to the reasons and potential impact they may have in reaching future goals and assessed the key drivers which contributed to the deviation.
Responsibilities of the Board of Directors for the financial statements The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.
Dow Jones STOXX 600 Insurance Index (in EUR) 31.12. 322.75 259.40 288.35 269.66 285.56
Performance of Dow Jones STOXX 600 Insurance Index (in %) +24 –10 +7 –6 +14
Dividend yield on year-end price (in %) 30.12. 3.40 3.57 3.19 2.95 2.40
Gross written premiums, policy fees and deposits received 23 008 19 218 18 565 17 366 18 853
Net insurance benefits and claims –17 838 –13 961 –13 189 –14 064 –15 516
Equity holders of Swiss Life Holding 1 199 1 076 1 007 922 872
Number of employees (full-time equivalents) 9 330 8 624 7 979 7 801 7 595
Publishing details Publisher — Swiss Life Holding Ltd, Zurich Editorial responsibility — Swiss Life, Group Communications and Strategic Marketing, Zurich Concept, design and technical realisation — EQS Group, Zurich Production — Management Digital Data AG, Lenzburg © Swiss Life Holding Ltd, 2020