1 equity excl. unrealised gains/losses on financial instruments 2 incl. share buy-back
The Swiss Life Group’s 2019 financial year at a glance: Business development — Business at Swiss Life continued to develop well in 2019: adjusted profit from operations rose by 10% over the previous year to CHF 1.69 billion, driven mainly by the improved fee result. Net profit came to CHF 1.20 billion, an increase of 12% over the previous year. Swiss Life was able to increase its fee income by 16% to CHF 1.82 billion in local currency. Gains were recorded in fee income from third-party business, with independent financial advisors as well as from own and third-party products and services. Premiums totalled CHF 23.0 billion; insurance reserves to the benefit of the company’s policyholders rose by 7% in local currency. In its insurance business Swiss Life generated direct investment income of CHF 4.4 billion, which corresponds to a direct investment yield of 2.8%. The net investment yield was 2.9%. As of 31 December 2019, Swiss Life Asset Managers had a total of CHF 254.4 billion assets under management. Of this, third-party business accounted for CHF 83.0 billion.
Employees — At the end of 2019 the Swiss Life Group employed approximately 9300 people worldwide and had a network of some 14 000 advisors.
Today, we are not just a company with proven but also far-reaching expertise in pension and financial advice. Around 14 000 advisors work to support our customers in leading a self-determined life. In 2006, we had just under 1400, so we have increased our weight in the advisory market tenfold.
There is also a second development that has strengthened our Group: we have increasingly made our successful work in managing policyholder assets available to external clients. In 2019, we thus achieved further successive growth in third-party assets under management, which are now CHF 83 billion.
Overall, we are able to report a net profit of CHF 1.2 billion for 2019 – an increase of 12% over the previous year. This includes a positive one-off of CHF 49 million related to the implementation of the Swiss tax reform in a number of cantons. The pleasing performance in 2019 enables the Board of Directors to propose a dividend of CHF 20.00 per share (previous year: CHF 16.50) at the Annual General Meeting, of which CHF 5.00 per share will be paid in the form of a reduction in par value. Furthermore, Swiss Life will implement a new share buyback programme of CHF 400 million, from March 2020 to May 2021.
The Swiss Life product strategy is explained in the section on “Products, Services and Advice” from page 95. 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). The company completed “Swiss Life 2018” when it presented the 2018 annual results and achieved all its goals – even exceeding most of them:
Swiss Life regularly reports in detail on the current status of its strategic implementation, including during its annual and half-year reporting. The documents are always available at www.swisslife.com under “Investors and Shareholders”.
At the end of November 2018 Swiss Life presented its latest Group-wide programme, “Swiss Life 2021”. It is based on our purpose and four strategic directions: the focus on preferred segments, the promotion of attractive offers, the steady improvement of customer relations and the continuing increase of productivity.
Operational efficiency – Improvement of the efficiency ratio in the life business to below 40 basis points by the end of 2021 – In its owned IFAs, a distribution operating expense ratio below 25 percent by the end of 2021 – Cost/income ratio in third-party asset management of around 75 percent by the end of 2021
The sub-brands are assigned to various levels in a clear brand hierarchy. The strategic management of the entire brand portfolio is an element of corporate communication. The brand hierarchy is under permanent review and adjustments are made regularly as needed.
With its brand personality 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.”
In the home market of Switzerland, Swiss Life focuses on sports and cultural sponsorship in addition to classical advertising. For example, the company has sponsored the Swiss national football teams for over ten years. Swiss Life has been the main sponsor of the ZSC Lions ice hockey team for over four years and, since 2019, name sponsor of the Swiss Life Arena ice hockey stadium undergoing construction in Zurich. In the cultural arena, film is the cornerstone of its engagement: Swiss Life is the main sponsor of the Solothurn Film Festival for example.
In 2018, Swiss Life launched its first cross-divisional brand campaign in Switzerland. At the heart of the campaign is a connection between the Swiss Life logo and the private and corporate clients of Swiss Life Switzerland, the institutional clients of Swiss Life Asset Managers and the Group’s stakeholders. The campaign continued in 2019 with over 30 new subjects and was also adapted for Swiss Life France and Asset Managers in France.
Segment Reporting Swiss Life continued its positive performance: adjusted profit from operations increased by 10% in 2019, compared with the previous year, to CHF 1.69 billion and net profit was up 12%, to CHF 1.20 billion.
In the Swiss domestic market, Swiss Life achieved a segment result of CHF 892 million, a rise of 3% over the previous year. France reported a segment result of CHF 275 million. The 1% decrease is attributable to the currency effects. Swiss Life in Germany contributed CHF 186 million to the result. The 30% rise is partly attributable to an exceptionally high savings result. Swiss Life International increased its segment result by 20% to CHF 81 million and Swiss Life Asset Managers achieved a segment result of CHF 309 million, which was 14% higher than the previous year.
As of 31 December 2019, Swiss Life Asset Managers had a total of CHF 254.4 billion under management. Third-party assets under management at year-end were CHF 83.0 billion – a 17% increase over the previous year.
In the home market of Switzerland, Swiss Life increased its segment result in 2019 by 3% to CHF 892 million (previous year: CHF 865 million). The growth was driven by the cost result, the risk result and the fee result.
In the year under review, Swiss Life Switzerland increased premium volume to a total CHF 13.5 billion (+41%), due especially to a competitor’s withdrawal from the full insurance business. Of the total premium volume, 88% came from group life business.
Insurance benefits, including changes in insurance reserves, rose by 35% to CHF 14.2 billion in 2019, due mainly to the exceptionally large rise in premiums and the concomitant greater reserving requirements. Operating expenses rose by 9% during the year under review to CHF 1.2 billion. This rise is attributable to higher acquisition costs due to the steep rise in premiums. Operational administrative costs were once again slightly lower than the previous year.
The group life business focused on operational processing of the new clients won in the previous year. At the same time, another investment strategy, with a 75% equity share, was added to the offer in the individual investment field (1e solution) and successfully launched. The market remained noticeably dynamic, as falling conversion rates prompted many clients to review their existing occupational pension plans in line with their needs.
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 13 453 9 525 41%
Swiss Life Germany is a leading provider of insurance and pension solutions in the sectors of life insurance, occupational pension provision and employee insurance. Swiss Life Germany offers allround financial and pensions advice, independent of product provider, under the Swiss Life Select, Tecis, Horbach, Proventus and Swiss Compare brands. The segment reporting comprises local insurance activities and the financial consultancies operating in Germany.
During the reporting year, in a still challenging market environment characterised by continuing low interest rates, Swiss Life Germany achieved a segment result of CHF 186 million (previous year: CHF 143 million). The rise reflects a higher fee result and an exceptionally high savings result. Slightly improved risk and cost results supported this positive development.
Fee income increased in 2019 to CHF 498 million, equivalent to an increase of 14% 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 2019 the proprietary financial advisory companies in Germany had 4173 trained and registered financial advisors under contract (+10% over the previous year).
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 a comprehensive international product range and higher assets under control of CHF 21.2 billion (previous year: CHF 19.6 billion), fee income again increased in the year under review.
In 2020 Swiss Life Global Solutions will continue to focus on innovative approaches and digital channels to win more new business. In financial consulting the company anticipates an increase in the number of advisors and an increase in revenue per advisor. Systematic digitalisation will ensure that people can be offered suitable high-quality financial services and advice going forward. Through its digitalisation, Swiss Life International is targeting further growth in fee and risk business.
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 2 304 2 459 –6%
The Asset Managers segment comprises Swiss Life’s Group-wide asset management and real estate services activities.
In 2019, Swiss Life Asset Managers posted a segment result of CHF 309 million (previous year: CHF 272 million), corresponding to a 14% increase. Fee income in the year under review increased by 20% to CHF 833 million overall, of which half is attributable to organic growth. Consolidation effects and the acquisition of Beos contributed also to that. Meanwhile operating costs rose by 20%, of which just under 80% was due to the newly included companies.
Third-party business grew vigorously: Swiss Life Asset Managers had third-party assets of CHF 83.0 billion under management at the end of 2019, an increase of 17% compared with the previous year. This growth is primarily due to net new assets of CHF 8.9 billion. Demand was strong for all investment classes, especially real-estate products.
Assets under management for third-party clients – breakdown by asset class As at 31.12.2019
The operational management structure as at 31 December 2019 is shown on page 47.
The disclosures of shareholdings that exceed the disclosure threshold on the balance sheet date of 31 December 2019 are shown below. In accordance with the disclosure requirements, the percentage figures given relate to the share capital and number of outstanding shares pursuant to the Articles of Association applicable at the time of the relevant disclosure.
All complete notifications can be seen on the website of the SIX Swiss Exchange’s disclosure office at www.six-exchange-regulation.com, “Publications” area, “Major Shareholders” subsection (
Additional information on the share buyback programme of Swiss Life Holding Ltd completed on 5 December 2019 can be accessed on the internet at www.swisslife.com “Investors & Shareholders ” area, “Swiss Life share” section (www.swisslife.com/share).
On the balance sheet date, some 157 000 shareholders and nominees were listed in the Swiss Life Holding share register, of which about 4200 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.
A table showing the shareholder structure is provided in the section “Share Performance and Historical Comparison” on page 328.
If the conditional share capital were utilised to the maximum extent possible, the share capital would increase by around 11% (19 675 534.80 divided by 171 332 490.60 or 3 857 948 divided by 33 594 606).
Shares 33 594 606 fully paid Swiss Life Holding registered shares with a par value of CHF 5.10 each were outstanding on the balance sheet date. Subject to the ten per cent limit on voting rights set out in the Articles of Association (cf. the section on “Shareholders’ participation rights” on page 71), each share grants the right to one vote at the General Meeting of Shareholders.
There are no other equity securities apart from the registered shares mentioned above, nor do any participation certificates or dividend right certificates exist.
Regulations are in place to govern transactions in Swiss Life Holding shares carried out by Swiss Life Group employees. Pursuant to the Code of Conduct and the Swiss Life Group’s Directive on Insider Information, all purchases and sales of Swiss Life Holding securities made by members of senior management or employees who are privy to confidential information are subject to a reporting requirement. Transactions by persons who, by virtue of their position, have regular access to insider information are also subject to a prior approval requirement. A general blackout period is imposed annually from 1 January until 24 hours after the year-end results have been presented and from 1 July until 24 hours after the half-year results have been presented, as well as from 20 days before until 24 hours after publication of the interim statements for the first and third quarters.
Swiss Life Holding shares are not subject to any limitations on transferability. According to the Articles of Association, resolutions for the introduction, amendment or repeal of limitations on transferability must be put before the General Meeting of Shareholders and must be approved by two thirds of the voting shares represented and by an absolute majority of the share par value represented.
Swiss and foreign banks, securities brokers and companies acting on their behalf may be entered in the share register as nominees if they are holding shares of Swiss Life Holding in their custody for the account of the beneficial owners. Professional asset managers may also be registered as nominees if, in a fiduciary capacity, they have deposited Swiss Life Holding shares for the account of third parties with Swiss or foreign banks or securities brokers in their own name. Nominees are required to be subject to banking or financial market supervision. A request must be filed to register as a nominee. The voting right representation is restricted to 10% of the share capital overall, whereby nominees who are connected with regard to capital or voting rights under uniform management or contractual agreement will be counted as a single shareholder. The Board of Directors may approve exceptions to these restrictions on registration, observing the principle of responsible judgement. No such exemptions were granted during the period under review.
As at 31 December 2019 Swiss Life Holding and its Group companies had not granted any options on rights to participate in Swiss Life Holding.
On the balance sheet date of 31 December 2019, 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 General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Frank Schnewlin will be put forward for re-election as Member of the Board of Directors and as Member of the Compensation Committee at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
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 Financial Services Group as Chief Financial Officer and
Thomas Buess will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Ueli Dietiker — Born 1953, Swiss national Member of the Board of Directors bild Certified accountant Ueli Dietiker started his career at Ernst & Young. He later assumed management responsibility in the finance division at Motor-Columbus Ltd. From 1995 to 2001 he worked at Cablecom Holdings Ltd, ultimately as CEO. In 2001 he switched to the Swiss telecommunications company Swisscom AG where he held several positions of responsibility. From 2002 until 2006 he was CFO and deputy CEO of the Swisscom Group. In 2006 and the first half of 2007 he was CEO of Swisscom Fixnet AG and afterwards became CFO and deputy CEO of the Swisscom Group again until the end of 2012. From 2013 until the end of February 2018 he had a 50% position at Swisscom, managed selected projects and served on the Board of Directors of various Swisscom subsidiaries and investment companies.
Ueli Dietiker will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Audit Committee – Renaissance KMU Schweizerische Anlagestiftung, Member of the Board of Trustees – Emaform AG, Member of the Board of Directors – Mobilejobs AG, Chairman of the Board of Directors – Bomatec Holding AG, Member of the Board of Directors – F&P Robotics AG, Member of the Board of Directors – CT Cinetrade Ltd, as well as Teleclub Ltd and Kitag AG, Member of the Board of Directors
Damir Filipovic will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Stefan Loacker will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Henry Peter will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Martin Schmid — Born 1969, Swiss national Member of the Board of Directors bild Martin Schmid completed his law degree at University of St. Gallen in 1995 and was admitted to the bar of Canton Graubünden in 1997. Following an assistantship in St. Gallen and a stint as an independent lawyer plus a spell at PricewaterhouseCoopers, he attained a doctorate from the University of St. Gallen in 2005. Martin Schmid was a member of the Cantonal Parliament of Canton Graubünden from 1994 to 2002. He was elected to the government of Canton Graubünden in 2002, where he initially managed the Department for Justice, Security and Health (2003–2007), and then the Department for Finance and Municipalities (2007–2011). He was elected to the Council of States in 2011 and gave up his mandate as a cantonal councillor. In addition to his role as a member of the Council of States, Martin Schmid has worked as a lawyer at the law firm KUNZ SCHMID Rechtsanwälte und Notare AG in Chur since 2012.
