Swiss Life Compensation Report for the Financial Year 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Report of the Statutory Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Swiss Life’s Contribution to the Sustainable Development Goals (SDG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 UN Global Compact Progress Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
GRI and SASB Content Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Report of the Statutory Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
(2020: CHF 29 million / 2019: CHF 913 million / 2018: CHF 87 million)
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.
You can see it in our pictures: the Chairman of the Board of Directors and the CEO with and without a mask. That sums up these extraordinary times. After all, 2020 was not just another financial year, including for Swiss Life. Our business activities are ultimately linked to society in many ways. The coronavirus pandemic posed major challenges for our customers, for our employees and for you as shareholders. Numerous measures, including those initiated by governments of the countries in which we operate, are helping to mitigate the pandemic’s impact from both a medical and an economic perspective in the short term. However, the crisis is far from over: the long-term effects of – for example – government debt and in the affected economic sectors are still unclear.
Swiss Life addresses a basic human need with its products and services: being able to lead a self-determined life with confidence. With the consistent and successful implementation of its multi-year Group-wide programmes, Swiss Life ensures that the long-term value propositions made to its customers are guaranteed and that Swiss Life creates sustainable value for its shareholders and target groups.
The Swiss Life Group is one of Europe’s leading comprehensive life and pensions and financial solutions providers. Swiss Life’s success is due to a clear strategy, the disciplined implementation of Group-wide programmes, a sound purpose and a charismatic brand.
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 15 800 advisors and 9800 employees, Swiss Life has proven advisory expertise and unique customer access.
A good third of profit from operations stems from the fee business
The Swiss Life product strategy is explained in the section on “Products, Services and Advice”. In view of its varied positioning in the relevant markets, Swiss Life uses a multi-local approach: Swiss Life also reports on strategic focuses and investments by individual divisions as part of its segment information.
Swiss Life has successfully completed its last three Group-wide programmes “Milestone” (financial targets for 2009–2012), “Swiss Life 2015” (2013–2015) and “Swiss Life 2018” (2016–2018).
At the end of November 2018 Swiss Life presented its latest Group-wide programme, “Swiss Life 2021”. It is based on the purpose and four strategic thrusts: the focus on preferred segments, the promotion of attractive offers, the continuous improvement of customer relationships and the continuing increase of productivity.
Increase in the fee result, to between CHF 600 and 650 million by the end of 2021
Swiss Life is on track with its Group-wide programme “Swiss Life 2021” and has confirmed its financial targets for 2021 as part of its 2020 annual results. Swiss Life increased its fee result to CHF 601 million in the year under review. The company is thus already in its 2021 ambition range. The new business margin came to 2.6% in 2020 and was thus significantly above the ambition of 1.5%. With a return on equity adjusted for unrealised gains and losses of 9.4%, Swiss Life is at the upper end of its ambition range.
Level 4 is for independent brands that are managed separately for strategic reasons. These brands have an independent existence without visible relation to the umbrella brand Swiss Life.
With its purpose and clear corporate design guidelines, Swiss Life guarantees a standardised appearance at all brand contact points. The Swiss Life brand personality always centres on the customer: “We enable people to lead a self-determined life.”
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 of Swiss Life tangible for external and internal target groups. It sets Swiss Life apart from the competition and produces its clear recognition effect.
In France, Swiss Life underscores its purpose by sponsoring the team of Thomas Ruyant for the Vendée Globe 20/21, the toughest solo regatta in sailing. Together with the distribution companies Swiss Life Select and Proventus, Swiss Life Germany supports popular sports for regional amateur clubs. The company is also a regular supporter of sporting events, such as the football benefit “Münchner Legendenspiel”, the proceeds of which go to charitable organisations.
In the context of the Covid-19 pandemic, Swiss Life has responded to the changed needs of its customers in its campaigns: with the focus on digital forms of consulting, for example via video, support for a self-determined life has been directly linked to the brand. In autumn 2020, Swiss Life in Switzerland also launched a campaign focusing on its corporate clients. Through long-term partnerships with corporate clients, Swiss Life shows how it has supported them for many years in pension-related matters to enable them to focus on their business goals in a selfdetermined manner.
Wie schafft es ein Start-up, 156 Jahre alt zu werden? So.
Katia Pennimpede, Teamleitung Konfektion SIGVARIS GROUP St. Gallen, mit einer Näherin von 1932.
Swiss Life protects its brands around the world. It takes vigorous action in cases of brand or copyright infringement. Customers can be sure that they will enjoy Swiss Life quality and service wherever the Swiss Life logo and corporate name appear.
Swiss Life carries out regular internal studies of brand value, which demonstrate the development of the brand’s value based on a wide range of factors.
The Swiss Life Group generated adjusted profit from operations of CHF 1572 million in 2020, a decline of 5% compared to the previous year. Net profit fell by 13% to CHF 1051 million, which was CHF 154 million lower than in the previous year. This decline is mainly due to two one-offs unrelated to the pandemic: on the one hand, a provision for the pending agreement with the US Department of Justice (DOJ) and, on the other, CHF 49 million due to a positive, one-off tax effect in 2019 in the context of the Swiss corporate tax reform. In addition, the effects of the Covid-19 pandemic on the financial markets reduced the savings result. The fee result increased by 11% over the corresponding period in the previous year from CH 541 million to CHF 601 million. Swiss Life Asset Managers and the owned advisory organisations in Germany made the biggest contribution to this result.
In its home market of Switzerland, Swiss Life achieved a segment result of CHF 830 million. The 7% decline stems from the lower savings result; the fee result and risk result, meanwhile, were expanded. France reported a segment result of CHF 217 million – 21% lower than the previous year due to the lower savings result. Swiss Life in Germany contributed CHF 180 million to the result, which was slightly below the previous year’s figure (CHF 186 million). The increased fee result largely compensated for the decline in the savings result. Swiss Life International contributed CHF 78 million (previous year: CHF 81 million) to the result. Swiss Life Asset Managers increased its segment result by 12% to CHF 345 million, of which CHF 137 million came from third-party asset management, 60% up on the previous year.
Swiss Life has its own sales force in Switzerland, and Swiss Life Select has a distribution network totalling over 1300 professionally trained advisors, making it the market leader in Switzerland. In this way, Swiss Life helps its customers prepare for their financial future and enables them to lead a self-determined life.
The offer season in the group life business was successful, and the processing of changes and customer queries, as well as advisory services and support were also carried out virtually thanks to the use of new technological facilities. Due to the very robust business volume, in particular as a result of disciplined underwriting, there were no impacts from the Covid-19 pandemic or the measures taken to contain the pandemic, in the year under review.
In the year under review, Swiss Life France posted a segment result of CHF 217 million (previous year: CHF 275 million). The 21% decline is due both to developments on the financial markets caused by the Covid-19 pandemic and to the higher costs brought about by business growth. The segment result decreased by 18% in local currency. Technical margins remained stable, with the Covid-19 pandemic having a neutral impact overall: lower claims in health and motor business due to the lockdowns were offset by higher costs for exceptional tax charges and contributions.
Swiss Life Germany is a leading provider of insurance and pension solutions in the areas of life insurance, occupational pensions and employee insurance as well as comprehensive financial and pension advice independent of product provider under the Swiss Life Select, Tecis, Horbach and Proventus brands. The segment reporting comprises local insurance activities and the financial consultancies operating in Germany.
In the year under review, Swiss Life Germany achieved a segment result of CHF 180 million (previous year: CHF 186 million) in a persistently challenging market environment. The moderate decline is attributable to currency effects. The fee result increased by 32% in local currency due to further growth in owned IFAs, while the exceptionally high savings result in 2019 could not be maintained as expected.
Thanks to various digitalisation measures, such as video consulting, remote signature and mobile working, Swiss Life Germany was able to further expand its consulting business during the Covid-19 pandemic. Fee income increased to CHF 552.0 million in 2020, equivalent to a 15% increase in local currency. The main driver was the strong growth of the distribution base in the owned IFAs as well as the brokered new business across all product areas. At the end of 2020, the proprietary financial advisory companies in Germany had 4635 trained and registered financial advisors under contract (+11% over the previous year).
Operating costs increased 1% less than business volume due to continuous improvement in operational efficiency.
In 2021, Swiss Life Germany will focus on the three strategic thrusts: the focus in insurance is on biometric, sector-specific and occupational pension solutions. For occupational and private retirement provisions, Swiss Life Germany focuses on unit-linked or hybrid products with low guarantees and therefore higher earnings expectations for customers. 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 consistent advance of digitalisation.
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 Swiss Life Select in Austria, Slovakia and the Czech Republic.
The Global Private Wealth Solutions business area, with carriers based in Luxembourg, Liechtenstein and Singapore, specialises in life insurance solutions for high net worth individuals. Thanks to its comprehensive, international product range and assets under control of CHF 20.1 billion (previous year: CHF 21.2 billion) fee income remained at a high level in a difficult environment during the year under review.
The Global Employee Benefits Solutions business area concentrates on global provisions solutions for multinational companies. Positive risk and volume development led to higher profitability in the pensions business. Swiss Life Network, a leading independent provider of global employee benefits solutions in conjunction with Swiss Life partner companies, again made a major contribution to the result and consolidated its good market position due to its fee optimisation.
Fee income from the financial distribution companies fell by CHF 25.5 million to CHF 185.3 million during the year under review. While Chase de Vere continued to grow in the United Kingdom despite the difficult market environment caused by the Covid-19 pandemic, income in Central and Eastern Europe (CEE) declined.
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 1 343 2 304 –42%
In 2020, Swiss Life Asset Managers achieved a segment result of CHF 345 million (previous year: CHF 309 million), which corresponds to an increase of 12%. Fee income in the year under review increased by 6% to CHF 886 million overall. The growth stems from third-party asset management. Fee income from insurance business remained constant. Operating costs, meanwhile, rose by 8%, of which just under a third was attributable to higher capital expenditure for projects.
Third-party business again grew vigorously: Swiss Life Asset Managers had third-party assets of CHF 91.6 billion under management at the end of 2020, an increase of 10% compared to the end of the previous year. This growth is primarily due to net new assets of CHF 7.5 billion. Real estate and infrastructure products in particular experienced strong demand.
The expansion of the pan-European real estate funds, investing in real estate in various European countries, was pursued further in 2020. Due to the persistently high competitive pressure in the real estate market, the consistent implementation of risk and return specifications remains key for acquisitions. As one of Europe’s leading real estate investors, Swiss Life Asset Managers was in close contact with its tenants during the Covid-19 pandemic. Swiss Life has provided constructive and pragmatic solutions to tenants experiencing difficulties as a result of the measures taken to contain the pandemic. Swiss Life assumes that demand for high-quality real estate will remain intact in view of the prevailing low interest rate environment for the foreseeable future.
Assets under management for insurance business – breakdown by asset class
On the balance sheet date, some 166 000 shareholders and nominees were listed in the Swiss Life Holding share register, of which about 4500 were institutional shareholders. Taken together, the shareholders entered in the share register held around 50% of the shares issued. Over half of these shares were owned by shareholders domiciled in Switzerland. Approximately a third of the registered shares were in private hands.
The capital structure of Swiss Life Holding was as follows on the balance sheet date: – Ordinary share capital: CHF 3 201 439.10, divided into 32 014 391 fully paid registered shares with a par value of CHF 0.10 each; – Conditional share capital: CHF 385 794.80, divided into 3 857 948 registered shares with a par value of CHF 0.10 each; – Authorised share capital: none.
If the conditional share capital were utilised to the maximum extent possible, the share capital would increase by around 12% (385 794.80 divided by 3 201 439.10 or 3 857 948 divided by 32 014 391).
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 2017 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 and Shareholders” area, “Results and Reports” section (www.swisslife.com/annualreports).
The Organisational Regulations stipulate that a member of the Board of Directors shall automatically resign from the Board at the Annual General Meeting in the year in which the member reaches the age of 70.
The acceptance of appointments to the Board of Directors of other companies requires the consent of the Board of Directors at Swiss Life Holding; the Chairman of the Board of Directors is to be informed of any intention to accept an additional board mandate. Information on additional board mandates held by individual members of the Board of Directors is presented in the following section.
The Articles of Association and Organisational Regulations of Swiss Life Holding can be seen at www.swisslife.com, “Investors and Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles).
The following information on the members of the Board of Directors is based on the situation on the balance sheet date. The CVs of former members of the Board of Directors and information on pre vious external mandates of current Board members can be found in the Corporate Governance section of the relevant previous annual reports, available at www.swisslife.com, “Investors and Shareholders” area, “Results and reports” section (www.swisslife.com/annualreports).
On the balance sheet date of 31 December 2020, the Board of Directors was composed of the following members.
Rolf Dörig will be put forward for re-election as Member and Chairman of the Board of Directors at the Annual General Meeting of Swiss Life Holding on 23 April 2021.
Head of the Business Division Southern Europe, Asia/Pacific, Middle East, Africa and Latin America. From 1993 he served on the Zurich Financial Services Group’s Executive Committee. From 2002 to 2007, Frank Schnewlin chaired the Baloise Group’s Corporate Executive Committee as CEO and was, at the same time, Head of the International Division.
Other appointments: – Vontobel Holding Ltd and Bank Vontobel Ltd, Vice Chairman of the Board of Directors and Member of the Risk and Audit Committee – Twelve Capital AG and Twelve Capital Holding AG, Chairman of the Board of Directors
Thomas Buess — Born 1957, Swiss national Member of the Board of Directors bild After completing his business administration and economics studies at the University of St. Gallen and a two-year research activity at the Institute of International Economics, Thomas Buess launched his career in insurance in 1985. From 1985 to 1993 he assumed various positions in the area of finance at the ELVIA Group. In 1994 he joined Zurich Insurance Group as Chief Financial Officer 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 Insurance 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 Insurance 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.
Thomas Buess will be put forward for re-election as Member of the Board of Directors at the Annual General Meeting of Swiss Life Holding on 23 April 2021.
Audit and Risk Committee (since April 2020) – Sygnum Bank AG, Member of the Board of Directors and Chairman of the
Adrienne Corboud Fumagalli — Born 1958, Swiss and Italian national Member of the Board of Directors bild Adrienne Corboud Fumagalli is a Doctor of Economics and Social Sciences and a graduate of the University of Fribourg. In 1996 she joined the PTT in the management team of Radiocom (radio, TV, mobile) in charge of New Business Development and the international market. The PTT then became Swisscom and Adrienne Corboud Fumagalli held various positions from 1997 to 2000, ultimately becoming Director of Product Marketing in Radio Broadcasting Services. In November 2000, Adrienne Corboud Fumagalli joined the Kudelski Group as Corporate Secretary and Member of the Corporate Executive Board. In January 2004, she was appointed Executive Vice
President in charge of Business Development. From 2008 to 2016, Adrienne Corboud Fumagalli served as Vice President for Innovation and Technology Transfer at EPF Lausanne. From 2017 to 2020, she was also President of the Board of Directors and Chief Executive Officer of Deeption SA (spin-off of the EPF Lausanne Social Media Lab).
Adrienne Corboud Fumagalli will be put forward for re-election as Member of the Board of Directors at the Annual General Meeting of Swiss Life Holding on 23 April 2021.
(President from 1 January 2021) – CSD Holding AG, Member of the Board of Directors and Chairwoman of the
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. as well as BLS Netz AG and BLS Fernverkehr AG,
(until December 2020) – Swiss Smart Technologies AG, Member of the Board of Directors (since August 2020)
Damir Filipovic will be put forward for re-election as Member of the Board of Directors at the Annual General Meeting of Swiss Life Holding on 23 April 2021.
Frank W. Keuper — Born 1953, German national Member of the Board of Directors bild Frank W. Keuper studied social and economic sciences at Vienna University of Economics and Business and obtained a doctorate in the same subject. He started his career in the insurance sector in 1985 at the Albingia insurance group as assistant to the Management Board and later became Head of Sales and Marketing. After switching to the Zurich Insurance Group he returned to Albingia in 1992 and served as a Member of the Management Board from 1994 until 2000. He later assumed responsibility as a Member of the Management Board at AXA Versicherung AG for the Private and Corporate Clients division as well as Damages. From 2004 until 2007 he managed DBV Winterthur Holding AG as Chairman of the Management Board and was simultaneously a Member of the Management Board of the Winterthur Group. From 2007 until 2012 Frank W. Keuper was CEO of AXA Konzern AG and a Member of the Executive Committee of AXA Group in Paris.
