Annual Report 2011 Financial Statement Section xxdd ddd ddd ddd ddd ddd ddd ddd xx xxxx xxxx
Contents 4 Corporate Governance 9 Board of Directors 17 Corporate Executive Board 21 Report on Compensation 36 Risk Management 38 Market Consistent Embedded Value (MCEV) 40 Introduction 42 Summary of MCEV Results 51 Information by Market Unit 57 Methodology 63 Assumptions 67 External Auditors’ Statement 68 Glossary and List of Abbreviations 70 Consolidated Financial Statements 72 Consolidated Statement of Income 73 Consolidated Statement of Comprehensive Income 74 Consolidated Balance Sheet 76 Consolidated Statement of Cash Flows 78 Consolidated Statement of Changes in Equity 79 Notes to the Consolidated Financial Statements 182 Report of the Statutory Auditor 184 Swiss Life Holding Financial Statements 185 Review of Operations 186 Statement of Income 187 Balance Sheet 188 Notes to the Financial Statements 203 Appropriation of Profit 204 Report of the Statutory Auditor
Swiss Life complies with internationally accepted standards of corporate governance and, in the interests of its shareholders, policyholders and staff, attaches great importance to the requirements entailed in terms of the management and organisation of the Swiss Life Group. The corporate governance of Swiss Life Holding Ltd (Swiss Life Holding) is based on the Directive on Information Relating to Corporate Governance issued by the SIX Swiss Exchange and the circulars 2008/32 on corporate governance, risk management and internal control systems for insurance companies and 2010/1 on minimum standards for remuneration schemes of financial institutions published by the Swiss Financial Market Supervisory Authority FINMA. It is also modelled on leading national and international corporate governance standards, in particular the Swiss Code of Best Practice for Corporate Governance issued by the Swiss Business Federation, economiesuisse, as well as the Organization for Economic Cooperation and Development’s (OECD) principles on corporate governance.
In the year under review, Swiss Life revised its Code of Conduct in the light of best practice. The Code offers guidance on the interaction of employees with each other and with persons outside Swiss Life. It lays down the values and principles of the Swiss Life Group and establishes binding guidelines. Specific rules are set out with relation to insider information for example. Management must obtain prior approval (pre-clearance) before carrying out transactions in Swiss Life Holding shares.
The operational management structure as at 31 December 2011 is shown on page 17.
Talanx AG, Riethorst 2, 30659 Hanover, Germany, reported in the publication of 23 February 2011 regarding a change in the composition of the Group subject to reporting requirements that it held 2 974 688 shares of Swiss Life Holding, equivalent to 9.27% of the voting rights. The group consists of: Talanx Beteiligungs-GmbH & Co. KG, Riethorst 2, 30659 Hanover and AmpegaGerling Investment GmbH, Charles-de-Gaulle-Platz 1, 50679 Cologne. Talanx Beteiligungs -GmbH & Co. KG is managed by the beneficial owner (HDI Haftpflichtverband der Deutschen Industrie V.a.G, Riethorst 2, 30659 Hanover) as follows: The limited partner is Talanx AG, Riethorst 2, 30659 Hanover. The sole shareholder of Talanx AG is the beneficial owner (HDI V.a.G.). The general partner is Gerling Beteiligungsgesellschaft mbH, Charles-de-Gaulle-Platz 1, 50679 Cologne. Talanx AG is Gerling Beteiligungsgesellschaft mbH’s sole partner. AmpegaGerling Investment GmbH is managed by the beneficial owner as follows: 94.9% is controlled by AmpegaGerling Asset Management GmbH, Charles-de-Gaulle-Platz 1, 50679 Cologne (Talanx AG is AmpegaGerling Asset Management GmbH’s sole partner) and 5.1% by Alstertor Erste Beteiligungs- und Investitionssteuerungs-GmbH & Co. KG, Hamburg. Alstertor’s sole limited partner is Talanx AG.
Letko Brosseau and Associates Inc., 1800 McGill College Avenue, Montreal, QC H3A 3J6 Canada, reported in the publication of 10 March 2011 that it held through managed accounts 967 104 shares of Swiss Life Holding, corresponding to a 3.01% share of the voting rights. In the publication of 19 April 2011, Letko reported a new holding of 956 604 shares, equivalent to a 2.98% share of the voting rights.
BlackRock Inc., 40 East 52nd Street, New York 10022, USA reported in a publication of 26 October 2011 that a group consisting of BlackRock Asset Management Japan Limited, Marunouchi Trust Tower Main, 1-8-3 Marunouchi, Chiyodaku, Tokyo 100-8217, BlackRock Advisors UK Ltd, Murray House, 1 Royal Mint Court, London EC3N 4HH, BlackRock Investment Management (UK) Ltd., 33 King William Street, London EC4R 9AS, BlackRock International Ltd., 40 Torphichen Street, Edinburgh EH3 8JB, BlackRock Investment Management (Australia) Limited, Level 43, Grosvenor Place, 225 George Street, Sydney NSW 2000, BlackRock Fund Managers Ltd., 33 King William Street, London EC4R 9AS, BlackRock Investment Management LLC, 800 Scudders Mill Road, Plainsboro NJ 08536, BlackRock Financial Management Inc., 40 East 52nd Street, New York NY 10022, BlackRock Asset Management Australia Limited, Level 43, Grovesnor Place, 225 George Street, Sydney NSW 2000, BlackRock Fund Advisors, 400 Howard Street, San Francisco, CA 94105, BlackRock Institutional Trust Company, N.A., 400 Howard Street, San Francisco, CA 94105-2618, BlackRock Investment Management (Dublin) Ltd., First Floor, Fitzwilton House, Wilton Place, Dublin 2 and BlackRock Asset Management Canada Limited, 161 Bay Street, Suite 2500, Toronto, Ontario M5J 2S1, held a total of 962 364 shares and 2808 other purchase positions of Swiss Life Holding, corresponding to 3.01% of the voting rights. In addition BlackRock held 411 sales positions, corresponding to 0.001% of the voting rights.
CAPITAL AND CHANGES IN CAPITAL — The capital structure of Swiss Life Holding was as follows on the balance sheet date: – Ordinary share capital: CHF 163 613 375.40, divided into 32 081 054 fully paid registered shares with a par value of CHF 5.10 each
SHARES — 32 081 054 fully paid Swiss Life Holding registered shares with a par value of CHF 5.10 each were outstanding on the balance sheet date. Subject to the 10% limit on voting rights set out in the Articles of Association (cf. the section on “Shareholders’ participation rights” on page 32), each share grants the right to one vote at the General Meeting of Shareholders.
Additional information on the Swiss Life share is available in the section “Information on Share Performance and Historical Comparison” on pages 76 and 77 in the Business Review.
As at 31 December 2011, Swiss Life Holding and its Group companies had not granted any options on rights to participate in Swiss Life Holding.
Gerold Bührer graduated in economics (lic. oec. publ.) from the University of Zurich in 1972. Following 17 years with the Union Bank of Switzerland as a member of senior management in its financial sector and a Member of the Executive Board of its fund investment company, he joined Georg Fischer Ltd in 1991, where he served as a Member of its Executive Board (Finances) from 1991 until 2000. He began working as an independent economic consultant in 2001 and, since the end of 2006, has held the office of Chairman of economiesuisse. Gerold Bührer was a Member of the Grand Council of the Canton of Schaffhausen from 1982 to 1991 and, from 1991 to 2007, a Member of the Swiss Parliament (National Councillor).
Other appointments: – economiesuisse, Chairman – Bank Sal. Oppenheim jr. & Cie. (Schweiz) Ltd, Member of the Board of Directors – Cellere AG, Member of the Board of Directors – Georg Fischer Ltd, Member of the Board of Directors – Swiss National Bank, Member of the Bank Council – Züblin Real Estate Holding Ltd, Member of the Board of Directors
Frank Schnewlin studied at the University of St. Gallen (lic. oec. HSG), the London School of Economics (Master of Science ) and the Harvard Business School (MBA) before earning his doctorate in economics in 1983 at the University of Lausanne (Dr. ès sc. écon). From 1983 to 2001 he held various positions at the Zurich Financial Services Group in Switzerland and the USA, including Head of Corporate Center and Head of the Business Division Southern Europe, Asia/Pacific, Middle East, Africa and Latin America. From 1993 he served on the Zurich Financial Services Group’s
Executive Committee. From 2002 to 2007, Frank Schnewlin chaired the Baloise Group’s Corporate Executive Committee as CEO and was, at the same time, Head of the International Division.
Frank Schnewlin will be put forward for re-election at the General Meeting of Shareholders of Swiss Life Holding on
Volker Bremkamp joined Albingia Versicherungs AG in Hamburg (a subsidiary of Guardian Royal Exchange plc, London) in 1963, receiving his qualifications as an insurance expert in 1965. Between 1969 and 1971 he was employed by various insurance companies and brokers in London and Paris. He returned to Albingia Versicherungs AG, Hamburg, in 1971, serving as an Executive Director from 1978 to 1989 and, from 1989 to 2000, as Chief Executive Officer of Albingia Lebensversicherungs AG and of Albingia Versicherungs AG. Between 1995 and 1999 Volker Bremkamp was an Executive Director and, at the same time, Group Executive Director, Continental Europe, of Guardian Royal Exchange plc, London, which was taken over by the AXA Group in 1999. From 1999 to 2000 he held the position of Executive Director of AXA Colonia Konzern AG, Cologne (holding company of AXA Germany). He has been Managing Director of BMB Bremkamp Management- und Beteiligungs-GmbH since 2000.
Henry Peter completed his studies in law at the University of Geneva in 1979, and in 1981 he was called to the Geneva bar. Following a pupillage in Geneva, a period of study as a visiting scholar at the University of California in Berkeley and legal work in Lugano, he obtained his PhD at the University of Geneva in 1988. Since 1988 he has been a partner in a law firm in Lugano, currently PSM. In addition, he has held the position of Professor of Business Law at the University of Geneva since 1997. He became a Member of the Swiss Takeover Board in 2004 and a Member of the Sanction Commission of the SIX Swiss Exchange in 2007.
Henry Peter will be put forward for re-election at the General Meeting of Shareholders of Swiss Life Holding on
Peter Quadri received his master’s degree in economics and business administration (lic. oec. publ.) in 1969 from the University of Zurich. In 1970 he joined IBM as a systems engineer and software/operating systems specialist. Following various periods in the USA, Denmark and Switzerland, he held the position of CEO of IBM Switzerland from 1998 to April 2006. He now works as a management and technology consultant.
The Board of Directors met nine times during the year under review. The meetings lasted around three and a half hours on average. There was full attendance at all meetings, with the exception of one meeting, which one member was unable to attend. The Group CEO and the other members of the Corporate Executive Board attended all the meetings. The Board of Directors conducted parts of the meetings among themselves.
The Chairman’s Committee held 13 meetings during the year under review. The average duration of a meeting was around two hours. There was full attendance at all meetings, and the Group CEO was also present on each occasion. The Group CFO attended ten meetings.
During the year under review the NCC convened a total of six times. Each session lasted for around two hours on average. There was full attendance at all meetings.
INVESTMENT AND RISK COMMITTEE — The Investment and Risk Committee assists the Board of Directors in matters concerning investment management, financial management and risk management within the Group. The tasks of the Investment and Risk Committee include drafting proposals on the principal features of asset and liability management (ALM) and submitting them to the Board of Directors, determining the investment policy, assessing capital adequacy, verifying compliance with guidelines on investments, and establishing the risk tolerance in insurance and investment operations. The Investment and Risk Committee is vested with the authority to define various regulations and directives pertaining to the investment activities of the Swiss Life Group and must inform the Board of Directors accordingly. In addition, the Investment and Risk Committee is responsible for making decisions on investments above a certain amount and specifies the terms of significant intra-Group financing.
DELINEATION OF COMPETENCIES BETWEEN THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE
The Articles of Association of Swiss Life Holding can be found at www.swisslife.com, “About us” area, “Organisation” section, “Corporate Governance” and “Articles” subsections (www.swisslife.com/association). The Organisational Regulations are also published on Swiss Life’s internet site in the “About us” area, “Organisation” section, “Corporate Governance ” and “Organisational Regulations” subsections (www.swisslife.com/en/organisation).
INFORMATION AND CONTROL INSTRUMENTS OF THE BOARD OF DIRECTORS VIS-À-VIS THE CORPORATE EXEC-
UTIVE BOARD — The Board of Directors is continually and comprehensively briefed on the activities of the Corporate Executive Board. The Group CEO regularly informs the Chairman of the Board of Directors and the Board of Directors and its committees on the course of business, new business activities and significant projects. The Group CEO informs the Chairman of the Board of Directors immediately of any extraordinary matters. Considerable expenditure which is unbudgeted for and amounts to more than 10% of the relevant budget must be submitted to the Chairman’s and Corporate Governance Committee for approval. Similarly, significant investments and divestments require the approval of the Investment and Risk Committee or, when they reach a certain level, the approval of the Board of Directors as a whole.
MEMBERS OF THE CORPORATE EXECUTIVE BOARD — On 31 December 2011 the Corporate Executive Board of Swiss Life Holding was composed of the following members: Member of the Corporate Executive
Bruno Pfister graduated from the University of Geneva with a master’s degree in law before being called to the bar in Geneva. Following completion of his business management studies (MBA from the UCLA Graduate School of Management in Los Angeles), the initial stages of his career saw him working for Chase Manhattan Bank in London and Geneva. From 1988 onwards he was a management consultant for McKinsey & Co in Zurich. In 1996 Bruno Pfister became Chief of Staff of the Private Banking division at Liechtenstein Global Trust (LGT) where he managed a global strategic project before being appointed Chief Financial Officer of LGT Group and LGT Bank in Liechtenstein in 1998. In 1999, as a Member of the Credit Suisse Group Executive Board, he took over as Head of Customer Segment Management and Product Management at Credit Suisse.
Other appointments: – Gottex Fund Management Holdings Limited, St. Peter Port, Guernsey, Member of the Board of Directors – Swiss Insurance Association (SIA), Vice Chairman, Member of the Board Committee – Avenir Suisse, Member of the Board of Trustees and Member of the Finance Committee – Swiss-American Chamber of Commerce, Member of the Board of Directors (since June 2011)
On 1 October 2008 Klaus G. Leyh was appointed Chief Executive Officer of Swiss Life in Germany (CEO Germany) and Member of the Swiss Life Group’s Corporate Executive Board.
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 Member of the Executive Committee of the Swiss P&C business unit. From 1997 to 1999 he was Chief Financial Officer of all Swiss operations. In 1999 Thomas Buess moved to the USA as Chief Financial Officer of Zurich Financial Services Group’s North American business area. In 2002 he was appointed Group Chief Financial Officer and Member of the Group Management Board. Thomas Buess went on to head the reorganisation of the life insurance business before assuming the role of Chief Operating Officer of Zurich Financial Services Global Life in 2004. In January 2009 he moved to Allianz Group as Head of Operational Transformation.
Charles Relecom graduated from the University of Namur (Belgium) with a degree in mathematics and went on to gain a master’s degree in Actuarial Science at the University of Louvain (Belgium). He began his career in 1978 as Chief Actuary and Chief Technology Officer at Swiss Life in Belgium. In 1984 he moved to the head office in Zurich, where he played a significant role in setting up the International Division. From 1988 to 1994 he worked for ELVIA Life as Director of Sales in the key accounts business. In 1994 he moved to «La Suisse» and, in 1998, was appointed CEO of the non-life business and Chief Actuary. In 2000 he became the CEO of «La Suisse», a position he held until 2005 when the company was integrated into the Swiss Life Group. Following the integration, Charles Relecom returned to Swiss Life in Belgium, initially as the CEO of Zelia S.A. and, from February 2006, as CEO for the entire Belgian business.
After graduating in law, Manfred Behrens initially worked as an attorney in a Hamburg-based law firm. In 1984 he moved to Hamburg Mannheimer AG, where he assumed various leading positions in the areas of law and sales and went on to become regional manager. He joined Volksfürsorge Deutsche Lebensversicherungs-AG in May 1996 and, in 1998, was appointed Member of the Board of Management with responsibility for sales and marketing.
The specifications below follow the directives on information relating to corporate governance issued by the SIX Swiss Exchange and take into consideration the transparency regulations set out in the Swiss Code of Obligations Art. 663bbis and Art. 663c as well as Circular 2010/1 of the Swiss Financial Market Supervisory Authority FINMA on minimum standards for remuneration schemes of financial institutions. Further 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 24 and 32) on pages 154 to 159 and 168 to 169. Additional details regarding the compensation and remuneration of the members of the Board of Directors and the Corporate Executive Board, and their participation interests, are shown in the Notes to the Swiss Life Holding Financial Statements on pages 191 to 202.
The Board of Directors as a whole sets the level and distribution of the variable compensation pool for all employees on the basis of its compensation policy guidelines upon a proposal by the Nomination and Compensation Committee.
Pursuant to the regulations of the 2009 and 2010 equity compensation plans, future subscription rights were allocated in the form of so-called Performance Share Units (PSUs), whereby share allocation after expiry of the three-year period was based on two performance criteria, each weighted at 50%. The allocation mechanism is set out in detail in the 2010 Annual Report and in this Annual Report in the Notes to the Swiss Life Holding Financial Statements on pages 194 to 195. 65 members of Swiss Life Group senior management, including members of the Corporate Executive Board, participated in the 2009 equity compensation plan. A total of 53 216 PSUs were allocated; 22 200 to the Corporate Executive Board, including 6500 to Bruno Pfister as Group CEO. In 2010, 69 members of the Swiss Life Group senior management took part in the plan, in which a total of 68 510 PSUs were allocated; 24 700 to the Corporate Executive Board, of which 6500 to Bruno Pfister in his capacity as Group CEO.