Martin Schmid will be put forward for re-election as Member of the Board of Directors at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
Other appointments: – BIOMED AG, Member of the Board of Directors – economiesuisse, Member of the Executive Board – Swissmem, Member of the Executive Board – Commercial Court St. Gallen, part-time commercial judge
Klaus Tschütscher — Born 1967, Liechtenstein national Member of the Board of Directors bild Klaus Tschütscher studied law at the University of St. Gallen and obtained a doctorate (Dr. iur.) in 1996. In 2004 he also completed a postgraduate LL.M. degree in International Business Law at the University of Zurich, specialising in banking, capital market and insurance law. He started his career in 1993 as a research assistant at the University of St. Gallen. Two years later he became Head of
Legal Services and Deputy Director of Liechtenstein Tax Administration. In this function he was notably a Member of the Liechtenstein OECD delegation and Governor of the European Bank for Reconstruction and Development (EBRD) in London for four years. Klaus Tschütscher went on to start his political career as a Member of government of the Principality of Liechtenstein. Initially he was Deputy Prime Minister from 2005 to 2009, responsible in particular for Justice and Economic Affairs. From 2009 to 2013 Klaus Tschütscher was Prime Minister and Finance Minister of Liechtenstein. He has received various awards and international distinctions. Klaus Tschütscher serves as Vice President and delegate at UNICEF Switzerland and Liechtenstein. Since his withdrawal from politics, Klaus Tschütscher has been a member of the Board of Directors of Swiss Life Holding Ltd. Since January 2014 he has been Owner and Chairman of the Board of Directors of Tschütscher Networks & Expertise AG and supports various startups.
Klaus Tschütscher will be put forward for re-election as Member of the Board of Directors and as Member of the Compensation Committee at the General Meeting of Shareholders of Swiss Life Holding on 28 April 2020.
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
Changes in the Board of Directors with effect from the 2020 General Meeting of Shareholders
No changes are planned for the forthcoming General Meeting of Shareholders on 28 April 2020; the current members of the Board of Directors will be proposed for re-election.
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 & Shareholders” area, “Shareholders and services” section, “Articles of Association” subsection (www.swisslife.com/articles).
The Board of Directors met ten times during the year under review. The meetings lasted around three hours on average. All members of the Board of Directors attended all the meetings, with the exception of one meeting, where one member was excused. The Group CEO and the other members of the Corporate Executive Board were present at all meetings. The Board of Directors conducted parts of the meetings among themselves.
The Chairman’s Committee held eight meetings during the year under review. Each session lasted for around one-and-a-half hours on average. The meetings were attended by all members. The Group CEO and Group CFO attended all the meetings.
The Compensation Committee may invite the Group CEO to some or all of its meetings in an advisory capacity. Other members of the Corporate Executive Board and in-house or external specialists may also be invited. The Compensation Committee meets at least three times a year.
At the General Meeting of Shareholders on 28 April 2020 the following will be proposed as Members of the Compensation Committee: Frank Schnewlin, Franziska Tschudi and Klaus Tschütscher. It is planned that Frank Schnewlin will again take over as Chairman of the Compensation Committee following the 2020 General Meeting.
It is planned that the Investment and Risk Committee will be constituted as follows once voting has been completed at the General Meeting of 28 April 2020: Ueli Dietiker as Chairman, Thomas Buess, Damir Filipovic, Frank W. Keuper, Stefan Loacker and Frank Schnewlin as Members.
Audit Committee The Audit Committee assists the Board of Directors in its supervision of the accounting function and financial reporting activities, as well as compliance with the legal framework. It reviews the appropriateness of the internal control structures and processes used to comply with the legal requirements. It monitors the activities of Corporate Internal Audit and the external audit services, takes due note of their reports and recommendations, and oversees any further measures that may prove necessary. The Committee is empowered to make decisions with respect to defining the terms and conditions for mandates to external auditors and keeps the Board of Directors appropriately informed. Moreover, the Audit Committee issues the regulations for Corporate Internal Audit and sets its annual programme of activities.
Generally, the Group CFO and the Head of Corporate Internal Audit attend the Audit Committee meetings or parts of the meetings in an advisory capacity. The Group CEO may attend the meetings of the Audit Committee (without voting rights). Representatives from the external audit services are also regularly invited (cf. also “Supervisory and control instruments vis-à-vis the auditors”, page 74). In addition, further members of the Corporate Executive Board or in-house specialists may also be invited to attend. The Audit Committee meets at least four times a year. The frequency of meetings depends on the financial budgeting and reporting process.
In the year under review, the Audit Committee convened six times, with a meeting lasting about two hours on average. There was full attendance at all meetings. The Chairman of the Board of Directors was present at one meeting of the Audit Committee. The Group CEO and Group CFO attended all the meetings. The Head of Corporate Internal Audit was present at all meetings and representatives of the external auditors attended some meetings.
It is planned that the Audit Committee will be constituted as follows once voting has been completed at the General Meeting of 28 April 2020: Stefan Loacker as Chairman, Adrienne Corboud Fumagalli, Henry Peter, Martin Schmid and Klaus Tschütscher as Members.
Delineation of competencies between the Board of Directors and the Corporate Executive Board
In accordance with the audit plan approved by the Audit Committee, Corporate Internal Audit prepares topic-related audit reports, which are distributed to the Chairman of the Board of Directors, the Members of the Audit Committee and the competent management staff and persons in charge of the audited area. In addition, Corporate Internal Audit prepares a written quarterly report for the attention of the Audit Committee at least four times a year. Qualitative risk management is generally discussed by the Audit Committee at least twice a year.
Management structure of the Swiss Life Group as at 31 December 2019
On 31 December 2019 the Corporate Executive Board of Swiss Life Holding was composed of the following members: Member of the Corporate Executive Name Function Board since
bild Patrick Frost studied at the ETH in Zurich and the universities of Cologne, Basel and Zurich, obtaining degrees in natural science (dipl. Natural Science (dipl. Natw. ETH), economics (Dr. rer. pol.) and law (lic. iur.)). He began his career in the mid-nineties as an analyst and subsequently as a Portfolio Manager in asset management for Winterthur Group. After two years in the US as a Corporate Bond Manager, he was appointed Head of Fixed Income at Winterthur Group in 2001.
Other appointments: – Roche Holding AG, Member of the Board of Directors (from March 2020) – American Chamber of Commerce, Member of the Financial Services Chapter Board – Zurich Chamber of Commerce, Member of the Board of Directors – Zürcher Volkswirtschaftliche Gesellschaft, (Zurich Economic Society), 1st Vice Chairman of the Board
Charles Relecom — Born 1953, Belgian and Swiss national Chief Executive Officer France (CEO France)
bild After completing his studies in business economics at the Univer sity of Cologne, Jörg Arnold joined what was then Colonia Versicherung (now the AXA Group) in 1991 as assistant to the CEO. Jörg Arnold worked in a variety of positions at the company, including head of the Distribution Management department and district manager of the Frankfurt branch office, and in 1998 was made sales director and Member of the
Executive Committee of Colonia Versicherung at its Berlin branch office. In 2001 he was appointed Head of Sales at Deutsche Ärzteversicherung AG, joining their Management Committee. In 2010 Jörg Arnold took over as CEO of Deutsche Ärzteversicherung AG. In this capacity he was responsible for sales as well as for operations, business development and human resources. In 2014 Jörg Arnold became Global Head of Savings, Retirement & Distribution at AXA Group in Paris within the Life & Savings Global Business Line, which is responsible for the Group’s worldwide life insurance business.
Other appointments: – Stiftung Technopark Zürich, Member of the Board of Trustees
Other appointments: – German-Swiss Chamber of Commerce, Member of the Board – British Swiss Chamber of Commerce, Member of the Board – International School Hannover Region (ISHR), Member of the Supervisory Board
– For the Corporate Executive Board: The short-term variable compensation component for the 2018 financial year in the amount of CHF 4 675 000 in total (bonus and deferred compensation in cash), determined by the Board of Directors at the beginning of 2019 in view of the 2018 annual results, and the maximum total amount of the fixed compensation and the long-term variable compensation (equity compensation plan) for the 2020 financial year in the amount of CHF 13 800 000 in total.
In the same way, the General Meeting on 28 April 2020 will be asked to approve the exclusively fixed compensation to be paid to the Board of Directors until the 2021 ordinary General Meeting, the short-term variable compensation component for the Corporate Executive Board for the 2019 financial year and the maximum total amount of fixed compensation (basic salary incl. ancillary benefits and occupational provisions) and of the long-term variable compensation component (equity compensation plan) for the 2021 financial year.
Additional information on compensation and benefit expenditure for the management and employees of the Swiss Life Group can be found in the Consolidated Financial Statements (notes 23 and 29 on pages 257 to 267 and 281 to 282). The information according to Art. 663c of the Swiss Code of Obligations regarding the shareholdings of members of the Board of Directors and the Corporate Executive Board is shown in the Notes to the Swiss Life Holding Financial Statements on pages 319 to 321.
The compensation policy principles are governed by 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 variable compensation components are linked to the strategic objectives of the Group and the individual divisions, and the associated financial and HR-related targets. They are based on the achievement of annual objectives defined in advance for a period of three years as part of medium-term planning and determined on the basis of the actual performance of individuals or teams in relation to the objectives set (performance-linked payment) and on the degree of achievement of the Swiss Life Group targets as reflected in its annual result (share in the company’s success). Quantitative and qualitative performance is also always assessed on the basis of the competencies required for the function held, such as professional expertise, entrepreneurship, task fulfilment, cooperation and leadership. The percentage weighting between the individual and/or team performance and the share in the company’s success depends on the position and responsibilities of the function holder.
The 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 medium-term 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).
Within the framework of the compensation arrangements for members of the Corporate Executive Board, “deferred compensation in cash” was introduced as a new compensation component linked to short-term variable compensation on 1 January 2012. On the basis of the corresponding regulations, a portion of the short-term variable cash compensation determined by the Board of Directors is not paid immediately but after a period of three years has elapsed and provided that the regulatory requirements are satisfied at that point. The allocated deferred compensation in cash represents an entitlement during the three-year deferral period. The underlying “deferred cash plan” also provides for adjustment and reclaiming mechanisms (clawback). A full or partial reduction of the deferred compensation is provided for in the following cases: negative impact of the key figures applying to the allocation of deferred compensation due to a restatement of the annual accounts or damage to Swiss Life as a result of a violation of statutory, regulatory or compliance standards by participants in the plan. If the employment relationship is terminated by a participant during the three-year deferral period for deferred compensation in cash, the entitlements expire worthless (retention component). For the 2019 financial year, the Board of Directors has determined that, as from a variable compensation amount in cash of CHF 500 000, 23% (or 33% for the Group CEO) of the total variable compensation in cash is to be allocated as deferred compensation.
The 2019 and 2020 equity compensation plans are based on the new Group-wide programme “Swiss Life 2021”, which was announced at the Swiss Life Group’s Investor Day on 29 November 2018 (see www.swisslife.com/investorsday2018). For the purpose of supporting the achievement of the respective corporate goals, the performance criteria have been determined by the Board of Directors as follows: IFRS profit (50% weighting), the risk and fee result (25% weighting ), Cash to Swiss Life Holding (25% weighting).
In accordance with the Group-wide programme “Swiss Life 2021” (financial years 2019–2021) the following target values were communicated in relation to these performance criteria: IFRS profit/equity ratio of 8–10%, risk result of CHF 400–450 million in 2021, fee result of CHF 600– 650 million in 2021 and Cash to Swiss Life Holding of CHF 2.00–2.25 billion cumulatively in 2019–2021. On this basis the Board of Directors determined the specific performance targets applicable to the 2019 and 2020 equity compensation programmes pursuant to the 2019–2021 MTP (2019 equity compensation programme) and the 2020–2022 MTP (2020 equity compensation programme). These MTP target values cannot be disclosed for reasons of business secrecy. The respective specific target values have been set on a basis consistent with the “Swiss Life 2021” Group-wide programme, taking account of the current business development, with comparatively at least equally high requirements for target achievement.
For the period from the 2019 ordinary General Meeting to the 2020 ordinary General Meeting, the General Meeting of Shareholders of 30 April 2019 approved a maximum amount of fixed compensation for the Board of Directors totalling CHF 3 200 000. In 2019, 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 2019 financial year is shown on an individual basis in the 2019 compensation table below. For comparison purposes, the compensation for the 2018 financial year is shown again after the 2019 compensation table.
At the General Meeting of 28 April 2020, 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 2020 ordinary General Meeting until the 2021 ordinary General Meeting.
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. 4 All contributions are gross contributions, i.e. they include employee contributions to AHV/IV/ALV. Employer contributions to AHV/IV/ALV/FAK amounted to a total of
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 what remains a very challenging economic environment, Swiss Life was again, as in the previous year, able to significantly exceed its medium-term planning targets based on the “Swiss Life 2021” Group-wide programme in the year under review: Net profit rose by 12% from CHF 1080 million to CHF 1205 million. Likewise, insurance reserves were again substantially strengthened to the benefit of the company’s policyholders. The cash remittance to Swiss Life Holding increased by 8% to CHF 752 million. The value of new business in the year under review also posted a marked increase of 45% from CHF 386 million to CHF 561 million in the context of the extraordinarily high demand for full insurance solutions in Switzerland; the new business margin was 1.9%. The solvency target was clearly exceeded from a qualitative and quantitative perspective; Swiss Life estimates its SST ratio at slightly above 200% as of 1 January 2020, based on the regulatory solvency standard model. The fee result grew 15% over the previous year to CHF 553 million. The risk result of CHF 417 million was also above target. The cost targets were met in their entirety. Finally, the target range of 8–10% for the adjusted return on equity in the 2019 financial year was exceeded at 10.8%.
The compensation for members of the Corporate Executive Board for the 2019 financial year is reported in detail in the 2019 compensation table below. Patrick Frost, Chairman of the Corporate Executive Board (Group CEO) since 1 July 2014, received the highest compensation of the members of the Corporate Executive Board in the 2019 financial year; accordingly his compensation is disclosed individually.
The short-term variable compensation component for the Corporate Executive Board of a total CHF 4 290 000 (cash bonus of CHF 3 790 000 and deferred compensation in cash of CHF 500 000), which was determined by the Board of Directors at the beginning of 2020 for the 2019 financial year and will be proposed to the General Meeting of Shareholders on 28 April 2020 for approval, is disclosed in the following compensation table on an accrual basis as compensation for the 2019 financial year (accrual method). The members of the Corporate Executive Board did not receive any compensation in shares for the 2019 financial year; they are participating in the current equity compensation plan that provides for the allocation of so-called Restricted Share Units (RSUs).