Stefan Loacker — Born 1969, Austrian national Member of the Board of Directors bild Stefan Loacker studied economics at Vienna University of Economics and Business and at the University of St. Gallen (Mag. rer. soc. oec., lic. oec. HSG). He began his professional career with stints at the Institute of Insurance Economics (I.VW) at the University of St. Gallen and at the then-Rentenanstalt (now Swiss Life) before joining Helvetia Patria Versicherungen in 1997 as assistant to the Executive Board. He was promoted to Head of Business Development, served in that capacity from 2000 to 2002 and subsequently became CFO and Head of IT at ANKER Versicherung (a subsidiary of the Helvetia Group) in Vienna from 2002 to 2005. In 2005 Stefan Loacker took over management of Helvetia Versicherungen AG (previously ANKER Versicherung). He returned to Switzerland in 2007 and, at age 38, became CEO of Helvetia Group. Stefan Loacker led Helvetia Group for nine years before handing over his function as CEO to a successor in 2016. Since October 2016 he has been managing partner of DELOS Management GmbH.
Member of the Risk and Audit Committee – Institute of Insurance Economics at the University of St. Gallen, Member of the
Carrard Lugano SA. He has also served since 1997 as professor of business law, and since 2017 President of the Geneva Center for Philanthropy, at the University of Geneva. Between 2004 and 2015 he was a Member of the Swiss Takeover Board. Since 2007 he has been a Member of the Sanctions Commission of SIX Swiss Exchange.
Henry Peter will be put forward for re-election as Member of the Board of Directors at the Annual General Meeting of Swiss Life Holding on 23 April 2021.
Other appointments: – Sigurd Rück Ltd, Chairman of the Board of Directors – Casino de Montreux SA, Chairman of the Board of Directors and
Member of the 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
Martin Schmid will be put forward for re-election as Member of the Board of Directors and for election as Member of the Compensation Committee at the Annual General Meeting of Swiss Life Holding on 23 April 2021.
Gasindustrie [VSG ASIG]), Chairman of the Board of Directors – Swissgas, Member of the Board of Directors – Kantonsspital Graubünden Foundation, Chairman of the Board of Trustees – economiesuisse, Member of the Executive Board – Entwicklung Schweiz, President of the association – Institute for Financial Economics and Financial Law (IFF) at the University of St. Gallen,
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 Annual General Meeting of Swiss Life Holding on 23 April 2021.
Other appointments: – Büchel Holding AG, Member of the Board of Directors – Grand Resort Bad Ragaz Ltd., Member of the Board of Directors – responsAbility Investments AG, Member of the Board of Directors – University of Liechtenstein, President of the University Council – UNICEF Switzerland and Liechtenstein, Vice President of the Board – Swiss-Austrian-Liechtenstein Chamber of Commerce, Member of the Governing Council
No members of the Board of Directors resigned during the reporting period.
Changes in the Board of Directors with effect from the 2021 Annual General Meeting
In accordance with the Articles of Association, the Board of Directors has issued Organisational Regulations setting forth the internal organisational structure and the duties and competencies of the Board of Directors, the Board of Directors’ committees, the Chairman of the Board of Directors and the Corporate Executive Board. The Organisational Regulations are reviewed regularly and adjusted where necessary. They can be found at www.swisslife.com, “Investors and Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles).
During the year under review, the Compensation Committee convened a total of seven times. Each session lasted for just under two 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.
Investment and Risk Committee The Investment and Risk Committee assists the Board of Directors in matters concerning investment management, financial management and risk management within the Group. The tasks of the Investment and Risk Committee include drafting proposals on the principal features of asset and liability management (ALM) and submitting them to the Board of Directors, determining the investment policy, assessing capital adequacy, verifying compliance with guidelines on investments, and establishing the risk tolerance in insurance and investment operations. The Investment and Risk Committee is vested with the authority to define various regulations and directives pertaining to the investment activities of the Swiss Life Group and must inform the Board of Directors accordingly. In addition, the Investment and Risk Committee is responsible for making decisions on investments above a certain amount and specifies the terms of significant intra-Group financing.
The Articles of Association of Swiss Life Holding can be seen at www.swisslife.com, “Investors and 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 and Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles).
Corporate Internal Audit, which reports directly to the Chairman of the Board, represents a suitable means of independent monitoring and information gathering for the Board of Directors. Regular meetings take place between the Chairman of the Board of Directors and the Head of Corporate Internal Audit, as well as between the Chairman of the Audit Committee and the Head of Corporate Internal Audit. In the same way, the Group CRO has direct access to the Chairman of the Board of Directors and to the Chairman of the Investment and Risk Committee. This ensures that in addition to regular reporting information is provided in a situation-specific and timely manner.
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 79.
The Corporate Executive Board may delegate operational responsibility for the management of subsidiaries to individual members of the Corporate Executive Board.
Management structure of the Swiss Life Group as at 31 December 2020
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 and Shareholders” area, “Results and reports” section (www.swisslife.com/annualreports).
Matthias Aellig — Born 1971, Swiss national Group Chief Financial Officer (Group CFO)
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 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.
Since March 2019, Matthias Aellig has been Group Chief Financial Officer (Group CFO) and Member of the Corporate Executive Board.
Other appointments: – Ina Invest Holding Ltd, Chairman of the Board of Directors – Stiftung Technopark Zürich, Member of the Board of Trustees
bild Nils Frowein is an economics graduate with German and American accountancy certification. He is a skilled banker and has extensive expertise in the financial services sector and many years of capital market experience. From 1997 until 2004 he worked at the auditing firm BDO Deutsche Warentreuhand AG, where he was responsible for the Financial Advisory Services division, most recently as partner.
From 2004 to 2007 Nils Frowein was CFO of financial services provider MLP. There he was significantly involved in laying the strategic foundations for the company. Nils Frowein joined AWD as deputy Chief Executive Officer in January 2008. He was initially Chief Financial Officer and was appointed Chief Operating Officer on 1 September 2008. Between 2009 and 2010 he additionally took charge of the Swiss business of AWD as acting CEO.
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.
Since 2017 he has in addition been Chairman of Swiss Life Singapore, Swiss Life Luxembourg and Swiss Life Liechtenstein. In October 2018 Nils Frowein became Chairman of the Supervisory Board of Fincentrum, in the Czech Republic and of Swiss Life Select Slovakia.
As announced in the media release of 4 November 2020, Tanguy Polet, currently on the Executive Board of Swiss Life France as “Directeur Division Clients et Transformation Digitale”, will become CEO of Swiss Life France and a member of the Corporate Executive Board with effect from 1 March 2021.
Swiss Life in Belgium as Head of Sales and Marketing and Member of the Executive Board. From 2008 to 2010, he was CEO of Swiss Life Luxembourg before moving to France in 2010, where he became CEO of Swiss Life Banque Privée and Member of the Executive Board of Swiss Life France. From 2015, Tanguy Polet was Chief Customer Officer for digital transformation and Customer Services and also a member of the Executive Board of Swiss Life France.
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 30 April 2019 as follows: – For the Board of Directors: The maximum total amount of fixed compensation until the next Annual General Meeting in 2020 in the amount of CHF 3 200 000 in total.
The Articles of Association of Swiss Life Holding can be seen and printed out at www.swisslife.com, “Investors and Shareholders” area, “Shareholders and services” section, “Articles of Association” (www.swisslife.com/articles) subsection. For stipulations on compensation and on the approval of compensation for the Board of Directors and the Corporate Executive Board, particular reference is made to Articles 14–16 of the Articles of Association.
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 2021 and is published on an accrual basis as compensation for the 2020 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.
The compensation policy principles are governed Articles 14-16 of the Articles of Association of Swiss Life Holding, which can be seen at www.swisslife.com, “Investors and Shareholders” area, “Shareholders and services” section, “Articles of Association” (www.swisslife.com/articles) subsection. Within this framework, the Board of Directors as a whole establishes the compensation policy guidelines for the Group (incl. variable compensation and equity compensation plans) and relevant guidelines for the employee benefit institutions.
The share in the company’s success is measured using quantitative Group targets (Key Performance Indicators, KPIs), which are defined in advance for the following three years as part of mediumterm planning. Besides the annual profit, the main KPIs for the medium-term planning are distribution capacity, the planned cost savings, the risk and fee result, new business profitability, the return on equity and solvency (Swiss Solvency Test, SST). In order to avoid conduct aimed at the short-term achievement of key indicators with a higher weighting, the individual KPIs are not mechanistically weighted in advance. Assuming the generally equal weighting of all KPIs, the individual weighting is determined at the end of each financial year by the Board of Directors as a whole on the basis of a proposal by the Compensation Committee taking all developments into account and consideration (discretionary decision).
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 270 to 280.
For the period from the 2020 Annual General Meeting to the 2021 Annual General Meeting, the General Meeting of Shareholders of 28 April 2020 approved a maximum amount of fixed compensation for the Board of Directors totalling CHF 3 200 000. In 2020, the Board of Directors determined the compensation for the members of the Board of Directors unchanged at the same level as in the previous year.
The compensation paid to members of the Board of Directors in the 2020 financial year is shown on an individual basis in the 2020 compensation table below. For comparison purposes, the compensation for the 2019 financial year is shown again after the 2020 compensation table.
At the General Meeting of 23 April 2021, the Board of Directors will submit for approval to the shareholders the maximum amount of fixed compensation for the Board of Directors for the new term from the 2021 Annual General Meeting until the 2022 Annual General Meeting.
Rolf Dörig, Chairman of the Board of Directors 840 000 948 360 557 1 200 557 1 From March to October 2020, Thomas Buess, Group CFO of Swiss Life from 2009 to February 2019, due to the extraordinary coronavirus situation, took over the project management of the Swiss Life Group Corona Task Force. This operational activity was remunerated with CHF 200 000 in total.
Rolf Dörig, Chairman of the Board of Directors 840 000 743 360 492 1 200 492 2 This includes the compensation of CHF 16 000 for the membership of the Board of Directors of Fontavis AG, a 100% subsidiary of Swiss Life Investment Management Holding AG. 3 The allocation of shares was effected on 18.06.2019 and 16.12.2019 at the stock exchange closing price of CHF 477.50 and CHF 493.10 respectively. Taking into account the blocking period of three years, the economic value, which is equal to the tax value, is CHF 400.9186 and CHF 414.0166 respectively.
The amount of the variable compensation (short-term variable compensation in cash and equity compensation plan as a long-term variable compensation component) is limited in the Articles of Association of Swiss Life Holding to a maximum of 181% of the fixed basic salary (statutory “bonus cap”, upper limit for the variable compensation). On the basis of the current compensation policy the Board of Directors has, with a view to harmonising fixed and variable compensation in the case of maximum target achievement and departing from a benchmark of 100%, set a range of 100–130% of the fixed basic salary for the variable compensation components; under extraordinarily positive circumstances the Board of Directors may augment this range at its own discretion to a maximum of 150% (Group CEO 165%). The short-term and long-term variable compensation components are, in principle, apportioned equally in a ratio determined by the Board of Directors in consideration of the results achieved in the given financial year (discretionary decision). In the case of an “on target” achievement, the range for variable compensation of members of the Corporate Executive Board is 80–100% of the fixed basic salary (“on-target bonus”).
In order to avoid behaviour aimed at achieving higher-weighted KPIs in the short term, the individual weighting of KPIs used to measure company success is not carried out mechanically in advance, but on the basis of the fundamentally equal weighting of all KPIs at the end of each financial year (discretionary decision). Similarly, the weighting of personal goals is determined by the Board of Directors on the basis of a proposal by the Compensation Committee, taking into account and weighing up all developments at the end of the financial year.
In an extraordinary year marked by the Covid-19 pandemic and a still very challenging economic environment, Swiss Life was able to mainly achieve or even exceed its medium-term planning targets based on the “Swiss Life 2021” Group-wide programme. Net profit, taking account of the one-offs affecting the business result, came to a comparatively high CHF 1051 million. This was, however, below plan, as was the return on equity at 9.4%. Adjusted profit from operations decreased by 5% compared to the previous year. The fee result increased by 11% from CHF 541 million to a very good CHF 601 million in spite of difficult conditions, compared with the corresponding period in the previous year. The risk result remained stable at CHF 407 million. The value of new business in the year under review came to a total of CHF 465 million with a new business margin of 2.6% and was thus well above the ambition. The cash remittance to Swiss Life Holding also increased again in 2020 and exceeded the target at CHF 784 million. The solvency target was well achieved with an SST ratio of around 195% as of 1 January 2021, based on the regulatory standard model. The cost targets were also met.
At the General Meeting of Shareholders of 23 April 2021, the Board of Directors will again submit for approval the maximum amount of the fixed compensation and long-term variable compensation component (equity compensation plan) for the Corporate Executive Board for the 2022 financial year.
The short-term variable compensation component for the Corporate Executive Board of a total CHF 3 670 000 (cash bonus of CHF 3 295 000 and deferred compensation in cash of CHF 375 000), which was determined by the Board of Directors at the beginning of 2021 for the 2020 financial year and will be proposed to the General Meeting of Shareholders on 23 April 2021 for approval, is disclosed in the following compensation table on an accrual basis as compensation for the 2020 financial year (accrual method). The members of the Corporate Executive Board did not receive any compensation in shares for the 2020 financial year; they are participating in the current equity compensation plan that provides for the allocation of so-called Restricted Share Units (RSUs).
Total Total compensation Bonus for 2020 Other compensation in cash and Salary paid in 2021 3 compensation 4 in cash Number Amount shares (amount)
Other members of Corporate Executive Board 1,2 5 003 710 2 545 000 205 819 7 754 529 0 0 7 754 529 1 6 individuals were taken into account in the period under review. 2 The salary amounts also include tax-equalisation payments and international travel expenses totalling CHF 205 800. 3 The short-term variable compensation component for the 2020 financial year (bonus and deferred compensation in cash) was determined by the Board of Directors at the beginning of 2021 for the 2020 financial year. 4 Child allowances (CHF 13 200), company cars (CHF 13 884), premium contributions to 3rd pillar pension plans (CHF 169 236), other (CHF 39 098) in total amounts.
Other members of Corporate Executive Board 1 320 930 0 9 075 459 5 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%. 6 All contributions are gross contributions, i.e. they include employee contributions to AHV/IV/ALV. Employer contributions to AHV/IV/ALV/FAK amounted to a total of
Other members of Corporate Executive Board 0 8 228 3 246 028 12 321 487 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. 8 The RSUs represent future subscription rights that entitle the individuals concerned to receive Swiss Life Holding shares after a period of three years, provided the requirements are satisfied at that point. 9 For the 2020 RSU plan beginning 01.03.2021 the 2020 financial year forms the basis for the amount of the allocation and the corresponding number of allocated RSUs. The allocation of RSUs on 01.03.2021 was effected at a fair value of CHF 394.51 as calculated by the independent consultancy firm KPMG AG, Zurich.
Other members of Corporate Executive Board 1,2 5 204 770 2 790 000 200 286 8 195 056 0 0 8 195 056 1 7 individuals were taken into account in the period under review. 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 0 8 474 3 196 731 12 749 782 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. 8 The RSUs represent future subscription rights that entitle the individuals concerned to receive Swiss Life Holding shares after a period of three years, provided the requirements are satisfied at that point. 9 For the 2020 RSU plan beginning 01.03.2020 the 2019 financial year forms the basis for the amount of the allocation and the corresponding number of allocated RSUs. The allocation of RSUs on 01.03.2020 was effected at a fair value of CHF 377.24 as calculated by the independent consultancy firm KPMG AG, Zurich.