In the period under review, participants in the 2011 equity compensation plan were allocated Restricted Share Units (RSUs) instead of PSUs. As with PSUs, RSUs grant the holder future subscription rights, entitling them to receive Swiss Life Holding shares free of charge after a three-year period has elapsed, but without any additional leverage effect. The attribution of shares after the expiry of the three-year deferral period is effected on a 1:1 basis (1 RSU = 1 share). The plan is therefore very simple, transparent throughout the whole term and directly linked to the performance of the Swiss Life share. The value of RSUs during the three-year term develops linear with the Swiss Life Holding share price and thus symmetrically corresponds with shareholder interests. During the period under review, a total of 62 members of Swiss Life Group senior management participated in the 2011 equity compensation plan, which came into effect on 1 April 2011. A total of 68 730 RSUs were allocated; 23 630 in total to the members of the Corporate Executive Board, of which 6350 RSUs to Bruno Pfister as Group CEO.
adjustment and reclaiming mechanisms (clawback). If the employment relationship is terminated by a participant during the three-year term of the RSU plan, the future entitlements expire worthless.
COMPENSATION PAID TO ACTING MEMBERS OF GOVERNING BODIES — The following compensation in cash was received by acting members of the Board of Directors and the Corporate Executive Board during the period under review: In CHF
1 Incl. cash bonus of CHF 4 340 500 for the 2011 financial year, determined and paid out at the beginning of 2012. 2 Incl. cash bonus of CHF 4 475 000 for the 2010 financial year, determined and paid out at the beginning of 2011.
Compensation remitted to members of the Corporate Executive Board comprises the basic salary, variable compensation in cash and other compensation (child allowances, company cars, premium contributions to 3rd pillar pension plans). The variable compensation in cash is allocated as a bonus and, if applicable, as deferred compensation in cash. The deferred compensation in cash, which was introduced on 1 January 2012, is paid out after a period of three years has elapsed and provided that the regulatory requirements have been satisfied. In addition, a mid- to long-term compensation component is in place in the form of an equity compensation plan linked to the performance of the Swiss Life Holding share price. As mentioned above, it gives an entitlement to Swiss Life Holding shares after a period of three years has elapsed and provided that the relevant requirements are satisfied at the time of allocation.
SHARE ALLOCATION IN THE YEAR UNDER REVIEW — The shares allocated to the members of the Board of Directors in the period under review form part of the compensation, which was granted 70% in cash and 30% in blocked Swiss Life Holding shares.
ADDITIONAL HONORARIUMS AND REMUNERATIONS — In the period under review no additional honorarium or remuneration payments were made to the members of the Board of Directors or the Corporate Executive Board.
In the year under review, Swiss Life Ltd, AWD Holding AG and their subsidiaries paid a total of EUR 341 800 in fees for consultancy services to a company in which Carsten Maschmeyer, who was a member of the Board of Directors of Swiss Life Holding until his resignation on 7 December 2011, has an important shareholding.
No such affiliation to employee benefits institutions of Swiss Life exists for other members of the Board of Directors and no contributions have been made on their behalf.
Expenditure for occupational provisions on behalf of the remaining members of the Corporate Executive Board totalled CHF 1 052 844 during the period under review.
HIGHEST TOTAL COMPENSATION, BOARD OF DIRECTORS — Rolf Dörig, as Chairman of the Board of Directors, received the highest total compensation for a member of the Board of Directors of Swiss Life Holding in 2011.
3 6350 future subscription rights in the form of RSUs entitling the holder to receive Swiss Life Holding shares on 1 April 2014, provided the requirements are satisfied at that point. On the allocation date of 1 April 2011 the fair value of an RSU was CHF 140.05.
4 6500 future subscription rights in the form of PSUs entitling the holder to receive Swiss Life Holding shares on 1 April 2013, provided the requirements are satisfied at that point. On the allocation date of 1 April 2010 the fair value of a PSU was CHF 149.98.
of which total variable compensation (total pool) 2 121 093 022
Total outstanding deferred compensation 7 611 521 of which cash payment 1 591 642 of which shares 0 of which options 0 of which others (Restricted Share Units, RSUs / Performance Share Units, PSUs) 6 019 879
Charges and credits in the financial year from compensation for previous financial years 3 –7 296 882
Total severance payments made in the financial year 5 0 1 The totality of any monetary value which the company distributes to a person directly or indirectly for the work performed for the company, e.g. in the form of cash payments, noncash benefits, expenditure which establishes or increases entitlements to occupational provisions, pensions, shares or other allocation of shareholding rights as well as the forgiving, extinguishing or renunciation of any claims or debts.
CONVOCATION OF THE GENERAL MEETING OF SHAREHOLDERS AND AGENDA — The rules set out in the Articles of Association for convening a General Meeting of Shareholders and drawing up the agenda comply with the stipulations of the law. Shareholders who represent at least 0.25% of the share capital can submit a written request within a time limit published in advance by Swiss Life Holding for the inclusion on the agenda of an item for discussion, together with the relevant motions. The written application must be accompanied by a blocking certificate issued by a bank to confirm that the shares are deposited with it until after the General Meeting of Shareholders is held.
The partner at PwC in charge of auditing the Swiss Life Holding annual financial statements and consolidated financial statements (lead auditor) took over the responsibility in the 2011 financial year. 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.
AUDITING FEES — In 2011 the auditing fees credited to PwC came to CHF 8.0 million (2010: CHF 9.2 million). This includes the fees for reviewing the 2011 half-year accounts.
SUPERVISORY AND CONTROL INSTRUMENTS VIS-À-VIS THE AUDITORS — The Audit Committee maintains regular contact with the external auditors. It evaluates the independence of the external auditors and identifies possible conflicts of interest. It also examines the terms and conditions of the external audit mandates and assesses the audit plan and strategy for the year in question.
report on the financial year just completed for the attention of the Audit Committee, the Board of Directors and the Swiss Financial Market Supervisory Authority FINMA.
OPERATIONAL RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM — Operational risk management (ORM) at Swiss Life includes the methods and processes used for the identification, assessment and steering or avoidance of operational risks. ORM defines operational risk as the danger that losses may result from shortcomings or failures in internal processes, people or systems, or from external events. Swiss Life’s internal control system (ICS) consists of the totality of procedures, methods and measures prescribed by the Board of Directors and the Corporate Executive Board to ensure the orderly conduct of business. The focus is on the reliability of financial reporting, the effectiveness of business processes and compliance with laws and regulations issued to protect the company’s assets.
ECONOMIC CAPITAL — 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 to maximise the company value is a trade-off between benefits and costs. For risk and capital management decisions, the Swiss Life Group 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 account appropriate diversification benefits among the above-mentioned risk categories.
Individual elements of the bottom-up risk capital per business unit allow for a monthly estimate of the SST solvency situation. The calibration is done based on the full SST calculations as at the beginning of each calendar year and as at mid-year.
Economic and statutory capital constraints and the profit target are the main elements determining the risk budgets. Based on these risk budgets, the Corporate Executive Board (Group Risk Committee) defines the risk limits for each country and business unit. Compliance with these limits is checked each month.
Swiss Life’s market consistent embedded value reporting follows the European Insurance CFO Forum Market Consistent Embedded Value Principles©1. The cost of credit risk relating to bonds is calculated and disclosed in addition to the Principles’ mandatory requirements. Further details on the MCEV methodology and assumptions are given in sections 4 and 5.
For details about the MCEV components, see section 4 on methodology. Please note that the notion of certainty equivalent value is equivalent to the notion of present value of future profits in the CFO Forum Principles.
During 2011, the capital markets were characterised by a strong decline of the relevant interest rates, a widening of corporate and sovereign credit spreads and higher interest rate volatilities.
The following tables show key results as at 31 December 2011 compared to the results as at 31 December 2010: In CHF million
Present value of new business premium (PVNBP) 12 914 14 607
Both the adverse economic environment and the reduction in volume, particularly in the PPLI business, led to a decrease by 28% of the value of new business and to a decrease of the new business margin from 1.4% to 1.2%. Continued expense reductions and an overall improvement of the business mix partially counteracted the adverse capital market developments.
The value of covered business increased by 8%. Operating MCEV earnings contributed to this increase by profitable new business and a strong operating return on the in-force business. A capital transfer also increased the value of covered business. The adverse capital market environment had a negative effect on the MCEV of covered business. This was partially alleviated by the move to QIS 5-styled valuation curves which include liquidity premiums. Due to the mentioned capital transfer and the dividend paid to shareholders, the value of the non-covered business is slightly below the previous year’s level. Overall the Group MCEV increased by 2%.
The following graph and table show the MCEV by components, together with the previous year’s figures: In CHF million
Time value of financial options and guarantees –2 601 –1 912
Overall the net asset value increased very significantly by 31% due to the strong operating profit of the year and nonrecurring effects. The required capital slightly decreased despite an increase of the balance sheet size. As a result free surplus – after financing new business – increased by CHF 631 million, whereof about one third is driven by non-recurring items including a net capital transfer into covered business. The biggest contribution to this increase results from Switzerland. Goodwill and other intangibles are not included in the net asset value, with the exception of France (see section 4.7).
The following graph and table detail the drivers for the change in new business value and margin of the business sold in 2011 compared to the business sold in 2010.
Amounts in CHF million NBM Change in NBM PVNBP VNB (% PVNBP) (% PVNBP)
The new business volume measured in PVNBP decreased by 12%. Most of this reduction is driven by lower premiums of the PPLI business, which are single premiums only. Despite this reduction in volume, the new business margin remained stable apart from effects from the adverse capital market environment and due to an overall improvement of the new business mix and other operational indicators.
The table below shows the development of Group MCEV split by components from 31 December 2010 to 31 December 2011.
The opening adjustment of the Group MCEV represents the dividend payment to shareholders of CHF 4.50 per share or a total of CHF 144 million as shown in the Consolidated Financial Statements (Note 27) and currency exchange rate effects of CHF –2 million.
The operating MCEV earnings for non-covered business increased by 19% compared to 2010 and correspond mainly to results from Swiss Life Holding, AWD, Investment Management and insurance business not within the scope of covered business. The change in operating MCEV earnings compared to 2010 originates almost entirely from the covered business.
The non-operating MCEV earnings relate to borrowing costs and tax effects for the non-covered business. The change in non-operating MCEV earnings compared to 2010 originates almost entirely from the covered business.
The other movements in IFRS net equity (non-covered business only) include the purchase of treasury shares, effects from equity-settled share-based payments and currency exchange rate effects on goodwill.
Transfers from VIF and required capital to free surplus 680 –158 –523 – –
TRANSFERS FROM VALUE IN FORCE AND REQUIRED CAPITAL TO FREE SURPLUS include the transfer of the results of the preceding step from VIF to free surplus. Also, the required capital is normally reduced after this step, resulting in an equal increase of free surplus. The total effect in this line is zero. In the context of a life insurer’s business model, this should be seen in combination of effects from new business which partly reverses this effect by an increase of required capital and a reduction of net asset value.
EXPERIENCE VARIANCES aggregate the impact of actual development versus expectations regarding non-economic assumptions such as mortality, expenses, lapses, as well as the deviations in handling of additional reserves. The large part of the experience variances comes from the Swiss business where a variety of effects including reserve strengthening contributed. Noteworthy is also the negative experience variance for International where the investments of the PPLI business contribute negatively.
Operational and demographic sensitivities as well as economic sensitivities with regard to equity/property implied volatilities or market values remained overall stable with respect to the ones for 2010. Sensitivities for MCEV with regard to reference rate levels are further reduced. Sensitivities with regard to swaption implied volatilities increased significantly. This is caused by the elevated swaption implied volatilities as at 31 December 2011 and the fact that relative changes to volatilities are determined.
The economic sensitivities are assumed to occur after the new business contracts have been sold, indicating how the value of in-force business and the value of new business written would be affected by the economic shocks.
10% increase in equity / property market values 746 14% 1 1 10% decrease in equity / property market values –814 –15% 1 1 25% increase in equity / property implied volatilities –243 –5% –9 –6%
25% decrease in equity / property implied volatilities 200 4% 8 5%
5% proportionate decrease in mortality rates (annuities) –141 –3% 0 0%
Swiss Life’s MCEV for covered business reflects the value of the shareholders’ interest in the life, health and pension business as well as assumed external reinsurance of the Swiss Life Group. This value includes the determination of best estimate liabilities for policyholder bonuses and tax payments, which are derived from results based on local statu-
Value of in-force business 2 836 1 Goodwill adjustments correspond to goodwill of covered business with the exception of CHF 81 million from French operations (see section 3.2). 2 Group MCEV includes CHF 1 377 million of goodwill and intangible assets as part of the unadjusted IFRS net assets for non-covered business.
SWITZERLAND — Swiss Life’s main business in the Swiss market is group life business with a full range of offerings. The individual business includes traditional savings, risk and annuity products, as well as modern savings and retirement products with flexible guarantees. Swiss Life’s own sales force plays the major role in distribution, followed by brokers and AWD. The business for assumed external reinsurance is included here.
VALUE OF IN-FORCE BUSINESS 1 593 815 173 255 2 836
The slightly higher TVOG of France at 31 December 2011 compared to the one reported a year ago, is mainly a consequence of higher interest rate volatilities partly offset by a de-risking of the strategic asset allocation. The health business does not offer financial options and guarantees and therefore does not contribute to the time value of financial options and guarantees.
GERMANY — While the net asset value increased in Germany despite a capital outflow, the VIF decreased because of the adverse capital market environment, especially due to the increased interest rate volatilities. Furthermore, an increase in free surplus was achieved for various reasons including lower policyholder bonuses in 2011.
INTERNATIONAL — The business of private placement life insurance (PPLI) accounted for 80% of the opening MCEV. While assets under control increased during the reporting period, a revised outlook on future new business volumes for the PPLI business led to a decrease of the MCEV.
Value of new business before new business strain 62 142 38 35 277
PRESENT VALUE OF NEW BUSINESS PREMIUMS (PVNBP) 3 875 4 478 1 739 2 822 12 914
GERMANY — The new business margin of Germany has been negatively affected by economic conditions as well as market pressure on disability business. The share of risk and supplementary disability insurance contracts written remains at a high level, but slightly lower than in the previous year. As a result the value of new business is lower than in 2010.
Expected existing business contribution (in excess of reference rate) 517 209 62 14 802
SWITZERLAND — Strong operating earnings of CHF 379 million correspond to 18% of the adjusted opening MCEV.
The observed experience variances are a combination of effects from deviations in persistency and demographic experience relative to opening assumptions as well as reserve strengthening in the light of the low interest rate environment.
Other operating variances are mainly attributable to group life business, in particular due to a reduction in risk premiums from 2012 onwards. Further negative effects on other operating variances come from an increased real estate share in the strategic asset allocation. With regard to hybrid debt an adjustment and a positive revaluation had a negative impact overall, which is also included in other operating variance.
FRANCE — The operating MCEV earnings of CHF 293 million corresponds to 16% of the adjusted opening MCEV. France has a significant contribution from new business production. The expected existing business contribution, combined with a disciplined policyholder profit sharing allowed a strengthening of the bonus fund and an increase in free surplus despite dividend payments.
The expense reductions achieved contributed positively to the assumption variances while other effects, including anticipated increases of health claims ratios more than offset this.
INTERNATIONAL — The operating MCEV earnings of CHF –9 million represent –4% of the opening MCEV. This is driven by a reassessment of PPLI’s volume outlook given the reorientation in private banking and the new business premiums in 2011. On the other hand the business with corporate clients had a stabilising effect on the value.
Despite a substantial volume reduction, the value of new business still contributed strongly to the result with CHF 30 million or 12% of the total embedded value of International.
Substantial cost reductions were achieved in the corporate clients business: however, the revised new business outlook for PPLI more than compensated the impact on the MCEV.
Main driver for negative economic variances is the investment performance of assets under control and currency exchange effects, whereas the closing adjustments reflect a capital transfer to PPLI.
NET ASSET VALUE (NAV) — The net asset value is the market value of assets allocated to the covered business, which are not backing liabilities from the covered business.
FREE SURPLUS (FS) — The free surplus is the market value of assets allocated to, but not required to support, the inforce covered business at the valuation date. The free surplus is calculated as the difference between the net asset value and the required capital.
Certainty equivalent value and time value of financial options and guarantees are items that involve projections encompassing local statutory liabilities and assets in line with: – local legal and regulatory obligations – company practice due to commercial and competitive constraints – local market practice in the calculation of embedded values
TIME VALUE OF FINANCIAL OPTIONS AND GUARANTEES (TVOG) — The certainty equivalent value does not allow for the risk that the financial outcome for shareholders could differ from the one implied by the certainty equivalent scenario. This is of particular relevance when products or funds include guarantees or options for the policyholder such as: – guaranteed interest rates – discretionary profit sharing and regulatory constraints, e.g. “legal quotes” – maturity guarantees – guaranteed minimum death benefits – guaranteed annuity options – surrender options
The cost of credit risk accounts for the shareholder’s share of credit risk of investments in bonds that would have otherwise been unaccounted for in other MCEV components. It is defined as the present value of charges on the projected economic capital for credit risk.
The initial economic capital for credit risk is defined as the impact on the value of in-force business corresponding to the 99% expected shortfall of the credit loss from the actual bond portfolio over one year, due to the migration and default risk. The underlying credit risk calculations are performed using an internal model based on the CreditMetrics ©2 methodology.