The variable compensation for the members of the Corporate Executive Board reflects the excellent business development. The variable compensation components in the year under review amounted to around 163% of the fixed basic salary of the Group CEO and 115% of the fixed basic salaries of the other Corporate Executive Board members. The variable compensation relative to the fixed basic salary is thus well below the statutory maximum of 181%. With regard to the overall compensation for the Group CEO, the Board of Directors has decided, as in the previous year, in favour of maintaining the fixed salary and applying a correspondingly higher weighting of the performancerelated variable compensation; with regard to variable compensation, the deferred components (variable deferred compensation in cash and RSUs) were overweighted.
Following the 2019 compensation table, the details of the compensation for 2018 are stated in a separate table for comparison.
Total Total compensation Bonus for 2019 Other compensation in cash and Salary paid in 2020 3 compensation 4 in cash Number Amount shares (amount)
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.
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 CHF 1 055 501 in the year under review.
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.
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.
Total Total compensation Bonus for 2018 Other compensation in cash and Salary paid in 2019 3 compensation 4 in cash Number Amount shares (amount)
2 The salary amounts also include tax-equalisation payments and international travel expenses totalling CHF 251 400.
3 The short-term variable compensation component for the 2018 financial year (bonus and deferred compensation in cash) was determined by the Board of Directors at the beginning of 2019 for the 2018 financial year.
Other members of Corporate Executive Board 1 444 310 0 10 296 799 5 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%.
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.
No loans or credit were granted to closely linked parties in the year under review; as at the balance sheet date, there are no outstanding loans or credit to closely linked parties.
As at the balance sheet date of 31 December 2019, acting members of the Board of Directors and the Corporate Executive Board (including closely linked parties) held the following number of registered Swiss Life Holding shares and future subscription rights to Swiss Life Holding shares in the form of Restricted Share Units (RSU): Board of Directors
Shareholdings as well as future subscription rights to Swiss Life Holding shares as at 31 December 2018 are shown in the Notes to the Swiss Life Holding Financial Statements on page 321.
In the form of an overview, the following additional information is provided on the Swiss Life Group compensation systems for the 2019 financial year: In CHF (unless otherwise indicated)
of which total variable compensation (total pool) 2 176 482 642
Opinion In our opinion, the compensation report of Swiss Life Holding Ltd for the year ended 31 December 2019 complies with Swiss law and articles 14–16 of the Ordinance.
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 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.
PwC invoiced additional fees of approximately CHF 0.9 million in 2019 (prior year CHF 1.0 million ), for services in the areas of risk management, fiscal and legal consulting and other advisory services. All services were performed in compliance with the relevant independency regulations set out in the Swiss Code of Obligations, the Audit Supervision Act and FINMA circular 2013/3, “Auditing”.
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 & Shareholders ” area, “Results & 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.
Swiss Life uses structured processes to ensure that strategic risks are dealt with adequately in what continues to be a very challenging economic 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 to take due account of the factors influencing risks during strategy development, so that they can be addressed appropriately.
All Swiss Life employees, including external staff, undergo regular information security training in their divi sions. There were no significant information or system security incidents within the Swiss Life Group during the reporting year.
Information security is closely related 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 is provided in the “Compliance at Swiss Life” section of the Sustainability Report from page 103.
Swiss Solvency Test The new SST standard model with company-specific adjustments has been used to determine regulatory solvency since 1 January 2019. The Swiss Solvency Test (SST) sets out the capital requirements valid for insurance companies and groups in Switzerland. The SST capital requirements are based on the understanding that insurers will meet their obligations towards policyholders even under difficult conditions. In addition to this solvency model, Swiss Life calculates economic solvency based on an internal model, as the standard model is too simplified to be used for business management.
Sustainability Report In this report, Swiss Life outlines its understanding of thinking and acting in a sustainable way. That applies to business operations, the role of Swiss Life as an employer and its responsibility to society and the environment. The reporting corresponds to the standards of the Global Reporting Initiative (GRI).
Our customer relationships often extend over decades. During this time we take on risks for many of our customers and we invest accordingly. We rely on professional, forward-looking action to ensure we can keep our promise over such a lengthy period. Sustainability has been at the core of our actions since the company was founded in 1857 and is part of the corporate culture at Swiss Life.
Overall responsibility for all relevant questions and decisions relating to sustainability rests with the Corporate Executive Board. In future, it will have the support of a dedicated sustainability team at the head office and a cross-border and inter-divisional organisation to ensure that sustainability measures and goals are coordinated, developed and implemented throughout the Group.
One topic that concerns all of us is climate change. At Swiss Life we want to find answers to this challenge in three areas: – As a large property owner we rely on prudent use of resources and in 2019 we continued to drive the expansion of renewable energies. In all our investment decisions – in the real estate sector, but also beyond – we naturally take environmental aspects as well as governance and social criteria into consideration. They are a key component in our risk management approach, which ensures that we act in a sustainable and responsible manner.
– A third area is operational ecology: we already set ourselves goals in 2018 to reduce greenhouse gas emissions by 2021.
Through our seven charitable foundations and targeted site promotion activities we also succeeded in achieving both small- and large-scale progress in the fields of culture, science, education, the environment and research. These engagements are also very important to me and are highly valued by our employees too.
This report summarises where we currently stand with regard to our sustainability initiatives. I hope that it will provide you with a good insight into this topic, which is important for us.
Swiss Life has set out its corporate sustainability principles in a Group-wide sustainability concept, which is subdivided into four areas: sustainability in daily business, as an employer, in society and with regard to the environment. The reporting in this Sustainability Report is based on this structure.
Specialist delegates on specific topics The Swiss Life Group sustainability team
In the reporting period, Swiss Life continued to develop its organisational structure and governance in the area of sustainability. The extended Corporate Executive Board is the highest steering committee for sustainability. It is chaired by the Group CEO. In the period under review, a new organisational structure was developed at Group level to coordinate, manage and implement the measures. It took effect on 1 January 2020 and is led by the Group Head of Sustainability. Alongside operational implementation, the new organisation is responsible for regular interaction between all specialists, ensures controlling and reporting functions, and prepares the basis for decisions by the extended Corporate Executive Board in its role as the steering committee.
The sustainability organisation is aligned to Swiss Life’s multi-divisional organisation and comprises sustainability delegates from all divisions and specialist delegates. Ten topics have been defined for specialist management.
The new organisation ensures operational implementation of the measures adopted at Group level directly in the relevant divisions and cross-divisional exchange on the defined focus topics.
Swiss Life has reported on the basis of the Global Reporting Initiative’s standards since 2016. In 2015 it produced the first version of its materiality matrix in a multi-step materiality process involving internal and external stakeholders. The matrix has been continuously refined since then. In 2019, Swiss Life performed an extensive re-evaluation of the material topics.
– Extended Corporate Executive Board – Representatives of the Board of Directors – Representatives of financial institutions and rating agencies – Representatives of sustainability organisations and a university
As a first step, specialists from Sustainability, Asset Management, Communications, Group Human Resources, Investor Relations and Group Finance & Risk drew up a longlist of potential topics. Over a dozen specialists from the entire Swiss Life Group were involved in this step.
Stakeholder relevance was determined using an online survey and a workshop with internal specialists from Sustainability, Communications, Group Human Resources, Investor Relations, Asset Management and Group Finance & Risk. Involving various specialist disciplines and representatives of the entire Group ensured that the survey covered the broadest possible spectrum of stakeholder groups.
Relevance for Swiss Life was determined by conducting interviews with the entire extended Corporate Executive Board and two members of the Board of Directors.
The dimension “Impact on sustainable development” was taken into account through structured interviews with five external sustainability experts and analysts. They included representatives of financial institutions, rating agencies, sustainability organisations and a Swiss university.
To enhance readability, the dimension “Impact on sustainable development” has not been integrated into the existing materiality matrix. The four topics that external stakeholders indicate as having the greatest impact on sustainable development are: – Responsible investing – Responsible real estate management – Risk management – Data protection and information security
Diversity, equal opportunities and non-discrimination (formerly: Equal treatment and non-discrimination and Diversity and equal opportunities)
The materiality analysis showed that the topics “innovation” and “health, safety and well-being in the workplace”, which were included in the questionnaire, were considered by the majority of those surveyed, whether internal or external, to be less relevant. Consequently, they are not included in the new materiality matrix.
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 76.
Diversity, equality of opportunity and non-discrimination Diversity, equality of opportunity and non-discrimination are part of Swiss Life’s corporate values. Accordingly, potential, abilities and skills are promoted equally among all employees of all ages.
At its Investor Day in November 2018, Swiss Life presented its corporate programme and financial targets for the period to 2021. With “Swiss Life 2021” the company is aiming at a continuous and yet ambitious further development of its profit sources, efficiency and distribution to shareholders.
Swiss Life places people at the centre of its activities and engages with them 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.
Swiss Life aims to use customer feedback to detect systemic problems, drive appropriate process optimisation measures and enable customers to express appreciation. The findings and lessons learned are used for ongoing employee training and coaching and are shared at Group level.
Swiss Life has continuously expanded its Direct Customer Feedback programme in recent years. Since launching it in 2014, Swiss Life has received and analysed around 226 000 customer communications, including more than 66 000 in 2019.
Swiss Life depends on the Net Promoter Score (NPS) for its quantitative measurement of customer satisfaction, 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 the objectives-setting and performance review of employees with customer contact.
The Swiss Life NPS has improved by and large at the key contact points, Consulting and Service Center, over the past four years, thanks to regular customer feedback analysis and the improvements derived from it.
In addition, Swiss Life surveys the internal perception of customer orientation. Until 2019, the Employees’ Customer Centricity Index (ECCI) was applied in-house and summarised the results. The Index rose in the last assessment, in 2017, by three index points over the previous year, to 81. The internal perception of customer centricity improved in 2017 in relation to all areas surveyed.
Relative to the global average of companies in the financial sector +10 ppt
A customer relationship at Swiss Life often spans several decades. Thanks to its individual pension and financial advice for private and corporate customers and proven investment expertise for institutional investors, Swiss Life enables people to lead a selfdetermined life.
Swiss Life’s consulting and product strategy combines optimal customer value with profitability for the company. The company 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 from the market that suits them best. In this way, customers are given access to an extensive range of products from many suppliers.
In France, Swiss Life developed a sustainable investment solution in 2019. “Swiss Life Choix Responsable” offers a new option of investing in a product that focuses on responsible management and environmental, social and governance (ESG) criteria. Moreover, in the reporting period Swiss Life started work on a Group-wide ESG approach in the area of insurance as part of its new sustainability organisation.
Long-term benefit commitments and obligations arising from pension and financial products demand a precise analysis of the legal and regulatory environment, and 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 for 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.
As a pensions and financial services company, Swiss Life puts people at the centre of its business. This includes digitalisation. The roughly 14 000 advisors that conduct Swiss Life’s dialogue with customers have access at all times to digital solutions that support them in the advisory process. Personal contact, however, remains a key factor. Digital aids give advisors more time for personal contact and to clarify the needs of their customers. This purposeful combination of personal advice and digital support is the root of Swiss Life’s “phygital approach”.
Swiss Life also makes increasing use of digital platforms within the company. In 2019, Group-wide collaboration software was introduced, enabling employees to hold virtual meetings and share and work together on files.
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. Swiss Life is guided in this regard by the UN Principles of Responsible Investment (PRI).
Swiss Life has set out its principles for responsible investing in its “Responsible Investment Policy”, which is available at www.swisslife-am.com/responsible-investment.
Climate change is one of the biggest challenges of our time. Swiss Life supports the objectives of the Paris climate agreement and has defined a strategy for exiting its assets from insurance business from the carbon-intensive coal sector. In particular, investments in coal for power stations harbour a risk of “stranded assets”, in other words assets exposed to early losses or impairment charges due to environmental or climate-related factors. Swiss Life therefore 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. With infrastructure investments, this 10%
Swiss Life – Annual Report 2019 threshold is measured in terms of the carrying amount. 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.
Swiss Life endeavours to persuade third-party customers to apply a similar exit strategy to their assets.
Swiss Life also represents its interests by exercising voting rights and actively fosters responsible investing through “active ownership”. In this way, it strives to increase the company’s long-term value. ESG factors are used to make a balanced assessment of the purpose of motions and the overall benefits for the shareholders of the respective company. In the past financial year, for instance, Swiss Life voted for corporate transparency in social and environmental aspects and for better governance. When exercising voting rights, Swiss Life uses analyses and services provided by the external voting rights consultant “Institutional Shareholder Services” (ISS) and other sources. In 2019, Swiss Life voted 4749 times at 361 annual general meetings. In 1% of cases it deviated from the recommendations made by ISS and in 9% of cases it voted against the Board of Directors.
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 long-term property life cycle.
– To ensure that sustainability criteria can be integrated systematically into the value creation process in real estate investment, Swiss Life has developed its own Responsible Property Investment Framework. This applies for all real estate management activities and optimises the environmental and social aspects of the real estate portfolio.
– 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. In this way, energy-related maintenance activities (for example, replacement of heating generators or refurbishment of the building shell) can result in energy and CO2 savings of up to 50% at the properties concerned. In this way, dependence on fossil fuels can be reduced further, with a shift to renewable energy sources (for example, solar power, geothermal energy, use of river and sea water or pellets).
– Moreover, energy-saving settings on technical installations and smaller renovations with a shorter payback period (for example, lighting systems or insulation of water pipes) can bring improvements outside of major refurbishment cycles. Experience shows that such optimisation measures can generate energy and CO2 savings of around 10%.
38% of proprietary real estate investments are in Switzerland. A review of the energy consumption and CO2 emissions of the real estate portfolio in the reporting period identified properties where energy consumption is currently above average and modernisation is due in the coming years. Energy-related maintenance, for example, replacement of heating generators or refurbishment of the building shell, will be carried out at these properties in the next three to four years. Thanks to targeted optimisation of operating and maintenance activities, the energy consumption and corresponding CO2 emissions will be reduced. To sharpen tenants’ awareness of energy efficiency, the tenant survey was expanded and information leaflets on saving energy were distributed.
Since 2018, six of Swiss Life’s investment vehicles (approximately 50% of total real estate assets under management) have been included 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 to integrate this into its facility management. All of the portfolios analysed qualify for the Green Star, which positions their sustainability performance versus the benchmark in the top quadrant.