In accordance with Article 20 of the Articles of Association, which can be seen at www.swisslife.com, “Investors and Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles), the Company may grant members of the Board of Directors and the Corporate Executive Board secured loans and credits at usual market terms for up to CHF 10 million each and unsecured loans and credit of up to CHF 0.5 million each.
No loans or credit were granted to former members of governing bodies in the year under review; as at the balance sheet date, there are no outstanding loans or credit to former members of governing bodies.
of which total variable compensation (total pool) 2 191 123 058
Total outstanding deferred compensation 15 440 174 of which cash payment 952 668 of which shares 0 of which options 0 of which others (Restricted Share Units, RSU) 14 487 506
Charges and credits in the financial year from compensation for previous financial years 3 –242 694
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, noncash 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 2020 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.
We have audited the compensation report of Swiss Life Holding Ltd for the year ended 31 December 2020. The audit was limited to the information contained on pages 64 and 68 to 70 of the compensation report.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the compensation report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of compensation, as well as assessing the overall presentation of the compensation report.
Opinion In our opinion, the compensation report of Swiss Life Holding Ltd for the year ended 31 December 2020 complies with Swiss law and articles 14–16 of the Ordinance.
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. Legal entities and partnerships which are connected through capital, voting rights, uniform management or in any other way, as well as individuals or legal entities and partnerships which act in concert by virtue of agreement, as a syndicate or in any other way, are deemed to be a single person. Any amendment to or revocation of restrictions on voting rights must be approved by at least two thirds of the voting shares represented at the Annual General Meeting and an absolute majority of the share par value represented. The Board of Directors can permit exceptions to this limit on the basis of its discretionary powers. During the year under review, no such exceptions were granted.
The Annual General Meeting elects an independent voting representative. His term of office ends after completion of the next ordinary Annual General Meeting. Re-election is possible. The independent voting representative is obliged to exercise the represented voting rights pursuant to the instructions given. He can be represented at the Annual General Meeting by an assistant. He remains fully responsible for compliance with his obligations. If the company does not have an independent voting representative, the Board of Directors appoints one for the next Annual General Meeting.
Entries can be made in the share register up to the day before the Annual General Meeting. In all cases, however, the company reserves the right to adhere to the legal maximum period of 20 days for recognition of entries in the share register in accordance with Art. 685g of the Swiss Code of Obligations. For administrative reasons (postal delivery times), the deadline for registering to participate in the Annual General Meeting is usually seven calendar days before the event takes place.
As was the case last year, PricewaterhouseCoopers (PwC) is again serving as external statutory auditor for all Swiss Life Group companies that are directly or indirectly held by Swiss Life Holding under its scope of consolidation.
The role of lead auditor rotates in compliance with the term of office regulations stipulated by the Swiss Code of Obligations, the independency guidelines set forth by the Swiss Institute of Certified Accountants and Tax Consultants, and internal guidelines at PwC. Under the Swiss Code of Obligations and the independency guidelines set forth by the Swiss Institute of Certified Accountants and Tax Consultants, the maximum term of office of the lead auditor is limited to seven years.
In 2020 the auditing fees credited to PricewaterhouseCoopers came to around CHF 9.2 million (prior year: CHF 9.1 million). This includes the fees for reviewing the 2020 half-year accounts.
The external auditors submit regular written reports on the status of the auditing work. They also submit detailed reports on the half-year and annual financial statements to the Audit Committee. At the end of the year, the external auditors draw up a comprehensive report for the attention of the Annual General Meeting and a detailed report on the financial year just completed for the attention of the Audit Committee, the Board of Directors and the Swiss Financial Market Supervisory Authority FINMA.
Key facts and figures about the Swiss Life Group and info kits on previous years’ reports are available on the internet at www.swisslife.com, “Investors and Shareholders” area, “Results and Reports” section (www.swisslife.com/results). Details on events relevant to shareholders, analysts and the media (Annual General Meetings, media conferences etc.) can be found at www.swisslife.com, “Investors and Shareholders” area, “Financial Calendar” section (www.swisslife.com/financialcalendar).
In addition to its comprehensive Annual Report and Financial Statements, Swiss Life Holding also publishes its half-year results. Furthermore, in May and November of each year, it publishes specific details on the previous quarter. All Swiss Life’s annual reports since 1998 and all halfyear reports since 2001 can be accessed on the internet at www.swisslife.com, “Investors and Shareholders” area, “Results and Reports” section, (www.swisslife.com/annualreports). A report detailing the key facts and figures on business operations is sent out on an annual basis to all the shareholders listed in the share register.
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. In addition to the key risk management elements described above, Swiss Life also analyses systemic risks in cooperation with the Swiss regulator.
Swiss Life uses structured processes to determine the comprehensive risk profile to deal with risks that could jeopardise strategic target achievement in what continues to be a very challenging environment. Swiss Life incorporates all the information on risks and corresponding earnings opportunities in its strategic decisions as part of its strategic risk management process. An understanding of the interplay of individual risks is essential so that the factors which influence risk can already be factored in and properly addressed when strategies are being developed.
Swiss Life depends on its information systems and communication technologies for the attainment of the operational goals derived from its business strategy. Ensuring the 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 leading and internationally recognised Data Security standards such as British Standards ISO/IEC 27001 and 27002, the Control Objectives for Information and Related Technology (CobiT) Framework v2019, 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 many different topics such as end-device encryption, remote network access control, vulnerability management, security operations, disaster recovery and cross-functional IT controls. Corporate Internal Audit reviews the area of information security and data protection several times a year as part of its internal auditing activities, and appropriate measures are taken to deal with any weaknesses.
All Swiss Life employees, including external staff, undergo regular information security and data protection training in their divisions. Relevant information or system security incidents are recorded and communicated to the appropriate units for analysis and rectification. Significant incidents are reported to the regulatory authorities. Information security is closely linked to locally applicable data protection provisions, such as the Swiss Federal Act on Data Protection (DSG) and the European Union’s General Data Protection Regulation (GDPR). More information on data protection can be found in the section “Compliance at Swiss Life” in the Sustainability Report.
Business continuity management (BCM) is a Group-wide approach at Swiss Life to identify and assess business-critical processes and document continuity plans. These entail temporary measures being taken in the event of an emergency or crisis such as a pandemic or hacker attacks until business can return to normal. The continuity plans are tested annually.
Standard & Poor’s rating capital In the Standard & Poor’s risk-based model, the total adjusted capital is the measure used for available capital, set against the capital required given the target rating category (target capital). The calculation of target capital takes into account, in particular, insurance risks, asset value volatility and credit risks. Swiss Life has established a target capital level in line with its rating ambition. Within the capital analysis, in addition to assessing capital adequacy, Standard & Poor’s assesses the quality of capital with respect to its structure (including the share of equity and hybrid capital). Capital adequacy is monitored on an ongoing basis according to the Standard & Poor’s model.
In November 2020 – in the light of Swiss Life’s improved diversification of profit sources and its capital position, which has stabilised at a sound level – Standard & Poor’s confirmed its rating “A+”, outlook stable.
Profitability and Growth ..............................................................................................................................93 People Centricity ..............................................................................................................................................94 Products, Services and Advice .....................................................................................................................97 Digitalisation ..................................................................................................................................................100 Responsible Investing ...................................................................................................................................101 Compliance at Swiss Life ............................................................................................................................106 Sustainable Procurement............................................................................................................................109
Sustainability in the Environment ...................................................................................................................139 Extract from the Swiss Life Climate Strategy ......................................................................................139 Operational Ecology .....................................................................................................................................140
Swiss Life’s Contribution to the Sustainable Development Goals (SDG) ........................................144 UN Global Compact Progress Report ............................................................................................................... 147 Information on Sustainability Reporting ..................................................................................................149 Memberships.........................................................................................................................................................151 GRI and SASB Content Index .........................................................................................................................152 Sustainability Indicators ..................................................................................................................................157
As part of our risk management activities, we also address challenges that are directly related to sustainability. These include dealing with climate change. As a company, we support the goals of the Paris Climate Agreement and would like to contribute to the achievement of these goals by implementing a range of measures. Some examples: – In our asset management activities we integrate ESG factors into 90% of the assets we manage. Furthermore, we refrain from investing in companies that achieve more than 10% of their sales with power station coal, monitor the CO2 intensity of the insurance portfolio and have set ourselves the goal of investing a total of CHF 2 billion in green bonds by 2023.
– Our goal in terms of operational ecology of reducing greenhouse gas emissions by 10% per fulltime equivalent by the end of 2021 is well on track. Among other things, this includes switching over to 100% renewable electricity in all company buildings.
– In order to further increase transparency and to show specifically how we deal with climate risks and opportunities, we are now for the first time publishing a climate report in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in addition to our Annual Report for 2020.
Last year the Corporate Executive Board continued with the successful development of our Group’s sustainability strategy in cooperation with a team of specialists from all divisions. This is also reflected in our sustainability ratings, which showed a further improvement. In addition to the standards of the Global Reporting Initiative (GRI), this report is also – for the first time – aligned to the standards for the insurance industry put forward by the Sustainability Accounting Standards Board (SASB). The following chapters show how Swiss Life assumes responsibility in a variety of ways and integrates sustainability into its day-to-day business.
– Swiss Life takes ESG criteria into account in the investment process and is, among other things, a signatory of the Principles for Responsible Investment (PRI) and a member of the Global Real Estate Sustainability Benchmark (GRESB).
– As a property owner, Swiss Life supports to energy-saving measures, renewable energy and the sparing use of resources.
In the pursuit of its core business, financial provision and advice, Swiss Life contributes directly to the sustainability of society and the economy. Over and above this, the company acknowledges its responsibility as an employer and in relation to the environment.
Swiss Life has summarised the principles of sustainability in a Group-wide sustainability strategy. This covers four areas: sustainability in business activities, in society, as an employer, and in the environment. The Group’s sustainability reporting is based on this same structure.
The highest management body in matters of sustainability is the Corporate Executive Board, chaired by the Group CEO. The Board of Directors – the supreme authority for strategic issues – is kept regularly informed about measures and progress in the area of sustainability. The Swiss Life Group Sustainability team is responsible for the coordination, steering and implementation of all measures at Group level. This team ensures that the focus areas defined by Swiss Life’s sustainability strategy are integrated within and implemented by the divisions. The team also reports on its progress and engages in dialogue with key stakeholder groups at Group level.
The four topics rated as having the greatest impact on sustainable development are: – Responsible investing – Responsible real estate management – Risk management – Data protection and information security
Business conduct in compliance with the law is a given for Swiss Life. Swiss Life accompanies its customers over many years. Responsible risk management is thus indispensable.
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.
People centricity Swiss Life puts people first and advocates encounters on an equal footing – whether in customer advising, processes, products and services, dealing with employees, using technology or in our role in society as a whole.
Responsible real estate management Swiss Life is one of Europe’s leading real estate investors and has the biggest private real estate portfolio in Switzerland. It systematically integrates sustainability criteria into the entire valuecreation process in real estate investments.
1 The subject parameters and the impact of Swiss Life on the material topics are set out in the relevant sections. 2 This topic is discussed in the Annual Report in the section “Risk Management” from page 79.
Employee development and retention The Swiss Life corporate culture is based on mutual respect and trustworthy cooperation. Regular feedback and professional development interviews and the recognition and appreciation of performance are important prerequisites for corporate success.
Helping people live a self-determined life is Swiss Life’s purpose. That includes its contribution to the public debate on demographic change and people’s growing responsibility for managing their own future provisions.
Combating corruption and fair competition Swiss Life does everything in its power to avoid infringing any legal and 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 advice, service and product range. Diligence and responsible action are the basis for successful business operations as well as for long-term, sustainable customer and business relationships.
With its current “Swiss Life 2021” Group-wide programme, Swiss Life is aiming at a continuous and yet ambitious further development of its profit sources, efficiency and distribution to shareholders. The programme, which is oriented towards Swiss Life’s purpose of enabling people to lead a self-determined life, focuses on four strategic thrusts. In addition to these focal areas and the corresponding financial objectives, sustainability and corporate responsibility are also part of the “Swiss Life 2021” Group-wide programme. With the consistent implementation of its strategy, Swiss Life is laying the groundwork for creating sustainable value for its stakeholder groups.
Further information on the Group-wide programme and the Swiss Life Group strategy may be found in the Annual Report in the “Strategy & Brand” section from page 8.
Swiss Life’s business is centred around people. Cooperation on an equal footing is a key feature in that regard – not only in providing customer advice but in our treatment of employees and our role in society.
Swiss Life has continuously expanded its Direct Customer Feedback programme in recent years.
Swiss Life bases its quantitative measurement of customer satisfaction on the Net Promoter Score (NPS), which indicates a customer’s willingness to recommend a provider to family and friends. The NPS is surveyed continuously and reported internally on a quarterly basis. What is more, the NPS is a component of objectives-setting and performance reviews of employees with customer contact.
The 2019 survey showed that 86% of all employees see Swiss Life as a customer-oriented company. The results were 4 percentage points above those for the most successful companies worldwide and 10 percentage points above the global average for companies in the financial sector.
Swiss Life’s consulting and product strategy combines optimal customer value with profitability for the company. Swiss Life offers private and corporate clients comprehensive and individual advice plus a broad range of proprietary and partner products through its financial advisors, agents and distribution partners. Swiss Life Select, the subsidiary specialising in financial planning for private households and brokering financial products, as well as the advisors at tecis, Horbach, Proventus, Chase de Vere and Fincentrum, use the Best Select approach to let their customers choose the product that suits them best. In this way, customers are given access to an extensive range of products from many suppliers. Swiss Life Asset Managers also offers comprehensive investment solutions and develops tailor-made investment strategies for its own insurance companies and for third-party clients, such as pension funds, investment foundations, asset managers and private clients.
Long-term benefit commitments and obligations arising from pension and financial products demand a precise analysis of the legal and regulatory environment and of the associated risk. This also provides the basis for customer-oriented consulting and is a major factor in the avoidance of mistakes or violations in advising, and their possible consequences.
– Product management is regulated through a number of directives at Group level. Swiss Life has established a uniform, auditable product development process to that end. This process defines the minimum requirements of local product development as well as the approval and escalation process for initiatives at Group level. The observance of laws and provisions, practical customer value and the quality of customer documentation are naturally essential criteria in the assessment process.
Swiss Life has products with integrated sustainability aspects in various markets. For example, Swiss Life in France has developed a sustainable investment solution with a focus on responsible management as well as ESG criteria. As part of its continuous product development processes, Swiss Life works on other sustainable insurance, pension and financial products.
Customers in the investment business can also benefit from Swiss Life’s ESG competencies and experience. In asset management, Swiss Life has a range of sustainable investment products. These include the securities fund in France or ESG solutions in the area of emerging markets, which have been awarded the SRI sustainability label. SRI is a sustainability label for financial products recognised by the French government. Development of “impact products” has been continued in the real estate area. These products, which focus on investments that have a positive impact on sustainable development, will supplement the existing ESG offering in other asset classes in the future. In addition, Swiss Life develops new investment solutions and strategies in various asset classes that focus on specific ESG topics or on companies that meet strict sustainability criteria.
Staying close to customers during the pandemic thanks to video consulting
The number of consultations increased sharply in 2020 due to the predominantly digital customer contact. The fact that more customers were at home and reachable due to the measures taken to contain the Covid-19 pandemic also contributed to this increase. Thanks to early investments in digital initiatives and tools, Swiss Life had already created the technological framework it needs to remain available to its customers during the Covid-19 pandemic. As client visits were temporarily no longer possible, digital communication tools such as video consulting were increasingly used. In Germany alone, for example, the number of video consultations per month has increased roughly sixfold. The much more frequent use of virtual advisory services led to a reduction in CO2 emissions in the year under review due to advisors’ restricted travel activities. This has a positive impact on Swiss Life’s carbon footprint (see the chapter on “Sustainability in the Environment”).
1 Managed corporate bonds for the insurance business (CHF 45.4 billion)
Swiss Life has for several years been systematically integrating ecological and social factors, as well as aspects of good corporate governance, into the investment process and risk management for nearly 90% of the assets it manages. In the year under review this approach was developed further to include a special focus on climate scenario analyses and the integration of climate indicators into the investment process.