COST OF RESIDUAL NON-HEDGEABLE RISKS (CNHR) — The cost of residual non-hedgeable risks for risk factors such as mortality, morbidity, expenses and lapse rates is calculated under a cost of capital approach. It is defined as the present value of annual charges on the projected economic capital for residual non-hedgeable risks.
An annual charge of 4% has been applied to the resulting projected capital at risk. It represents the excess return or risk premium that a shareholder might expect on capital exposed to non-hedgeable risks.
All bonds and bond-like securities (such as mortgages) are modelled as fixed or floating government bonds. For all bonds, coupons and nominals have been recalibrated so that the valuation of the bonds using the reference yields converges to the observed market value.
INSURANCE LIABILITIES — Liabilities are valued in line with local statutory requirements generally using individual policy data. For projection purposes, policies of the same product with similar risk profiles are grouped together to form model points.
The crediting rules for policyholders are consistent with current company practices and local regulatory environments, in particular regarding the existence of a “legal quote”. They ensure that the statutory solvency rules (Solvency I, including stress tests if legally required in the country) and other legal requirements are fulfilled for each projection year.
Lapse rates from policyholders have been dynamically modelled. For traditional business, lapse rates depend on the difference between the credited rate to the policyholders and the anticipated policyholders’ expectations. Lapse parameters depend on the country and product line considered.
Covered business relates to the operations in: – Switzerland – Germany – France: sub-consolidated – Luxembourg – Liechtenstein – Singapore
The 100% liquidity premiums, relative to swaps rates as of 31 December 2011 amount to 62 bp for Swiss franc, 107 bp for euro and 108 bp for US dollar. For the calculation of the MCEV 2010 Swiss Life had decided to set the liquidity premiums to zero.
5.1.2 VOLATILITY ASSUMPTIONS — Volatility assumptions for the year-end 2011 and 2010 calculations are derived from market data as at 31 December 2011 and 2010.
5.1.2.3 EQUITY OPTION IMPLIED VOLATILITIES AS AT 31 DECEMBER 2011 AND 31 DECEMBER 2010
For 31 December 2011 Swiss Life reassessed the property volatilities considering historical data.
5.1.4.1 FORWARD INFLATION RATES USED FOR THE CALCULATION AS AT 31 DECEMBER 2011
Fixed risk premiums are used for other risky assets. Return assumptions for equity and property are derived from the 10-year reference rates, plus a risk premium; see table 5.1.5.1 below.
Property (Switzerland and Europe) 200 bp 200 bp 5.2 TAXATION AND LEGISLATION
Expense assumptions are reconciled with past and current experience. They do not account for future cost reductions. Projected expenses are subject to inflation. All the expected expense overruns affecting the covered business, such as overhead expenses and development costs in new markets have been allowed for in the calculations. Corporate costs are included in the expenses of market units by means of a “look-through” procedure (see section 4.6).
We have audited the accompanying Market Consistent Embedded Value Report (“MCEV Report”) of Swiss Life Holding Ltd for the year ended 31 December 2011. The embedded value information included in the MCEV Report has been prepared in accordance with the Market Consistent Embedded Value (“MCEV”) Principles issued by the European Insurance CFO Forum, as described in sections 1 and 4 of the MCEV Report.
We conducted our audit in accordance with Swiss Auditing Standards as well as the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the MCEV Report is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the MCEV Report. An audit also includes assessing the principles used and significant estimates made by the Board of Directors, as well as evaluating the adequacy of the overall presentation of the MCEV Report. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the MCEV Report of Swiss Life Holding Ltd for the year ended 31 December 2011 has been properly prepared in accordance with the MCEV Principles.
BEST ESTIMATE ASSUMPTIONS — A best estimate assumption should equal the mean estimate (probability weighted average) of outcomes of that risk variable.
GROUP MCEV — The Group MCEV for Swiss Life comprises MCEV results for covered business and IFRS net asset values for non-covered business of the Swiss Life Group (as explained above under point 4.7).
LIQUIDITY PREMIUM — As stipulated in the MCEV Principles, liquidity premiums are included in swap yield curves in cases where liabilities are not liquid.
NON-COVERED BUSINESS — All businesses of the Swiss Life Group which are not accounted for under covered business, such as investment management and AWD, are included in the non-covered business of the Group MCEV by means of their IFRS net asset values.
OPERATING MCEV EARNINGS — Change in MCEV and in Group MCEV in the reporting period after initial and closing adjustments, economic variances and other non-operating variances, as well as other movements in IFRS net equity.
PRESENT VALUE OF NEW BUSINESS PREMIUMS (PVNBP) — Volume measure for new business. It represents the present value of premiums from new business. It is the sum of single premiums and the present value of periodic premiums from new business.
Financial assets at fair value through profit or loss 10 24 120 23 395
Premiums, policy fees and deposits received, net of reinsurance 13 264 13 868
Benefits and claims paid, net of reinsurance –12 695 –12 781
Acquisition of insurance portfolio, net of cash and cash equivalents 31 100 –
TOTAL CHANGE IN CASH AND CASH EQUIVALENTS –2 020 –1 192
Cash and cash equivalents as at 1 January 6 940 8 683
TOTAL CASH AND CASH EQUIVALENTS AS AT END OF PERIOD 5 084 6 940
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2011
Reduction in par value 27 –144 1 – – – – –143 – –143
BALANCE AS AT END OF PERIOD 164 1 651 –25 –833 1 544 6 626 9 127 35 9 162
Reduction in par value 27 –77 0 – – – – –77 – –77
The Swiss Life Group is one of Europe’s leading providers of life insurance and pension solutions. In Switzerland, France and Germany, the Group offers individuals and corporations comprehensive advice and a broad range of products through its own sales force as well as brokers and banks. Swiss Life provides international corporations with employee benefits solutions from a single source, and is one of the global leaders in structured life and pension products for international high net worth individuals. The AWD Group has been part of the Swiss Life Group since 2008. Hanover-based AWD is one of the leading European financial services providers in the medium and high-income client segments and offers its clients comprehensive financial advisory services. Germany, the UK, Austria and Switzerland are the AWD Group’s core markets.
As approved by the shareholders at the General Meeting of Swiss Life Holding Ltd (hereinafter referred to as “Swiss Life Holding”) on 5 May 2011, a reduction in par value of CHF 4.50 per registered share was effected in 2011. The payout took place on 28 July 2011 and amounted to CHF 143 million.
On 15 March 2012, 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.
The consolidated financial statements of Swiss Life have been prepared in accordance with and comply with International Financial Reporting Standards (IFRS). The consolidated financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which are stated at their fair value: derivatives, financial assets and liabilities at fair value through profit or loss, financial assets classified as available for sale and investment property.
STANDARDS AND INTERPRETATIONS EFFECTIVE IN THE CURRENT PERIOD — In May 2010, the International Accounting Standards Board issued annual improvements to IFRS. The improvements are effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate. An amendment to IFRS 7 Financial Instruments: Disclosures clarifies certain disclosures with regard to credit risk and quantitative disclosures. The amended disclosures are reflected in these consolidated financial statements.
In November 2009, IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments was issued. The Interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. The Interpretation has been effective for annual periods beginning on or after 1 July 2010. The Swiss Life Group does not currently have such extinguishments.
In November 2009, amendments to IAS 24 Related Party Disclosures were issued by the International Accounting Standards Board. The amendments apply to annual periods beginning on or after 1 January 2011 and clarify and simplify the definition of a related party. The requirements for government-related entities to disclose details of all transactions with the government and other government-related entities are removed. The Swiss Life Group is currently not affected by these changes.
In October 2009, an amendment to IAS 32 Financial Instruments: Presentation was issued. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Previously such rights issues were accounted for as derivative liabilities. Provided certain conditions are met, such rights issues are classified as equity under the amendment regardless of the currency in which the exercise price is denominated. The amendment has been effective for annual periods beginning on or after 1 February 2010. The Swiss Life Group does not currently have such rights issues.
The following amended Standards and Interpretations are not relevant to the Swiss Life Group: – IFRS 1 First-time Adoption of International Financial Reporting Standards – Limited exemption from comparative IFRS 7 disclosures for first-time adopters
– Annual improvements as issued in May 2010, except for the amendments to IFRS 7 Financial Instruments: Disclosures as discussed above.
FOREIGN CURRENCY TRANSLATION — On consolidation, assets and liabilities of Group entities denominated in foreign currencies are translated into Swiss francs at year-end exchange rates. Income and expense items are translated into Swiss francs at the annual average exchange rate. Goodwill reported before 1 January 2005 is translated at historical exchange rates. Goodwill for which the agreement date is on or after 1 January 2005 is carried in the foreign operation ’s functional currency and is translated into Swiss francs at year-end exchange rates. The resulting translation differences are recorded directly in equity as cumulative translation adjustments. On disposal of foreign entities, such translation differences are recognised in income as part of the gain or loss on the sale.
or contract volumes of derivatives, which are used to express the volume of instruments outstanding and to provide a basis for comparison with other financial instruments, do not, except for certain foreign exchange contracts, represent the amounts that are effectively exchanged by the parties and, therefore, do not measure the Group’s exposure to credit risk. The amounts exchanged are calculated on the basis of the notional amounts or contract volumes and other terms of the derivatives that relate to interest or exchange rates, securities prices and the volatility of these rates and prices.
– Certain equity instruments with a quoted price in an active market which are managed on a fair value basis. – Certain financial assets with embedded derivatives which otherwise would have to be separated. – Certain financial assets which share a risk with other financial instruments and give rise to opposite changes in fair value that tend to offset each other (“economic hedges”).
FINANCIAL ASSETS AVAILABLE FOR SALE (AFS) — Financial assets classified as available for sale are carried at fair value. Financial assets are classified as available for sale if they do not qualify as held to maturity, held for trading, loans and receivables or if they are not designated as at fair value through profit or loss. Gains and losses arising from fair value changes, being the difference between fair value and cost/amortised cost, are reported in equity. On disposal of an AFS investment, the cumulative gain or loss is transferred from equity to income for the period. Gains and losses on disposal are determined using the average cost method.
LOANS AND RECEIVABLES — Loans and receivables are non-derivative financial assets with fixed or determinable payments. Loans include loans originated by the Group and investments in debt instruments which are not quoted in an active market and for which no intention of sale in the near term exists. Loans are initially recognised at fair value, net of transaction costs, or direct origination costs. Subsequent measurement is at amortised cost using the effective interest method.
FINANCIAL ASSETS CARRIED AT FAIR VALUE (AVAILABLE FOR SALE) — At each balance sheet date, an assessment is made whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of an equity instrument classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered objective evidence of impairment. In this respect, a decline of 30% or more is regarded as significant, and a period of 12 months or longer is considered to be prolonged. In such a situation, the impairment loss – measured as the difference between the acquisition cost and the current fair value – is removed from equity and recognised in the income statement. After recognition of an impairment loss, any further declines in fair value are recognised in the income statement, and subsequent increases in fair value are recognised directly in equity.
cause an insurer to pay significant additional benefits in any scenario, excluding scenarios that lack commercial substance (i.e. have no discernible effect on the economics of the transaction). The classification of contracts identifies both the insurance contracts that the Group issues and reinsurance contracts that the Group holds. As a Group policy, Swiss Life considers those contracts to be insurance contracts that require the payment of additional benefits in excess of 10% of the benefits that would be payable if the insured event had not occurred, excluding scenarios that lack commercial substance.
INVESTMENT CONTRACTS WITH AND WITHOUT DISCRETIONARY PARTICIPATION FEATURES — For investment contracts that contain discretionary participation features (see below) the same recognition and measurement principles as for insurance contracts apply. For investment contracts without discretionary participation features the recognition and measurement rules for financial instruments apply.
RECOGNITION AND MEASUREMENT PRINCIPLES — Subject to certain limitations, the Group uses its existing accounting policies for the recognition and measurement of insurance contracts and investment contracts with discretionary participation features that it issues (including related deferred acquisition costs and related intangible assets) and reinsurance contracts that it holds. The existing accounting policies for recognition and measurement have primarily been based on the requirements of the Generally Accepted Accounting Principles in the United States (US GAAP).
DISCRETIONARY PARTICIPATION FEATURES (DPF) — Discretionary participation features are defined in IFRS 4 Insurance Contracts as contractual rights to receive, as a supplement to guaranteed benefits, additional benefits which are likely to be a significant portion of the total contractual benefits and whose amount or timing is contractually at the discretion of the issuer. These DPF are contractually based on the performance of a specified pool of contracts or a specified type of contract or on the realised and unrealised investment returns on a specified pool of assets held by the issuer or on the profit or loss of the company. The unrealised investment returns comprise gains/losses recognised directly in equity.
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”.
policyholder bonuses are based on the development of biometric parameters such as mortality and morbidity. These policyholder bonuses are allocated based on the risk result of the contracts involved. The amount and timing of these bonuses are not subject to management discretion and are accrued to the policyholders’ liabilities based on the relevant contractual terms and conditions.
LIABILITIES FOR CLAIMS AND CLAIM SETTLEMENT COSTS — Liabilities for unpaid claims and claim settlement costs are for future payment obligations under insurance claims for which normally either the amount of benefits to be paid or the date when payments must be made is not yet fixed. They include claims reported at the balance sheet date, claims incurred but not yet reported and claim settlement expenses. Liabilities for unpaid claims and claim settlement costs are calculated at the estimated amount considered necessary to settle future claims in full, using actuarial methods.
If a reinsurance asset is impaired, the impairment loss is recognised in the income statement and the carrying amount is reduced accordingly.
SEPARATE ACCOUNT/UNIT-LINKED CONTRACTS/PRIVATE PLACEMENT LIFE INSURANCE — Separate account contracts represent life insurance contracts with a separated part that is invested in assets managed for the account and risk of the Swiss Life Group’s customers according to their specific investment objectives. Separate account liabilities are included in insurance liabilities. Separate account liabilities include the right of the policyholder to participate in the performance of the underlying assets.
Costs primarily comprise commissions paid to independent financial advisors, employee benefits attributable to advisory services and other expenses.
CONTRACTS WITH DISCRETIONARY PARTICIPATION FEATURES — On acquisition of a portfolio of insurance contracts or a portfolio of investment contracts with discretionary participation features (DPF), either directly from another insurer or through the acquisition of a subsidiary undertaking, the Group recognises an intangible asset representing the present value of future profits (PVP) embedded in the contracts acquired. The PVP represents the difference between the fair value of the contractual rights acquired and insurance obligations assumed and a liability measured in accordance with the accounting policies for insurance contracts and investment contracts with DPF. The PVP is determined by estimating the net present value of future cash flows from the contracts in force at the date of acquisition. For acquired insurance and investment contracts with DPF, future positive cash flows generally include net valuation premiums while future negative cash flows include policyholders’ benefits and certain maintenance expenses.
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised on a straight-line basis for the expected useful life up to three years. Costs associated with developing or maintaining computer software programs are recognised as an expense as incurred. Development costs that are directly associated with identifiable software products controlled by the Group and that will probably generate future economic benefits are capitalised. Direct costs include the software development team’s employee costs. Computer software development costs recognised as assets are amortised using the straight-line method over their useful lives, not exceeding a period of three years.
Swiss Life — Financial Statements 2011 2.16 IMPAIRMENT OF NON-FINANCIAL ASSETS
Current and deferred income taxes are recognised in income except when they relate to items recognised directly in equity. Income taxes are calculated using the tax rates enacted or substantively enacted as of the balance sheet date.
POST-EMPLOYMENT BENEFITS — The Swiss Life Group provides post-employment benefits under two types of arrangement: defined benefit plans and defined contribution plans.
In June 2011, the International Accounting Standards Board issued an amended version of IAS 19 Employee Benefits. Important improvements were made by eliminating an option to defer the recognition of gains and losses, known as the ‘corridor method’, and by streamlining the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income. Furthermore, the disclosure requirements for defined benefit plans were enhanced, providing better information about the characteristics and risks of defined benefit plans. The amended version of IAS 19 Employee Benefits comes into effect for annual periods beginning on or after 1 January 2013. The Swiss Life Group expects an impact of these new requirements on the reported amounts relating to defined benefit plans. The estimated net impact of these changes on shareholders’ equity as at 1 January 2012 is a decrease of approx. CHF 200 million.
In June 2011, amendments to IAS 1 Presentation of Financial Statements were issued. The amended IAS 1 Presentation of Financial Statements requires entities to group together items within other comprehensive income that may be reclassified to profit or loss. The amendments also reaffirm existing requirements that items in other comprehensive income and profit or loss should be presented as either a single statement or two consecutive statements. The amendments will be effective for annual periods beginning on or after 1 July 2012. The presentation of items within other comprehensive income will be adjusted according to the new requirements.
In May 2011, the International Accounting Standards Board issued IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities. IFRS 10 Consolidated Financial Statements builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 11 Joint Arrangements provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form as is currently the case. The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 12 Disclosure of Interests in Other Entities comprises all the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The
Swiss Life — Financial Statements 2011 new standards will be effective for annual periods beginning on or after 1 January 2013. The Swiss Life Group is currently analysing the impact of these new requirements.
In December 2010, an amendment to IAS 12 Income Taxes was issued by the International Accounting Standards Board. The amendment is set out in Deferred Tax: Recovery of Underlying Assets. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will normally be through sale. The amendment applies to annual periods beginning on or after 1 January 2012. The Swiss Life Group does not expect a significant impact of these amendments on its consolidated financial statements.
In October 2010, amendments to IFRS 7 Financial Instruments: Disclosures were issued. The amendments will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example securitisations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. The amendments apply to annual periods beginning on or after 1 July 2011. The Swiss Life Group does not expect a significant impact of these amendments on its consolidated financial statements.