Swiss Life sets great store by compliance with all applicable legal provisions and regulatory stipulations. Correct and honest behaviour by its employees is mandatory.
Regular training ensures that the employees are kept informed about the relevant compliance themes and directives. All new employees throughout the Group receive training on the Code of Conduct and essential rules of behaviour as well as the data protection and data security requirements, within six months after joining. All new employees are likewise provided within the same period with training on the prevention of monetary laundering, combating the financing of terrorism and sanctions and embargos, to the extent relevant for their activity. All employees also undergo refresher training on these issues every two years. Participation in such training is compulsory and is checked. The goal is a 100% participation and success rate. Refresher courses are provided more often in divisions where the regulator prescribes more frequent training. In addition, in some cases external advisors and other contractors are trained in compliance issues or required to give a contractual assurance that they will comply with the Code of Conduct. Development of a uniform, Group-wide ruling is planned for 2020.
There were no significant data protection infringements within the Swiss Life Group during the reporting year.
Data are secured and protected with the appropriate organisational and technical protection measures and are a part of risk management. More information on the subject of risk management can be found in the Annual Report in the section “Risk Management” from page 76.
Swiss Life incurred no significant monetary penalties or fines during the year under review, nor did the company make any settlements in connection with corruption charges or anti-competitive behaviour.
Swiss Life mainly accesses products and services from the following categories: – 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
Percentage split of purchasing volume by category based on the Swiss location (excl. Asset Managers) As at 31.12.2019
Swiss Life is one of Europe’s leading real estate investors and has the biggest private real estate portfolio in Switzerland. As part of this activity, Swiss Life mainly uses external services for architecture and expert planning services plus general construction services.
Swiss Life also works mainly with national suppliers in its other core markets, France and Germany. Foreign suppliers account for under 5% in both countries.
In cooperating with major international companies in the IT area, Swiss Life works with their national subsidiaries wherever possible at all locations.
Swiss Life demands corrective action against any violations of agreed standards. The cooperation is terminated in the event of serious or repeated violations. Swiss Life contractually asserts its right to conduct audits of suppliers and service providers. That includes requesting, for example, confirmation of ISO certification, the validity of such certification and analysis of the underlying reports.
At its Swiss location, Swiss Life also gives priority to products and services from companies that can prove they have a certified environmental management system (ISO 14001 or EMAS) and a 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 based on leading and recognised standards, such as the Global Reporting Initiative (GRI), “UN Global Compact” and ISO 26000, and is supervised by an international scientific committee. When issuing tenders, Swiss Life France routinely asks for any available sustainability rating results and ISO certification and decides on a case-by-case basis whether certification is required as a basis for cooperation.
As a pension provider, Swiss Life assumes social and economic responsibility. In addition, Swiss Life supports projects and institutions in the fields of culture, science, education and research that promote self-determination and confidence.
This section shows how Swiss Life thinks and acts sustainably towards society. For this, it has defined the following focus topics:  Economic responsibility
– Insurance companies use statistical tools to translate dangers and uncertainty into risks that can be evaluated and mitigated. Over the past centuries, they have fundamentally changed society’s view of risks: instead of being seen as a potential loss, risks are now often seen as an opportunity.
– Swiss Life covers risks and, with its products and services, offers people the chance to focus on their skills and look to the future with confidence. Swiss Life’s services help people to accumulate capital and ensure they achieve financial security.
– Through their skills and their work, Swiss Life’s advisors play a key role in improving the financial literacy of society.
– As one of Europe’s leading institutional real estate investors and owner of Switzerland’s largest private real estate portfolio, Swiss Life invests several hundred million francs every year in the renewal of its properties, and thus plays a part in shaping urban areas, creating living and working space, and acts as a key principal on the construction scene.
Swiss Life’s business is relevant for people and society. The consequences of demographic change are widely underestimated and entail new challenges. If people are living ever longer and state pension systems reach their limits, every single individual will have to take on greater personal responsibility for their own future provisions. At the same time, self-determination is a basic human need, and the source of the Swiss Life purpose: Swiss Life enables people to lead a selfdetermined life.
Swiss Life is committed to promoting a competitive business location and appropriate regulation in all markets. In this, it focuses on the most significant issues for its business areas, for example pensions and insurance, investment and consulting, and insurance solvency and consumer protection requirements.
Political advocacy work and communication in Switzerland, France and Germany are closely coordinated with trade associations. Moreover, a number of company executives are members of various national trade associations. The Chairman of Swiss Life’s Board of Directors, Rolf Dörig, is chairman of the Swiss Insurance Association (SIA). In addition, members of the Corporate Executive Board and Swiss Life employees work on various SIA committees.
Swiss Life Germany is represented on the major committees of the German Insurance Association (GDV) and is a member of various associations of intermediaries. It is in regular professional dialogue with the AFW Bundesverband Finanzdienstleistung e.V. (German federal association of financial service providers) as well as with the Verband unabhängiger FinanzdienstleistungsUnternehmen in Europa e.V. (Votum, an association representing the interests of financial service providers operating throughout Europe). In addition to its advocacy work through these associations, in 2019 Swiss Life Germany established a new “Regulatory and Public Affairs” unit, headed by the General Counsel. The role of this staff unit is to ensure the best possible alignment of the most relevant regulatory issues and the related political communication with the goal of optimum advocacy of the interests of financial services distributors and insurers.
Swiss Life supports projects and institutions in the fields of culture, science, education and research, and operates seven foundations. The focus is on encouraging commitment, self-determination and confidence.
– In 2005, Swiss Life founded the “Perspectives” Foundation, which supports charitable initiatives in the fields of health, science, education, culture and sport and spends CHF 1.3 to 1.5 million every year on charitable projects in Switzerland. In 2019, support of around CHF 1.5 million was provided for 127 projects. All funds are made available in their entirety by the founder, Swiss Life.
– In addition to is foundation work, Swiss Life promotes Swiss film-making and helps artists follow their own path. For example, in 2019 Swiss Life supported the Solothurn Film Festival, the Locarno Festival and the Zurich Film Festival. Moreover, Swiss Life in Switzerland supports classical music through its financial commitment to Tonhalle-Orchester Zurich, Zurich Opera House, the Lucerne Festival and the Davos Festival.
– The Swiss Life Select distribution company operates the “Confidence for Children” foundation in Switzerland, which aims to improve the life and development opportunities of disadvantaged children and give them a better chance at 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 is supported principally by Swiss Life Select financial advisors and employees, who donated CHF 120 000 to the foundation in 2019. Swiss Life Select Switzerland pays all administrative costs.
– Since its establishment in 2008, “Fondation Swiss Life” has supported long-term projects in the areas of healthcare (Institut Curie and France Alzheimer), voluntary work by employees (Aider à Aider – Help to Help) and, since 2014, art work that brings together two different art forms, music and photography (Prix Swiss Life à 4 mains).
– In 2019, the “Fondation Swiss Life” was the principal source of funding for a cancer research project conducted by the Institut Curie. Donations totalling EUR 117 000 were collected by employees in connection with their work in sales.
– The “Fondation Swiss Life” also supported people with Alzheimer’s and their relatives and carers through France Alzheimer in the reporting period. The purpose is to enable innovative nonmedical therapies such as art and music therapy.
Photo from the series “Digital After Love. Que restera-t-il de nos amours?”, Prix Swiss Life à 4 mains.
– 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 selfdetermined life. The Foundation is mainly financed with donations from employees and financial advisors. Swiss Life Germany covers staff and administrative costs, thus allowing 100% of donation revenues to go towards project work. In 2019, its third year of operation, the Foundation provided support totalling just under EUR 430 000 for 35 initiatives.
As a basis for successful leadership and communication, the Swiss Life Group has issued behavioural principles that are applicable throughout the Group. The focus is on encouraging employees to take personal responsibility. By delegating competencies and responsibility to employees, managers do not simply encourage their innovative capability and ability to act independently, they also express respect and appreciation, which leads to greater engagement from everyone. Through their leadership and communication, line managers establish credibility and trust in their daily work, provide guidance and perspective, and put shared goals into practice.
The behavioural principles of the Swiss Life Group: – I think and act in an exemplary manner and in the best interests of the company – I collaborate effectively in the best interests of the company. – I act in an efficient and goal-oriented way. – I work in a committed and agile manner.
The behavioural principles for managers in the Swiss Life Group: – 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.
The following Group-wide standard HR management processes are used to provide optimal support to managers and employees.
Swiss Life plays an active public role in “self-determined living”. The same aspiration is implemented within the company: Swiss Life provides an extensive range of offers and opportunities for its employees to help them shape their working lives themselves through all phases of their career. In its Group-wide “Actively shaping your career” programme, Swiss Life focuses on three success factors: “Ensuring employability through constant development”, “Valuing and exploiting diversity” and “Maintaining long-term work ability”. In this way, Swiss Life aims to strengthen employees’ individual resources. This takes into account and balances different operational requirements and personal needs in various phases of working and private life.
“Valuing and exploiting diversity” – Offering flexible working models – Promoting cooperation among generations – Childcare offerings and support for those caring for relatives – Specific training for managers in leading diverse teams
“Maintaining long-term work ability” – Offering time-out models – Diverse range of offerings for the promotion and maintenance of health – Social counselling offers 1 Korn Ferry, 2019
Young employees with potential have the opportunity to undertake all sorts of vocational courses, apprenticeships, placements, graduate programmes and combined university degrees. Here, Swiss Life places great value on offering them wide-ranging perspectives.
– At Swiss Life Switzerland, 90% of trainees, interns and graduates on graduate training programmes are offered employment on completion of their training.
– In 2019, the Luxembourg location held negotiations with the universities in Luxembourg, Brussels and Maastricht to develop and introduce partnership offers in order to offer perspective to young people at Swiss Life.
The Key Persons Programme (KPP) is intended for Swiss Life Group management, specialists and project managers who are already in a key function or show potential for such a function. The aim of the Group-wide programme is to prepare people who show the desire and ability to help shape the company’s future in their own areas for a key position so they can live up to their role as decision maker. The programme also plays a role in employee and succession planning. Within a 12-month period, the participants acquire a detailed insight into the most important business areas within the Swiss Life Group, give and receive new impulses and apply what they have learnt to their daily work. The KPP’s four focus themes are: – People leadership and communication – Finance – Innovation – Corporate strategy
Employees without management functions by gender Total 8 204 as at 31.12.2019
Swiss Life offers its employees a work environment characterised by individual responsibility, respect and esteem. Based on this, there are divisional directives and regulations that set out our zero-tolerance policy regarding mobbing and discrimination on the basis of race, gender, religion, confession, national origin, disability, age, sexual orientation, physical or mental handicap, marital status, political views and other attributes.
The principles by which we work together at the Swiss Life Group are set down in the Code of Conduct, valid Group-wide. The Swiss Life behavioural principles, which are applicable for all employees, are integrated into Group-wide management processes. The behavioural principles set out, for example, principles of responsible behaviour, particularly with regard to compliance standards, laws and risks. Employees are regularly informed about the legal framework in which they operate, backed up by training courses to ensure they behave with integrity and in conformity with the law. Swiss Life has established management processes and informal channels (e.g. an ombudsman managed by a third party) for reporting and dealing with cases of discrimination or complaints.
– In 2019 the staff committee was actively involved in designing the new “Workday” HR management system, especially with a view to employee experience, reporting, and the overviews of key performance indicators.
– In 2019, the staff committee answered around 300 enquiries from employees
The ten-person “Europa Forum”, a committee comprising delegates from four countries, meets regularly with representatives of the Corporate Executive Board at ordinary and extraordinary meetings. It deals with transnational information and consultation on topics which affect all Swiss Life employees. The focal areas in 2019 were: HR strategy 2021, corporate culture, collaboration, people leadership, the 2019 Employee Survey and the new “Workday” HR management system.
GmbH and Swiss Life Invest GmbH in Germany – Swiss Life Luxembourg: The collective bargaining agreement signed in 2018 remained in force in 2019 and ends in 2020. Negotiations between the trade unions and insurance sector will start in the course of the coming year.
In addition, Swiss Life has local employee representation in numerous countries as legally required.
A specific training programme is available to enable the employee representatives to develop their competencies.
– extension of the mobile office agreement – third agreement on the mandate of administrative employees
– 22 regular members of the Economic and social committee, 30 hours per month
– including one secretary (25 hours per month), an assistant secretary (15 hours per month)
– a treasurer (15 hours per month) an assistant treasurer (5 hours per month)
– 14 trade union delegates (24 hours per month) – 4 central delegates (26 hours per month – three mediators, responsible for dealing with harassment/
– Agreement on additional Works Council elections on 3 July 2019
Prior to the merger of 1 April 2019 between SWISS LIFE REIM (France) and Swiss Life Asset Management (France), there were three representative union organisations (CFDT, CFE-CGC and CFTC) with a total of 14 Works Council members, nine for SWISS LIFE REIM (France) and five for Swiss Life Asset Management (France).
Following the merger on 1 April 2019, a union organisation (CFDT) was established with eleven members of the Works Council in accordance with the agreement on the additional Works Council elections in July 2019. No employee representative carries out his/her activity full-time.
Agreements signed Number of Works Council members broken down by full-time and part-time, area of responsibility
– An extensive works agreement focuses on professional development, safeguarding knowledge management, defining training requirements and planning professional training
– In cooperation with the HR department, in occupational health management, greater importance has been given to the special subject of resilience and psychological stress at work
– An extensive works agreement focuses on continuing professional development at Swiss Life, without restrictions on entitlement to training (age, gender, department)
– The Central Works Council as the overarching body of all operations consists of five persons (two representatives of Works Council Internal Services, two representatives of Works Council Sales Force, 1 representative of the severely handicapped). The Central Works Council chair is also chair of the Works Council Internal Services, a member of the business committee and spokesperson for the European Works Council of Swiss Life Ltd.
– The Works Council Internal Services (responsible for the German branch in Garching as well as Swiss Life Partner Service- und Finanzvermittlungs GmbH and SLPM Schweizer Leben PensionsManagement GmbH) is composed as follows: Eleven members, of whom the Works Council chair with 100% work dispensation for Works Council activities.
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.
– Calculation of variable compensation (bonus) for 2018 – Basic salary adjustment process for non-management, non-pay-scale employees as at 1 April 2019 – Occupational pension provisions through deferred compensation (additional pension provision) including all additional benefit
The Works Council of Swiss Life Management GmbH and Swiss Life Invest GmbH comprises three members. All members work without dispensation.