Swiss Life systematically integrates ecological and social factors, including aspects of good corporate governance, into the investment process and risk management for 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 managed by Swiss Life. The remaining 10% are investment products such as share index-tracking strategies or mortgages, where this sustainability approach currently still cannot be used because of their product structure. The sustainability approach is applied not only to proprietary assets, but also to third-party assets.
Swiss Life supports the goals of the Paris Agreement. For example, it has defined a strategy for its insurance business investments to exit the carbon-intensive coal sector. Swiss Life refrains from investing in bonds issued by companies which derive more than 10% of their revenue from the mining, extraction and sale of coal for power stations. In the year under review, all securities of these coal companies were sold. A corresponding threshold also applies to infrastructure investments: Swiss Life does not invest in projects or companies in which more than 10% of the company or project valuation is attributable to contributions from transactions involving coal for power stations.
Climate change and the associated risks are also central to the “active ownership” approach. Recently, Swiss Life joined “Climate Action 100+” in order to support this collective undertaking. Swiss Life has also launched a green investment programme. Here the carbon footprint of companies and countries is used to control the portfolios’ carbon intensity. In this context, Swiss Life has also set itself the goal of investing CHF 2 billion in green bonds by 2023.
For all its assets, Swiss Life has defined specific limits for investment in the defence industry. Swiss Life recognises that sovereign states have a right to self-defence, but refrains from investing in companies that are significantly involved in the production of internationally banned armaments such as land mines, cluster ammunition, and chemical, biological and nuclear weapons. For this, Swiss Life uses data from an independent ESG research and rating service provider plus the generally known exclusion lists for controversial weapons published by PAX, an international non-profit and NGO-type peace organisation, and from SVVK-ASIR, the Swiss association for responsible investments.
Swiss Life is one of Europe’s leading real estate investors and has the biggest private real estate portfolio in Switzerland. Preserving and increasing value in the long term and ensuring sustainable earnings are of central significance to Swiss Life. All decisions are thus oriented to a longterm property life cycle.
– 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, Swiss Life defines minimum energy standards, examines ecological risk profiles, analyses the socio-economic effects of real estate development projects and decides on the certification of buildings according to sustainability labels such as Minergie, DGNB, SGNI, LEED, BREEAM and HQE. These labels provide external confirmation of the sustainable quality of buildings.
– Implementing sustainability measures in property management – for example extensive renovation, specific optimisation measures, efficient in-house utilities and maintenance work – helps reduce energy consumption in the portfolio. In turn, the associated increase in the energy efficiency of the properties leads to a reduction in CO2 emissions. Energy-related maintenance activities (e.g. replacement of heating generators or refurbishment of the building shell) can thus produce energy and CO2 savings of up to 50% at the properties concerned. In this way, dependence on fossil fuels is reduced further, with a shift to renewable energy sources (e.g. photovoltaics, geothermal energy, use of river and sea water or pellets).
– Swiss Life brings about improvements through energy-saving settings for technical installations and smaller-scale refurbishment measures with a shorter payback period (e.g. lighting systems or insulation of water pipes). Energy and CO2 savings of around 10% can be achieved through these optimisation measures.
Since 2018, Swiss Life has participated in the annual Global Real Estate Sustainability Benchmark (GRESB). This sustainability benchmarking analysis enables Swiss Life to systematically measure sustainability aspects of the real estate portfolios evaluated and integrate them into its facility management. In 2020, almost 65% of the total real estate assets under management and around 85% of the proprietary insurance asset management portfolio of Swiss Life Asset Managers were submitted to the GRESB. Nine out of twelve audited portfolios were awarded the label “Green Star”.
Swiss Life incorporates ESG considerations, including a systematic ESG analysis, in the due diligence process of infrastructure investments. Each investment recommendation includes an ESG section that indicates the rating for 12 ESG themes and an aggregated ESG score. The rating is based on a systematic ESG questionnaire developed in-house to assess indicators in various areas and covers all ESG topics. Swiss Life also monitors ESG criteria and relevant developments on a quarterly basis as part of the regular monitoring processes of its underlying assets.
The Code of Conduct contains Swiss Life’s Group-wide values and principles and its rules of conduct, which are binding for all employees.
The Code of Conduct applies Group-wide and is reviewed at regular intervals and adjusted as necessary. Acceptance and observance of the Code of Conduct is confirmed by all employees when they join the company. The Code of Conduct can be viewed at www.swisslife.com/en/coc.
Established processes ensure adequate identification, management and monitoring of compliance and data protection risks at Swiss Life.
Regular risk assessments as well as ongoing and comprehensive compliance reporting to the Audit Committee of the Board of Directors and the Risk Committee of the Corporate Executive Board are carried out to safeguard their respective responsibilities. These support the implementation of all requisite measures at Group level and within the business units.
Swiss Life maintains a complete set of directives to ensure that the Code of Conduct is put into practice in daily activities. The directives contain binding Group-wide minimum standards which are included in the local regulations of all business units. The directives are periodically reviewed in terms of relevance and accuracy and, if necessary, adjusted to new regulatory and business requirements.
Regular training ensures that the employees are kept informed about the relevant compliance themes and directives. Within six months of joining, all new employees throughout the Group receive training on the Code of Conduct and essential rules of behaviour as well as on the data protection and data security requirements. Also within this period, all new employees are given training – to the extent relevant for their area of work – in preventing money-laundering, in com-
Infringements of data protection must be reported immediately to Compliance, and information security incidents are handled consistently throughout the Group as part of operational risk management. 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 given 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 Directors’ Audit Committee and the Corporate Executive Board’s Risk Committee are kept informed on an ongoing basis about data protection topics within the framework of compliance reporting, thus assuming their responsibility in the area of data protection. 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 requires its external service providers and suppliers to comply with these high sustainability standards and to thereby accept their responsibility towards their employees, society and the environment.
Swiss Life mainly accesses products and services from the following categories for its insurance business: – Professional services (advisory services for example) – Marketing and public relations – Human resources – IT services and telecoms – IT software and IT hardware – Facility management services (e.g. security personnel, building maintenance, cleaning) and general services (refreshments, electricity, gas, etc.) – Travel and events
Swiss Life also works mainly with national suppliers in its other core markets of France and Germany. Foreign suppliers account for under 5% in both countries.
In all divisions, companies that wish to work with Swiss Life must be able to ensure compliance with the relevant statutory provisions. Evaluation of key suppliers and service providers is integrated in the Swiss Life Group’s risk management framework.
In its core markets of Switzerland, France and Germany, Swiss Life gives preference to products and services from companies that can be shown to have a certified environmental management system (ISO 14001 or EMAS) and general quality certification (e.g. ISO 9001 or ISAE 3402).
In France, Swiss Life commits to monitoring its strategic suppliers’ environmental, social and ethical risks based on the EcoVadis methodology, which is derived from a framework of 21 corporate social responsibility criteria. The methodology is oriented towards leading and recognised standards, such as the GRI Sustainability Reporting Standards, the “UN Global Compact ” and ISO 26000, and is supervised by an international scientific committee. When issuing tenders, moreover, Swiss Life France routinely asks for any available corporate responsibility rating results and ISO certification, and decides on a case-by-case basis whether certification is required as a basis for cooperation.
– Swiss Life covers risks and, with its products and services, offers people the chance to focus on their skills. That allows them to look to the future with self-determination and confidence. Swiss Life’s services help people to accumulate capital, and ensure they achieve financial security.
– Through their expertise and work, Swiss Life advisors make a key contribution to improving financial literacy in society and giving people a better understanding of their financial and pension situation.
– Swiss Life is one of Europe’s leading institutional real estate investors and has the biggest private real estate portfolio in Switzerland. It invests several hundred million francs a year in the renovation of its properties; in doing so it helps to shape the urban landscape and create living and working space, while also being a major client for the construction industry.
Political and regulatory conditions have a major influence on Swiss Life’s operating environment. For example, they directly affect product design and processes as well as the way in which information is reported to shareholders, supervisory authorities and the public. Swiss Life therefore cultivates an active dialogue with politicians and contributes its viewpoints.
Swiss Life is committed to promoting a competitive business location and appropriate regulation in all its markets. In this, it focuses on the most significant issues for its business areas, for example pensions and insurance, investment and asset management, real estate management, customer advice, and insurance solvency and consumer protection requirements.
Swiss Life fosters contacts with representatives of the political, administrative and business communities as well as with 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 support was provided to political parties in the markets outside Switzerland. In this area, the company is guided by the rules in the Swiss Life Group Code of Conduct, as specified in the internal directive “Code of Conduct”. These rules stipulate, for example, that donations to political parties in the home market of Switzerland must be free of any obligation.
In Switzerland, Swiss Life Asset Managers is a member of the Board of the Swiss Real Estate Association (VIS) and of the Asset Management Association Switzerland, and is also a member of the Conference of Investment Foundation Managers (KGAST) through the Swiss Life Investment Foundation. The managing director of subsidiary Livit Ltd chairs the Swiss Real Estate Association (SVIT Schweiz).
– The Swiss Life Select distribution company operates the “Confidence for Children” foundation in Switzerland. This seeks to improve the life and development opportunities of disadvantaged children and give them a better chance of leading a self-determined and independent life. Among its key undertakings are two projects in Kyrgyzstan providing medical care to children with cleft lips and palates. The foundation receives key support from Swiss Life Select’s financial advisors and employees, who donated around CHF 143 000 to the foundation in 2020. Swiss Life Select Switzerland pays all the foundation’s administrative costs.
– Through the “Swiss Life Stiftung für Chancenreichtum und Zukunft” (Foundation for opportunities and the future), Swiss Life Germany does its part for educational equity and equal opportunity in Germany. It works towards having as many people as possible – regardless of their social background – remain curious, acquire knowledge and, as a result, lead a self-determined life. The foundation is mainly financed with donations from employees and financial advisors. Swiss Life Germany covers its personnel and administrative costs, thus allowing 100% of donation revenues to go towards project work. This organisation is a pure support foundation: it supported more than 40 initiatives with over EUR 800 000 in 2020.
The behavioural principles for managers: – I think and act in an exemplary manner and in the best interests of the company. – I create meaning and understanding within the context of our purpose. – I trust my employees.
– I encourage appreciative collaboration. – I promote the development of my employees. – I set and achieve ambitious goals.
– Regular discussions with all employees – Regular performance appraisals and feedback processes (setting of objectives and assessment/
– Three main areas for action have been identified within Swiss Life International: firstly, to further improve internal communication by adapting content and tonality to the internal target audience (e.g. the use of videos); secondly, to enhance customer centricity and service quality through improved IT infrastructure; and thirdly, to adapt the organisation to the new generations while ensuring disciplined execution. The focus is on the digital experience at the workplace and on the facilities and internal processes that enable new and modern forms of collaboration.
Germany - Top Employer Certification - Top Employer Certification - Top Employer Certification
Asset Managers - Fair Trainee Programme by Tendence (Corpus Sireo) - Top employer in the property industry - Top 100 Most Attractive Employers by - Top employer in the property industry by Immobilienzeitschrift (Corpus Sireo) “Universum”1 in Switzerland by Immobilienzeitschrift (BEOS) - TOP Job (BEOS) - Real Estate Manager Award in the - Best Recruiter – silver award (AM Switzerland) Human Resources category (BEOS) - Best Recruiter – silver award (AM Switzerland)
Employees of the Swiss Life Group benefit from a wide range of operational benefits: – With its “Actively shaping your career” initiative, which is based on the three success factors “Employability – remaining competitive through constant development”, “Diversity – diversity as a success factor” and “Work Ability – staying fit for work thanks to balance, motivation and health”, Swiss Life Switzerland offers support for managers and employees to optimally exploit the opportunities and challenges of their professional lives.
– At its Luxembourg location, the International division offers an Employee Assistance Programme which aims to offer support to employees in solving professional, personal or practical problems; employees also benefit from health insurance.
– Employees in the Asset Managers division have access to special leave, allowances for births and weddings, support with caring for family members and social counselling offers.
To ensure an optimal work-life balance, Swiss Life benefits are structured in line with local market conditions: – Swiss Life Switzerland offers paid maternity leave in excess of legally required minimum, three weeks’ paternity leave (also in excess of the statutory minimum) and social counselling services. Furthermore, parents – like all other employees – can benefit from agreements on working from home.
– In the International division in Luxembourg, fathers benefit from eight days of paternity leave in excess of the legally required minimum. Furthermore, fathers and mothers can choose from several forms of parental leave lasting between four and 24 months. To achieve a better workfamily balance, moreover, parents benefit from working arrangements that are not bound by time or location.
– To reconcile work and family commitments, Swiss Life Asset Managers offers maternity/paternity leave in Switzerland and Luxembourg exceeding the legally required minimum, plus part-time employment and job-sharing opportunities.
Swiss Life anticipates the rapid change in the world of work by offering varied and targeted training and development opportunities to update the professional and methodological skills of its employees. The training is open to all employees, regardless of age or hierarchical level.
To help them develop and retain skills, employees are offered training content that combines conventional training formats with a digital platform so that managers and employees can undertake advanced training anytime and anywhere under their own responsibility.
– Swiss Life Asset Managers in Switzerland collaborates with UNIVERSA, the sole business network at the University of St. Gallen offering activities exclusively for female students.
Diversity and respect as the basis for collaboration based on trust
– Swiss Life Asset Managers offers a range of measures aimed at actively promoting employee diversity. Measures include reverse mentoring and flexible working hours. Diversity and inclusion are proactively addressed and managed as part of succession planning and recruiting processes (e.g. through cooperation with UNIVERSA, University of St. Gallen).
– Swiss Life International publishes a gender pay report every year at its UK location. The report contains the following four key figures: average and median figures on salary and bonus differentials, figures on the proportion of employees receiving a bonus, and percentiles by gender.
The nature of employment at a service provider means that general health and safety risks are relatively low. The framework conditions for health and safety at the workplace, which are provided by European and local laws and regulations, apply to all Swiss Life companies and form the basis of all health management standards and guidelines.
Hazard identification, risk assessment and investigation of work-related incidents are integrated into the management system and guaranteed by the relevant regulations and processes, which in turn are based on the aforementioned legal principles.
– In cooperation with a “family service”, Swiss Life Germany offers free and confidential anonymous advice for employees on psychosocial support/crisis management, conflicts at the workplace, addiction or partnership problems and support with organising and financing longterm care services. In addition, a wide range of health promotion and prevention options are available, such as specialist lectures on health topics, services provided by the occupational physician, workshops for managers and/or employees (e.g. identifying employees suffering from mental strain) and workplace inspections/advice (e.g. on ergonomics).
– All employees of Swiss Life Asset Managers have access to prevention-related services, such as free flu vaccination, occupational physicians and counselling for social problems.
Employee participation in the area of occupational safety and health protection is coordinated with the social partners on the basis of collective agreements. These offerings are accessible to employees via various communication channels, including the intranet; managers also inform employees on a regular basis via management channels.
– The following measures have been implemented at the Swiss location: a coronavirus information centre, implementation of the home-working recommendations of the Federal Office of Public Health (FOPH), directives for meetings, client visits and professional events, online “collaboration hacks” on the topic of virtual cooperation, and training modules for management development such as managing remotely, onboarding of employees and managing virtual teams.
– In 2020, the staff committee participated in pilot workshops on “Diversity & Inclusion”. Overall, the staff committee was involved in all the topics set forth in the regulations. An intensive dialogue took place between employee and employer representatives, particularly with regard to the current Covid-19 pandemic.
European Works Council – were newly defined. – In 2020, the staff committee answered around 280 enquiries from employees.
– Nine members; the chairwoman enjoys up to 20% work dispensation for work on the staff committee, the vice chairwoman up to 15% and the members up to 10%.
The employee-employer relationship is characterised by close contact between the staff and the Corporate Executive Board. Since 1996, Swiss Life has had a European Works Council (pursuant to EU Directives 94/45/EC and 2009/38/EC).