With regard to debt securities carried at fair value inputs to the fair value measurement categorised as level 2 within the fair value hierarchy are primarily determined using present value techniques on the basis of yield curves and appropriate spreads or discounted cash flow models with deposit and swap rates as the main input parameters. With regard to equity instruments carried at fair value inputs to the fair value measurement categorised as level 2 within the fair value hierarchy are determined using quotes from the custodian bank for the determination of fair values of fund units. Quoted prices of the underlying equity and debt securities are taken into account. Some fair value measurements of fund units categorised as level 2 are determined based on quoted prices/redemption prices with an adequate adjustment for illiquidity. Fair value measurements of equity securities categorised as level 3 within the fair value hierarchy are determined based on net asset value techniques with an adequate adjustment for illiquidity.
– Private equity investments are primarily classified as available for sale and are measured at fair value. The fair values are based on generally accepted valuation techniques. Valuation techniques use a maximum of market inputs and include the use of comparable recent arm’s length transactions, discounted cash flow analysis and other valuation
– The fair value of investment contracts without discretionary participation, which are carried at amortised cost, is estimated using discounted cash flow calculations based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. The fair values of deposits are equal to the amount payable on demand or the carrying amount. The carrying amounts of variable-rate deposits approximate their fair values at the reporting date.
– It is impracticable to determine the fair value of investment contracts with discretionary participation features due to the lack of a reliable basis to measure such supplemental discretionary returns. IFRS 4 Insurance Contracts is silent on the measurement of the amounts identified as DPF.
MORTALITY AND LONGEVITY — Pricing and valuation assumptions for mortality and longevity are generally based on the statistics provided by national insurance associations and complemented with internal claims experience reflecting own company records.
MORBIDITY AND DISABILITY — For the individual and group life business in Switzerland internal tables are in place. In the individual life business, the internal disability rates are based on the Swiss Insurance Association statistics and reflect the average situation of the past in the Swiss market. In the individual life business, only reactivation is
INVESTMENT RETURNS — Assumptions relating to investment returns are based on the strategic asset allocation. From this gross investment return, projected asset management fees are deducted to obtain a net investment return.
Due to an internal reorganisation with effect from 1 January 2011 the composition of the reportable segments changed. “Insurance Other” has been renamed as “Insurance International” and now comprises all the crossborder insurance operations. Payment protection insurance now operates on a run-off basis and is included in the segment “Other”. The corresponding information for the statement of income for the year ended 31 December 2010 and the balance sheet as at 31 December 2010 was restated.
“Insurance International” comprises the cross-border insurance operations in Liechtenstein, Luxembourg, Austria, Singapore and Dubai.
“AWD” comprises the Hanover-based AWD Group, which was acquired by the Swiss Life Group on 19 March 2008. The AWD Group specialises in comprehensive financial advisory services for medium and high-income client segments.
Policy fees earned on insurance contracts 16 23 – 0 – – – 39 – 39
Policyholder participation –450 –102 –237 –14 – – 2 –801 10 –791
Depreciation and amortisation expense –185 –237 –89 –5 –1 –34 –3 –554 – –554
Other expenses –101 –167 –54 –35 –41 –94 –17 –509 2 –507 of which inter-segment –336 131 –64 –20 –14 0 –6 –309 309 of which inter-segment –155 –8 –63 –35 181 53 56 29 –29
Premiums earned on insurance contracts 6 831 2 740 1 814 48 – – 47 11480 –24 11 456
Depreciation and amortisation expense –139 –254 –152 –7 –1 –40 –1 –594 – –594
Impairment of property and equipment and intangible assets –3 – –2 – – 0 – –5 – –5
Additions to non-current assets 857 65 224 11 1 7 1 1 166 – 1 166
Switzer- Insurance Insurance Inter- Manage- elimi- Elimiland France Germany national ment AWD Other nations nations Total
Assets held for sale – 22 – – – – – 22 – 22
Financial assets at fair value through profit or loss 2 262 6 911 915 13 965 – 10 57 24 120 – 24 120
Liabilities associated with assets held for sale – 15 – – – – – 15 – 15
Assets held for sale 94 – 0 – – – – 94 – 94
Financial assets at fair value through profit or loss 2 494 6 499 933 13 402 – 9 58 23 395 – 23 395
Financial assets available for sale 40 184 12 091 4 319 759 30 – 567 57 950 – 57 950
Financial assets held to maturity 3 726 1 462 38 3 – – – 5 229 – 5 229
Liabilities associated with assets held for sale – – – – – – – – – –
Risks must be identified, assessed, managed and monitored locally and aggregated. Monthly reports covering interest rate risk, equity price risk, currency risk, credit risk and insurance risk are prepared on a consolidated basis. Additionally, market risks and financial risk limits are reported for the largest operations in the insurance business. Strategic and operational risks are assessed and reported on an annual basis.
The risk appetite for the largest operations in the insurance business is defined with the help of local risk budgets which are used as a basis for the determination of the individual risk limits. These limits are used as a framework for the asset and liability management process, the objective of which is to define a strategic asset allocation. From this strategic asset allocation a scenario-based expected return is calculated which forms the basis for the mid-term planning of the Group.
LIABILITIES LINKED TO ASSETS FOR THE ACCOUNT AND RISK OF THE SWISS LIFE GROUP’S CUSTOMERS
Net gains/losses on financial instruments at fair value through profit or loss (FVPL) 8 –803 4 249 –17 1 –820 4 250
Net gains/losses on investment property 513 306 – – 513 306
The risk capacity and the risk appetite of the Swiss Life Group’s insurance operations are primarily defined based on economic principles. Consequently, the market values or best estimates of both the assets and the liabilities are obtained by discounting the cash flows generated by these assets and liabilities with an appropriate discount rate or by direct observation of market values. The available risk capital is defined as the difference of the economic value of the assets compared to liabilities. The available risk capital is used to cover the different risks to which the Swiss Life Group’s insurance operations are exposed by the nature of their activities. The final decision on the risk appetite for each insurance operation rests with the Corporate Executive Board.
The main focus of these limits is on overall market risk, credit risk and, more specifically, on interest rate risk as well as on currency risk and equity price risk.
Depending on the regulatory framework in which the Swiss Life Group’s insurance operations evolve, the asset portfolios might need to be split to reflect the different categories of insurance products. The asset portfolios of the insurance operations in Switzerland have been separated to distinguish between individual life and group life. As a consequence, such separation is also reflected in the ALM process.
HEDGING — The Swiss Life Group uses derivatives within the strict limits set by the applicable insurance legislation and by internal guidelines. Derivatives are primarily used to manage the exposure to equity securities, interest rates, counterparties and foreign exchange rates. The main instruments include index futures and option structures in stock markets, bond futures and swaps in order to manage duration, currency forwards in order to manage currency risk and credit default swaps in order to manage counterparty risk. Within certain limits, derivatives are used to enhance returns on the existing portfolio. The types of derivatives generally permitted for usage within the Swiss Life Group as well as the list of allowed over-the-counter trading partners have been approved by the Group Risk Committee.
TOTAL INTEREST-SENSITIVE INSURANCE LIABILITIES 60 089 24 285 98 84 472
Most life insurance products with a savings component and investment contracts are subject to minimum guaranteed interest rates. The guaranteed rate differs according to the type of contract. In Switzerland for instance the minimum guaranteed interest rate for the occupational pensions segment (mandatory BVG savings account) stood at 2% in 2011 and will be reduced to 1.5% for 2012.
In addition to the strategic optimisation of the net interest rate risk exposure at an economic level, the Group has designated a portion of assets to be held to maturity and matching the maturity profile of the associated liabilities to minimise the interest risk arising from these positions. The assets to be held to maturity fund the insurance and investment contracts that will not be surrendered or will not require the payment of a death benefit.
Counterparty risk is managed through the holding of credit default swaps or credit default swap indices. A credit default swap provides insurance to the debt holder against a default of the debt issuer. It is traded over-the-counter
For fixed-income assets the total exposure per counterparty is aggregated and reported to the Group Risk Committee. The individual operations maintain records of the payment history for the significant contract holders with whom they conduct regular business. Ratings and single positions above a certain level with regard to fixed-income assets are reported to management on a regular basis. The exposure to individual counterparties 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, or homogenous groups of policyholders, a financial analysis equivalent to that conducted for reinsurers is carried out.
In certain countries, specific additional guidelines and rules have been defined locally to monitor credit risk. Such guidelines cover investments in fixed-income securities which are mostly based on the average rating of the issuers (calculated by weighting default probabilities). Minimum and maximum thresholds apply with regard to permitted investments in non-government bonds. For investments in government bonds with a rating lower than AA- (according to Standard & Poor’s or equivalent) and non-government bonds additional exposure limits are in place. For certain businesses, credit risk is monitored and controlled with a risk limit framework whereby maximum limits are reviewed and approved at least annually. The majority of the bond portfolio is invested in government bonds (including supranational and sovereigns) and bonds issued by the financial sector covered by collateral or government guarantees.
Debt securities at fair value through profit or loss 1 906 964 6 083 5 848 7 989 6 812
Debt securities pledged as collateral 969 1 060 – – 969 1 060
Debt securities classified as loans 8 608 9 498 – – 8 608 9 498
Policy and other originated loans 1 708 953 – – 1 708 953
TOTAL EXPOSURE TO CREDIT RISK 104 591 99 272 8 529 8 181 113 120 107 453
CREDIT RISK MITIGATION – COLLATERAL HELD AS SECURITY AND OTHER CREDIT ENHANCEMENTS
Debt Loans and Cash and cash Derivatives Reinsurance and loan securities receivables equivalents (assets) assets commitments Total
Secured by other collateral – 363 – – – – 363
TOTAL OTHER LOANS AND RECEIVABLES 5 088 2 011 1 883 573 18 3 840 58 13 471
EXPOSURE TO CREDIT RISK OF DEBT INSTRUMENTS – CREDIT RATING BY CLASS AS AT 31 DECEMBER 2010
TOTAL OTHER LOANS AND RECEIVABLES 6 243 2 051 1 901 150 3 4 666 34 15 048
FINANCIAL ASSETS PAST DUE (NOT IMPAIRED) – AGE ANALYSIS AS AT 31 DECEMBER 2011
FINANCIAL ASSETS PAST DUE (NOT IMPAIRED) – AGE ANALYSIS AS AT 31 DECEMBER 2010
The Swiss Life Group’s European insurance and investment operations (excluding Switzerland) generally invest in assets denominated in the same currency as their insurance and investment contract liabilities, which mitigates the currency risk for these operations. As a result, currency risk arises from recognised assets and liabilities denominated in other currencies and net investments in foreign operations. Although the Swiss Life Group actively engages in currency management to reduce the effect of exchange rate fluctuations on its assets and liabilities, particularly by hedging against the risk of such movements in relation to part of its investments denominated in euros and in US dollars, significant movements in exchange rates could adversely affect the Swiss Life Group’s earnings and financial position, including the value of its investment portfolio. Foreign exchange exposure is hedged to a large extent in line with the strategic asset allocation. The Group’s hedging arrangements are directed at covering its exposure mainly from an economic perspective. The instruments which the Swiss Life Group uses to hedge exposure may not be perfectly correlated to the related assets, so the Group will still be exposed to losses if the value of the hedge and the value of the underlying asset or liability do not correspond appropriately.
Entities with functional currency EUR 6 – 1 335 301 7 373
Entities with functional currency CHF – 14 342 11 699 2 685 111 2 769
Entities with functional currency CHF – –14 629 –10 894 –2 602 –131 –1 644
CURRENT AND NON-CURRENT ASSETS AND LIABILITIES — The table below shows the expected recovery or settlement of assets and liabilities. Assets are classified as current if they are expected to be realised within twelve months after the balance sheet date. Liabilities are classified as current if they are due to be settled within twelve months after the balance sheet date. All other assets and liabilities are classified as non-current.
Assets held for sale 22 94 – – – – 22 94
Financial assets available for sale 2 483 2 945 64 781 55 005 – – 67 264 57 950
Financial assets pledged as collateral – 33 969 1 027 – – 969 1 060
Intangible assets including intangible insurance assets – – 3 722 3 982 – – 3 722 3 982
Current income tax liabilities 120 295 – – – – 120 295 5.5 INSURANCE RISK MANAGEMENT OBJECTIVES AND POLICIES
NATURE OF INSURANCE RISK — When designing a new product or reviewing an existing one, care has to be taken that the product neither includes systemic risk nor provides incentives for adverse selection. The product should meet the market’s needs. The Swiss Life Group generally favours transparent and simple product design with a reliable pricing basis with sufficient statistical data available. Insurance risk arises when biometric parameters deviate adversely from expectations. The uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts is due to the unpredictability of long-term changes in overall levels of mortality and disability, for instance. Furthermore, deviations from the expected outcome of a portfolio can also arise because of random fluctuations. The impact of random fluctuations depends on the extent of diversification within a portfolio of contracts, that is, on the size of the portfolio.
In Switzerland, the Swiss occupational pensions (BVG) segment of the group life insurance business is a significant part of the Group’s overall life insurance business. The BVG business provides an example of a minimum return guarantee. The guarantee takes the form of the right to convert an assured sum into a life annuity at a guaranteed conversion rate: The prevalent annuity conversion rate for the mandatory part of the BVG business is set at 6.9% for men (retirement age 65) and 6.85% for women (retirement age 64) for retirements in 2012 (6.95% for men and 6.9% for women for retirements in 2011). Under an amendment to the BVG legislation, which took effect on 1 January 2005, the rate will be reduced in stages to 6.8% by 2014.
With regard to mortality, morbidity and longevity risk the most important annuities payable and sums insured are as follows: ANNUITIES PAYABLE PER ANNUM BY TYPE OF ANNUITY – INDIVIDUAL LIFE
Disability income and other annuities – deferred 7 661 7 556
Disability income and other annuities – deferred 14 311 14 176
EMBEDDED OPTIONS — The ability of a policyholder to pay reduced or no future premiums under a contract, to terminate the contract completely or to exercise a guaranteed annuity option means that the insurer’s liability is also subject to policyholder behaviour to a certain extent. On the assumption that a certain part of policyholders will make decisions rationally, overall insurance risk can be assumed to be aggravated by such behaviour. For example, it is likely that policyholders whose health has deteriorated significantly will be less inclined to terminate contracts insuring disability or death benefits than those policyholders remaining in good health, thus resulting in an increasing trend in the expected mortality of policyholders, as the portfolio of insurance contracts is reduced due to surrender (adverse selection).
UNDERWRITING STRATEGY — Underwriting is the process of selecting and classifying insurable risks. The underwriting strategy attempts to ensure that the risks underwritten are well diversified in terms of type of risk and level of insured benefits. Life insurance underwriting is performed to ensure that the premiums and the general conditions of the insurance policies are consistent with the risks to be insured. The first step in the underwriting process is to determine which individual risks can be accepted. The second step is to place the accepted risks into groups of roughly
NON-LIFE — The Swiss Life Group has non-life operations in France covering risks associated with accident and health (disability) as well as property and casualty.
Claims arising from the accident and health business primarily cover refunds for medical treatment, daily allowances in the case of sick leave, annuities and long-term medical care. The most significant factors that could increase the overall liabilities in health insurance are the increase in the claim frequency due to an increase in the average age of the insured persons and negative economic and social factors. The insurance liabilities arising from accident and health insurance contracts must consider outstanding claims and claims incurred but not reported (IBNR). A large part of the insurance liabilities arising from these contracts relates to IBNR, and experience shows that health insurance contracts are sensitive to late reporting of claims (both number of claims and amounts).
In CHF million Estimate of ultimate claim costs by year of loss occurrence
CURRENT ESTIMATE OF CUMULATIVE CLAIMS 357 353 284 283 290 288 288 333 382 329 3 187
At 31 December 2011, if the longevity improvement parameter had increased by 5%, the embedded value would have been CHF 37 million lower (2010: CHF 28 million lower).
At 31 December 2011, if morbidity had been 5% lower, the embedded value would have been CHF 85 million higher (2010: CHF 81 million higher).
At 31 December 2011, if the interest rates had been 100 basis points higher, the embedded value would have been CHF 283 million higher (2010: CHF 473 million higher).
At 31 December 2011, if the market value of equity securities and property had been 10% lower, the embedded value would have been CHF 814 million lower (2010: CHF 808 million lower).
At 31 December 2011, if the equity securities and property implied volatilities had been 25% higher, the embedded value would have been CHF 243 million lower (2010: CHF 276 million lower).
Net result attributable to equity holders of Swiss Life Holding 605 557
DILUTED EARNINGS PER SHARE FOR THE NET RESULT ATTRIBUTABLE TO EQUITY HOLDERS OF SWISS LIFE HOLDING (IN CHF) 18.87 17.37
Deposits received under insurance and investment contracts 5 063 7 914
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 17 143 20 191 8 Details of Certain Items in the Consolidated Statement of Income
Interest income on financial assets held to maturity and available for sale 2 430 2 201
TOTAL NET GAINS/LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS 5 –820 4 250
Realised gains/losses on sales of subsidiaries and other assets –1 15
Change in liability for future life policyholder benefits, gross 2 028 2 543
Change in liability for future life policyholder benefits, gross 272 379
Net benefits and claims under investment contracts with discretionary participation 709 543
Derivatives designated as cash flow hedges 239 2 63 – 6 497 25
Derivatives held for risk management primarily comprise derivatives that share a risk with other financial instruments and give rise to opposite changes in fair value that tend to offset each other (“economic hedges”).