The Works Council of CORPUS SIREO Real Estate GmbH consists of eleven members, one member with 100% work dispensation (Works Council chair), all other members without dispensation.
Elections were held in March 2019 and the newly elected staff committee started its work in April.
The number of employee representatives and the time required for their work are directly proportional to the number of employees. In the Global Solutions area in Luxembourg the future employee representation consists of five ordinary representatives and five deputies. The employee representatives have at their disposal 16 hours a week to exercise their mandate.
Sustainability in the Environment – Environmental and Climate Protection in Operational Ecology
Swiss Life wants to make an active contribution to climate protection and to reducing CO2 emissions. Therefore, the company has set targets for operational ecology. These are set out in a Groupwide directive. At the same time, the company wants to further increase employee awareness of environmental and climate protection. It therefore has awareness-raising activities at various locations.
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). Its annual data collection allows Swiss Life to determine where progress has been made, where risks lie and where steps must be taken. The VfU key figures conform to the international Greenhouse Gas Protocol (Scope 1, 2 and 3) standards, and thus to the Carbon Disclosure Project (CDP) as well. The data are gathered, evaluated and analysed across the Group. All the major Swiss Life locations have environmental officers and the individual divisions work closely together. Following the extensive professionalisation of operational ecology initiated in 2018, Swiss Life has also set itself the goal of continuously improving data quality and significantly reducing the proportion of estimates.
District heating/cooling (in MWh) 5 187 1 556 1 503 1 609
Proportion of paper with FSC label (in %) 68 66 63 60
TOTAL GREENHOUSE GAS EMISSIONS (IN KG/FTE) 2 536 2 771 2 775 3 311
1 The key figures for the 2019 financial year refer to VfU 2018, the previous key figures to VfU 2013. 2 Following the recording of environmental data in 2018, minor corrections were also made to the assessment of the 2016 data.
The Swiss Life Group reduced its greenhouse gas emissions by 3% in 2019. One contributory factor to that was a reduction in business traffic (–10%). In addition, Swiss Life increased its share of electricity from renewable energy sources by 21 percentage points in the year under review, which helped reduce greenhouse gas emissions. In addition, the share of fossil fuels was further reduced in favour of district heating. Overall, total energy consumption increased slightly, which can be traced back to the cold winter of 2019.
Swiss Life Group – In 2019 Swiss Life introduced collaboration software to enable Group-wide digital collaboration and optimal use of resources in the future. Meetings can now be held Group-wide in virtual rooms, with information being made available digitally. Among other things, Swiss Life expects this to significantly reduce greenhouse gas emissions in the coming years by reducing business trips and cutting consumption of paper and printing.
– Swiss Life’s head office in Zurich is virtually carbon-neutral. Since the early 1990s, the building has been cooled with water from Lake Zurich. Around four years ago, the system was further developed to make use of lake water for heating as well, by means of a heat pump. Over 95% of the building’s heating needs are now supplied in this fashion. All the sanitary facilities at both Zurich locations are equipped with water-saving installations. This enables Swiss Life Switzerland to save some three million litres of water each year. Moreover, rainwater has been used for some sanitary installations for the past 20 years.
Since 2011, the Swiss Life Group has taken part in the CDP (Carbon Disclosure Project) survey. The CDP is an independent charitable organisation which holds the world’s most comprehensive collection of corporate information on climate change. In both 2018 and 2019, Swiss Life was awarded a B-rating.
– 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 undertakes, in cooperation with other companies, to reduce CO2 emissions and increase energy efficiency in urban areas.
We guarantee all people of all ages a healthy life and promote their well-being
The social and economic consequences of increased life expectancy are insufficiently accounted for in almost all areas of life. Swiss Life is committed to raising society’s awareness of this topic and actively addressing the attendant challenges. Swiss Life supports its customers in preparing early so they can lead a self-determined life. Swiss Life supports its employees, for example, by offering them flexible working models and a wide range of health and prevention services.
See also “Strategy & Brand” (pages 8–13) and “Sustainability as an Employer”, sections “Collaboration and Diversity” and “Health and Safety” (pages 124–128).
Swiss Life supports its employees maintain 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.
Swiss Life specifically uses some of its investments to support climate -friendly technologies, projects and initiatives. In this way, it also makes a direct contribution to the global climate targets.
In 2019, Swiss Life acquired Fontavis AG, a leading investment manager for clean energy and infrastructure funds in Switzerland. The Fontavis portfolios are focused on thermal, water, solar and wind power.
The United Nations’ 17 Sustainable Development Goals (SDGs) are the heart of the Agenda 2030 for Sustainable Development. Swiss Life is transparent about which of these goals it is already making a contribution to.
In this report, Swiss Life focuses on the sustainable development goals where the company is currently having the biggest impact through its business activities, investments and social commitment. In keeping with this, the reporting is restricted to six of the 17 SDGs.
Swiss Life is one of Europe’s leading real estate investors and has the biggest private real estate portfolio in Switzerland. The majority of its properties are in urban areas. As a builder, property owner and asset manager, Swiss Life aims to use ecological and economic resources with maximum efficiency and to make an active contribution to sustainable urban development.
– and make sure that they are not complicit in human rights abuses.
– Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining – the elimination of all forms of forced and compulsory labour; – the effective abolition of child labour; and – the elimination of discrimination in respect of employment and occupation
Environment Principles 7, 8 and 9: – Businesses should support a precautionary approach to environmental challenges; – undertake initiatives to promote greater environmental responsibility; and – encourage the development and diffusion of environmentally friendly technologies
 “Responsible Investing” (pages 98–102)  “Responsible Real Estate Management” (pages 101–102)  “Sustainable Procurement” (pages 106–108)  “Sustainability in the Environment” (pages 132–135)
Combating corruption Principle 10: – Businesses should work against corruption in all its forms, including extortion and bribery.
 “Compliance at Swiss Life” (pages 103–105)  “Sustainable Procurement” (pages 106–108)
Reporting in accordance with the standards of the Global Reporting Initiative
The Swiss Life Sustainability Report meets the requirements of the Global Reporting Initiative (GRI), a framework for transparent sustainability reporting. The 2019 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.
Do you have any questions or suggestions about sustainability at Swiss Life? Write to us at sustainability@swisslife.ch.
For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report. The Materiality Disclosures Service was performed on the German version of the report.
GRI 102-10 Significant changes to the organisation and its supply chain p. 52
GRI 102-45 Entities included in the consolidated financial statements p. 299
GRI 102-51 Date of most recent report Sustainability Report 2018, published in March 2019
GRI 201-2 Financial implications and other risks and opportunities due to climate change p. 76–77, p. 99–100, p. 102
GRI 103: 2016 Management approach p. 98–100 103-1/103-2/103-3 RESPONSIBLE REAL ESTATE MANAGEMENT
GRI 308-1 New suppliers that were screened using environmental criteria p. 106–108
GRI 103: 2016 Management approach p. 92–94 103-1/103-2/103-3 Net promoter score (NPS) p. 93
GRI 401-1 New employee hires and employee turnover p. 120, p. 128
GRI 403-1 Workers representation in formal joint management-worker health and safety committees p. 129–131
GRI 403-2 Types of injury and rates of injury, occupational diseases, lost days, absenteeism p. 128 and number of work-related fatalities
GRI 404-2 Programs for upgrading employee skills and transition assistance programs p. 122–123
GRI 417-2 Incidents of non-compliance concerning product and None service information and labeling
GRI 418-1 Substantiated complaints concerning breaches of customer privacy and None losses of customer data
GRI 419-1 Non-compliance with laws and regulations in the social and economic area None
Total greenhouse gas emissions 2 536 2 771 2 775 3 311 2 AR, p. 133 (in kg CO2-equivalents/FTE)
Emissions reduction initiatives yes yes yes yes AR, p. 102, p. 132–135
Climate change listed as a business risk factor yes yes yes yes AR, p. 76–77, p. 81, p. 85–86, p. 88, p. 99–100
Climate reporting as per the recommendations of the under no no no Task Force on Climate-Related Disclosures develop-
2 Following the recording of environmental data in 2018, minor corrections were also made to the assessment of the 2016 data.
Health and safety policy yes yes yes yes AR, p. 127–128
Company monitors employee satisfaction on a regular yes yes yes yes AR, p. 94, p. 121, p. 124
Major layoffs in the last three years no no no no (affecting 10% of staff or over 1000 employees)
Job-specific development training programs yes yes yes yes AR, p. 122–123
Partnerships with training institutions yes yes yes yes AR, p. 122
Proportion of employees with professional development 100% 100% 100% 100% AR, p. 119 interviews / performance reviews per year
UN Global Compact Signatory yes yes no no AR, p. 89, p. 98, p. 108, p. 138–139, p. 141
Guidelines for environmental assessment of suppliers yes yes yes yes AR, p. 89, p. 106–108, p. 137
Company has foundations yes yes yes yes AR, p. 81–82, p. 113–116, p. 137
Employee protection / Whistle blowing policy yes yes yes yes Code of Conduct
ESG integration in asset management yes yes no no AR, p. 99–100, p. 102
Sustainable real estate strategy yes yes yes yes AR, p. 101–102
Company has customer privacy policy yes yes yes yes AR, p. 76–78, p. 87, p. 103–105 Code of Conduct plus additional directives
Prevents unauthorised access to personal data yes yes yes yes AR, p. 76–78, p. 87, p. 103–105
Auditable product development process yes yes yes yes AR, p. 96
Average term of office (years) 8 7 7 7 AR, p. 33
Voting rights of largest shareholder >5% >5% >5% >5% AR, p. 27–28
Proportion of women on the Board 17% 18% 18% 18% AR, p. 124
Average age of Board member 59 58 59 60 AR. p. 34–41
Commitment to Board diversity yes yes yes yes AR. p. 34–41
CSR/sustainability committee at yes yes yes yes AR, p. 83 Corporate Executive Board level
Risk management system covers reputational risks yes yes yes yes AR, p. 76–78
Consolidated Financial Statements 152 Consolidated Statement of Income 153 Consolidated Statement of Comprehensive Income 154 Consolidated Balance Sheet 156 Consolidated Statement of Cash Flows 158 Consolidated Statement of Changes in Equity 159 Notes to the Consolidated Financial Statements 159 1 General Information 160 2 Summary of Significant Accounting Policies 160 2.1 Basis of preparation 160 2.2 Changes in accounting policies 162 2.3 Consolidation principles 163 2.4 Foreign currency translation and transactions 163 2.5 Cash and cash equivalents 165 2.7 Financial assets 166 2.8 Impairment of financial assets 168 2.9 Investment property 169 2.10 Insurance operations 174 2.11 Property and equipment 174 2.12 Inventory property 175 2.14 Investment management 176 2.15 Commission income and expense 176 2.16 Intangible assets 178 2.17 Impairment of non-financial assets 179 2.18 Income taxes 179 2.19 Assets held for sale and associated liabilities 179 2.20 Financial liabilities 180 2.21 Employee benefits 182 2.22 Provisions and contingent liabilities 182 2.23 Treasury shares 182 2.24 Earnings per share 182 2.26 Forthcoming changes in accounting policies 184 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies 188 4 Segment Information 195 5 Risk Management Policies and Procedures 196 5.1 Risk budgeting and limit setting 196 5.2 Asset and liability management (ALM)
Impairment of property and equipment and intangible assets 16, 17 –3 –14
Benefits and claims paid, net of reinsurance –14 283 –14 086
Disposals of subsidiaries, net of cash and cash equivalents 28 –118 48
Dividends paid to equity holders of Swiss Life Holding –464 –
TOTAL CASH AND CASH EQUIVALENTS AS AT END OF PERIOD 8 247 8 410
Share buyback – – –913 – – –913 – – –913
Interest on hybrid equity 26 – – – – –7 –7 – – –7
Interest on hybrid equity 26 – – – – –4 –4 – – –4
For the 2018 financial year, Swiss Life paid a dividend of CHF 14.00 per registered share and made a distribution to the shareholders of Swiss Life Holding Ltd (hereafter referred to as “Swiss Life Holding”) from the capital contribution reserve of CHF 2.50 per registered share. Both payments amounted to CHF 547 million in total and were paid in the first half of 2019.
In November 2018, the Group announced a CHF 1 billion share buyback programme that commenced in December 2018 and ended in December 2019 when the target size had been reached. 2 208 715 Swiss Life Holding shares were repurchased for CHF 1 billion under the share buyback programme. The average price paid was CHF 452.75.
On 10 March 2020, the Board of Directors approved the annual financial statements and the financial report and authorised them for issue. The financial report, therefore, only reflects events up to that date.
Swiss Life – Annual Report 2019 2 Summary of Significant Accounting Policies
Effective from 1 January 2019, the Swiss Life Group adopted IFRS 16 Leases. The new standard eliminates the classification of leases as either operating leases or finance leases for lessees. Instead, the Swiss Life Group records most of these leases on-balance sheet, the effect being that reported assets and liabilities increase. The straight-line operating lease expense is replaced with a depreciation charge for the right-of-use asset and an interest expense on the lease liability. As a practical expedient, the Swiss Life Group excludes short-term and low-value leases from this treatment and expenses the related lease payments as they occur. From a lessor’s perspective, the
Swiss Life Group’s accounting treatment was carried forward. As a lessee, the Swiss Life Group measures the lease liability at the present value of the future lease payments comprising the following components: fixed payments net of lease incentives receivable, variable payments that depend on an index or rate, expected payments for residual value guarantees, penalties and the exercise price of a purchase option, if reasonably certain to be exercised. The lease liability is included in other financial liabilities on the balance sheet. Its present value is determined using the implicit interest rate from the lease contract if available or, otherwise, an incremental borrowing rate, which represents the borrowing costs the lessee would pay to finance the purchase of the leased asset, taking into consideration the economic environment, the lease term and the asset type. The Swiss Life Group measures the right-of-use asset at cost, comprising the following components: the amount of the initial measurement of the lease liability, any lease payments made before the commencement date, any initial direct costs and an estimate of costs for dismantling, removing or restoring at the end of the lease term. The right-of-use asset is depreciated on a straightline basis over the useful life of the underlying asset, if the ownership of the underlying asset will be transferred to the lessee by the end of the lease term or a purchase option is reasonably certain to be exercised. Otherwise, the right-of-use asset is depreciated over the useful life of the underlying asset, or the lease term, whichever is shorter. The right-of-use asset, which comprises leased premises, vehicles and office equipment, is included in property and equipment on the balance sheet. It is the Swiss Life Group’s policy that for perpetual lease contracts with a termination right given only to the lessee, the assumed remaining lease term should not exceed ten years. The remaining lease term should be reassessed and the lease liability should be remeasured by the end of the ten years considering all relevant facts and circumstances. At transition as per 1 January 2019, the Swiss Life Group applied the modified retrospective approach with the following practical expedients: the exclusion of short-term and low-value leases and leases with a short remaining term, the treatment of non-lease components as lease components, the measurement of the rightof -use asset being equal to the lease liability at transition date, the use of discount rates as per transition date and the use of hindsight. The lease liability as per 1 January 2019 amounted to CHF 171 million and the right-of-use asset amounted to CHF 171 million. The adjustment through equity relating to prior periods was nil. Prior period financial statements have not been restated. Further transition-related information is summarised in the following table.