Freedom of association and the right to collective bargaining are guaranteed by local legislation (EU Charter Art. 12, Swiss Federal Constitution Art. 23); they form the basis for internal policies and guidelines. Collective bargaining agreements exist in the following countries and units (GRI 102-41):
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 safety”, “Business and strategy”, “Social affairs” and “Workplace learning”. Elections are held every four years.
– Three annual wage negotiations took place in 2019 with wage agreements – An extension of the working from home agreement – An agreement on the mandate of administrative employees – A one-year extension of participation and interest agreements relating to health – An agreement on teleworking
Collective bargaining agreements 98% of employees are covered by a collective bargaining agreement.
The Adaptation Agreement (works agreement), which was signed unanimously following the merger, contains: – Amendment of working time regulations – Implementation of the working from home arrangements – Harmonisation of bonus, fringe benefit, profit sharing and employee savings plans, etc. – Employee referendum for the implementation of the agreement – Expansion of the Works Council
– A works agreement on mobile working was concluded shortly before the Covid-19 pandemic, which proved to be a solid basis for the challenges of the first lockdown phase in spring 2020.
– An agreement setting out comprehensive measures to support employees during the corona restrictions was concluded in good time. Among other things, this covered an extension of the working time corridors and a flexible handling of home schooling requirements). To this end, the Works Council launched a holiday fundraising campaign and successfully distributed more than 50 days of donated leave to colleagues in support of childcare or home care.
– In cooperation with the HR department, in occupational health management, the focus has returned to resilience and mental stress at the workplace.
– An agreement on an increase in base salaries in 2020 and 2021 for non-pay-scale employees was reached with the Executive Board in the spring.
Swiss Life Asset Managers Germany and Swiss Life Investment Management Deutschland Holding GmbH
– Interim agreement during the project phase for the introduction of the “Workday” personnel management system; Group works agreement on occupational pension provision.
The Group Works Council has four members, who are appointed by the above Works Councils. One member of the Works Council at Corpus Sireo with 100% dispensation, is also a member of the European Works Council. All other members work without dispensation. The Group works agreements are relevant for all employees of Swiss Life Asset Managers in Germany in accordance with the particular agreement’s scope of application.
Collective bargaining agreements/Works agreements 26% of employees are covered by a collective bargaining agreement. Works agreements apply to 81% of the employees.
– Ensuring appropriate investment in the retraining of insurance workers and adapting skills to future workplace demands – In addition, one employee representative assumes responsibility for reviewing “equal opportunities” (including gender aspects) and one other person is responsible for the topic of “safety and wellbeing”.
Swiss Life (Luxembourg) S.A. and Swiss Life Products (Luxembourg) S.A. are subject to a new collective bargaining agreement for the insurance sector. The new contract, which was concluded between the social partners and the insurance sector (“Association des Compagnies d’Assurance”), entered into force on 1 January 2021 and is identical to the previous one.
Fossil fuels Swiss Life wants to continuously reduce its use of fossil fuels in its business premises within its investment cycles.
Key environmental data on operational ecology are gathered annually in accordance with the globally recognised standard of the Association for Environmental Management and Sustainability at Financial Institutions (VfU). By gathering data on an annual basis, Swiss Life is able to determine where progress has been made, where risks lie and where steps must be taken. The VfU’s key figures conform to the international Greenhouse Gas Protocol standards (Scope 1, 2 and 3). The data are gathered, evaluated and analysed across the Group. All the major Swiss Life locations have environmental officers who collect the data for the individual divisions. The data are consolidated and analysed at Group level. Following the extensive professionalisation of operational ecology, Swiss Life has set itself the goal of continuously improving data quality. Thus, in 2020, additional locations were included in the data collection and the share of extrapolations and estimates could be further limited.
TOTAL ENERGY CONSUMPTION (IN MWH) 40 755 51 694 49 500 47 819
Proportion of paper with FSC label (in %) 87 68 66 63
TOTAL GREENHOUSE GAS EMISSIONS (IN T) 13 611 23 657 24 436 22 788
TOTAL ENERGY CONSUMPTION (IN KWH/FTE) 4 149 5 540 5 614 5 823
RENEWABLE ELECTRICITY (IN KWH/FTE) 2 053 2 474 1 802 2 176
In 2020, the effects of the Covid-19 pandemic led to some significant changes in key environmental indicators. Total greenhouse gas emissions per FTE fell significantly (–45%) compared to the previous year. This was mainly due to the sharp reduction in business travel (-59%). Meanwhile, the share of electricity from renewable energy sources has been increased further and now stands at 89%. Both paper and water consumption and the amount of waste generated in office buildings were significantly reduced in 2020 due to the above-average proportion of work done at home. Swiss Life is well on track to achieve the Group-wide targets set for the end of 2021 and will prepare new successor targets for the further reduction of greenhouse gas emissions in its own operations in 2021.
Swiss Life Group – The sharp decline in travel due to the widespread travel restrictions and the increase in virtual collaboration due to the Covid-19 pandemic led to a significant reduction of greenhouse gas emissions in 2020. In the year under review, Swiss Life initiated a project to anchor the positive experiences of using digital aids in its processes and corporate culture over the long term, and thus sustainably reduce greenhouse gas emissions from business travel.
Switzerland – In Switzerland, Swiss Life is a member of the Zurich Energy Model and has been obtaining all its electricity from renewable energy sources for over ten years. Founded in 1987, the Energy Model Zurich is an association of companies that set themselves voluntary targets for energy efficiency. In setting its new targets for 2020, Swiss Life renewed its pledge to increase energy efficiency at its Zurich location by 1.5% annually until 2030.
France – In 2020, Swiss Life France introduced targeted measures to further raise employee awareness of environmental protection and sustainability. Employees received further training in environmental and climate issues through a company-wide digital training programme. 93% of staff participated in the scheme. In addition, the local sustainability team held a digital event on the topic of waste reduction.
– Swiss Life Germany has also been represented in the Klima-Allianz der Stadt Hannover (Climate Alliance of the City of Hanover) network for over ten years and, in cooperation with other companies, undertakes to reduce CO2 emissions and increase energy efficiency in this urban area.
– In 2020, moreover, an energy audit was carried out for Swiss Life Germany in accordance with the Energy Services Act (EDL-G). In addition to sensitising employees to the separation of waste for recycling, the outdoor lighting at the Hanover location was converted to state-of-theart LED technology.
Slovakia are housed in modern, energy-efficient premises. 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.
Swiss Life supports its employees in maintaining their employability and promotes their ongoing development. This includes continuous internal and external education for employees of all ages, training for apprentices and trainees and entry-level opportunities for university graduates.
In addition, Swiss Life uses its own foundations to support institutions that help people from a wide range of backgrounds educate and better themselves.
See also “Products, Services and Advice” (pages 97–99), “Corporate Citizenship” (pages 116–117) and “Sustainability as an Employer”, subsection “Training and development” (pages 125–126).
As it owns Fontavis, the Swiss Life Group also includes a leading investment manager for clean energy and infrastructure funds in Switzerland. The Fontavis portfolios are focused on thermal, water, solar and wind power.
Swiss Life invests through its own funds in the renewal of urban infrastructure, such as the Thames Tideway Tunnel in London. 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. Furthermore, Swiss Life is Member of the Foundation Board and of the Business Council of Swiss Innovation Park.
Achieve gender equality and empower all women and girls to achieve self-determination
In keeping with current national and international law, as well as the conventions of the International Labour Organisation (ILO), Swiss Life applies fair employment procedures that are free of discrimination with the aim of guaranteeing and promoting equal opportunities. 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. For a number of years, Swiss Life has had processes and instruments for removing the gender-specific salary gap at all its national companies.
See also “Sustainability as an Employer”, subsection “Collaboration and diversity” (pages 129–131).
As a builder and in its own operations, Swiss Life supports the sparing use of resources. Swiss Life publishes annual figures on waste and paper consumption as well as the other key indicators for operational ecology. Furthermore, Swiss Life uses Group-wide targets to ensure that the company can make further progress in the realm of operational ecology.
Swiss Life makes an active contribution to climate protection by reducing CO2 emissions and has set itself Group-wide targets for this purpose. 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 also “Responsible Investing” (pages 101–105) and “Sustainability in the Environment” (pages 139–143).
Strengthen the means for implementing the goals and re-invigorating the Global Partnership for Sustainable Development
Swiss Life is a member of a wide variety of organisations and networks in the area of sustainability, as well as being a co-signatory of various initiatives. For example, Swiss Life is involved in working groups and networks, ensures the transfer of know-how and is in dialogue with key stakeholder groups to help shape sustainable development.
As a signatory of the UN Global Compact, Swiss Life supports its ten principles of sustainability and contributes to making globalisation socially and ecologically compatible.
 “Sustainable Procurement” (pages 109–111)  “Sustainability as an Employer” (pages 118–138)
Environment Principles 7, 8 and 9: – Businesses should support a precautionary approach to environmental challenges; – undertake initiatives to promote greater environmental responsibility; and – accelerate the development and diffusion of environmentally friendly technologies.
Anti-Corruption Principle 10: – Businesses should work against corruption in all its forms, including extortion and bribery.
The Swiss Life Group’s Sustainability Report is in conformity with the EU’s NFRD Directive. In this sustainability report Swiss Life reports on environmental issues (pages 85, 86–91, 101– 105, 109–111, 139–143), employee issues (pages 85, 86–91, 101–105, 118–138), social issues (pages 85, 86–91, 101–105, 118–138) as well as on respect for human rights (pages 91, 101, 106–111, 147) and the fight against corruption and bribery (pages 91, 102, 106–111, 148). The pages cited also provide information on the concepts and associated results, as well as on due diligence processes and risk management. With their two dimensions: “relevance for Swiss Life” and “impact on sustainable development”, the principal topics reflect the NFRD Directive’s requirements regarding the purpose of the non-financial content of the report.
The Swiss Life Sustainability Report meets the requirements of the GRI Standards, a framework for transparent sustainability reporting. The 2020 report covers the Switzerland, France, Germany, International and Asset Managers segments. This report has been prepared in accordance with the GRI Standards: Core option. The aim of the GRI is, on the one hand, to support companies, governments and non-governmental organisations (NGOs) in focusing their reporting on topics that are material from the perspective of their stakeholders and their influence on sustainable development. On the other hand, the standardised format of the reports, based on key figures, also contributes to the comparability and transparency of sustainability reporting.
Swiss Life’s sustainability report for the 2020 financial year is based for the first time on the provisions of the SASB standard for the insurance industry. SASB is a US-based non-profit organisation that provides industry-specific reporting standards to strengthen communication between companies and financial market participants on the financial impact of sustainability issues. The corresponding content references can be found in the combined GRI and SASB content index on pages 152–156.
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 – Principles for Sustainable Insurance (PSI): unepfi.org/psi – UN Global Compact (UNGC): unglobalcompact.org – Global Real Estate Sustainability Benchmark (GRESB): gresb.com – Carbon Disclosure Project (CDP): 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 – Climate Action 100+ (CA100+): climateaction100.org – International Corporate Governance Network (ICGN): icgn.org
For the Materiality Disclosures Service, the GRI Services Team checked that the GRI Content Index is clearly set out and that the references for items 102-40 to 102-49 match the corresponding contents in the Report. The Materiality Disclosures Service was performed on the German version of the report.
GRI 102-8 Information on employees and other workers p. 120, 131
GRI 102-16 Values, principles, standards and norms of behaviour S. 106–108, 119
GRI 102-45 Entities included in the consolidated financial statements p. 312
GRI 102-53 Contact point for questions regarding the report Media Relations, p. 348
GRI 102-54 Claims of reporting in accordance with the GRI standards p. 149
GRI 308-1 New suppliers that were screened using environmental criteria p. 109–111
GRI 401-1 New employee hires and employee turnover p. 121, 126
GRI 403-7 Prevention and mitigation of occupational health and safety p. 109–111 impacts directly linked by business relationships
GRI 404-2 Programs for upgrading employee skills and transition p. 125–126 assistance programs
GRI 405-2 Ratio of basic salary and remuneration of women to men p. 130–131
GRI 414-1 New suppliers that were screened using social criteria p. 109-111
GRI 417-2 FN-IN-270a.1 Incidents of non-compliance concerning product and service None information and labeling FN-IN-270a.2 Ratio of appeals to claims made Swiss Life is currently not publishing any complaints figures. Information on customer satisfaction can be found on pages 99-101.
Targets to reduce GHG emissions yes yes yes yes AR, p. 140
Total energy consumption (in KWh/FTE) 4 149 5 540 5 614 5 823 AR, p. 141
Consumption of renewable energy (in KWh/FTE) 2 053 2 474 1 802 2 176 AR, p. 141
Business travel (in km/FTE) 2 729 6 634 7 804 7 686 AR, p. 141
Total water consumption (in m3/FTE) 7 11 11 10 AR, p. 141
Proportion of waste recycling 50% 45% 54% 58% AR, p. 141
Participation CDP (Carbon Disclosure Project) yes yes yes yes AR, p. 143, 151
Total number of part-time employees 1 901 1 953 1 528 1 380 AR, p. 131
Leadership training and skills development yes yes yes yes AR, p. 125–126
Partnerships with educational institutions yes yes yes yes AR, p. 125–126
Share of employees with professional development 100% 100% 100% 100% AR, p. 120 interviews/annual performance reviews
Guidelines for social assessment of suppliers yes yes yes yes AR, p. 91, 109–111
Inclusion of ESG criteria in supplier contracts yes yes yes yes AR, p. 109–111
Company has foundations yes yes yes yes AR, p. 86, 116–117
Business ethics guidelines incl. conflicts of interest yes yes yes yes Code of Conduct
Anti-bribery guidelines yes yes yes yes Anti-bribery policy: Code of Conduct
Guidelines on the prevention of money-laundering and yes yes yes yes AR, p. 106 and Swiss Life Holding Ltd, on sanctions and embargoes Articles of Association, Article 11
Employee training on ethics and compliance yes yes yes yes AR, p. 108
Proportion of women with management functions 2 33% 32% 27% 25% AR, p. 129
Total number of agenda items where 5 750 4 749 n/a n/a AR, p. 103 Swiss Life Asset Managers voted
Participation in green bonds (in CHF million) 541 150 n/a n/a AR, p. 103-104
Sustainable real estate strategy yes yes yes yes AR, p. 104
Number of ESG specialists (in FTE) 12 5 n/a n/a swisslife-am.com/rireport, p. 24
Obesity and emerging health issues listed as a yes yes yes yes AR, Notes of the Consolidated Financial Statements, business risk factor Note 5 “ Risk management policies and procedures” and Note 5.5 “ Insurance risk management objectives
Aging population and demographic change listed as a yes yes yes yes AR, Notes of the Consolidated Financial Statements, business risk factor Note 5 “ Risk management policies and procedures” and Note 5.5 “ Insurance risk management objectives
Guidelines on the protection of customer data yes yes yes yes AR, p. 106-108 and other personal data Code of Conduct plus additional directives
Prohibition of access to personal data by yes yes yes yes AR, p. 106-108
Regular internal audits of the IT systems yes yes yes yes AR, p. 80–81, 108
Guidelines on due diligence in advisory services yes yes yes yes AR, p. 97-99 and how to deal with complaints
Auditable product development process yes yes yes yes AR, p. 97-99
Former CEO or equivalent on Board yes yes yes yes AR, p. 35
Number of women on the Board 2 2 2 2 AR, p. 36, 129
Proportion of women on the Board 17% 17% 18% 18% AR, p. 129
Average age of Board member 60 59 58 59 AR, p. 37–44
Commitment to Board diversity yes yes yes yes AR, p. 37–44
CSR/sustainability committee at yes yes yes yes AR, p. 87 Corporate Executive Board level
CEO total summary compensation (in CHF million) 3.9 4.3 4.3 3.4 AR, p. 65–68
Climate reporting according to the recommendations yes under n/a n/a swisslife.com/reports of the Task Force on Climate-related develop-
Risk management system covers reputational risks yes yes yes yes AR, p. 79–82
Risk management covers human rights risks under n/a n/a n/a AR, p. 79–82
Risk management covers climate risks yes yes yes n/a AR, p. 79–82
Consolidated Statement of Income .............................................................................................................164 Consolidated Statement of Comprehensive Income ...............................................................................165 Consolidated Balance Sheet ............................................................................................................................166 Consolidated Statement of Cash Flows ......................................................................................................168 Consolidated Statement of Changes in Equity .........................................................................................170 Notes to the Consolidated Financial Statements ....................................................................................171 1 General Information .......................................................................................................................171 2 Summary of Significant Accounting Policies .........................................................................172 2.1 Basis of preparation .........................................................................................................................172 2.2 Changes in accounting policies ...................................................................................................172 2.3 Consolidation principles ................................................................................................................173 2.4 Foreign currency translation and transactions .....................................................................174 2.5 Cash and cash equivalents ............................................................................................................175 2.7 Financial assets .................................................................................................................................177 2.8 Impairment of financial assets ....................................................................................................178 2.9 Investment property ........................................................................................................................180 2.10 Insurance operations .......................................................................................................................181 2.11 Property and equipment ................................................................................................................186 2.12 Inventory property ...........................................................................................................................186 2.14 Investment management ...............................................................................................................187 2.15 Commission income and expense ..............................................................................................187 2.16 Intangible assets ...............................................................................................................................188 2.17 Impairment of non-financial assets .......................................................................................... 190 2.18 Income taxes ......................................................................................................................................191 2.19 Assets held for sale and associated liabilities ..........................................................................191 2.20 Financial liabilities ..........................................................................................................................191 2.21 Employee benefits .............................................................................................................................193 2.22 Provisions and contingent liabilities .........................................................................................194 2.23 Treasury shares ..................................................................................................................................194 2.25 Forthcoming changes in accounting policies .........................................................................194 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies ....196 5 Risk Management Policies and Procedures ............................................................................ 207 5.1 Risk budgeting and limit setting ............................................................................................... 208 5.2 Asset and liability management (ALM) ................................................................................... 208 5.3 Contracts for the account and risk of the Swiss Life Group’s customers ......................210
Net gains/losses on financial instruments at fair value through profit or loss 5, 8 191 –1 620
Deferred income tax assets 24 79 72 1 Including IFRS 16 right-of-use assets
Premiums, policy fees and deposits received, net of reinsurance 18 317 18 702
Benefits and claims paid, net of reinsurance –15 028 –14 283
financial instruments at fair value through profit or loss –4 450 –219
Acquisitions of subsidiaries, net of cash and cash equivalents –6 –886
Disposals of subsidiaries, net of cash and cash equivalents 10 –118
Consolidated statement of changes in equity for the year ended 31 December 2020
Share buyback – – –29 – – –29 – – –29
Cancellation of treasury shares 0 – 740 – –740 – – – –
Income tax effects – –4 – – 2 –2 – – –2
BALANCE AS AT END OF PERIOD 3 14 –77 3 995 12 810 16 745 425 93 17 263
Income tax effects – –3 – – 2 –1 – – –1
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.