Interest rate swaps to hedge available-for-sale bond portfolios – – – – –154 –17 154 16 – –
In CHF million Amounts Cash flows Ineffective- transferred Cash flows expected
Amounts ness to the Contract/ expected to affect Fair value Fair value recognised recognised in income notional to occur profit or loss assets liabilities in equity profit or loss statement amount (year) (year)
In 2011, the Group entered into 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 2011 and 2010, the Group entered into futures to hedge the cash flows in euro arising from policy fees earned on investment and unit-linked contracts against foreign currency movements. In 2011, CHF 2 million was transferred to the income statement and was included in policy fees earned on investment and unit-linked contracts.
10 Financial Assets and Liabilities at Fair Value through Profit or Loss
In CHF million Designated as at fair value through profit or loss
TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 24 120 23 395
Share of net assets of investment funds attributable to minority unitholders 566 312
No held-to-maturity securities were transferred to the available-for-sale category and no available-for-sale securities were transferred to the held-to-maturity category in the period under review.
Financial assets available for sale that have been sold under a repurchase agreement or lent under an agreement to return them, and where the transferee has the right to sell or repledge the financial assets given as collateral, were reclassified to financial assets pledged as collateral.
Debt securities reclassified from financial assets available for sale 969 972 financial assets held to maturity 33 – 88
Debt securities designated as loans 663 714 – – 663 714
In CHF million Individual Collective evaluation of impairment evaluation of impairment Total
BALANCE AS AT END OF PERIOD 7 8 17 16 24 24
TOTAL ALLOWANCE FOR IMPAIRMENT LOSSES 60 78 26 25 86 103
In CHF million Allowance for impairment Cost/amortised cost Gross amount losses (carrying amount)
Classification as assets held for sale and other disposals –594 –187
Rental income from investment property was CHF 751 million for the period ended 31 December 2011 (2010: CHF 718 million). Operating expenses arising from investment property that generated rental income stood at CHF 165 million for the period ended 31 December 2011 (2010: CHF 153 million). Operating expenses arising from investment property that did not generate rental income during the period stood at nil for the period ended 31 December 2011 (2010: CHF 0.1 million).
Crédit et services financiers (CRESERFI), Paris 241 107 134 45 50 7 3 33.4%
Classification as assets held for sale and other disposals –2 –9 –7 –2 –20
Reclassifications and transfers to investment property 15 –44 – – 6 –38
BALANCE AS AT END OF PERIOD 700 52 50 16 818
TOTAL PROPERTY AND EQUIPMENT AS AT END OF PERIOD 499 17 16 7 539 of which assets held under a finance lease – – 3 – 3 of which buildings in the course of construction 14
Classification as assets held for sale and other disposals 5 18 14 2 39
BALANCE AS AT END OF PERIOD –194 –35 –34 –5 –268
No borrowing costs were capitalised in property and equipment in 2011 and 2010.
In CHF million Present value of future profits from acquired insurance Deferred acquisition costs Deferred origination costs portfolios (PVP) (DAC) (DOC) Total
PRESENT VALUE OF FUTURE PROFITS (PVP) — The present value of future profits relates to portfolios of insurance contracts and investment contracts with discretionary participation acquired in a business combination or transfer of portfolios. It relates to contracts acquired in Switzerland, Germany and France and is amortised in proportion to gross profits over the effective life of the acquired insurance and investment contracts.
DEFERRED ORIGINATION COSTS (DOC) — These costs are recoverable and are directly attributable to securing the right for investment management services within investment contract policies. They relate to contracts in Luxembourg and Switzerland.
Balance as at 1 January –157 –157 –83 –63 –102 –120 –342 –340
Goodwill relating to Lloyd Continental has been allocated to the “Insurance France” segment. Goodwill relating to CapitalLeben has been allocated to the “Insurance International” segment. Of the goodwill relating to other acquisitions, CHF 12 million (2010: CHF 12 million) has been allocated to the “Insurance France” segment and CHF 9 million (2010: nil) to the “Investment Management” segment as at 31 December 2011.
The key assumptions used for the impairment testing on the carrying amount of goodwill were as follows: In CHF million Lloyd Continental CapitalLeben Other
Net carrying amount of goodwill 287 287 149 149 21 12
Goodwill relating to the acquisitions of AWD Holding AG and Deutsche Proventus AG has been allocated to the “Insurance Switzerland”, “Insurance Germany” and “AWD” segments.
The calculations relating to the recoverable amounts which have been determined on a value-in-use basis use cash flow projections based on financial budgets approved by management. The projection covers a three-year period for Insurance Switzerland and Insurance Germany and a five-year period for AWD. The calculations are based on present values that traditionally use a single set of estimated cash flows and a single discount rate. The key assumptions used for the impairment testing on the carrying amount of goodwill relating to AWD were as follows:
CUSTOMER RELATIONSHIPS — As at 31 December 2011 customer relationships comprise customer relationships relating to the “AWD” segment CHF 156 million (2010: CHF 186 million), “Insurance France” segment CHF 21 million (2010: CHF 25 million), “Insurance International” segment CHF 20 million (2010: CHF 22 million) and “Investment Management” segment CHF 2 million (2010: nil).
Investment contracts without discretionary participation at fair value through profit or loss 237 236 of which for the account and risk of the Swiss Life Group’s customers investment contracts with discretionary participation 2 623 2 559 investment contracts without discretionary participation 205 229
Liabilities released for payments on death, surrender and other terminations during the year –437 –164
In the case of contracts that do not have significant insurance risk but contain discretionary participation features, the Swiss Life Group primarily bases its accounting policies on the requirements of the Generally Accepted Accounting Principles in the United States (US GAAP).
For investment-type contracts, savings premiums collected are reported as deposits (deposit accounting). These amounts relate to contracts issued in France and Luxembourg.
INVESTMENT CONTRACTS WITHOUT DISCRETIONARY PARTICIPATION AT FAIR VALUE THROUGH PROFIT OR LOSS
On 16 November 2005, J.P. Morgan Bank Luxembourg S.A. issued on a fiduciary basis EUR 350 million fixed/floating rate subordinated perpetual notes at a price of 99.423% to fund a loan made by it to Swiss Life AG. Swiss Life AG may repay the loan in full on 16 November 2015 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 16 November 2005 to 16 November 2015 at a rate of 5% p.a. If the notes are not redeemed on 16 November 2015, the interest rate will be the aggregate of Euribor for 3-month deposits and a margin of 2.43%.
Swiss Life AG CHF 500 CHF 500 5.250% 2011 2016 490 –
Swiss Life AG EUR 443 EUR 443 +2.050% 1999 2014 538 553
Bank loans relate to mortgage loans for newly acquired real estate.
Amounts in CHF million Carrying Carrying Currency Interest rate Maturity amount amount
Claims under life insurance contracts 6 332 6 274 92 66 6 240 6 208
Claims incurred, benefits paid and surrenders –72 –72 17 –2 –89 –70
Deposits released for payments on death, surrender and other terminations during the year –582 –666
The contributions expected to be paid for the year ending 31 December 2012 are CHF 56 million. These contributions include amounts payable under insurance contracts issued to defined benefit plans covering own employees.
Fair value of plan assets 1 059 289 296 268 371
Certain subsidiaries sponsor various defined contribution plans. Participation in the various plans is based either on completion of a specific period of continuous service or on the date of hire. The plans stipulate contributions by both employers and employees. The expenses under these plans amounted to CHF 1 million in 2011 (2010: CHF 1 million).
The termination benefit liability totalling CHF 0.05 million for the year ended 31 December 2011 (2010: CHF 0.05 million ) arose as a result of early retirements.
From 2011, participants in the share-based payment programme are allocated restricted share units (RSUs) instead of PSUs. As with PSUs, RSUs grant the holder future subscription rights, entitling him to receive Swiss Life Holding shares free of charge after a three-year period has elapsed and if certain conditions are fulfilled, but without additional performance leverage. The attribution of shares after the expiry of the three-year deferral period will be effected on a 1:1 basis (1 RSU = 1 share). The value of the RSUs during the three-year term develops linearly with the Swiss Life Holding share price and systematically corresponds with shareholder interests. The plan also provides for adjustment and reclaiming mechanisms (clawback).
In 2009, the number of PSUs granted under this programme amounted to 53 216. The fair value at the measurement date amounted to CHF 51.22. The date of grant was 1 April 2009.
In 2010, the number of PSUs granted under this programme amounted to 68 510. The fair value at the measurement date amounted to CHF 149.98. The date of grant was 1 April 2010.
Income tax calculated using the expected weighted-average tax rate 155 159
In 2010, a positive one-off income tax effect amounting to CHF 87 million was realised due to a change in the French tax legislation. The intercompany effects in 2010 were based on tax grouping and intragroup income and expense.
The movements in net deferred income tax assets/liabilities during the period were as follows: In CHF million Foreign currency
Additional provisions made during the reporting period 4 65 69 28
Other provisions were primarily set up for warranties and litigation. Also included in other provisions are customer claims mainly relating to AWD.
Due to the reduction in the par value of CHF 4.50 per registered SLH share in 2011 (2010: CHF 2.40 per registered SLH share), an amount of CHF 1 million was credited to share premium in respect of treasury shares (2010: CHF 0.4 million).
The following table shows the development of SLH shares issued and treasury shares held by the Swiss Life Group during the period: Number of shares
Revaluation surplus on investment property 17 – – – 16 16
NET BALANCE AS AT END OF PERIOD –833 1 523 145 –124 1 544
Hedging gains/losses arising during the period 9 44 – 2 – 2
In accordance with the federal act on the supervision of insurance companies and corresponding decree, the Swiss Life Group reports as an insurance group to the Swiss Financial Market Supervisory Authority (FINMA). The reporting covers risk management as outlined in note 5, Group Solvency I, legal structure, management organisation and intragroup transactions. The reporting is submitted on an ad-hoc, monthly, 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 2011 and 2010, the Group was compliant with the legal requirements.
In March 2011, the Swiss Life Group acquired a majority share of Viveris REIM, Marseilles, a real estate management company. The voting interest of the Group was 68.3% as at 31 December 2011. The revenue of Viveris REIM, Marseilles, amounted to CHF 7 million from the acquisition date to the end of 2011 and the Group’s share of the net loss to CHF 0.1 million.
In 2011 and 2010, no significant disposals of subsidiaries took place.
Swiss Life — Financial Statements 2011 30 Assets Held for Sale and Associated Liabilities
Intangible assets including intangible insurance assets 0 – – – 0 –
Amounts recognised directly in equity relating to assets held for sale 0 – – – 0 –
Outstanding balances at year-end are unsecured and settlement is made in cash. There have been no guarantees provided or received for any related party receivables. For the year ended 31 December 2011, 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.
Debt securities available for sale 61 517 3 364 2 64 883
Financial assets for the account and risk of the Swiss Life Group’s customers 18 735 919 246 19 900
Debt securities at fair value through profit or loss 245 525 194 964
Financial assets for the account and risk of the Swiss Life Group’s customers 17 668 990 284 18 942
The fair value of financial instruments included in level 1 is based on unadjusted quoted prices in active markets for identical assets or liabilities.
FINANCIAL ASSETS MEASURED AT FAIR VALUE BASED ON LEVEL 3 FOR THE YEAR 2011
At fair value At fair value Swiss Life through Available through Available Group’s
Derivatives profit or loss for sale profit or loss for sale customers
Total gains/losses recognised in the income statement – –2 –1 0 49 0
Gains/losses for assets held at end of period recognised in the income statement are presented in net gains/losses on financial assets – – –1 – –15 –
Total gains/losses recognised in the income statement 1 4 16 0 188 –105
The Group has issued financial guarantees and transaction-related guarantees and similar instruments. Financial guarantees provide for specified payments to be made to reimburse the holder for a loss incurred in the event that a client fails to make payment when due.
The total amount of credit commitments includes commitments to lend at fixed rates, which expose the Group to interest rate risk. These commitments are entered into for restricted periods of time. As at 31 December 2011, committed principal amounts stood at EUR 13 million and CHF 68 million (2010: EUR 4 million and CHF 52 million). The range of committed interest rates is 2.6% to 5.9% for commitments in euro and 1.0% to 3.2% for commitments in Swiss francs.
Later than 1 year and not later than 5 years 443 414
Adroit Private Equity AG, Zürich Ins. CH 100.0% 100.0% CHF 5 000
Swiss Life Private Equity Partners AG, Zürich IM 100.0% 100.0% CHF 250
Swissville Centers Holding AG, Zürich Ins. CH 100.0% 100.0% CHF 7 100
Financière du Capitole, Balma Ins. FR 80.0% 80.0% EUR 1 700
MA Santé Facile, Paris Ins. FR from 10.06.2010 100.0% 100.0% EUR 1 388
Swiss Life Assurance et Patrimoine, Paris Ins. FR 99.9% 100.0% EUR 169 036
SL Beteiligungs-GmbH & Co. Immobilien I KG, München Ins. DE 100.0% 100.0% EUR 10
SL Beteiligungs-GmbH & Co. Immobilien Ost KG, München Ins. DE 100.0% 100.0% EUR 50
SLPM Schweizer Leben PensionsManagement GmbH, München Ins. DE 100.0% 100.0% EUR 150
Swiss Life AG, München (Branch Swiss Life AG) Ins. DE 100.0% 100.0% – –
Swiss Life Asset Management GmbH, München IM 100.0% 100.0% EUR 1 000
Swiss Life Cooperations GmbH in liquidation, Hamburg Ins. DE until 03.11.2010 – –
Swiss Life Insurance Solutions AG, München Other 100.0% 100.0% EUR 7 500
Swiss Life Insurance Solutions S.A. Branch Germany, München Other from 29.06.2010 100.0% 100.0% – –
Swiss Life Pensionsfonds AG, München Ins. DE 100.0% 100.0% EUR 3 000
Swiss Life Products (Luxembourg) S.A. Branch Germany, München Ins. Int. 100.0% 100.0% – –
Swiss Life Service GmbH, Leipzig Ins. DE from 23.11.2010 100.0% 100.0% EUR 100
SWISS LIFE (LUXEMBOURG), Strassen Ins. Int. 100.0% 100.0% EUR 23 000
Swiss Life Assurance Solutions S.A., Strassen Other 100.0% 100.0% EUR 6 000
Swiss Life Immo-Arlon, Société Anonyme, Strassen Other 100.0% 100.0% EUR 1 000
Swiss Life Insurance Solutions S.A., Strassen Other 100.0% 100.0% EUR 18 450
Swiss Life Invest Luxembourg S.A., Strassen Other 100.0% 100.0% EUR 60 211
AWD Chase de Vere Consulting Limited, London AWD 100.0% 100.0% GBP 1 935
AWD Chase de Vere Limited, London AWD 100.0% 100.0% GBP 23 088
AWD Chase de Vere Financial Services Ltd, Manchester AWD until 04.05.2010 – –
Swiss Life Österreich AG, Wien Ins. Int. 100.0% 100.0% EUR 70
AWD Savjetovanje d.o.o. za poslovno savjetovanje, Zagreb AWD until 24.06.2010 – –
AWD Magyarország Pénzügyi Szolgáltató Korlátolt Felelősségű Társaság, Budapest AWD 100.0% 100.0% HUF 5 000
ECG Oktatási Korlátolt Felelősségű Társaság, Budapest AWD 100.0% 100.0% HUF 5 000
Swiss Life Private Placement (Ireland) Limited, Dublin Other until 13.01.2011 – –
AWD Consultanta Financiara SRL, Târgu Mureş AWD until 15.04.2011 – –
Swiss Life (Liechtenstein) AG, Singapore Branch, Singapore Ins. Int. until 27.04.2010 – –
Swiss Life Network (Asia) Pte.Ltd., Singapore Ins. Int. 100.0% 100.0% SGD 0
Swiss Life (Singapore) Pte. Ltd. (formerly Swiss Life Private Placement (Singapore) Pte.Ltd.), Singapore Ins. Int. 100.0% 100.0% SGD 11 000
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.
Swiss Life Holding Financial Statements 185 Review of Operations 186 Statement of Income 187 Balance Sheet 188 Notes to the Financial Statements 203 Appropriation of Profit 204 Report of the Statutory Auditor
Swiss Life Holding increased its profit in the 2011 financial year by CHF 38 million to CHF 238 million.
In order to continue to finance the insurance business, CHF 200 million was made available to Swiss Life Ltd and CHF 87 million to Swiss Life International Holding AG, which comprises the foreign insurance companies. The total value of participations thus grew from CHF 3258 million to CHF 3545 million.
Swiss Life Holding’s profit distribution to shareholders in the period under review came to CHF 144 million or CHF 4.50 per share. This took the form of a reduction in par value of the Swiss Life Holding share from CHF 9.60 to CHF 5.10. The company’s nominal share capital thus totals CHF 163.6 million.
Swiss Life AG, Zürich CHF 587 350 100.00% CHF 587 350 100.00%
SHARE CAPITAL — As at 31 December 2011, the share capital of Swiss Life Holding consisted of 32 081 054 fully-paid shares with a par value of CHF 5.10 each. In exercising voting rights, no shareholder can collect more than 10% of the total share capital directly or indirectly in respect of his own shares and those he represents. As at 31 December 2010, Swiss Life Holding had 32 081 054 registered shares outstanding with a par value of CHF 9.60 per share. Conditional share capital was CHF 12 032 868.60 as at 31 December 2011 (2010: CHF 22 650 105.60).
LEGAL RESERVES — Legal reserves comprise the general reserves (plus the additional paid-in capital in excess of the par value, net of transaction costs), the reserve for treasury shares (equivalent in value to own Swiss Life Holding shares held by the Swiss Life Group) and the new capital contribution reserve of CHF 1533 million established on 1 January 2011. Of this amount CHF 1363 million is recognised by the Federal Tax Administration, while the legal qualification of CHF 170 million is still open and is to be reassessed according to future legal developments.