Derivatives embedded in other financial instruments or in insurance contracts which are not closely related to the host contract are separated and measured at fair value, unless they represent surrender options with a fixed strike price embedded in host insurance contracts and host investment contracts with discretionary participation features. Changes in the fair value are included in profit or loss. Derivatives embedded in insurance contracts which are closely related or which are insurance contracts themselves, such as guaranteed annuity options or guaranteed interest rates, are reflected in the measurement of the insurance liabilities. Options, guarantees and other derivatives embedded in an insurance contract that do not carry any insurance risk are recognised as derivatives.
The Group reviews the carrying value of financial assets regularly for indications of impairment.
A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Loans and receivables are assessed for impairment when a
Swiss Life – Annual Report 2019 significant decrease in market value related to credit risk arises, namely after a downgrade of a debtor’s rating below single B– after initial recognition (i.e. CCC or lower according to Standard and Poor’s or equivalent) or when payments of principal and/or interest are overdue by more than 90 days. If there is objective evidence that an impairment loss on loans and receivables has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
Available-for-sale debt instruments are assessed for impairment when a significant decrease in market value related to credit risk arises, namely after a downgrade of a debtor’s rating below single B– after initial recognition (i.e. CCC or lower according to Standard and Poor’s or equivalent) or when payments of principal and/ or interest are overdue by more than 90 days. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event after the impairment loss was recognised, the impairment loss is reversed through profit or loss.
The accounting policies for insurance contracts and investment contracts with discretionary participation features have been modified as appropriate to be consistent with the IFRS requirements. Guidance dealing with similar and related issues, definitions, recognition and mea surement criteria for assets, liabilities, income and expenses as set out in the IASB Framework for the Preparation and Presentation of Financial Statements has been considered.
The statutory minimum distribution ratios (“legal quote”) relating to the Swiss Life Group’s operations are as follows: Switzerland Group business subject to “legal quote”: at least 90% of the calculated income on the savings, risk and cost components minus the expenses thereof must be allocated to the policyholders. All other business: no “legal quote”.
Germany A minimum of 90% of the net investment returns, a minimum of 90% of the risk result and a minimum of 50% of the positive other result including expenses /costs are allocated to the policyholder. A negative investment result can be offset with positive other profit sources.
For investment-type products, bonuses are only accrued on deposits under policyholder accounts if the policyholders were entitled to receive those bonuses upon surrender at the balance sheet date.
Swiss Life – Annual Report 2019 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.
Liability adequacy test If the actual results show that the carrying amount of the insurance liabilities together with anti ci pated future revenues (less related deferred acquisition costs [DAC] and related intangible assets) are not adequate to meet the future obligations and to recover the unamortised DAC or intangible assets, the entire deficiency is recognised in profit or loss, either by reducing the un amortised DAC or intangible assets or by increasing the insurance liabilities. The liability adequacy test is performed at portfolio level at each reporting date in accordance with a loss recognition test considering current estimates of future cash flows including those resulting from embedded options and guarantees.
Assets associated with separate account/unit-linked contracts and private placement life insurance are included in financial assets designated as at fair value through profit or loss, derivatives and cash and cash equivalents. The related income and gains or losses are included in the income statement under the respective line items. The Group has allocated on a rational basis the proportion of acquisition costs related to the insurance and deposit components. The accounting policy for deferred acquisition costs applies to the portion of acquisition costs associated with the insurance component, and the policy for deferred origination costs applies to the other portion (see 2.16 Intangible assets).
If the lease agreement transferred the risks and rewards of the assets, the lease was recorded as a finance lease and the related asset was capitalised. At inception, the asset was recognised at the lower of the present value of the minimum lease payments or fair value and was depreciated over its estimated useful life. The correspond ing finance lease obligations were recorded as liabilities.
Swiss Life – Annual Report 2019 2.15 Commission income and expense
Revenue consists principally of brokerage fees, recurring fees for existing business and other fees. Such revenue is recognised when earned, i.e. when the services are rendered. Cancellations are recorded as a deduction of fee income.
For participating life insurance contracts, where the contribution principle applies to the allocation of the policyholder bonus, the deferred acquisition costs are amortised over the life of the contract based on the present value of the estimated gross margin amounts expected to be realised.
Expected gross margins include expected premiums and investment results less expected benefit claims and administrative expenses, anticipated changes to future life policyholder benefit liabilities and expected annual policyholder bonuses.
Goodwill represents the excess of the fair value of the consideration transferred and the amount of any non-controlling interest recognised, if applicable, over the fair value of the assets and liabilities recognised at the date of acquisition. The Group has the option for each business combination in which control is achieved without buying all of the equity of the acquiree to recognise 100% of the goodwill in business combinations, not just the acquirer’s portion of the goodwill (“full goodwill method”). Goodwill on acquisitions of subsidiaries is included in intangible assets. Acquisition-related costs are expensed. Goodwill on associates is included in the carrying amount of the investment.
For the purpose of impairment testing, goodwill is allocated to cash-generating units. Goodwill is tested for impairment annually and whenever there is an indication that the unit may be impaired. Goodwill is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed in subsequent periods.
A deferred tax liability is recognised for taxable temporary differences relating to investments in subsidiaries, branches and associates, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Remeasurements, comprising actuarial gains and losses, the effect of the changes of the asset ceiling and the return on plan assets (excluding interest), are reflected immediately in the consolidated balance sheet and in other comprehensive income in the period in which they occur. Such remea surements recognised in other comprehensive income will subsequently not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit asset or liability. Defined benefit costs comprise service costs and net interest expense, which are presented in the income statement under employee benefits expense.
Basic earnings per share are calculated by dividing net profit or loss available to shareholders by the weighted average number of shares in issue during the reporting period, excluding the average number of shares purchased by the Group and held as treasury shares.
In July 2014 the International Accounting Standards Board completed IFRS 9 Financial Instruments. The new standard replaces IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 covers classification and measurement of financial instruments, impairment of financial assets and hedge accounting. Classification determines how financial assets and financial liabilities are accounted for in financial statements and how they are measured on an ongoing basis. Financial assets are classified on the basis of the business model within which they are held and their contractual cash flow characteristics. An expected-loss impairment model is introduced. Under the new model, it is no longer necessary for a credit event to have occurred before an impairment loss is recognised. The new model for hedge accounting aligns accounting treatment more closely with risk management activities. IFRS 9 was effective for annual periods beginning on or after 1 January 2018. However, as set out above, the Swiss Life Group will defer the application of IFRS 9 and continue to apply IAS 39 Financial Instruments: Recognition and Measurement, as its activities were predominantly connected with insurance on 31 December 2015.
Swiss Life – Annual Report 2019 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies
In Germany, disability insurance products for the group life business are based on tables of the German Actuarial Association, which are reviewed periodically. New disability insurance products for the individual life business are developed in close collaboration with reinsurance companies, which evaluate pricing and valuation assumptions for disability and morbidity on statistics provided by the database of reinsurance pool results. Furthermore, own company
The accounting policies for the segments are the same as those described in the Summary of Significant Accounting Policies section. Intersegmental services and transfers of assets and liabilities are treated as if the transactions were with third parties, i.e. at market prices applicable at the time of the transaction.
“Other” principally refers to various finance and service companies, as well as payment protection insurance.
Benefits and claims under investment contracts with discretionary participation –898 – – – – – –898 – –898
Policy fees earned on insurance contracts 9 6 12 0 – – 27 – 27
Share of profit or loss of associates –9 3 0 – 6 – 0 – 0
Investment and unit-linked contracts 6 582 12 211 1 030 22 480 – – 42 304 –1 42 303
Assets held for sale 28 – – – – – 28 – 28
The Swiss Life Group operates in selected countries. The Group’s income and non-current assets by geographical location are detailed below.
The risk appetite is defined and set by the Board of Directors using limit frameworks based on solvency ratios and economic capitalisation. Furthermore, it is allocated by the Group Risk Committee of the Corporate Executive Board to the relevant units in the insurance business. This risk budget at unit level is used as a framework for the asset and liability management process, the objective of which is to define a strategic asset allocation. From this strategic asset allocation a scenario-based expected return is calculated, which forms the basis for the Group’s mid-term planning.
Liabilities linked to assets for the account and risk of the Swiss Life Group’s customers
TOTAL LIABILITIES LINKED TO ASSETS FOR THE ACCOUNT AND RISK OF THE SWISS LIFE GROUP’S CUSTOMERS 38 318 34 222
Share of profit or loss of associates 6 0 – – 6 0 5.4 Financial risk management objectives and policies
Monitoring Swiss Life monitors the risks through exposure limits on a regular basis.
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.
A portion of Swiss Life’s investment portfolio comprises investments in funds which hold securities issued by non-public companies (e. g. private equity and infrastructure funds). These investments may be illi quid or may only be disposed of over time or at a loss, and they may not produce adequate returns or capital gains.
In building and maintaining its real estate portfolio, Swiss Life ensures adequate diversification in terms of use, location and geography.
For fixed-income assets the total exposure per counterparty is aggregated and reported to the Group Risk Committee. Ratings and single positions above a certain level with regard to fixedincome assets are reported to management on a regular basis. The exposure to individual counter parties is also managed by other mechanisms, such as the right to offset where counterparties are both debtors and creditors of the Group. In addition, limits regarding single counterparty exposure are in place which depend on the rating and amount of exposure in relation to total investments. Information reported to management includes assessment of bad debts. Where there exists a certain exposure to individual policyholders due to size of the contract, or homogenous groups of policyholders, a financial analysis equivalent to that conducted for reinsurers is carried out.
Debt securities at fair value through profit or loss 622 340 6 934 6 378 7 556 6 718
Debt securities available for sale 87 766 81 242 – – 87 766 81 242
Debt securities pledged as collateral 2 438 4 767 – – 2 438 4 767
TOTAL EXPOSURE TO CREDIT RISK 125 663 119 398 9 877 9 195 135 540 128 593
Credit risk mitigation – collateral held and other credit enhancements as at 31 December 2019
Financial guarantees Debt Loans and Cash and cash Derivatives Reinsurance and loan securities receivables equivalents (assets) assets commitments Total
Credit risk mitigation – collateral held and other credit enhancements as at 31 December 2018
Exposure to credit risk of debt instruments – credit rating by class as at 31 December 2019
TOTAL OTHER LOANS AND RECEIVABLES 2 844 2 472 1 047 5 650 3 196 –20 15 187
Debt instruments that on a specific date give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding meet the SPPI criterion. The exposure to credit risk of such debt instruments is disclosed in the following table at gross carrying amounts.
At 31 December 2019 and 2018, no reinsurance assets were past due or impaired.
Due to the limitations of the Swiss capital market with regards to liquidity and duration, investments in Switzerland are also made in currencies other than the Swiss franc. However, the balance sheet currency exposure is to a large extent hedged using foreign currency derivatives.
Derivatives designated as cash flow hedges – – 245 476 – 11 733 16
Assets held for sale – 28 – – – – – 28
Intangible assets including intangible insurance assets – – 3 074 3 135 – – 3 074 3 135
The quantification of life insurance risk is based on a sensitivity analysis. Insurance risk is thus measured as the deviation of (the realisations of) the insurance risk factors from the corres ponding best estimate values. Life insurance risk factors include mortality rates, disability/recovery rates and longevity.
Disability and morbidity Disability risk reflects the financial consequences of groups of individuals getting disabled more often and/or recovering less quickly than expected. With regard to morbidity, the most significant risk factors are epidemics, widespread changes in lifestyle, such as eating, smoking and exercise habits, and economic effects.
For certain group life business, local law is relevant with regard to medical examinations required before any business is written. For certain individual life business, agreements exist with regard to medical examinations of applicants before business is written. If the risk is assessed as high, exclusion of specific risks, premium adjustments and reinsurance are considered or the application may be rejected.
The Group manages the risks arising from these contracts by means of its underwriting strategy and reinsurance arrangements.
At end of year of loss occurrence 323 311 303 335 342 296 267 297 331 304 n/a
LIABILITIES FOR THE CURRENT AND 9 PREVIOUS YEARS 17 35 28 30 47 55 59 82 153 179 686
As far as property and casualty insurance is concerned, the reinsurance arrangements mostly include non-proportional coverage on any single risk and/or event, and are adapted to the specific exposure. This includes excess of loss, stop-loss and catastrophe coverage, as well as facultative reinsurance for protection against specific risks.
Swiss Life uses a structured process to ensure that strategic risks are dealt with adequately in what continues to be a very challenging economic environment. In its strategic risk management process, Swiss Life incorporates all the information on risks and corresponding return characteristics in its strategic decisions. An understanding of the interplay of individual risks is essential in order to take into account the factors influencing risks during strategy development and address them accordingly.