For the 2019 financial year, Swiss Life paid to the shareholders of Swiss Life Holding Ltd (hereafter referred to as “Swiss Life Holding”) a dividend of CHF 15.00 per registered share in the first half of 2020 and a reduction of par value of CHF 5.00 per registered share in the second half of 2020. Both payments amounted to CHF 636 million in total.
Swiss Life – Annual Report 2020 2 Summary of Significant Accounting Policies
The consolidated financial statements of Swiss Life have been prepared in accordance and compliance with International Financial Reporting Standards (IFRS). The consolidated financial statements have been prepared on a historical cost basis, except for the following assets and liabilities, which are stated at their fair value: derivatives, financial assets and liabilities at fair value through profit or loss, financial assets classified as available for sale and investment property.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3.
Swiss Life – Annual Report 2020 fair value is concentrated in a single identifiable asset or group of similar identifiable assets. The amendments have been applied prospectively and have not had an impact on the consolidated financial statements yet.
Swiss Life Group decided to early adopt the amendment to IFRS 16, which was published in response to the COVID-19 pandemic in May 2020. This IFRS 16 amendment has had no effect on the consolidated financial statements.
Swiss Life Group decided to present all interest and borrowing cost paid as a component of cash flows from operating activities. Previously, interest paid was presented as cash flows from operating activities and borrowing cost paid as cash flows from financing activities. The comparative period of the consolidated statement of cash flows was restated accordingly.
“Regular way” purchases and sales of financial assets are recorded on the trade date. The amor tisation of premiums and discounts is computed using the effective interest method and is recognised in profit or loss as an adjustment of yield. Dividends are recorded as investment income on the ex-dividend date. Interest income is recognised on an accrual basis.
Financial assets available for sale (AFS) Financial assets classified as available for sale are carried at fair value. Financial assets are classified as available for sale if they do not qualify as held to maturity, loans and receivables or if they are not designated as at fair value through profit or loss. Gains and losses arising from fair value changes, being the difference between fair value and cost/amortised cost, are reported in other comprehensive income. On disposal of an AFS investment, the cumulative gain or loss is transferred from other comprehensive income to profit or loss for the period. Gains and losses on disposal are determined using the average cost method.
Financial assets at amortised cost The Group assesses at each balance sheet date if there is objective evidence that a financial asset or a group of financial assets is impaired. It is assessed whether there is objective evidence of impairment individually for financial assets that are individually significant, and collectively for financial assets that are not individually significant.
Financial assets carried at fair value (available for sale) At each balance sheet date, an assessment is made whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of an equity instrument classi fied as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered objective evidence of impairment. In this respect, a decline of 30% or more is regarded as significant, and a period of 12 months or longer is considered to be prolonged. In such a situation, the impairment loss – measured as the difference between the acquisition cost and the current fair value – is removed from other comprehensive income and recognised in profit or loss. After recognition of an impairment loss, any further declines in fair value are recognised in profit or loss, and subsequent increases in fair value are recognised in other comprehensive income.
Swiss Life – Annual Report 2020 only when, the valuation differences on the assets arise from gains or losses recognised in other comprehensive income (“shadow accounting”).
France In life insurance business, 85% of the net investment returns and 90% of any other results are allocated to the policyholders as a minimum.
Swiss Life – Annual Report 2020 cost of insurance, administrative charges and surrender charges. Benefits recognised under expenses include claims for benefits incurred in the period under review that exceed the related deposits under policyholder contracts and interest that is credited to the appropriate insurance policy accounts.
Insurance liabilities and liabilities from investment contracts Future life policyholder benefit liabilities These liabilities are determined by using the net-level-premium method. Depending on the type of profit participation, the calculations are based on various actuarial assumptions as to mortality, interest rates, investment returns, expenses and persistency, including a margin for adverse deviation. The assumptions are initially set at contract issue and are locked in except for deficiency.
Future lease payments that are fixed or variable based on an index or rate are discounted and recorded on the balance sheet as lease a liability. The lease liability is amortised by the payments made to the lessor, less the interest expense.
Present value of future profits (PVP) arising from acquired insurance contracts and investment contracts with discretionary participation features On acquisition of a portfolio of insurance contracts or a portfolio of investment contracts with discretionary participation features (DPF), either directly from another insurer or through the acquisition of a subsidiary undertaking, the Group recognises an intangible asset representing the present value of future profits (PVP) embedded in the contracts acquired. The PVP represents the difference between the fair value of the contractual rights acquired and insurance obligations assumed and a liability measured in accordance with the accounting policies for insurance contracts and investment contracts with DPF. The PVP is determined by estimating the net present value of future cash flows from the contracts in force at the date of acquisition. For acquired insurance and investment contracts with DPF, future positive cash flows generally include net valuation premiums while future negative cash flows include policyholders’ benefits and certain maintenance expenses.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which they can be used. For unused tax losses a deferred income tax asset is recognised to the extent that it is probable that these losses can be offset against future taxable profits. Deferred income tax liabilities represent income taxes payable in the future in respect of taxable temporary differences.
Where the entity has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred income tax assets and deferred income tax liabilities relate to income taxes levied by the same tax authority, the corresponding assets and liabilities are presented on a net basis.
Based on the terms and conditions, such as repayment provisions and contractual interest payments, certain hybrid instruments are considered financial liabilities.
Post-employment benefits The Swiss Life Group provides post-employment benefits under two types of arrangement: defined benefit plans and defined contribution plans.
Swiss Life – Annual Report 2020 2.22 Provisions and contingent liabilities
Provisions are liabilities with uncertainties as to the amount or timing of payments. Provisions are recognised if there is a present obligation that probably requires an outflow of resources and a reliable estimate can be made at the balance sheet date and be measured on a best estimate basis. Contingent liabilities are disclosed in the Notes if there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources or the amount of the obligation cannot be measured with sufficient reliability.
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.
In January 2020 an amendment to IAS 1 Presentation of Financial Statements was published clarifying that liabilities are classified as either current or non-current, depending on the rights regarding the settlement of the liability that exist at the end of the reporting period, and not depending on expectations or management intentions. The effective date of the amendment will be 1 January 2023.
In May 2017, IFRS 17 Insurance Contracts was published and replaces IFRS 4 insurance contracts, which currently permits a wide variety of practices. IFRS 17 will fundamentally change the accounting by entities that issue insurance contracts, reinsurance contracts and investment contracts with discretionary participation features. IFRS 17 requires a current
Swiss Life – Annual Report 2020 measurement model, where estimates are remeasured in each reporting period. The measurement is based on the building blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin (“CSM”) representing the unearned profits of the contract. The CSM is released to profit or loss based on the transfer of services in each period. An entity groups contracts of similar risks which are managed together, and separates the contracts that are onerous at initial recognition from contracts that are not onerous at initial recognition. On a group of onerous contracts a loss is recognised in profit or loss at initial recognition. A loss is also immediately recognised in profit or loss if a group of contracts becomes onerous on subsequent measurement. The standard provides a simplified accounting approach for certain short-duration contracts, as well as an accounting policy choice to recognise the impact of changes in discount rates and other assumptions that relate to financial risks either in profit or loss, or in other comprehensive income. The variable fee approach is required for insurance contracts that specify a link between payments to the policyholder and the returns on underlying items. Requirements in IFRS 17 align the presentation of revenue with other industries. Revenue is allocated to periods in proportion to the value of expected coverage and other services that the insurer provides in the period, and claims are presented when incurred. The disclosure requirements are more detailed than currently required under IFRS 4. On transition to IFRS 17, an entity applies the standard fully retrospectively to groups of insurance contracts, unless it is impracticable, in which case there is a choice between a modified retrospective approach and the fair value approach. IFRS 17 will be effective for reporting periods beginning on or after 1 January 2023. The Swiss Life Group is currently assessing the impact on its financial statements, which will be significant.
Swiss Life – Annual Report 2020 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 Germany, mortality tables provided by the German Actuarial Association are in use. They are verified periodically by the Association and updated, if necessary. Best estimate assumptions are deduced from these generally accepted tables.
Morbidity and disability For the individual and group life business in Switzerland internal tables are in place. In the individual life business, the internal disability rates are based on Swiss Insurance Association statistics and reflect the average situation of the past in the Swiss market. In the individual life business, only reactivation is considered, whereas increased mortality is also taken into account in group life business. In the individual life business, disability tables are usually reviewed every five years when new statistics from the Swiss Insurance Association become available.
Swiss Life – Annual Report 2020 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.
In Luxembourg, expense allocation is based on an activity-based cost methodology. Recurring costs are subdivided into the following main cost categories: acquisition costs, administration costs and asset management costs, which are allocated by lines of business.
“International” comprises the cross-border insurance operations in Liechtenstein, Luxembourg and Singapore, the Fincentrum and Swiss Life Select units operating in Austria, Czech Republic and Slovakia, and Chase de Vere operating in the United Kingdom.
The statement of income and the balance sheet for the segments are provided on the following pages.
Policy fees earned on investment and unit-linked contracts 47 203 13 80 – – 342 – 342
Share of profit or loss of associates 6 3 0 – 0 – 9 – 9
Benefits and claims under investment contracts with discretionary participation –846 – – – – – –846 – –846
Impairment of property and equipment and intangible assets – – 0 0 –21 – –21 – –21
Additions to non-current assets 3 191 413 198 27 95 – 3 923 – 3 923
Premiums earned on insurance contracts 12 186 2 960 1 135 60 – – 16 341 –18 16 323
Premiums earned on investment contracts with discretionary participation 890 – – – – – 890 – 890
Policy fees earned on investment and unit-linked contracts 46 200 8 88 – – 342 0 342
Net gains/losses on financial assets 1 500 57 132 –1 –2 –8 1 678 – 1 678
Net gains/losses on financial instruments at fair value through profit or loss –1 774 –11 162 4 1 –1 –1 620 0 –1 620
Depreciation and amortisation expense –154 –227 –88 –16 –30 0 –516 – –516
Additions to non-current assets 5 166 250 222 39 91 – 5 769 – 5 769
Financial assets available for sale 74 214 21 825 9 849 1 683 1 869 108 441 – 108 441
Financial assets at fair value through profit or loss 7 931 14 284 2 943 18 521 14 – 43 692 – 43 692
Financial assets pledged as collateral 841 1 330 – 78 – 189 2 438 – 2 438
Swiss Life – Annual Report 2020 5 Risk Management Policies and Procedures
Net gains/losses on financial instruments at fair value through profit or loss 8 191 –1 636 –1 16 191 –1 620
Share of profit or loss of associates 9 6 – – 9 6 5.4 Financial risk management objectives and policies
The risk budgeting and limit setting described above ensures that the corresponding risks remain under control. The market risk capital, interest rate risk capital, credit spread risk capital and credit risk capital limits, as well as exposure limits for currencies and net equity for each large insurance operation, are defined based on the risk appetite per operation.
Insurance liabilities linked to assets for the account and risk of the Swiss Life Group’s customers 8 399
TOTAL INTEREST-SENSITIVE INSURANCE LIABILITIES 77 667 24 721 65 102 452
Some life insurance products with a savings component and investment contracts are subject to minimum guaranteed interest rates. The guaranteed rate differs according to the type of contract. In Switzerland for instance the minimum guaranteed interest rate for the occupational pensions segment (mandatory BVG savings account) stood at 1.00% in 2020 (2019: 1.00%).
The Group manages interest rate and interest rate volatility risk by managing the interest rate sensitivity of its investment portfolio against the corresponding sensitivity of liabilities issued. The interest rate and volatility exposure of the liabilities is determined by projecting the expected cash flows from the contracts using best estimates of mortality, longevity, disability, expenses, surrender and exercise of policyholder options in combination with interest rate and volatility scenarios. The ALM process defines the strategic asset allocation optimising the net interest rate sensitivity of the investment and liability portfolios. Where this is not practicable, swap contracts and other instruments are used to hedge interest rate risk. In certain markets payer swaptions are used to hedge the risk of fair value changes of interest-sensitive financial assets. A minimum interest rate risk is accepted, since a perfect interest rate hedge can either not be achieved or may not be targeted.
Credit spread risk Spread risk arises from bond investments when the counterparties are not considered risk free. The market value of these bonds corresponds to the discounting of the agreed payment flows with an interest rate curve composed of the base interest rate curve and a spread curve. The spread curve is defined by the counterparty’s credit quality and the risk aversion of the capital market actors. Spreads increase markedly during capital market crises, leading to a significant decrease in the bond portfolio’s market value. On the other hand, typically historic spread volatility increases during such crisis, which leads to a higher spread risk capital, even if the pre-crisis spread level has been restored.
To reduce the credit exposure relating to derivatives a collateral management process is in place. Clearly defined processes ensure that exposure concentrations and limit utilisations are appropriately monitored and managed. Counterparties for derivative transactions, over-thecounter and exchange-traded, have to be approved by both the Group Chief Risk Officer and the Group Chief Investment Officer. Furthermore, the counterparties must fulfil stringent minimum rating requirements for the Swiss Life Group’s insurance operations. During periods of market turmoil reliance on ratings is of limited value; therefore an additional qualitative and quantitative counter party monitoring process has been established to allow for immediate proactive measures.