CONTINGENCIES — Swiss Life Holding acts as warrantor for all Swiss Life Ltd liabilities with regard to the various tranches of the subordinated perpetual step-up loan (hybrid debt), which amounted to an equivalent value of CHF 2308 million at the balance sheet date.
Swiss Life Holding further gives several capital guarantees for a maximum net asset value of CHF 750 million to Swiss Life Ltd, CHF 150 million to Swiss Life Funds, CHF 150 million to Swiss Life Funds (Lux) Management Company and CHF 97 million to Swiss Life Products.
In addition, Swiss Life Holding grants a credit line of CHF 37 million to Swiss Life Products.
ACCORDANCE WITH THE SWISS CODE OF OBLIGATIONS (CO) ART. 663BBIS AND ART. 663C
COMPENSATION IN 2011 — The specifications below take into consideration the transparency regulations relating to compensation set out in the Swiss Code of Obligations Art. 663bbis and Art. 663c and the directives on information relating to corporate governance issued by the SIX Swiss Exchange as well as Circular 2010/1 of the Swiss Financial Market Supervisory Authority FINMA on minimum standards for remuneration schemes of financial institutions. Further information on compensation and benefit expenditure can be found in the Corporate Governance section on pages 21 to 31 and in the Consolidated Financial Statements (Notes 24 and 32) on pages 154 to 159 and 168 to 169.
The description of the compensation received by the members of the Board of Directors and the Corporate Executive Board and the tables showing the relevant amounts are based on those of 2010. The variable cash compensation to the Corporate Executive Board members (the cash bonus and the new deferred compensation in cash introduced on 1 January 2012) for the 2011 financial year, which was determined by the Board of Directors at the beginning of 2012, is published in the compensation tables on an accrual basis as compensation for 2011. As a matter of new policy, the members of the Board of Directors are granted exclusively fixed compensation, payable 70% in cash and 30% in Swiss Life Holding shares, which are subject to a three-year blocking period. This replaces the previous arrangements, whereby Board of Director members received variable compensation in the form of blocked shares amounting to a maximum of 15% of the fixed compensation, depending on the business results.
The compensation received by each member of the Board of Directors and the Chairman of the Corporate Executive Board (Group CEO) is disclosed individually.
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 (performance-linked payment) in relation to the objectives set 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 Board of Directors as a whole sets the level and distribution of the variable compensation pool for all employees on the basis of its compensation policy guidelines and taking into consideration a proposal by the Nomination and Compensation Committee. When determining the level of the allocation to the compensation pool, it takes into consideration the annual result, as well as medium-term planning and the degree of target achievement. The Board of Directors as a whole is also responsible for determining the individual compensation of members of the Corporate Executive Board. It carries out an annual performance assessment of all members of the Corporate Executive Board,
Swiss Life — Financial Statements 2011 based on preparatory work by the Nomination and Compensation Committee. In addition, current aspects of HR policy and in particular succession planning are regularly discussed at meetings of the Nomination and Compensation Committee and the Board of Directors as a whole.
COMPENSATION TO MEMBERS OF THE BOARD OF DIRECTORS — As a matter of new policy, the members of the Board of Directors are granted exclusively fixed compensation. The previous arrangements, according to which members of the Board of Directors were allocated variable compensation in the form of blocked Swiss Life Holding shares of up to a maximum of 15% of the fixed compensation, depending on the business results, no longer apply. The total compensation is now paid 70% in cash and 30% in Swiss Life Holding shares with a three-year blocking period. The proportion of shares has thus been increased in comparison with the previous arrangements, under which 20% of the basic compensation was granted in the form of blocked Swiss Life Holding shares.
The compensation takes into account membership of the Board of Directors of Swiss Life Holding and its subsidiary Swiss Life Ltd, as well as membership of the individual Board Committees, and is commensurate with the individual’s function and workload. The compensation is determined annually by the Board of Directors. The amount of compensation granted to members of the Board of Directors has been adjusted in the 2011 financial year in connection with the new compensation arrangements (transition to exclusively fixed compensation, payable 70% in cash and 30% in blocked shares), taking into consideration compensation paid to board members in comparable companies within the insurance sector (Baloise Insurance, Swiss Re, Zurich Financial Services, National, Helvetia and Vaudoise).
At Corporate Executive Board level, the amount of the variable compensation depends 60% directly on the company’s success. As mentioned above, the following key figures are included in the Key Performance Indicators (KPIs) used to assess company success: the annual profit, costs, business volume, investment return, return on equity and solvency, as well as the profitability of in-force and new business, margin performance and the share of non-traditional products in new business.
In the year under review, the profit and costs targets used to measure the success of the Swiss Life Group were exceeded. Investment return and return on equity were also above the target levels. The volume and margin expectations for inforce and new business were only partially satisfied. The target share of non-traditional products in new business was achieved. As far as the weighting of these KPIs is concerned, the Board of Directors took the targets for annual profit and return on equity, which directly impact the interests of shareholders and policyholders, into greater consideration than the other targets in view of the economic environment which prevailed during the year under review.
Within the framework of the compensation arrangements for members of the Corporate Executive Board, “deferred compensation in cash” was introduced as a new compensation component on 1 January 2012. On the basis of the corresponding regulations, the Board of Directors determines every year from what amount and, if applicable, what portion of the variable cash compensation is not paid immediately but is allocated as deferred compensation in cash. The Board of Directors determined that, for the 2011 financial year, as of a variable cash compensation level of CHF 500 000, a 23% share of the total variable cash compensation will be paid as deferred compensation in cash.
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). 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 of the plan. If the employment relationship is terminated by a participant during the three-year deferral period, the entitlements expire worthless.
In the year under review, participants in the 2011 equity compensation plan, which was launched on 1 April 2011, were allocated Restricted Share Units (RSUs) instead of PSUs. As with PSUs, RSUs grant the holder future subscription rights, entitling them to receive Swiss Life Holding shares free of charge after a three-year period has elapsed, but without any additional leverage effect. The attribution of shares after the expiry of the three-year deferral period is effected on a 1:1 basis (1 RSU = 1 share): the plan is therefore very simple, transparent throughout the whole term and directly linked to the performance of the Swiss Life share. The value of RSUs during the three-year term develops linear with the Swiss Life Holding share price and thus symmetrically corresponds with shareholder interests. The value of the PSUs allocated equals the fair value as at 1 April of the year of allocation. It is determined by an independent consultancy company.
COMPENSATION TO THE BOARD OF DIRECTORS IN 2011 — For comparison purposes, the corresponding details of the compensation for 2010, as published in the Annual Report 2010, are shown in a separate table below the compensation table for 2011.
Rolf Dörig, Chairman of the Board of Directors 1 008 000 4 478 362 839 1 370 839 225 504 – 1 596 343 3 Resigned 07.12.2011. Swiss Life Ltd, AWD Holding AG and their subsidiaries paid a total of EUR 341 800 in fees for consultancy services to a company in which Carsten Maschmeyer has an important shareholding.
4 The allocation of shares was effected on 23.06.2011 and 15.12.2011 at economic value, which is equal to the tax value (CHF 111 0817 and CHF 73 3828 respectively), taking into account the blocking period of three years. The share prices (closing prices) on the days of allocation were CHF 132.30 and CHF 87.40 respectively. 5 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
COMPENSATION TO THE BOARD OF DIRECTORS IN 2010 — The members of the Board of Directors received variable compensation in the form of blocked shares for the 2010 financial year. This is disclosed on an accrual basis as compensation for 2010.
Amounts in CHF Expenditure for Compensation in cash Compensation in blocked shares2 occupational provisions
The members of the Corporate Executive Board did not receive any compensation in shares for the 2011 financial year. They are participating in the current equity compensation plan, which provides for the allocation of Restricted Share Units (RSUs).
Other members of Corporate Executive Board 1 3 811 229 3 140 500 155 743 7 107 472 0 0 7 107 472 1 Six individuals were taken into account in the period under review. 2 The bonus paid in 2012 relates to the 2011 financial year. 3 Child allowances (CHF 4150), company cars (CHF 101 439), premium contributions to 3rd pillar pension plans (CHF 93 762), other (CHF 4388), each in total.
Other members of Corporate Executive Board 1 052 844 0 8 160 316 4 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 70% to 30%. 5 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
Amounts in CHF Deferred compensation in cash Restricted Share Units (RSUs)7,8 Aggregate total compensation incl. deferred compensation in cash and RSUs Amount6 Number Amount (amount)
8 The allocation of RSUs as at 01.04.2011 was effected at a fair value of CHF 140.05, as calculated by an independent consultancy firm.
Other members of Corporate Executive Board 1 3 627 025 3 275 000 213 535 7 115 560 – 0 7 115 560 1 Six individuals were taken into account in the period under review. 2 The bonus paid in 2011 relates to the 2010 financial year. 3 Child allowances (CHF 12 150), allowance for years of service (CHF 45 840), company cars (CHF 102 363), premium contributions to 3rd pillar pension plans (CHF 91 413), other
Other members of Corporate Executive Board 6 976 910 0 8 092 470 4 Pursuant to the pension fund regulations, occupational provisions were financed by the employer and the employee at a ratio of 2/3 to 1/3.
Other members of Corporate Executive Board 18 200 2 729 636 10 822 106 8 The PSUs represent future subscription rights that entitle the individuals concerned to receive Swiss Life Holding shares after a period of three years provided the relevant conditions are then met. Depending on the fulfilment during the three-year term of the two performance criteria defined, the number of PSUs can increase by a factor of 2.0 or drop to zero.
9 The allocation of PSUs as at 01.04.2010 was effected at a fair value of CHF 149.98, as calculated by an independent consultancy firm.
SHARE OWNERSHIP/PARTICIPATION RIGHTS AS AT 31.12.2011 — As at the balance sheet date, acting members of the Board of Directors and the Corporate Executive Board (including closely related parties) held the following number of registered Swiss Life Holding shares and future subscription rights to Swiss Life Holding shares in the form of Restricted Share Units (RSUs) and Performance Share Units (PSUs).
2 Total number of RSUs allocated in the year 2011 in connection with the relevant equity compensation plan. The RSUs represent future subscription rights that entitle the individuals concerned to receive SLH shares after a period of three years, provided that the relevant conditions are then met.
Performance Share Units (PSUs) as future subscription rights to SLH shares 31.12.20101
Balance carried forward from previous year 3 793 683 3 609 395
In our opinion, the financial statements for the year ended 31 December 2011 comply with Swiss law and the company ’s articles of incorporation.
The Business Review is published in German, English and French. The English text is definitive for the extract from the Financial Statements.
PUBLISHER — Swiss Life Holding Ltd, Zurich EDITORIAL RESPONSIBILITY — Swiss Life Group Communications, Zurich CONCEPT AND DESIGN — Eclat AG, Erlenbach, Canton of Zurich PRODUCTION — Management Digital Data AG, Lenzburg, Canton of Aargau PRINTERS — Heer Druck AG, Sulgen, Canton of Thurgau © Swiss Life Holding Ltd, 2012
The work we do every day is all about providing for the future: we advise our customers on risk, life and pensions products and, with the products and services we provide, we enable them to shape their financial future individually and independently.
Markets — Swiss Life is a leading international specialist for risk, life and pensions solutions. With a market share of 27%, the company is one of the market leaders in Switzerland. It is one of the top ten companies in the European life insurance market and also ranks among the leading providers in the global business for high net worth individuals.
Swiss Life was not alone in finding 2011 a challenging year. Natural catastrophes such as the one which triggered the Fukushima reactor disaster, the Arab Spring, the legacy of which has yet to emerge, plus the debt crisis and the resulting fall in the euro sent jitters through the global economy. The unforeseeable, or even the unthinkable, has shown many areas in a new light. Security and financial stability cannot be taken for granted – as was harshly demonstrated by the many events of 2011.
Swiss Life successfully negotiated a tough market environment and can look back on a very good year, due in no small measure to the successful implementation of the MILESTONE programme. Our operational improvements enabled us to increase our net profit from CHF 560 million in the previous year to CHF 606 million. We also improved the quality of our premium income – especially in terms of profitability and the composition of our sources of income. Thanks to our strong asset and liability management and the high intrinsic value of our investment portfolio, we achieved an excellent investment result. We were particularly pleased to see Swiss Life grow in strategically important business areas.
Growth in Swiss corporate client business in particular shows demand for full insurance solutions, which can only be provided by private insurers. These solutions are very important in economic terms, as they make a major contribution to the stability of the Swiss pension system. It is precisely when many Vorsorgewerks (employee benefits units) are experiencing a funding shortfall that customers come to seek a safe haven in Swiss Life and its
Swiss Life — Business Review 2011 solutions. This customer confidence is both an honour and a commitment. We will make every effort, going forward, to ensure the regulatory framework conditions continue to permit these solutions.
Our solid performance in the 2011 financial year comes on the back of our MILESTONE programme, which was launched in 2009 and set the foundations on which we were able to build a more resilient business model. We had already achieved most of our targets by the end of 2011, one year ahead of schedule.
We see the key to doing business successfully as never losing sight of our goal and our responsibility: the loyalty and security of our customers are the compass that we consistently turn to for guidance. Our insurance solutions are gaining in importance. There are two major trends making our work both relevant and demanding: firstly, people are living longer, which means their pension provision also has to last longer. Secondly, countries are finding it more of a strain financing their pension commitments due to their financial situation. The financial market turbulence and historically low interest rates are also preventing assets from appreciating naturally. In fact, it will actually become harder in future to preserve the value of our personal assets and ensure adequate pension provision. Swiss Life’s loyal customers, committed employees, financial solidity, expertise and prominent brand place it in an excellent position to exploit the opportunities of a growing, but also very competitive, pensions market.
2012 will be a year of consolidation for Swiss Life. We will conclude MILESTONE and present our new plans for the coming years at our Investors’ Day on 28 November 2012. We don’t anticipate any marked improvement in market conditions. Nevertheless, Swiss Life is in an excellent position to meet the challenges posed by the market, even if operating conditions remain difficult over the longer term.
We are very grateful for your support, as shareholders, for Swiss Life as it pursues this path. We look forward to continuing to work with you towards a successful future for Swiss Life.
You’re always emphasising that you’re aiming for profitable growth rather than just simply growth. What does this mean exactly? Our credo is: We don’t want growth at any price. It’s relatively easy to generate premium volume in the pensions market. You push up guarantees and promises or you increase commissions for the distribution force. This may work in the short term – but it represents corporate irresponsibility in the medium term. It’s not how Swiss Life wants to do business. We’re striving for “the best of both worlds” – namely profitable growth. And indeed with some success: Overall Swiss Life was able to significantly improve the quality of its premium income in 2011.
AWD has also made progress. What’s your take on this? The latest operational improvements at AWD are beyond dispute. In the AWD core market of Germany in particular, we’re excellently positioned vis-à-vis the competition. AWD is also developing well in England. But we’re not quite where we want to be in Austria and Eastern Europe. Here we have quite a path ahead of us. Inherited legal issues in Germany and Austria are making our job even more challenging. But what we shouldn’t forget is that, since the acquisition of AWD, we’ve survived two economic crises, which didn’t just take their toll on us but on the whole financial services industry. The strategic significance of AWD for Swiss Life will continue unchanged in the medium to long term. Firstly, AWD helps us to diversify our earning sources; secondly, Swiss Life benefits from AWD’s enormous additional distribution capacity to bring its own top products and solutions to market.
“I’m saving my pocket money for a dog – although my parents don’t know it yet! I’ve already got a lead. I often take the dogs from the animal shelter out for a walk. They have a good life there but I still feel sorry for them because they don’t have a home of their own.”
“Growing old is great fun. But only if you stay healthy. I swim 700 metres twice a week in the Piscine de Puteaux in Paris to keep fit.
Although I’m 92, the doctors say I have the heart of a 60-year-old.”
“Every living creature, whether human or animal, depends on professional support in an emergency situation. I would also want to get help if I ever found myself in a life-threatening situation.
“I speak to the Lord above every day. It helps me find the right path to follow in all good conscience. Even when the answers to my questions are not always what
I expected, I know from experience that I should listen to them.”
“Oral hygiene for children lies close to my heart. My regular school visits are aimed at preventing dental caries. I show pupils how to clean their teeth properly, give them nutrition tips for keeping their teeth healthy and distribute snack boxes containing tooth-friendly foods.”
EMILIE AMMANN, 9, ZURICH✟ Emilie Ammann has two cats: “Pepper” is white with black spots and “Ginger” is black. But the Zurich primary school pupil wants a dog most of all. Because she can’t have her own dog yet, she takes dogs from the animal shelter out for a walk on Saturdays and she marks her favourite dogs in her books with stickers.
DANIEL GUT, 44, ZURICH✟ With a Swiss father and a Dutch mother, Daniel Gut grew up in South Africa, where he completed his studies in structural engineering. He has been living in Switzerland since 2000. He works as an infrastructure manager for ERZ Entsorgung + Recycling Zurich, where he is involved in municipal waste disposal and recycling. He also enjoys the best of the city and countryside in his spare time. He likes the outdoors, sailing and cycling – freedoms which he considers a privilege.
CHRISTOPH TRUMMER, 55, FRUTIGEN✟ Christoph Trummer is a hermit who lives on the Engstligen dry river bed near Frutigen in a house he built himself from driftwood and mud. Ever since visiting India and Nepal, spirituality has played an important part in the life of Mr Trummer, who is an electrician by trade. He wants to make a statement through his simple way of life – and he receives two to three thousand visitors a year to his isolated dwelling.