BASIC EARNINGS PER SHARE FOR THE NET RESULT ATTRIBUTABLE TO EQUITY HOLDERS OF SWISS LIFE HOLDING (IN CHF) 36.59 31.58
Net result attributable to equity holders of Swiss Life Holding 1 199 1 076
RESULT USED TO DETERMINE DILUTED EARNINGS PER SHARE 1 199 1 076
Weighted average number of shares outstanding 32 768 031 34 059 072
DILUTED EARNINGS PER SHARE FOR THE NET RESULT ATTRIBUTABLE TO EQUITY HOLDERS OF SWISS LIFE HOLDING (IN CHF) 36.48 31.49
Deposits received under insurance and investment contracts 5 409 5 527
Swiss Life – Annual Report 2019 8 Details of Certain Items in the Consolidated Statement of Income
Financial assets designated as at fair value through profit or loss 1 599 109
Associates at fair value through profit or loss 1 3 6
Assets for the account and risk of the Swiss Life Group’s customers 1 3 907 –2 169
Change in liability for future life policyholder benefits, gross –457 –211
Swiss Life – Annual Report 2019 9 Derivatives and Hedge Accounting
Derivatives designated as fair value hedges 106 149 12 26 12 354 11 650
Currency forwards to hedge non-monetary investments 88 3 8 809 649 –584 584 –649
TOTAL DERIVATIVES DESIGNATED AS CASH FLOW HEDGES 420 16 3 489 408 – n/a n/a
TOTAL DERIVATIVES DESIGNATED AS CASH FLOW HEDGES 72 21 1 358 –33 – n/a n/a
In 2019 and 2018, 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.
In 2019, a gain of CHF 50 million was reclassified from other comprehensive income to profit or loss (2018: gain of CHF 66 million), of which CHF 49 million were included in investment income (2018: CHF 45 million), and CHF 1 million in net gains /losses on financial assets (2018: gain of CHF 21 million).
In 2019, investments in senior secured loan funds of USD 3282 million (2018: USD 3196 million) and EUR 125 million (2018: nil) and investments in real estate funds of EUR 1281 milllion (2018: EUR 1012 milllion) were hedged.
In 2019, investments in real estate funds of EUR 188 million were hedged (2018: nil).
TOTAL FINANCIAL ASSETS AVAILABLE FOR SALE 93 076 91 605 15 310 8 832 108 386 100 437
Swiss Life – Annual Report 2019 12 Financial Assets Pledged as Collateral
Financial assets that have been sold under a repurchase agreement or lent under an agreement to return them are not derecognised when all the risks and rewards of ownership are retained substantially by the Swiss Life Group. If the transferee has the right to sell or repledge the financial assets given as collateral, they are reclassified in the balance sheet as financial assets pledged at their respective carrying amounts.
Other debt securities classified as loans 159 211 – – 159 211
BALANCE AS AT END OF PERIOD 4 4 17 16 22 20
TOTAL ALLOWANCE FOR IMPAIRMENT LOSSES 20 20 30 31 50 51
Interest income accrued on impaired loans was CHF 0.1 million as at 31 December 2019 (2018: CHF 0.08 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.
Fair value as at end of period 1 296 1 345
Classification as assets held for sale and other disposals –2 580 –630
Rental income from investment property was CHF 1276 million for the period ended 31 December 2019 (2018: CHF 1154 million). Operating expenses arising from investment property that generated rental income amounted to CHF 266 million for the period ended 31 December 2019 (2018: CHF 221 million).
Agrippa Quartier GmbH & Co. Geschlossene InvKG, Heusenstamm 38.4% 48 0 n/a n/a n/a
Share of net assets (carrying amount) 47 48 n/a n/a n/a n/a n/a n/a n/a n/a
BALANCE AS AT END OF PERIOD 340 21 10 21 392
TOTAL PROPERTY AND EQUIPMENT AS AT END OF PERIOD 340 21 10 21 392 of which buildings in the course of construction 3
BALANCE AS AT END OF PERIOD 7 8 1 360 1 454 54 32 1 421 1 494
BALANCE AS AT END OF PERIOD 1 457 111 39 34 1 641
TOTAL OTHER INTANGIBLE ASSETS AS AT END OF PERIOD 1 457 111 39 34 1 641
Goodwill relating to Lloyd Continental has been allocated to the “France” segment. Goodwill relating to CapitalLeben has been allocated to the “International” segment. Goodwill relating to Corpus Sireo and Beos has been allocated to the “Asset Managers” segment. Of the goodwill relating to other acquisitions, CHF 18 million (31.12.2018: CHF 19 million) have been allocated to the “France” segment, CHF 51 million (31.12.2018: CHF 26 million) to the “Asset Managers” segment and CHF 67 million (31.12.2018: CHF 61 million) to the “International” segment as at 31 December 2019.
Net carrying amount of goodwill 287 287 149 149 94 101 132 136 136 106
Net carrying amount of goodwill 152 152 438 454 72 72 663 678
The acquisition of BEOS AG, Berlin, in August 2018 led to the recognition of customer relationships of CHF 68 million.
Brands and other As at 31 December 2019, “Brands and other” comprises the brands Corpus Sireo, Mayfair, Beos, Fincentrum and Fontavis and each a performance fee related to the acquisition of Beos and Fontavis, which is recognised as other intangible assets. At acquisition date the performance fee of Beos had a fair value of CHF 38 million. Subsequent to the acquisition date, the condition for receiving most of the performance fee was met. Therefore, CHF 35 million resulted in a disposal in the last quarter of 2018. The performance fee of Fontavis had a fair value of CHF 12 million at acquisition date. The brands of Beos, Fincentrum and Fontavis are amortised over their useful lives.
Swiss Life – Annual Report 2019 18 Other Assets and Liabilities
1 of which CHF 214 million pledged as security for loans (2018: CHF 247 million)
Investment contracts without DPF at fair value through profit or loss 30 599 514 – – 599 514
Investment contracts without DPF at amortised cost 30 1 0 – – 1 0
Liabilities released for payments on death, surrender and other terminations –2 986 –2 401
On 22 March 2018, Swiss Life Ltd issued subordinated dated callable bonds in the amount of CHF 175 million. The bonds are guaranteed by Swiss Life Holding, have their maturity date on 25 September 2048 and are first callable on 25 September 2028 or at each interest payment date thereafter at the option of the issuer, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The interest has been fixed at 2.625% p.a. until 25 September 2028. If the bonds are not redeemed on 25 September 2028, the interest resets at a rate fixed for the subsequent five years, consisting of the aggregate of the then-prevailing five-year CHF swap rate and the initial margin of 2.113% p.a.
On 16 June 2015, Demeter Investments B.V., a Dutch repackaging vehicle, issued EUR 750 million in fixed to floating rate subordinated perpetual notes (at an issue price of 99.105%) secured by loan notes granted to Swiss Life Ltd, which are guaranteed by Swiss Life Holding. Swiss Life Ltd may repay the loan notes in full on 16 June 2025 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The interest has been fixed at 4.375% p.a. until 16 June 2025. If the notes are not redeemed on 16 June 2025, the interest will be the aggregate of three-month Euribor and a margin of 4.30% p.a.
Swiss Life AG EUR 750 EUR 750 4.375% 2015 2025 806 834
Swiss Life AG EUR 443 EUR 193 +2.050% 1999 2024 209 217
Swiss Life Holding AG CHF 225 1.125% 2013 2019 – 225
Swiss Life Holding AG CHF 250 0.000% 2019 2025 249 –
Third party interests in consolidated investment funds 30 3 589 3 700
Deposits released for payments on death, surrender and other terminations during the year –233 –314
Insurance liabilities linked to assets for the account and risk of the Swiss Life Group’s customers 7 109 5 905
To assess the funding situation of the defined benefit plans in total, plan assets as well as insurance contracts not eligible as plan assets under IFRS must be set off against the present value of the defined benefit obligation. The total deficit taking into consideration insurance contracts not eligible as plan assets under IFRS amounted to a deficit of CHF 566 million as at 31 December 2019 (2018: deficit of CHF 338 million).
Actuarial gains and losses on the defined benefit obligation –371 45
Average life expectation at ordinary retirement age (women) 25.6 25.5 25.7–31.4 23.2–30.2
At 31 December 2019, if the discount rate had been 50 basis points higher (lower), the defined benefit obligation would have decreased by CHF 298 million (increase CHF 340 million). At 31 December 2018, if the discount rate had been 50 basis points higher (lower), the defined benefit obligation would have decreased by CHF 253 million (increase CHF 286 million).
At 31 December 2019, if the average life expectancy had increased by one year (for both men and women), the defined benefit obligation would have increased by CHF 133 million. At 31 December 2018, if the average life expectancy had increased by one year (for both men and women), the defined benefit obligation would have increased by CHF 112 million.
The expense recognised for share-based payment amounted to CHF 14 million in 2019 (2018: CHF 12 million).
Balance as at Employee Balance as at 1 January Issued departures Vested end of period
Income tax calculated using the expected weighted-average tax rate 291 295
TOTAL DEFERRED INCOME TAX ASSETS/LIABILITIES 72 55 2 432 1 991
The movements in net deferred income tax assets /liabilities during the period were as follows.
NET DEFERRED INCOME TAX ASSETS/LIABILITIES –2 176 –82 391 –80 11 –1 936
Unused amounts reversed 0 0 –6 –7 –5 –3 –11 –10
Foreign currency translation differences 0 0 –1 –1 –1 –1 –2 –2
BALANCE AS AT END OF PERIOD 11 17 23 22 33 48 66 87
Provisions for restructuring were set up in 2019 in Germany (2018: Switzerland and Germany). The outflow of the amounts is expected within the following one to two years.
As at 31 December 2019, the share capital of Swiss Life Holding consisted of 33 594 606 fullypaid shares with a par value of CHF 5.10 each (2018: 34 223 106 fully-paid shares with a par value of CHF 5.10 each). In exercising voting rights, no shareholder can collect more than 10% of the total share capital directly or indirectly in respect of own shares or shares they represent. Conditional share capital was CHF 19 675 534.80 as at 31 December 2019 (2018: CHF 19 675 534.80).
In 2019, a distribution to shareholders out of the capital contribution reserve of CHF 83 million (CHF 2.50 per registered share) was made (2018: distribution out of the capital contribution reserve of CHF 460 million, CHF 13.50 per registered share).
In November 2018, the Group announced a CHF 1 billion share buyback programme that commenced in December 2018 and ended in December 2019 when the target size had been reached. 2 208 715 Swiss Life Holding shares were repurchased for CHF 1 billion under the share buyback programme. The average share price paid was CHF 452.75. In July 2019, 628 500 shares were cancelled.
BALANCE AS AT END OF PERIOD 33 594 606 34 223 106
BALANCE AS AT END OF PERIOD 1 721 351 418 899
Foreign currency translation differences comprise the resulting differences arising on the translation of assets, liabilities, income and expenses of Group entities denominated in foreign currencies into Swiss francs.
The amounts are presented net of certain policyholder bonuses and other policyholder liabilities, deferred acquisition costs, deferred income taxes and non-controlling interests.
Items that will not be reclassified to the income statement to the income statement Total
Remea- Gains/ sure- losses Revalu- ments Foreign financial Gains/ Debt ation net currency assets losses securities surplus defined translation available cash flow reclassified investment benefit differences for sale hedges to loans Total property liability Total
Net balance as at 1 January –888 4 127 410 –22 3 626 72 –325 –252 3 374
Net investment hedges – gross 9 – – – 9 – – – 9
Reclassification to profit or loss – gross 0 257 –66 30 221 – – – 221
The Group’s insurance subsidiaries are subject to regulatory restrictions on the amount of dividends, cash loans and advances which can be remitted to the Group. Certain foreign jurisdictions have restrictions that allow the payment of dividends but may cause a delay in their remittance. Dividends payable are not accrued until they have been ratified at the General Meeting. In 2019, a dividend payment of CHF 464 million (CHF 14.00 per registered share) was made in addition to the distribution to shareholders out of the capital contribution reserve.
On 22 March 2018, Swiss Life Ltd issued subordinated perpetual callable bonds in the amount of CHF 425 million. The bonds are guaranteed by Swiss Life Holding, have no fixed maturity date and are first callable on 25 September 2024 or at each interest payment date thereafter at the option of the issuer, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The interest has been fixed at 2.00% p.a. until 25 September 2024. If the bonds are not redeemed on 25 September 2024, the interest resets at a rate fixed for the subsequent five years, consisting of the aggregate of the then-prevailing five-year CHF swap rate and the initial margin of 1.842% p.a. The bonds are accounted for as equity, the issuance costs of CHF 3 million (in 2018 only) and the interest net of tax of CHF 7 million (2018: CHF 4 million) are accounted for as a deduction from equity.
Profit or loss allocated to non-controlling interests 3 2 3 2
NET CHANGE IN CASH AND CASH EQUIVALENTS 1 197 –154 –4 –4
Swiss Life reports to the Swiss Financial Market Supervisory Authority FINMA. The reporting covers risk management and solvency, liquidity, legal structure, management organisation and intra-group transactions. The reporting is submitted on an ad-hoc, quarterly, half-yearly or yearly basis depending on the topic and is reviewed on a yearly basis by the statutory auditor according to the legal requirements. As at 31 December 2019 and 2018, Swiss Life was compliant with the legal requirements.
In addition to the Group’s solvency requirements, constraints at local level such as Solvency II are considered to address the specific situation of each country and business unit.
The value of a life insurance company for its shareholders comprises the economic net worth and the present value of future profits. The optimal amount of economic capital an insurance company needs to hold in order to maximise the company value is based on a risk/reward trade-off. For risk and capital management decisions, Swiss Life uses an integrated approach. The economic risk capital is determined bottom-up for each large business unit and takes into account market risk, credit risk and insurance risk. These risks are calculated on the basis of loss distributions using a specified risk measure. The overall capital requirement is obtained by taking into consideration respective diversification effects.
Economic and statutory capital requirements and the profit target are the main elements determining the risk budgets. Based on the overall risk budget set by the Investment and Risk Committee of the Board of Directors, the Group Risk Committee of the Corporate Executive Board defines the risk limits for the particular business units. Adherence to these limits is checked on an ongoing basis.
The Group has defined a reference capital structure based on IFRS with the goal of optimising the return on equity and the interest coverage ratio, while taking into account restrictions such as regulatory and rating agency targets. The capital components include shareholders’ equity, hybrid capital and senior debt. The Swiss Life Group seeks to maintain its capital structure close to the reference levels.
Swiss Life – Annual Report 2019 28 Acquisitions and Disposals of Subsidiaries
The Swiss Life Group acquired Fontavis AG, an independent funds and investment manager in Baar, Switzerland, in October 2019. The total consideration of this acquisition consists of a cash component and a contingent consideration in relation to the performance fee payable and earnout liability.
The Swiss Life Group acquired BEOS AG, Berlin, the leading investment manager of corporate real estate in Germany, in August 2018. The total consideration of this acquisition consists of a cash component and a contingent consideration in relation to the performance fee payable and earn-out liability.