Counterparty risk is primarily managed by counterparty exposure limits and diversification in a broad debtor universe. The default risk is managed through the holding of credit default swaps or credit default swap indices and options on credit default swap indices. A credit default swap provides insurance to the debt holder against a default of the debt issuer. It is traded over-the-counter and itself underlies the collateral management process described above. The credit default swap index is a hedge on credit risk of a basket of counterparties and is an over- the-counter derivative. A put option on a credit default swap index provides protection against adverse credit spread movements in the underlying basket of counterparties, and is traded over-the-counter.
Debt securities at fair value through profit or loss 674 622 7 683 6 934 8 358 7 556
Senior secured loans available for sale 3 908 3 144 – – 3 908 3 144
Exposure to credit risk of debt instruments – credit rating by class as at 31 December 2020
Exposure to credit risk of debt instruments– credit rating by class as at 31 December 2019
Individual impairment loss AAA AA A BBB Below BBB allowance Total
Financial assets individually determined as impaired – impairment loss allowance for the year 2020
At 31 December 2020 and 2019, no reinsurance assets were past due or impaired.
The liquidity analysis of financial liabilities and commitments is based on undiscounted cash flows by remaining contractual maturities, whereas insurance and policyholder participation liabilities are analysed by estimated timing of net cash outflows. Cash outflows of derivative liabilities designated as cash flow hedging instruments are analysed on the basis of expected settle ment dates for forward starting swaps, and on the basis of contractual maturity for forward starting bonds. The analysis is made for amounts for the account and risk of the Swiss Life Group.
Assets held for sale 1 – – – – – 1 –
Intangible assets including intangible insurance assets – – 3 058 3 074 – – 3 058 3 074
Investment and unit-linked contracts 288 293 10 727 10 801 31 008 31 209 42 024 42 303
With regard to mortality, morbidity and longevity risk, the most important annuities payable (annuities in payment phase) or insured (annuities in deferral phase) as well as sums insured are expected to be as follows.
Disability income and other annuities – deferred 7 488 7 438
Disability income and other annuities – deferred 18 751 17 921
In the accident and health business, as well as the credit life business in France, the underwriting strategy comprises biometric and financial data of the persons to be insured, type of contract and experience.
At end of year of loss occurrence 311 303 335 342 296 267 297 331 304 295 n/a
Cumulative payments to date –243 –233 –235 –234 –219 –204 –207 –216 –212 –117 –2 120
LIABILITIES FOR THE CURRENT AND 9 PREVIOUS YEARS 28 22 23 37 46 50 62 109 157 178 712
Reinsurance Reinsurance is used to limit the Group’s exposure to insurance risk. This does not, however, discharge the Group’s liability as a primary insurer, and, if a reinsurer fails to pay a claim, the Group remains liable for the payments to the policyholder. A loss allowance would be recognised for any estimated unrecoverable reinsurance.
Operational risk management at Swiss Life includes the methods and processes used for the identification, assessment, monitoring and steering of operational risks. Operational risk management defines operational risk as the adverse impacts from shortcomings or failures stemming from internal processes, people, systems or external events. Reliability of information and ensuring confidentiality, availability and integrity of data are integral parts of operational risk management. Swiss Life’s internal control system consists of the entirety of procedures, methods and measures prescribed by the Board of Directors and the Corporate Executive Board to ensure the orderly conduct of business. The focus is on the reliability of financial reporting, the effectiveness of business processes and compliance with laws and regulations issued to protect the Swiss Life Group’s assets.
The sensitivity analysis is based on how IFRS profit or loss and other comprehensive income would have been affected if changes in the relevant risk variables that were reasonably possible at the end of the reporting period had occurred.
At 31 December 2020, if equity prices had been higher by 10%, profit or loss would have been CHF 155 million lower (2019: CHF 347 million lower) and other comprehensive income would have been CHF 694 million higher (2019: CHF 701 million higher). If equity prices had been lower by 10%, profit or loss would have been CHF 11 million higher (2019: CHF 246 million higher) and other comprehensive income would have been CHF 653 million lower (2019: CHF 690 million lower). These impacts are gross before policyholder participation 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.
Diluted earnings per share include shares contingently issuable under equity compensation plans calculated on the basis of the expected fulfilment of predefined conditions. For further information on the equity compensation plans please refer to note 23 Employee Benefits.
Weighted average number of shares outstanding 31 823 922 32 768 031
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING FOR DILUTED EARNINGS PER SHARE 31 913 212 32 861 834
Deposits received under insurance and investment contracts 4 160 5 409
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 20 020 23 008
Swiss Life – Annual Report 2020 8 Details of Certain Items in the Consolidated Statement of Income
An impairment loss for an equity instrument classified as available for sale is recognised if there is a significant decline of 30% or more, or a prolonged decline of 12 months or longer, in the fair value of the instrument below its cost. As at 31 December 2020, the Swiss Life Group recognised an impairment loss of CHF 628 million (2019: CHF 32 million) for equity instruments available for sale.
1 Includes interest and dividend income of CHF 117 million (2019: CHF 142 million) 2 Includes dividend income of CHF 0 million (2019: CHF 1 million)
Realised gains/losses on sales of subsidiaries and other assets 3 19
Change in future life policyholder benefits and claims, gross 2 901 5 864
Net benefits and claims under insurance contracts 14 783 16 939
Change in future life policyholder benefits and claims, gross 174 –457
Net benefits and claims under investment contracts with discretionary participation 846 898
Swiss Life – Annual Report 2020 9 Derivatives and Hedge Accounting
Derivatives designated as cash flow hedges as at 31 December 2020
TOTAL DERIVATIVES DESIGNATED AS CASH FLOW HEDGES 651 10 2 832 663 – n/a n/a
Derivatives designated as cash flow hedges as at 31 December 2019
In 2020, the Group used forward starting swaps and forward starting bonds to hedge the exposure to variability in interest cash flows arising on the highly probable purchase of bonds in order to achieve an adequate yield level for reinvestments.
TOTAL DERIVATIVES DESIGNATED AS NET INVESTMENT HEDGES 133 12 4 546 322 –
Foreign currency borrowing to hedge net investments in foreign entities 196 182 1 –
TOTAL FINANCIAL ASSETS AVAILABLE FOR SALE 90 584 93 076 17 857 15 310 108 441 108 386
Debt securities previously classified as available for sale 727 968 – – 727 968
Other debt securities classified as loans 146 159 – – 146 159
BALANCE AS AT END OF PERIOD 2 4 20 17 23 22
TOTAL ALLOWANCE FOR IMPAIRMENT LOSSES 31 20 29 30 60 50
Interest income accrued on impaired loans was CHF 0.04 million as at 31 December 2020 (2019: CHF 0.1 million). The Group’s loan port folio is monitored closely through the review of information such as debt service, annual reports and assessments. This information is evaluated in light of current economic conditions and other factors, such as diversification of the property portfolio. This evaluation is part of the regular review to determine whether the allowance for potential loan losses is warranted. Management believes that the allowance for loan losses is sufficient. However, management cannot predict with assurance the impact of future economic circumstances or how the mortgage and real estate portfolios would be affected by various economic circumstances.
Gains (+)/losses (–) that would have been recognised in other comprehensive income if the assets had not been reclassified
Gains (+)/losses (–) recognised in profit or loss (including impairment) 46 2
Rental income from investment property was CHF 1242 million for the period ended 31 December 2020 (2019: CHF 1276 million). Operating expenses arising from investment property that generated rental income amounted to CHF 291 million for the period ended 31 December 2020 (2019: CHF 266 million).
Share of Share of other Share of total Ownership Carrying Dividends profit or comprehensive comprehensive interest amount received loss income income
Crédit et Services Financiers (CRESERFI), Paris 33.4% 47 – 0 – 0
Ownership Carrying Dividends profit or comprehensive comprehensive interest amount received loss income income
BALANCE AS AT END OF PERIOD 325 21 15 24 384
TOTAL PROPERTY AND EQUIPMENT AS AT END OF PERIOD 325 21 15 24 384 of which buildings in the course of construction 9
BALANCE AS AT END OF PERIOD 326 19 16 24 385
BALANCE AS AT END OF PERIOD 124 1 4 2 131
Swiss Life – Annual Report 2020 17 Intangible Assets including Intangible Insurance Assets
Foreign currency translation differences 0 0 –3 –34 –1 0 –4 –34
BALANCE AS AT END OF PERIOD 1 452 76 40 32 1 600
TOTAL OTHER INTANGIBLE ASSETS AS AT END OF PERIOD 1 452 76 40 32 1 600
As a result of the COVID-19 pandemic, input factors for the assessment of recoverable amounts have become more volatile. At 31 December 2020, Swiss Life did not identify any indication for an impairment. Headrooms on all individual positions of goodwill were assessed as sufficient to absorb the aforementioned additional volatility.
Net carrying amount of goodwill 287 287 149 149 94 94 131 132 131 136
As at 31 December 2020, customer relationships comprise customer relationships relating to Swiss Life Select: CHF 1 million (31.12.2019: CHF 2 million), which were allocated to the “Switzer land” segment. The “France” segment comprises customer relationships of CHF 5 million (31.12.2019: CHF 8 million) and the “Asset Managers” segment comprises customer relationships of CHF 63 million (31.12.2019: CHF 87 million). An impairment loss of CHF 12 million was recognised related to customer relationships in the “Asset Managers” segment in the first half of 2020. The “International” segment comprises customer relationships of CHF 7 million (31.12.2019: CHF 8 million). Customer relationships were included in the impairment test of the respective cash-generating unit.
Swiss Life – Annual Report 2020 18 Other Assets and Liabilities
Investment contracts with discretionary participation features (DPF) 15 717 15 395 119 114 15 598 15 281
Investment contracts without DPF at amortised cost 30 0 1 – – 0 1
Liabilities released for payments on death, surrender and other terminations –2 159 –2 986
Effect of changes in actuarial assumptions and other movements –47 1 415
Swiss Life AG CHF 175 CHF 175 2.625% 2018 2028 174 174
Swiss Life AG CHF 450 CHF 450 3.750% 2016 2021 449 449
Swiss Life AG EUR 750 EUR 750 4.375% 2015 2025 805 806
Swiss Life AG CHF 471 CHF 471 +4.200% 2012 2022 470 469
On 6 December 2019, Swiss Life Holding issued three tranches of senior green bonds totalling CHF 600 million: one CHF 200 million tranche with a tenor of 2 years and floating rate coupon (floored at 0.00% capped at 0.05%), one CHF 250 million tranche with a tenor of 5.5 years and 0% coupon, and one CHF 150 million tranche with a tenor of 9.25 years and coupon of 0.35% p.a.
On 13 March 2019, Swiss Life Holding issued a CHF 250 million senior bond with a tenor of 4.6 years and coupon of 0.25% p.a.
On 21 June 2013, Swiss Life Holding issued two tranches of senior bonds totalling CHF 425 million: one CHF 225 million tranche with a tenor of 6 years and coupon of 1.125% p.a. and one CHF 200 million tranche with a tenor of 10 years and coupon of 1.875% p.a. On 21 June 2019, the CHF 225 million tranche matured and was redeemed.
Swiss Life Holding AG CHF 200 1.875% 2013 2023 200 199
Swiss Life Holding AG CHF 250 0.250% 2019 2023 250 250
Swiss Life Holding AG CHF 250 0.000% 2019 2025 249 249
Claims under life insurance contracts represent the liability for unpaid portions of claims incurred. The liability includes an estimate for claims incurred but not reported (IBNR). The measurement at reporting date is a best estimate of ultimate future claim payments.
Effect of changes in actuarial assumptions and other movements 613 856
For some plans, the level of the pension benefits is determined by the years of service and the last salary before retirement according to the benefit formula as defined in the pension plan. Other benefits comprise widows’/widowers’ pensions in case of death as well as disability pensions (if disabled before retirement age). The levels of these benefits are determined similar to the old-age pensions assuming service up to normal retirement age. Widows’/widowers’ pensions are 60% of the old age/disability pension benefits.
Switzerland The responsibility for maintaining a sufficient funding status lies with the foundations. In the case of underfunding (as assessed according to BVG rules, not IFRS) the foundations are required to take appropriate measures to restore a sufficient funding status. Potential measures that could be taken are adjustments to the pension accounts’ interest rate, benefit levels and regular employer/employee contributions. Furthermore, the foundations could require additional contributions from the employer and the employees. Because the funding status of the foundations in Switzerland is sufficient, it is not expected that any such additional contributions will be required in the near future.
The investment risk inherent in achieving an adequate return on the plan assets covering the pension accounts of active employees is borne by the foundations. In addition, the investment risk and actuarial risk relating to old-age pensions lie with the foundations. However, for the major plan, all pensions which were already in payout before 1 January 2011 are fully covered under a group insurance contract issued by Swiss Life Ltd. Furthermore, all insurance risk relating to death/survivors’/disability benefits is fully covered by several group contracts issued by Swiss Life Ltd.
Actuarial gains and losses on the defined benefit obligation –87 –371
For 2020, 2019, 2018, 2017 and 2016 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.
After expiry of the three-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.
TOTAL DEFERRED INCOME TAX ASSETS/LIABILITIES 79 72 2 636 2 432
NET DEFERRED INCOME TAX ASSETS/LIABILITIES –2 360 –34 –144 –20 1 –2 557
Provisions for restructuring were set up in 2020 in Germany (2019: Germany). The outflow of the amounts is expected within the following one to two years.
NET BALANCE AS AT END OF PERIOD –1 178 5 118 383 6 4 328 64 –397 –333 3 995
Net investment hedges – gross 322 – – – 322 – – – 322
Reclassification to profit or loss – gross –1 –181 –404 9 –578 – – – –578
Remea- Gains/ Debt sure- losses securities Revalu- ments Foreign financial Gains/ reclassified ation net currency assets losses to loans surplus defined translation available cash flow and investment benefit differences for sale hedges receivables Total property liability Total
Net other comprehensive income before non-controlling interests –140 1 782 103 7 1 754 –1 –96 –97 1 655
In 2020, a dividend payment of CHF 477 million (CHF 15.00 per registered share) was made (2019: CHF 464 million or CHF 14.00 per registered share).
Swiss Life’s objectives when managing capital are as follows: to comply with the legal and regulatory requirements, to manage economic capital, to fulfil the company’s rating capital target and to optimise capital efficiency. The company also actively manages the composition and quality of the capital to continuously optimise its capital structure and interest coverage ratio.
Capital planning is an integral part of the Group’s yearly mid-term plan. Intercompany and external capital flows are planned based on the Group’s objectives and according to the frameworks set out above. In this context, the Swiss Life Group also plans to fund transactions in accordance with its reference capital structure and its debt maturity profile.
Also in October 2019, Ferguson Oliver Limited in Angus, United Kingdom, an independent financial advisor, was acquired.
For the years ended 31 December 2020 and 2019, no impairment allowance has been made for doubtful debts in respect of the amounts owed by related parties. This assessment is undertaken each financial year by examining the financial position of the related party and the market in which the related party operates.
The short-term employee benefits also include compensation of CHF 200 000 to Thomas Buess for an extraordinary operational consulting and work activity as head of project management of the Swiss Life Corona Task Force for approximately seven months in 2020 due to the coronavirus situation in support of the group management, which he performed outside of his board of directors mandate.
Associates at fair value through profit or loss – – – – 67 164 67 164
To measure the fair value of hedge funds for which no quoted market price is available, valuation techniques are used that take into account the market value of the underlying assets, transaction prices and other information.
Market rental value p.a. (price/m²/year) CHF 267 – 307 CHF 257 – 305 EUR 95 – 400 EUR 87 – 471
Significant increases or decreases in estimated rental value and rent growth per annum would result in a higher or lower fair value of investment property. Significant decreases or increases in the discount rate would result in a higher or lower fair value. The following sensitivity information show how the fair value of investment property would have been affected if changes in certain parameters that are used in the discounted cash flow model for the determination of fair value had occurred. At 31 December 2020, if rental income that can be earned in the long term had decreased by 5%, the fair value of investment property would have been CHF 2544 million lower (2019: CHF 2260 million). At 31 December 2020, if discount rates had been 10 basis points higher, the fair value of investment property would have been CHF 1255 million lower (2019: CHF 1139 million).