JÜRGEN SEIDEL, 65, BAD RAGAZ✟Prof. J. Jürgen Seidel is a Protestant minister and lecturer in Modern Church History. He has been teaching at the university for 20 years and, in addition to his research and publishing work, he taught religion for 35 years. One of his priorities in life is to inspire the young to take responsibility and work towards a peaceful world.
STRATEGIC THRUSTS — Swiss Life aims to become a leading international specialist for risk, life and pensions solutions. This self-image is precisely defined in six principal thrusts. Embedded in a clear goal, formulated in an ambition and supported by a mission, the strategic thrusts cover the entire value chain: 1. Enhance customer value and new business profitability 2. Increase distribution quality and power 3. Improve operational excellence 4. Preserve the balance sheet and optimise in-force business 5. Drive disciplined execution 6. Engage employees
The customer stands at the heart of Swiss Life’s strategy. We are committed to helping our clients create a financially secure future. For life. This promise requires our company to be securely positioned and sustainably financed even in a difficult market environment.
With MILESTONE, Swiss Life has the right answer to the ongoing turbulence on the financial markets. The fitness programme, which is linked to specific goals for 2012, has made Swiss Life’s business model more robust and resilient in the long term. The action taken under MILESTONE has also made the Swiss Life strategy more tangible and comprehensible for the relevant stakeholders. The focus on achieving profitable growth and enhancing customer value is being increasingly recognised within the company as part of the corporate culture. The initiatives
Strategy and Brand 2011 was another challenging year for Swiss Life. These turbulent times have proved the value of steadfastly holding to our course. The forward-looking strategy and the ambitious Group-wide MILESTONE programme have made Swiss Life more robust and resilient, while at the same time allowing us to exploit opportunities which have arisen despite volatile markets and the weak Euro. In a difficult economic climate customers rely on positive experiences and the credible promises of a strong brand, criteria which Swiss Life meets through its brand promise, “The future starts here.”
pursued with MILESTONE are reflected in the strategic thrusts set by the company and have now been integrated into day-to-day business. Swiss Life will be reporting on its future strategic direction and the period post MILESTONE at its Investors’ Day on 28 November 2012.
CREDIBLE BRAND PROMISE — In an environment of ever-increasing competition and ever-changing market conditions, the character and credibility of a brand are important prerequisites for corporate success. A strong brand identity offers distinct competitive advantages, particularly in the long-term financial security business. Swiss Life is represented in all markets with the uniform claim, “The future starts here.” The brand positioning, as expressed in a condensed form in the claim, is based on the image dimensions of future, reference, independence and Swissness. The clear message of the claim also radiates inwards: It represents a commitment by the employees to employ their expertise, openness, engagement, proximity and clarity in the service of our customers.
TARGETED BRAND MANAGEMENT — Activities aimed at strengthening the brand and raising the profile of our brand promise are carried out within the framework of targeted brand management. The new brand management cycle was completed for the first time in the year under review. All marketing measures and their impact on image and brand perception were tested in each market from both a quantitative and a qualitative standpoint. These findings are taken into consideration by brand managers when budgeting and planning and provide specific reference points when planning future measures.
: Whether it’s a personal thing, because we have set ourselves and systematically pursued new goals, or whether changes are forced on us from outside: life is characterised by changes and turning points. In 2011, Swiss Life in Switzerland specifically addressed this subject by launching a campaign which gave tangible form to the brand positioning and the claim “The future starts here.” “Reversed sentences”, where one word links two phrases which have completely different meanings, were used in a nationwide advertising poster campaign.
Swiss Life increased its net profit in 2011 to CHF 606 million compared to CHF 560 million in the previous year. Adjusted for one-offs and currency effects, profit from operations stood at CHF 793 million, representing a substantial improvement over the previous year’s figure of CHF 751 million. This was mainly driven by the outstanding investment result, improvements at operational level and ongoing cost management. Thanks to the MILESTONE programme, Swiss Life has already achieved most of its targets one year earlier than planned.
After adjustment for one-offs and currency effects, Swiss Life increased profit from operations in 2011 by 6% to CHF 793 million (2010: CHF 751 million). On a nonadjusted basis, profit from operations climbed 1% to CHF 699 million. At CHF 606 million, net profit rose CHF 46 million or 8% over the prior-year figure. This corresponds to earnings per share of CHF 18.87 and a return on equity of 7.3%. In Investment Management Swiss Life achieved a net investment result on the insurance portfolio of CHF 4.3 billion, corresponding to a net investment return of 3.8% (2010: 4.1%), which again represents an excellent result in the current market environment.
GROWTH — Growth in strategically important business areas — Swiss Life generated premium volume of CHF 17.1 billion, which represents a currency-adjusted decrease of 10% over the previous year. Performance in the home market of Switzerland was very encouraging, with premium growth of 6% to CHF 8.1 billion. In France, premiums fell 6% on a currency-adjusted basis to CHF 4.4 billion, with an improvement in the quality of new business as a result of the increase in unit-linked products to 29% (2010: 22%) and the enhanced product mix.
EARNING POWER — Focus lies on profitability — Adjusted for currency effects, Swiss Life Group’s profit from operations increased from CHF 751 million to CHF 793 million (+6%). In Switzerland, Swiss Life reported an improved segment result on a comparable basis of CHF 476 million (2010: CHF 469 million). In France, Swiss Life recorded a segment result of EUR 100 million (2010: EUR 117 million on an adjusted basis), chiefly due to a lower financial result and a higher loss ratio in health insurance business.
MILESTONE — MILESTONE delivers significant advances — Swiss Life has already implemented most of its goals under the Group-wide MILESTONE programme, one year ahead of schedule. The company has made impressive progress on the cost front in particular: By the end of 2011, the planned savings of CHF 350-400 million announced in 2009 had already been achieved, with a reduction of CHF 404 million from the cost basis of 2008. Thanks to its margin management, Swiss Life has been able to maintain its new business margin at a healthy level: At the end of 2011 it stood at 1.2% (2010: 1.4%), helping to offset the negative impact of the volatile markets. The value of new business, however, fell by 28% to CHF 150 million. Swiss Life succeeded in keeping the share of modern and risk products in new business at the target level of 1 Insurance Switzerland 47% 2 Insurance France 25% 3 Insurance Germany 10% 4 Insurance International 18%
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 17 143 20 191 –15.1%
Net earned premiums and policy fees 11 894 12 051 –1.3%
Equity securities and equity funds 2 602 2.2% 4 265 3.8%
Cash and cash equivalents and other 591 0.5% 2 582 2.3%
In 2011, Swiss Life generated an overall segment profit from operations of CHF 699 million (2010: CHF 694 million). Adjusted for one-offs and currency effects, profit from operations rose 6% to CHF 793 million.
Swiss Life not only reports its insurance business by country (Switzerland, France and Germany), it also discloses separately the results of its cross-border segments, namely Insurance International, Investment Management and AWD. The company posted a profit of CHF 476 million in its home market Switzerland, CHF 124 million in France and CHF 58 million in Germany. The Investment Management segment achieved an excellent result of CHF 130 million. The successful reorganisation of AWD was confirmed with adjusted operating profit of EUR 54 million (2010: EUR 49 million), although its operating result was encumbered by provisions for legal cases amounting to EUR 47 million, producing EBIT of EUR 7 million and a segment loss of CHF 13 million. Swiss Life International reported a loss of CHF 10 million.
INSURANCE SWITZERLAND — In the year under review Swiss Life in Switzerland posted a promising segment result of CHF 476 million (2010: CHF 491 million) . The 3% decline over the previous year can be attributed to a one-off effect in 2010 resulting from the conversion of its own pension fund, as well as to higher acquisition costs caused by an increase in new business. This result is all the more remarkable in view of the enduring low interest rate environment, the decline in the value of key currencies and the high margin pressure in life insurance.
Operating expenses rose by 16% to CHF 873 million in 2011. This can be attributed to the positive one-off effect in 2010 resulting from the Swiss Life pension fund changeover from a defined benefit system to a defined contribution system, as well as to higher acquisition costs caused by the increase in new business in 2011. The further reduction in administrative costs is the result of a sustained efficiency programme, which mainly impacted staff and advisor costs.
Insurance benefits, including changes in insurance reserves, increased by 4% to CHF 9.0 billion. This rise is primarily attributable to the increased need for reserves for future risks and to the higher premiums (savings deposits).
Swiss Life — Business Review 2011 additional tranches for Swiss Life Premium Select, a nontax -qualified (pillar 3b) unit-linked life insurance product. The holding account, a temporary account with a variable interest rate, was introduced in the first quarter. In the second semester the capitalisation product Swiss Life Classic Midterm offering was extended. Swiss Life Classic Crescendo Duo, a combined pillar 3a and 3b savings product, was launched in the third quarter. In the second semester Swiss Life launched the product Swiss Life Business Invest complementary occupational benefits, an attractive pension solution with a modern investment concept for members of management, which targets Swiss corporate clients. In the area of full insurance the product Swiss Life Business Protect complementary occupational benefits was launched for members of management.
Net earned premiums and policy fees 7 757 7 365 5.3%
In 2012, Swiss Life in France aims to reinforce its leading position in life insurance for affluent and high net worth individuals by pursuing its strategy of improving profitability with a stronger focus on customer orientation.
INSURANCE FRANCE — Swiss Life in France posted a segment result of CHF 124 million (2010: CHF 82 million), driven by rate increases in 2011, a stable financial margin despite an extremely tough economic environment, cost discipline resulting in higher productivity, and the absence of any extraordinary events in property and casualty business.
INSURANCE GERMANY — Swiss Life in Germany posted a segment result of CHF 58 million (2010: CHF 102 million ). This is mainly attributable to the lower financial result. Swiss Life grew stronger than the market in the key area of periodic premiums.
The German life insurance market contracted by 4% in 2011. Swiss Life generated premium volume of CHF 1.7 billion, equivalent to a drop of 6% in local currency. Occupational pensions and the “Sofortrente”, a single premium refund annuity product, on the other hand, were very successful. Insurance benefits and policyholder participation declined by 14% overall in 2011, chiefly due to the decrease in policyholder participation to CHF 237 million on the back of the lower financial result. Operating expenses fell by 21% (11% in local currency) while new business premiums dropped 23% (in local currency) to CHF 470 million.
Due to margin considerations, the distribution of products through AWD, measured by production volume, declined by 7% (in local currency) to CHF 493 million.
GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED 1 739 2 073 –16.1%
Net earned premiums and policy fees 1 618 1 814 –10.8%
successful disability insurance solution and the longterm care insurance solution to be launched in 2012 are set to boost growth. There are also plans to strengthen occupational pensions business.
INSURANCE INTERNATIONAL — The International segment serves international high net worth individuals (PPLI) and multinationals (Corporate Clients). Due to strict cost management and reduced investment in new business areas, the segment loss was brought down to CHF 10 million (2010: CHF –27 million). However, exchange rates had a particularly negative effect on the result, as did the cost of restructuring in the affluent segment, for which there will no longer be any direct sales outside the Swiss Life national companies. Gross written premiums, policy fees and deposits received remained below the previous year’s level (CHF 5.2 billion) at CHF 3 billion, which represents a 37% loss in local currency.
The PPLI area specialises in life insurance for high net worth individuals and has built up a presence in Liechtenstein, Luxembourg, Singapore, Dubai and Switzerland. At CHF 2.8 billion, gross premium volume in 2011 was lower than the previous year’s figure of CHF 5 billion. The decrease is due to an exceptionally strong result in the same period the previous year (an effect of the Italian tax amnesty (“Scudo Fiscale”) and to the reorientation in private banking – the most important client interface in this business.
Corporate Clients specialises in global life and pensions solutions for multinationals. It increased its new business in all markets and cemented its market leadership as a provider of global employee benefits solutions. Growth will be driven forward in 2012, with a focus on profitability.
Swiss Life — Business Review 2011 for the start of 2013. In the product area, the focus will lie on supporting the insurance units in developing modern insurance products, as well as stepping up the expansion of third-party business.
Intensified efforts to expand third-party business led to a net inflow in assets under management of almost CHF 1 billion. In cooperation with the insurance units, new real estate investment opportunities were offered to institutional clients in particular. This is also reflected in the growth of the Swiss Life Investment Foundation which, as in the previous year, was one of the strongest growing investment foundations in Switzerland.
After its start-up in Switzerland in 2010, the new asset management application was implemented in Germany during the year under review. It is set to go live in 2012 and will facilitate more efficient management of assets. Investment Management is also planning to implement the application in France in 2012, with the launch scheduled
At the end of 2011, the AWD Group had 4932 trained and registered financial advisors, as well as 2407 advisors in training under contract. The number of advisors has fallen since the previous year, chiefly due to stricter training and registration requirements within the financial services industry. Although this may quell growth in advisor numbers in the short term, it serves to improve the quality and sustainability of the advice provided in the medium term.
PERFORMANCE CULTURE — The efficiency-enhancing programme with lasting success — The Group-wide initiative “My Milestones” launched in 2009 was also continued in the year under review. The goal is to accentuate Swiss Life’s values and employee competencies so as to strengthen the performance culture. Every market unit has launched a programme of measures to address these issues. The impact is visible in the employee survey. An impressive 78% of employees gave a positive rating for teamwork – this is 6% higher than the score achieved by the best employers in the European financial industry (72%). Furthermore, employees are very happy with their managers. They feel supported in achieving their goals; here the score of 74% puts Swiss Life in the top quartile of the European financial industry (73%). An above-average rating was given to the aspect of how much employees are involved by their managers in decisions which affect their
There is no longer-term arrangement than that offered by life and pensions and risk products – in many cases the time horizon stretches to the end of our lives. This is why Swiss Life thinks and operates on a holistic and long-term basis. However, sustainability for Swiss Life also means responsible corporate conduct: an obligation towards clients, employees, society and the environment, and is an integral part of corporate culture.
work. The score of 74% was 8% higher than that achieved by the best employers in the European financial industry.
As a result of the survey findings, measures have been taken to introduce improvements in all Swiss Life Group units. These measures are aimed at boosting the development of the company and employees in such a way as to establish a performance culture which is in line with the corporate strategy.
TALENT DEVELOPMENT — Target-oriented development of junior staff with potential — Swiss Life gives high priority to the ongoing development and motivation of employees. Every year the company nominates employees who demonstrate a high level of performance and potential for talent development (manager pool). Training modules and projects help to prepare these future firstand second-level managers (team leaders and department heads) for their future roles. The initiative supports efforts to open up career paths within the company and to fill key positions with budding and qualified young managers from among its own ranks. The AWD Group also runs its own talent programmes. In the two initiatives, GOLD and GOLD Alumni, employees are actively promoted on an ongoing basis, both professionally and personally.
The consistent promotion of up-and-coming managers can be regarded as a success. Since the introduction of the senior management programme in 2005, 74% of the graduates have been appointed to key senior management positions.
SOCIAL PARTNERSHIP — Intensive cooperation between employers and employees —Cooperation with Swiss Life’s European Works Council, the Europa Forum, was stepped up in 2011. It was strengthened with the signing of a new social partner agreement for an indefinite period. The nine-person committee with representatives from four countries meets regularly in ordinary and extraordinary meetings and deals with transnational information and consultation in relation to topics which affect all Swiss Life employees. The Europa Forum was founded in 1996.
Intensive social partnerships are also forged in the national companies, primarily in relation to topics arising from the operational requirements of the business units. The staff committee in Switzerland celebrated its 40th anniversary in 2011. In a revision of the regulations, the decision was taken to increase the committee from seven to nine employee representatives for the 2012 legislative period.
Compared with 2010, the number of full-time positions Group-wide fell by 315 to 7168. This reduction is linked to the MILESTONE programme and affects all Group units. Net fluctuation was 5.2%.
1 Apprentices and trainees 20% 2 Management and talent development 21% 3 Specialist training, social and methodological skills 59%
Swiss Life is one of the leading providers of life insurance and pension solutions. A good many people and institutions place their trust in Swiss Life: clients, business partners, shareholders, governmental bodies, employees. In order to create and cultivate trust, the company has laid down five basic values: – Expertise: Professional know-how and experience – Proximity: Close relationships with clients and business partners – Openness: Nurturing an open dialogue both within and outside the organisation – Clarity: Clear communication and a range of comprehensible products – Engagement: Motivation and enthusiasm to help our clients, staff and shareholders achieve their goals.
Swiss Life is aware of its social responsibility: As a Swiss company and provider of life and pension services for over 150 years, Swiss life stands at the centre of public life. The
Group supports community life in a wide variety of ways with charity commitments, voluntary work, active involvement in shaping the political process and constant improvement of its ecological balance sheet.
Swiss Life also conducts its dialogue with the public and decision makers on insurance- and pension-related topics through industry groupings and professional associations. It plays an active role in the committee work of professional associations and specialist bodies. The Chairman of the Board of Directors of Swiss Life is a member of the Board Committee of the national business association economiesuisse, while the Group CEO is a member of the Board and the Board Committee of the Swiss Insurance Association (SIA). In fact the company is particularly well represented in the SIA. The CEO of the Swiss Market chairs the central Life Insurance Committee, the Group CFO is a member of the Finance and Regulation Committee, and further experts represent Swiss Life on some 15 committees and working groups. Other representatives of Swiss Life Management are likewise active in local industry associations in other core markets.
Swiss Life is one of the 11 companies which founded the Swiss Climate Foundation in 2008. It donates its steering tax reimbursements on CO2 emissions to the non-profit foundation.
report for the whole Group. Each market unit has specialist offices for environmental management, which exchange information with each other on an informal basis. Environmental Management Switzerland is responsible for the annual Group-wide environmental report.