Due to loss of control in 2019, BEOS Corporate Real Estate Fund Germany IV and SL REF (DE) European Real Estate Living and Working both are accounted for as financial assets through profit and loss.
In 2018, the Swiss Life Group sold the S Corpus Immobilienmakler GmbH, Cologne.
For the years ended 31 December 2019 and 2018, 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.
Associates at fair value through profit or loss – – 33 31 131 52 164 84
Investment contracts without discretionary participation – – 599 514 – – 599 514
Third party interests in consolidated investment funds – – 1 007 2 089 2 582 1 611 3 589 3 700
Level 3 fair values of CDO /CLO positions are determined by external providers. Their pro prietary methodologies typically rely both on indicative market prices of comparable assets as well as discounted expected cash flows. Unobservable inputs for the cash flow models include assumptions about prepayment rates, discount margins and asset default rates.
Financial liabilities Investment contracts without discretionary participation: The fair value of investment contracts, which are carried at fair value, is measured using market consistent, risk-neutral economic option price models, i.e. Monte Carlo simulations based on scenarios of capital market variables (share price and interest rate indices, interest rates and foreign currency rates). These inputs to fair value measurements are generally categorised as level 2 within the fair value hierarchy.
Market rental value p.a. (price/m²/year) CHF 257 – 305 CHF 252–304 EUR 87 – 471 EUR 87–377
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 2019, 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 2260 million lower (2018: CHF 1887 million). At 31 December 2019, if discount rates had been 10 basis points higher, the fair value of investment property would have been CHF 1139 million lower (2018: CHF 862 million).
Total gains/losses recognised in other comprehensive income – – –10 – –34 – – –44
During 2019, debt securities of CHF 32 million (2018: CHF 36 million) were transferred from level 1 into level 2 due to reduced frequency of price quotations, and debt securities of CHF 344 million (2018: CHF 23 million) were transferred from level 2 into level 1 due to new liquid price sources. Real estate funds of CHF 161 million were listed at the SIX Swiss Exchange and therefore transferred from level 2 into level 1. Changes in the pricing frequency (daily/ weekly) resulted in the following transfers of investment funds during 2019: CHF 10 million (2018: CHF 19 million) from level 1 into level 2, and CHF 6 million (2018: nil) from level 2 into level 1.
The transfers between the levels of the fair value hierarchy were made at the end of the reporting period.
for liabilities held at the end of the period – – 1 0 73 59 74 59
Total gains/losses recognised in profit or loss 31 54 17 471 776 725
at the end of the period – – –74 –59 – –
Investment contracts without discretionary participation 1 1 0 1 0 1 Carrying amount approximates fair value. 2 Excluding third party interests in consolidated investment funds
Level 2: This category mainly consists of note loans (Schuldscheindarlehen) classified as loans. The fair values are measured on a discounted cash flow basis with zero coupon yield curves and credit spreads as main inputs.
For mortgages, the discount factors are derived from the libor/swap curve and a flat spread. Contract-specific spreads are based on an internal model that covers both risk and administration costs. Main inputs to that model are characteristics of the underlying property, the financial situation of the debtor and the duration of the contract. If no contract-specific spread is available a standard spread is applied that shall cover the marketability disadvantages and the administration costs, as mortgages are less standardised and tradable than exchange-traded bonds.
NET AMOUNTS PRESENTED IN THE BALANCE SHEET 2 090 2 140 – – 9 19 2 099 2 158
Contractual obligations to purchase or construct investment property 1 070 862
The Group has entered into various operating leases as a lessee. Rental expenses for these items totalled CHF 53 million for the year ended 31 December 2018. Minimum lease payments totalled CHF 53 million in 2018. Since 1 January 2019, applying IFRS 16, the operating lease commitments are accounted for as lease liabilities on the balance sheet.
Securities lent in exchange for securities received 3 448 3 861 3 448 3 861 1 of which can be sold or repledged by transferee 2 438 4 767 2 438 4 767
Securities received as collateral in exchange for securities lent 3 448 3 861
LIVIT AG, Zürich AM 100.0% 100.0% Asset management & Real estate CHF 3 000 000
Swiss Life Asset Management AG, Zürich AM 100.0% 100.0% Finance CHF 20 000 000
Swiss Life International Holding AG, Zürich IN 100.0% 100.0% Holding CHF 1 000 000
Swiss Life Investment Management Holding AG, Zürich AM 100.0% 100.0% Holding CHF 50 000 000
Swiss Life Pension Services AG, Zürich CH 100.0% 100.0% Services CHF 250 000
Swiss Life Private Equity Partners AG, Zürich AM 100.0% 100.0% Asset management CHF 250 000
Swiss Life Schweiz Holding AG, Zürich CH 100.0% 100.0% Holding CHF 250 000
Swiss Life Select Schweiz AG, Zug CH 100.0% 100.0% Services CHF 5 600 000
Swiss Life (Liechtenstein) AG, Ruggell (formerly Schaan) IN 100.0% 100.0% Life insurance CHF 5 000 000
(formerly Schaan) IN 100.0% 100.0% Services CHF 100 000 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
ATIM Université SCI, Paris FR 100.0% 100.0% Real estate EUR 72 789 644
Financière du Capitole, Toulouse FR 80.0% 80.0% Finance EUR 1 700 000
PARIS PRIME OFFICE, Paris CH from 07.05.2019 55.4% 55.4% Real estate EUR 426 165 000
PIERRE CAPITALE, Paris FR 89.8% 89.9% Real estate EUR 77 908 000
Swiss Life Asset Management (France), Levallois-Perret AM until 01.04.2019 – –
SwissLife Agence Régionale, Nanterre FR 100.0% 100.0% Asset management EUR 101 000
SwissLife Assurance et Patrimoine, Levallois-Perret FR 100.0% 100.0% Life insurance EUR 169 036 086
SwissLife Gestion Privée, Paris FR 60.0% 100.0% Bank EUR 277 171
SwissLife Prévoyance et Santé, Levallois-Perret FR 99.8% 99.8% Non-life insurance EUR 150 000 000 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
ACB Projekt GmbH, Köln CH 50.0% 50.0% Asset management & Real estate EUR 25 000
BEOS Fixture GmbH, Berlin AM from 30.08.2018 100.0% 100.0% Asset management & Real estate EUR 25 000
CORPUS SIREO Projektentwicklung Wohnen GmbH, Köln AM 99.9% 100.0% Asset management & Real estate EUR 4 000 000
DEUTSCHE PROVENTUS AG, Hannover DE 100.0% 100.0% Services EUR 511 292
Garching b. München DE 100.0% 100.0% Real estate EUR 10 000
SL Private Equity GmbH, Frankfurt am Main DE 98.9% 98.9% Private equity EUR 91 000
Swiss Life Deutschland Holding GmbH, Hannover DE 100.0% 100.0% Holding EUR 25 000
Swiss Life Deutschland Vertriebsservice GmbH, Hannover DE 100.0% 100.0% Services EUR 25 000
Heusenstamm AM 100.0% 100.0% Asset management & Real estate EUR 125 000
Fontavis Capital Partners, Luxembourg AM from 23.10.2019 100.0% 100.0% Asset management EUR 12 000
Heralux S.A., Luxembourg FR 99.8% 100.0% Reinsurance EUR 3 500 000
SWISS LIFE (LUXEMBOURG) S.A., Luxembourg IN 100.0% 100.0% Life insurance EUR 23 000 000
(formerly Swiss Life Hotel Properties SCS), Luxembourg DE 100.0% 100.0% Asset management & Real estate EUR 261 977 750 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
Luxembourg CH from 02.04.2019 100.0% 100.0% Investment funds EUR 10 837 500
Chase de Vere Financial Solutions Limited, Manchester IN 100.0% 100.0% n/a GBP 1
Chase de Vere IFA Group Plc, London IN 100.0% 100.0% Finance GBP 26 000 000
Chase de Vere Loans Limited, Manchester IN 100.0% 100.0% n/a GBP 1 000 000
MAYFAIR CAPITAL PARTNERS LIMITED, London AM 100.0% 100.0% n/a GBP 1
LIMITED, St. Helier AM 100.0% 100.0% Asset management GBP 10 000
Oakfield Wealth Holdings Limited, London IN 100.0% 100.0% Holding GBP 90
Oakfield Wealth Management Limited, London IN 100.0% 100.0% Broker GBP 100
Swiss Life Select CEE Holding GmbH, Wien IN 100.0% 100.0% Holding EUR 35 000
Swiss Life Select Österreich GmbH, Wien IN 100.0% 100.0% Services EUR 726 728 1 Segment (CH = Switzerland, AM = Asset Managers, IN = International, FR = France, DE = Germany)
RENAISSANCE OFFICE SPRL, Bruxelles FR 100.0% 100.0% Real estate EUR 2 484 148
Swiss Life BelCo, Etterbeek FR 100.0% 100.0% Real estate EUR 3 500 070
Adroit Partnerships (Offshore) L.P., Grand Cayman CH 100.0% 100.0% Private equity CHF 6 579 948
Swiss Life Financial Services (Cayman) Ltd., Grand Cayman Other 100.0% 100.0% Services CHF 100
Swiss Life Network (Asia) Pte. Ltd., Singapore IN 100.0% 100.0% Services SGD 1
Report of the statutory auditor to the General Meeting of Swiss Life Holding Ltd
As key audit matters the following areas of focus have been identified: Models and assumptions used to calculate future life policyholder benefits
We continuously adjusted our audit approach to the developments of the Swiss Life Group and its subsidiaries. While all material positions in the consolidated financial statements are audited, emphasis is placed on matters identified during our risk assessment process. We have described such matters further below in section “Key audit matters”.
As set out in note 22 – Insurance Liabilities – total net future life policyholder benefits of the Swiss Life Group amount to CHF 106’789 million. We consider the future life policyholder benefits in Switzerland, which make up 76% of the future life policyholder benefits on the Group's balance sheet as a key audit matter.
We have obtained the cash flow projections based on financial budgets for the individual cash generating units approved by management and the board of directors, including details on activities supporting the expected development. We challenged management as to the feasibility of reaching the cash flows.
In addition, with the support of our valuation experts, we assessed the main parameters used in the calculation of the weighted average cost of capital, from which the discount rate is derived. We identified the market data inputs used by the Group and tested these against independent data. As for the long-term growth rate used at the end of the mid-term planning period, we compared it to the economic environment and industry trends.
In addition, a significant driver of the value-in-use is the discount rate, which is based on the weighted average cost of capital.
As the actual cash flows naturally vary from planned projections, management have created detailed sensitivity analysis. This sensitivity analysis provides insights as to the recoverability of goodwill when the assumptions used in the planned projections, individually or as a whole, are not met.
We critically assessed management’s sensitivity analyses to ascertain the level of reliability of the assumptions when compared to past performance.
We focused on investment property due to the size of such property with respect to the total amount of invested assets and the fact that there is a high degree of judgement involved in determining the fair value. Further, we consider the investment property held by Swiss Life Switzerland as a key audit matter, as the value makes up a substantial part of the investment property on the Group’s balance sheet.
• Examination of the valuation parameters (discount rate and operating costs) used and comparison of the same to market data
Other information in the annual report The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements and the remuneration report of Swiss Life Holding Ltd and our auditor’s reports thereon.
As at the end of the year, Swiss Life Holding had assets (liquid funds, receivables from Group companies, debt securities, investment funds and equities) of CHF 1056 million. Liquid funds declined to CHF 51 million (previous year: CHF 118 million) and debt security, investment fund and equity holdings fell to CHF 937 million (previous year: CHF 1524 million). The main reason for the decrease is the financing of the share buyback programme begun in 2018 and completed in 2019 with a total value of CHF 1 billion. A total of 2 208 715 treasury shares were repurchased, 628 500 of which had already been cancelled by the end of the year under review. As at the end of the year, Swiss Life Holding held 5.12% treasury shares.
New loans totalling CHF 682 million were awarded to Group units to finance real estate projects or smaller acquisitions. Including repayments of expired loans and payments under lines of credit granted, the outstanding amount increased to CHF 1637 million (previous year: CHF 986 million).
The 2018 Financial Statements were prepared in accordance with the provisions of Swiss accounting law (Title 32 of the Swiss Code of Obligations). Swiss Life Holding’s Financial Statements are presented in millions of Swiss francs (CHF), which is the presentation currency. Figures may not add up exactly due to rounding.
Treasury shares The Swiss Life Group companies did not purchase any treasury shares during the year under review. In the same period, they did not sell any shares. As at 31 December 2019, the Swiss Life Group held 141 136 treasury shares which are not part of the share buyback programme.
Financial assets pledged as collateral Debt securities of CHF 190 million were pledged on the balance sheet date as part of a repurchase agreement (repo transactions).
TOTAL PROFIT SHOWN IN THE BALANCE SHEET 758 292 876 460 842 881
Participations represent a significant amount of the balance sheet (CHF 3’216 million, 54% of total assets). We refer to page 314 of the financial statements of Swiss Life Holding Ltd.
Management test the valuation of individual participations through a comparison of the book value of each participation to the respective IFRS equity value. Management utilize the equity value of each participation determined for the IFRS closings. As long as the IFRS equity value exceeds the book value of the participation, the conclusion is drawn that the valuation of the participation is sufficient.
We consider the valuation approach, and the assumptions and parameters used within, as a reasonable and adequate basis for the management assessment of the participation value recorded on the balance sheet. The audit evidence obtained through our audit procedures was sufficient and suitable to assess the valuation of participations.
Swiss Life Holding Ltd | Report of the statutory auditor to the General Meeting
Share Performance and Historical Comparison The Swiss Life share price developed strongly in 2019, closing the year at CHF 485.80. This is an increase of 28%, or 33% taking into account the dividend payment of CHF 16.50 in April 2019.
Performance of Swiss Life (in %) +28 +10 +20 +6 +15
Performance of Swiss Market Index (SMI) (in %) +26 –10 +14 –7 –2
Total dividend payout to shareholders (in CHF million) 07.05. 547 460 356 271 207
2 equity excl. unrealised gains/losses on financial instruments 3 incl. share buy-back (2019: CHF 913 million / 2018: CHF 87 million)
The English text is definitive for the Consolidated Financial Statements; the original German text is binding in all other respects.