Debt instruments managed on a fair value basis 1 28 674 622
Assets measured at fair value based on level 3 for the year 2020
Transfers out of level 3 – – –61 – – –66 – –127
Foreign currency translation differences – – –1 4 –1 –86 –28 –110
BALANCE AS AT END OF PERIOD – – 156 5 677 1 238 3 862 38 120 49 053
for assets held at the end of the period – – 0 –7 –21 –84 844 731
BALANCE AS AT END OF PERIOD – – 238 4 570 1 032 4 275 34 866 44 981
for assets held at the end of the period – – 0 145 –21 –128 748 743
Total gains/losses recognised in profit or loss – – 0 1 46 504 46 505
for liabilities held at the end of the period – – 0 1 39 73 40 74
Total gains/losses recognised in profit or loss – – –46 –505 – –
Receivables, investment contracts and other financial liabilities The carrying amounts of receivables and other financial liabilities represent a reasonable estimate of fair value as the effect of discounting is immaterial and changes in credit risk are not significant. Such instruments include insurance receivables and payables, demand and short-term deposits and repurchase agreements. The carrying amount of investment contracts without discretionary participation approximates the fair value at reporting date. The disclosure of the fair value hierarchy is not applicable for these instruments.
Borrowings Level 1: This category consists of senior bonds and hybrid debt listed on the stock exchange.
Swiss Life – Annual Report 2020 31 Offsetting Financial Assets and Liabilities
Gross amounts of recognised financial assets set off – – – – 0 0 0 0
Contractual obligations to purchase or construct investment property 857 1 070
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 2020, committed principal amounts totalled EUR 1 million and CHF 489 million (2019: EUR 1 million and CHF 651 million). The range of committed interest rates is 0.75% to 2.26% for commitments in Swiss francs and 1.54% to 5.09% for commitments in euro.
Contractual obligations for repairs and maintenance of investment property amounted to CHF 163 million as at 31 December 2020, which are included in this line item (2019: CHF 357 million ).
It was announced in the media release of 14 September 2017 that Swiss Life was engaged in discussions with the US Department of Justice (DOJ) concerning its prior cross-border business with US clients. Swiss Life is now in advanced discussions with the DOJ about the resolution of their inquiry. As a result, Swiss Life has taken a provision of CHF 70 million charged against the 2020 results to address the financial component of the expected resolution, see note 25 to the consolidated financial statements. The discussions with the DOJ are not concluded and, as a result, the final number could be somewhat higher. Although the precise timing cannot be predicted, the current expectation of Swiss Life is that this matter will be resolved in the near term.
Securities lent in exchange for securities received 2 744 3 448 2 744 3 448 1 of which can be sold or repledged by transferee 4 064 2 438 4 064 2 438
Securities received as collateral in exchange for securities lent 2 744 3 448
Other securities received 74 21 34 Events after the Reporting Period
Fontavis AG, Baar AM from 23.10.2019 100.0% 100.0% Services CHF 210 000
Swiss Life REF (CH) European Properties, Zürich CH 46.7% 46.7% Investment funds EUR 466 666 600
Swiss Life (Liechtenstein) AG, Ruggell IN 100.0% 100.0% Life insurance CHF 5 000 000
Swiss Life International Services AG, Ruggell IN 100.0% 100.0% Services CHF 100 000 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
Financière du Capitole, Balma (formerly Toulouse) FR until 30.12.2020 – –
PARIS PRIME OFFICE 1, Paris CH from 04.04.2019 41.6% 100.0% Real estate EUR 76 096 000
SWISS LIFE ASSET MANAGERS France, Marseille AM 100.0% 100.0% Asset management EUR 671 167
SwissLife Prestigimmo, Levallois-Perret FR 100.0% 100.0% Real estate EUR 583 377 121
BCP GP GmbH, Berlin AM 100.0% 100.0% Asset management & Real estate EUR 25 000
BCP Steinerne Furt GmbH & Co. KG, Berlin AM from 01.10.2019 100.0% 100.0% Asset management & Real estate EUR 100 000
BVIFG I General Partner GmbH, Berlin AM 100.0% 100.0% Asset management & Real estate EUR 25 000
BVIFG I Management GmbH, Berlin AM 100.0% 100.0% Asset management & Real estate EUR 25 000
Köln AM 100.0% 100.0% Asset management & Real estate EUR 25 000
SLP Swiss Life Partner Vertriebs GmbH, Hamburg DE from 30.06.2019 51.0% 100.0% Services EUR 76 694
Swiss Life Asset Management GmbH, Garching b. München AM 100.0% 100.0% Services EUR 1 000 000
Luxembourg), Garching b. München AM from 02.01.2020 100.0% 100.0% Investment funds
GmbH, Garching b. München DE 100.0% 100.0% Services EUR 50 000
Frankfurt am Main (formerly Heusenstamm) AM 100.0% 100.0% Asset management & Real estate EUR 125 000
Swiss Life Pensionskasse AG, Garching b. München DE 100.0% 100.0% Life insurance EUR 3 000 000
Swiss Life Service GmbH, Leipzig DE 100.0% 100.0% Services EUR 50 000
Swiss Life Vermittlungs GmbH, Garching b. München DE 100.0% 100.0% Services EUR 50 000 tecis Finanzdienstleistungen Aktiengesellschaft, Hamburg DE 100.0% 100.0% Services EUR 500 000
CORPUS SIREO Real Estate S.à r.l., Luxembourg AM until 21.03.2019 – –
SL Institutional Fund SICAV-SIF, S.A., Luxembourg CH 100.0% 100.0% Investment funds USD 40 000
SLIC Infra EV S.A. SICAF-SIF, Luxembourg CH from 16.10.2019 100.0% 100.0% Investment funds CHF 50 469 500
SLIC Infra KV S.A. SICAF-SIF, Luxembourg CH from 16.10.2019 100.0% 100.0% Investment funds CHF 100 050 500
Swiss Life Asset Managers Luxembourg, Luxembourg AM 100.0% 100.0% Investment funds EUR 2 399 300
SwissLife Co-Invest, Luxembourg FR from 28.10.2020 100.0% 100.0% Real estate EUR 2 017 547
SwissLife LuxCo 2, Luxembourg FR from 29.10.2020 100.0% 100.0% Real estate EUR 936 504
Chase de Vere Financial Solutions Limited, Manchester IN until 25.02.2020 – –
Opinion We have audited the consolidated financial statements of Swiss Life Holding Ltd and its subsidiaries (the Group), which comprise the consolidated statement of income, consolidated statement of comprehensive income, consolidated balance sheet as at 31 December 2020, the consolidated statement of cash flows, consolidated statement of changes in equity for the year then ended and notes to the consolidated financial statements, including a summary of significant accounting policies.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the International Code of Ethics for Professional Accountants (including International Independence Standards) of the International Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We agreed with the Audit Committee that we would report to them misstatements above CHF 5 million identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
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 guaranteed mortality benefits, interest rates, discount rates,
Our audit procedures relating to actuarially determined future life policyholder benefits 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.
We assessed the biometric assumptions, such as mortality and disability for reasonableness.
rate used in the traditional life insurance policies. In assessing the interest rate used, we tested that the interest rates are supported by the anticipated economic performance of the assets backing the liability when considering any planned changes in asset strategy and reinvestment. We assessed the different components of the discount rate on a portfolio level. Our audit procedures for the discount rate included, but were not limited to: • Assessment of the estimated future expected returns for all major investment classes, such as bonds, investment property, loans, mortgages, equity, and alternative investments
• Assessment of the methodology for determining the selected discount rate, based on the above input parameters.
As elaborated in note 17 - Intangible Assets including Intangible Insurance Assets - Goodwill represents the excess of the fair value of the consideration transferred and the amount of any non-controlling interest recognised, if applicable, over the fair value of the assets and liabilities recognised at the date of acquisition.
The existing goodwill amounts to CHF 1’452 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.
The fair value is usually derived using the generally accepted discounted cash flow method. Ordinarily the valuation of each investment property is determined on an annual basis by an independent valuation expert. Consideration is given to the expected rental revenue, over the period in use, and discounted using a rate which reflects the risk assessment of the investment property, such as location and market value.
The fair value of investment property is essentially sensitive to a) the development of the investment property market for residential, commercial, and mixed-use properties in general, to b) the expected rental revenue, and c) the discount rate.
During the audit we have been supported by our real estate valuation experts. Our valuation testing included the following: • Assessment of the completeness and appropriateness of the valuation report
• Evaluation of the competence, objectivity and independence of the valuation expert
• Examination of the formal aspects, in particular the compliance with investment property valuation standards
We consider the valuation methodology, and the underlying valuation parameters used, to be reasonable. The audit evidence obtained through our audit procedures was sufficient and suitable to assess the valuation of investment property.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of EXPERTsuisse: This description forms part of our auditor ’s report.
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 ..............................................335
Swiss Life Holding generated a profit of CHF 719 million in the 2020 financial year (previous year CHF 758 million).
The annual profit mainly consisted of dividends, investment income and revenues from guaranteed benefits and commissions. Dividend payments from subsidiaries increased from CHF 670 million in the previous year to CHF 712 million, income from guaranteed benefits and commissions fell slightly from CHF 46 million to CHF 42 million and investment income declined from CHF 72 million to CHF 52 million. The decline in investment income is due to the sale of investments to finance the CHF 1 billion share buyback programme concluded in 2019.
As at the end of the year, Swiss Life Holding had assets (liquid funds, receivables from Group companies, debt securities, equities and investment funds) of CHF 1072 million (previous year: CHF 1057 million). Cash on hand declined to CHF 28 million (previous year: CHF 51 million) and receivables from Group companies rose to CHF 165 million (previous year: CHF 68 million). Debt securities, investment funds and equities amounted to CHF 879 million at year-end (previous year: CHF 938 million).
Swiss Life Holding’s total distribution to shareholders in the period under review came to CHF 636 million, or CHF 20.00 per share, of which CHF 477 million (CHF 15.00 per share) took the form of an ordinary dividend and CHF 159 million (CHF 5.00 per share) a reduction in par value. As a result of this reduction, the par value of the share decreased to CHF 0.10 and the nominal share capital of Swiss Life Holding to CHF 3 million (previous year: CHF 171 million).
The long-term debt capital remained unchanged at CHF 1049 million. In the year under review, interest on long-term bonds totalled CHF 5 million (previous year CHF 6 million). With shortterm repo transactions, Swiss Life Holding generated interest income of CHF 1 million (previous year: CHF 2 million).
Staff costs and operating expenses remained unchanged from the previous year at CHF 16 million. Tax expenses fell to CHF 7 million (previous year: CHF 32 million).
Swiss Life Finance I, Ruggell LI CHF 100 100.00% – – –
Loans to Group companies CHF 713 million of the loans to Group companies is classified as subordinated.
Share capital As at 31 December 2020, the share capital of Swiss Life Holding (SLH) consisted of 32 014 391 fully-paid shares. As at 31 December 2019, Swiss Life Holding had 33 594 606 registered shares outstanding with a par value of CHF 5.10 per share. In accordance with a public deed, the par value was reduced to CHF 0.10 per share on 15 July 2020. Conditional share capital was CHF 385 794.80 as at 31 December 2020 (previous year: CHF 19 675 534.80). 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.
Statutory capital reserve The statutory capital reserve consists of the capital contribution reserve. As at 31 December 2020, the capital contribution reserve was unchanged at CHF 181 million. Of this amount, CHF 4 million is recognised by the Federal Tax Administration, while the qualification of CHF 177 million for tax purposes is still pending and is to be reassessed according to future legal developments.
Free reserves This item comprises accumulated retained earnings which have not been distributed to the shareholders. In the year under review, CHF 254 million was allocated to the free reserve. In addition, the free reserve was reduced by CHF 740 million due to the cancellation of 1 580 215 shares, which took place on 15 July 2020.
On 13 March 2019, Swiss Life Holding placed a senior bond amounting to CHF 250 million. The bond has a tenor of 4.6 years and a coupon of 0.25% p.a.
As part of the second share buyback programme, Swiss Life Holding purchased a total of 79 324 treasury shares at an average price of CHF 363.13. Over the same period, 1 580 215 shares were cancelled in the first share cancellation programme. The Swiss Life Group therefore held total 219 132 treasury shares as at 31 December 2020.
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 4133 million at the balance sheet date. The guarantees are classified as subordinated at Swiss Life Holding.
Financial assets pledged as collateral Debt securities of CHF 45 million were pledged on the balance sheet date as part of a repurchase agreement (repo transactions). In this connection, additional debt securities totalling CHF 46 million were reserved for the liquidity-shortage financing facility (SNB EFF).
Reduction in par value (incl. cancellation of treasury shares) –168 –3
Compensation in 2020 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 2020 financial year is provided on pages 56 to 75.
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.
The proposal of the Board of Directors to the General Meeting of Shareholders on 28 April 2021 is based on shares entitled to a dividend as at 31 December 2020. Thus, the effective dividend payment and the resulting balance carried forward from the previous year are calculated on the basis of the share capital issued on the last trading day prior to the dividend payment, less the own capital shares held at that time. The last trading day with entitlement to receive the distribution is 26 April 2021.
TOTAL PROFIT SHOWN IN THE BALANCE SHEET 746 118 269 758 292 876
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
Opinion We have audited the financial statements of Swiss Life Holding Ltd, which comprise the statement of income, balance sheet as at 31 December 2020, and notes for the year then ended, including accounting rules.
In our opinion, the financial statements (pages 329-337) as at 31 December 2020 comply with Swiss law and the company ’s articles of incorporation.
Participations represent a significant amount of the balance sheet (CHF 3’221 million, 55% of total assets).
Annually, management analyses participations to assess valuation adjustments. For the analysis significant judgement is applied, to determine assumptions, such as new business volume, commission income, cost development applied discount rates on projected cash flows. We consider our audit procedures in this area as particularly important, due to the size of the balance sheet position and level of significant assumptions.
Our audit work in the area of participations focused on the audit of management’s analysis of valuation adjustments of participations as well as an assessment of assumptions used by management to determine the value in use.
In case that the IFRS equity value is below the book value of the participation, management performs an extensive valuation analysis and the value in use is compared to the book value of the participation. For the calculation of the value in use, an extensive valuation analysis using cash flow projections, based on mid-term planning approved by management and the board of directors, is performed.
As the actual cash flows naturally vary from planned projections, management have created detailed sensitivity analyses. The sensitivity analyses provide insights as to the valuation of the participation, when key assumptions, individually or as a whole, on which planned projections are based, are not met.
The Swiss Life share closed out 2020 at CHF 412.40. That corresponds to a decrease of 15%, or 10% taking into account the dividend distribution plus repayment of par value totalling CHF 20.00.
The Covid-19 pandemic triggered major uncertainty on the stock exchanges. This led to significant upheavals on the global equity and bond markets, particularly in the first quarter of 2020. By bundling monetary and fiscal policy measures, governments and central banks were able to calm the markets for the most part in the following quarters. Thanks to the rapid successes in the development and approval of vaccines, the first vaccinations had been administered by the end of the year. This led to a strong market recovery, although the macroeconomic situation deteriorated again in the fourth quarter due to renewed lockdown measures.
In this challenging environment, the Swiss Market Index (SMI) posted a performance of +1%. The Swiss Life share closed the year 15% down, thereby exhibiting a similar trend to the European insurance industry index Dow Jones STOXX 600 Insurance (–14%). Insurance stocks thus underperformed compared to the SMI.
Performance of Swiss Market Index (SMI) (in %) +1 +26 –10 +14 –7
Dow Jones STOXX 600 Insurance Index (in EUR) 31.12. 279.14 322.75 259.40 288.35 269.66
Market capitalisation (in CHF million) 30.12. 13 203 16 320 12 957 11 807 9 246
Equity holders of Swiss Life Holding 1 046 1 199 1 076 1 007 922
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, 2021