In accordance with the standards set by the Association for Environmental Management and Sustainability in Banks, Savings Banks and Insurance Companies (VfU), the environmental report collects and analyses data on electricity, heating, paper, transport, water and waste disposal and proposes measures for improvement. The Association ’s standardised key figures make for fair comparison of the results of different companies. The reporting cycle, however, is not aligned with Swiss Life’s annual report so that the final figures for 2011 are not yet available. The environmental report includes data for Swiss Life in Switzerland (internal services and the sales force), Germany, France, Luxembourg and Liechtenstein, and in 2010, for the first time the AWD headquarters in Hanover. Data for the other AWD locations in Europe has been projected in order to make cross comparisons.
Energy consumption (electricity and heating) for the Swiss Life Group in 2010 rose considerably over the previous year’s figures to 63.8 million kWh as a result of the new inclusion of AWD. The overall distance travelled for business purposes was maintained at the prior year’s level, totalling 31.5 million km, despite the inclusion of AWD. A year-on-year comparison of GHG emissions is not possible due to methodological differences caused by new emission factors in accordance with the VfU indicators. Total GHG emissions in 2010 amounted to 26 352 tonnes. The key figures are also available on the internet this year for the first time.
ENVIRONMENTAL FOOTPRINT — Ongoing improvement through deployment of alternative energy sources — There are several reasons for the improved results regarding environmental indicators: optimisation of energy efficiency in the business premises, procurement of environmentally friendly electricity from renewable sources and active environmental management.
The Swiss Life Group is one of the leading private real estate owners in Switzerland. As part of its environmental initiatives , it has fitted some 10 000 of its properties since 2005 with water meters for consumption-based billing. This measure has resulted in water savings of almost 20%.
Research shapes the future. And research should be fun. That is why the foundation Swiss Youth in Science has been promoting the joys of science for over 40 years. It runs various programmes to get young people interested in science.
The Swiss Youth in Science foundation was founded in 1970 by Adolf Portmann. Mr Portmann was a young man with a thirst for knowledge who lacked the means to pursue his interest. After retiring, his experiences as a youth led him to organise a national research competition for young people. Three years later this resulted in the creation of Swiss Youth in Science. Swiss Life’s Perspectives foundation has supported Swiss Youth in Science for several years.
Kathrin Ernst and Miriam Marti Design, construction and analysis of a solar simulator using LED The two Zofingen Kantonsschule pupils actually constructed a solar simulator using commercially available LED. The solar simulator can be used in research cells to test new materials for their efficiency and suitability for future solar cells. The two students, who completed the project as part of their school-leaving certificate (Matura), worked with the Swiss Federal Laboratories for Materials Science and Technology (Empa).
The project certainly won over the jury. They were awarded the Swiss Youth in Science special prize and gained an invitation to join the International Science Summer Camp (ISSC) in Denmark, an international event for young people with an interest in science.
Pino Dietiker A conscience issue – avoiding military service in Switzerland during the Cold War There have never been more cases of people avoiding military service than from 1969-1995. Pino Dietiker has compiled an intriguing and varied chronicle based on ten detailed accounts of the experiences of draft dodgers during the Cold War. His work includes the protagonists ’ personal stories, motivations and experiences, which are all very different from each other. Pino Dietiker’s interviews and written accounts are a new approach to researching this subject and, as such, form a basis for further studies. The author received the special prize from Academia Engelberg for his work.
Swiss Life uses its product strategy to further its goal of profitable growth and improvement in the new business margin.
NEW PRODUCTS — Swiss Life is always working on new products for changing customer needs. In 2011, for example, Swiss Life in France launched “e-reputation” insurance: the first comprehensive and professional cover for online reputation. AWD launched its “Sorglos-Paket” (“No worries package”) in Switzerland: this is a comprehensive insurance package bringing all the personal insurance types of cover under one roof. It allows the customer to simply refer any household, motor vehicle or personal liability claims to his or her advisor.
In Switzerland, the Swiss Life Investment Foundation successfully completed the biggest new launch of a real estate investment group with a volume of CHF 500 million in November 2011. In 2011, Swiss Life in Germany launched an immediate annuity product “Sofortrente Aktiv”, which also offers young people the opportunity to invest a single premium with maximum flexibility. Swiss Life’s “Sofortrente Aktiv” thus caters for all the different stages of life – from student to retiree.
COOPERATION — In order to provide customers with as comprehensive a range of products and services as possible, Swiss Life is involved in certain cooperative ventures with various partners in a range of markets. For example, Swiss Life initiated cooperation with the online bank Swissquote in the year under review. This cooperation, which focuses on the management of savings and investment products in the Swiss market, aims to substantially increase reinvestment over the next three years and develop innovative products and online services for customers seeking investment and pension products in the “digital native” age.
Our environment is constantly evolving. New technologies and changing lifestyles are transforming people’s needs for insurance. We want to meet these needs. After all, innovation and targeted investment ensure our competitiveness, both now and in the future. That is why Swiss Life is continually working on its product strategy and employing innovative solutions to meet the needs of its customers.
Innovations in the product range during 2011 1 40% new products or products with increased customer value.
The measures and mechanisms introduced by Swiss Life to ensure good corporate governance work well in practice; however, specific adjustments are examined on an ongoing basis in order to adapt the management and control tools and disclosure to current circumstances and to implement further improvements.
Talanx AG, Germany, reported in the publication of 23 February 2011 regarding a change in the composition of the Group subject to reporting requirements that it held 2 974 688 shares of Swiss Life Holding, equivalent to 9.27% of the voting rights.
Carsten Maschmeyer, Germany, reported in the publication of 13 December 2011 that his shareholding had fallen below the disclosure threshold of 3%.
SHAREHOLDER STRUCTURE — On the balance sheet date a total of 183 277 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. Around one third of the registered shares were in private hands.
SHARES — Subject to the 10% limit on voting rights set out in the Articles of Association (cf. the section on “Shareholders ’ participation rights” on page 67), each share grants the right to one vote at the General Meeting of Shareholders.
CONVERTIBLE BONDS AND OPTIONS — No convertible bond issues of Swiss Life Holding were outstanding on the balance sheet date. As at 31 December 2011, Swiss Life Holding and its Group companies had not granted any options on rights to participate in Swiss Life Holding.
Frank Schnewlin 2nd Vice Chairman Nomination and Compensation Committee, Chairman 2009 2012
Zurich. Joining Credit Suisse in 1986, he assumed a number of executive responsibilities in various areas of banking and in different geographical markets. As a Member of the Executive Board, he was assigned responsibility for Swiss Corporate and Retail Banking from 2000 onwards. In 2002 he assumed the role of Chairman Switzerland of Credit Suisse. Following his move to Swiss Life, Rolf Dörig held the positions of Chairman of the Corporate Executive Board from November 2002 to May 2008 and Delegate of the Board of Directors from May 2008 to May 2009.
Other appointments: – Adecco S.A., Chairman of the Board of Directors – Kaba Holding Ltd, Vice Chairman of the Board of
Directors – Danzer AG, Chairman of the Board of Directors – Walter Frey Holding AG, Member of the Board of
AL Gerold Bührer graduated in economics (lic. oec. publ.) from the University of Zurich in 1972. Following 17 years with the Union Bank of Switzerland as a member of senior management in its financial sector and a Member of the Executive Board of its fund investment company, he joined Georg Fischer Ltd in 1991, where he served as a Member of its Executive Board (Finances) from 1991 until 2000. He began working as an independent economic consultant in 2001 and, since the end of
Directors/Chairman of the Risk and Audit Committee – Drosos Foundation, Member of the Board of
Between 1995 and 1999 Volker Bremkamp was an Executive Director and, at the same time, Group Executive Director, Continental Europe, of Guardian Royal Exchange plc, London, which was taken over by the AXA Group in 1999. From 1999 to 2000 he held the position of Executive Director of AXA Colonia Konzern AG, Cologne (holding company of AXA Germany). He has been Managing Director of BMB Bremkamp Management- und Beteiligungs-GmbH since 2000.
AL Henry Peter completed his studies in law at the University of Geneva in 1979, and in 1981 he was called to the Geneva bar. Following a pupillage in Geneva, a period of study as a visiting scholar at the University of California in Berkeley and legal work in Lugano, he obtained his PhD at the University of Geneva in 1988. Since 1988 he has been a partner in a law firm in Lugano, currently PSM. In addition, he has held the position of Professor of Business Law at the University of Geneva since 1997. He became a Member of the Swiss Takeover Board in 2004 and a Member of the Sanction Commission of the SIX Swiss Exchange in 2007.
Other appointments: – Sigurd Rück Ltd, Chairman of the Board of Directors – Cassa Pensioni della Città di Lugano, Member of the
Directors and Member of the Audit Committee – Otis, Member of the Board of Directors – Autogrill Switzerland LTD, Member of the Board of
Board of Directors – Swiss Olympic Association, Vice Chairman of the disciplinary chamber in charge of doping cases
IBM as a systems engineer and software/operating systems specialist. Following various periods in the USA, Denmark and Switzerland, he held the position of CEO of IBM Switzerland from 1998 to April 2006. He now works as a management and technology consultant.
Other appointments: – Vontobel Holding Ltd, Member of the Board of
Directors – Bühler AG, Member of the Board of Directors – Zurich Chamber of Commerce, Chairman – Unitectra Ltd, Chairman of the Board of Directors – economiesuisse, Member of the Executive Board
NOMINATION AND COMPENSATION COMMITTEE — The Nomination and Compensation Committee (NCC) supports the Board of Directors with regard to setting the compensation policy and in key personnel decisions regarding appointments to the highest levels of management and related performance-based and market consistent compensation.
INVESTMENT AND RISK COMMITTEE — The Investment and Risk Committee assists the Board of Directors in matters concerning investment management, financial management and risk management within the Group. The tasks of the Investment and Risk Committee include drafting proposals on the principal features of asset and liability management (ALM) and submitting them to the Board of Directors, determining the investment policy, assessing capital adequacy, verifying compliance with guidelines on investments, and establishing the risk tolerance in insurance and investment operations.
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, and takes due note of their reports and recommendations.
The Corporate Executive Board bears responsibility in particular for the implementation of the corporate strategy, for the conditions governing business operations and for financial guidance.
Corporate Internal Audit, which reports directly to the Chairman of the Board, represents a suitable means of independent monitoring and information gathering for the Board of Directors. Regular meetings take place between the Chairman of the Board of Directors and the Head of Corporate Internal Audit, as well as between the Chairman of the Audit Committee and the Head of Corporate Internal Audit. Implementation of the measures recommended by Corporate Internal Audit is monitored by Group Compliance & Operational Risk Management. The Audit Committee regularly receives a report on operational risk management within the Swiss Life Group. Swiss Life’s Internal Control System (ICS) also serves the Board of Directors for information and controlling purposes. Further details on this system are available in the “Risk Management” section of the Financial Statements on page 36.
On 31 December 2011 the Corporate Executive Board of Swiss Life Holding was composed of the following members: Member of the Corporate Executive
Port, Guernsey, Member of the Board of Directors – Swiss Insurance Association (SIA), Vice Chairman,
Ivo Furrer graduated in law from the universities of Zurich and Fribourg and earned his PhD with a thesis on employee benefits in Switzerland. After joining Winterthur Life in 1982, he worked for several years in international industrial insurance in Switzerland, the UK and the USA. In 1998 he was appointed Chief Underwriting Officer at Winterthur International. He subsequently moved to Credit Suisse Group, where he was Head of eInvestment Services Europe and member of the management of Personal Financial Services. Ivo Furrer began working for Zurich Financial Services in 2002, initially in Germany as head of the international key account business, and in 2005 as a Member of the Global Corporate Executive Committee. In 2007 he was appointed CEO Life Switzerland and Member of the Global Life Executive Committee of Zurich Financial Services.
Life Insurance Committee – German-Swiss Chamber of Commerce, Member of the
KLAUS G. LEYH — Born 1966, German national Chief Executive Officer Germany (CEO Germany)
After completing his business administration and economics studies at the University of St. Gallen and a twoyear 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 Member of the Executive Committee of the Swiss P&C business unit. From 1997 to 1999 he was Chief Financial Officer of all Swiss operations. In 1999 Thomas Buess moved to the USA as Chief Financial Officer of Zurich Financial Services Group’s North American business area. In 2002 he was appointed Group Chief Financial Officer and Member of the Group Management Board. Thomas Buess went on to head the reorganisation of the life insurance business before assuming the role of Chief Operating Officer of Zurich Financial Services Global Life in 2004. In January 2009 he moved to Allianz Group as Head of Operational Transformation.
Charles Relecom graduated from the University of Namur (Belgium) with a degree in mathematics and went on to gain a master’s degree in Actuarial Science at the University of Louvain (Belgium). He began his career in 1978 as Chief Actuary and Chief Technology Officer at Swiss Life in Belgium. In 1984 he moved to the head office in Zurich, where he played a significant role in setting up the International Division. From 1988 to 1994 he worked for ELVIA Life as Director of Sales in the key accounts business. In 1994 he moved to «La Suisse» and, in 1998, was appointed CEO of the non-life business and Chief
Actuary. In 2000 he became the CEO of «La Suisse», a position he held until 2005 when the company was integrated into the Swiss Life Group. Following the integration, Charles Relecom returned to Swiss Life in Belgium, initially as the CEO of Zelia S.A. and, from February 2006, as CEO for the entire Belgian business.
Other appointments: – Technopark Zurich, Member of the Board of Trustees
MANFRED BEHRENS —Born 1955, German national Chief Executive Officer AWD (CEO AWD)
After graduating in law, Manfred Behrens initially worked as an attorney in a Hamburg-based law firm. In 1984 he moved to Hamburg Mannheimer AG, where he assumed various leading positions in the areas of law and sales and went on to become regional manager. He joined Volksfürsorge Deutsche Lebensversicherungs-AG in May 1996 and, in 1998, was appointed Member of the Board of Management with responsibility for sales and marketing. Manfred Behrens moved to Swiss Life in January 2004, where he held the position of Chief Executive Officer of Swiss Life in Germany (CEO Germany) until August 2008. He was appointed Co-Chief Executive Officer of AWD (Co-CEO AWD) in September 2008. In April 2009 he assumed the role of Chief Executive Officer of AWD (CEO AWD).
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 (performance -linked payment) in relation to the objectives set 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.
not mechanistically weighted in advance; their individual weighting is determined by the Board of Directors at the end of each financial year.
Pursuant to the regulations of the 2009 and 2010 equity compensation plans, future subscription rights were allocated in the form of so-called Performance Share Units
A total of 68 730 RSUs were allocated; 23 630 in total to the members of the Corporate Executive Board, of which 6350 RSUs to Bruno Pfister as Group CEO.
The attribution of mid- to long-term compensation components (RSU plan) is deferred for a period of three years from the date of allocation in the same way as the deferred compensation in cash. Likewise, the RSU plan provides for adjustment and reclaiming mechanisms (clawback). If the employment relationship is terminated by a participant during the three-year term of the RSU plan, the future entitlements expire worthless.
Two members of the Board of Directors resigned in the 2011 financial year. After serving for eight years on the Board of Directors of Swiss Life Holding, Paul Embrechts did not stand for re-election at the General Meeting of Shareholders in 2011 and no longer serves on the Board of Directors. Carsten Maschmeyer, who was elected to the Board of Directors of Swiss Life Holding at the 2009 General Meeting of Shareholders, resigned as a member of the Board of Directors on 7 December 2011.
As a matter of new policy, the members of the Board of Directors are granted exclusively fixed compensation. The previous arrangements, according to which members of the Board of Directors were allocated variable compensation in the form of blocked Swiss Life Holding shares of up to a maximum of 15% of the fixed compensation, depending on the business results, no longer apply. The total compensation is now paid 70% in cash and 30% in Swiss Life Holding shares with a three-year blocking period. The proportion of shares has thus been increased in comparison with the previous arrangements, under which 20% of the basic compensation was granted in the form of blocked Swiss Life Holding shares.
The shares allocated to the members of the Board of Directors in the period under review form part of the compensation, which was granted 70% in cash and 30% in blocked Swiss Life Holding shares.
No variable compensation in shares was granted to the members of the Corporate Executive Board for the 2011 financial year. As described, they are participating in the current equity compensation plan.
Corporate Executive Board none 1 Economic value equal to the tax value, taking the blocking period into account. The share prices (closing prices) on the days of allocation of 23.06.2011 and 15.12.2011 were CHF 132.30 and CHF 87.40 respectively.
TORS — Rolf Dörig, as Chairman of the Board of Directors, received the highest total compensation for a member of the Board of Directors of Swiss Life Holding in 2011.
In the 2011 financial year, Bruno Pfister was allocated the following amounts in the form of salary, cash bonus, contributions to occupational provisions, deferred compensation in cash and deferred compensation in shares (RSU plan): In CHF
RESTRICTIONS ON VOTING RIGHTS — In exercising voting rights, no shareholder can collect more than 10% of the total share capital directly or indirectly in respect of his own shares and those he represents.
REQUIRED MAJORITIES — In addition to the resolutions provided for by law, a qualified majority (corresponding to at least two thirds of the voting shares represented and an absolute majority of the share par value represented) is required to change provisions concerning restrictions on voting rights, dissolve the company (liquidation), dismiss more than one third of the members of the Board of Directors, or change these provisions of the Articles of Association.
As was the case last year PricewaterhouseCoopers (PwC) is again serving as external statutory auditor for all Swiss Life Group companies that are directly or indirectly held by Swiss Life Holding under its scope of consolidation.
ADDITIONAL FEES — In 2011 PwC received additional fees totalling around CHF 1.5 million for advisory services (2010: CHF 3.7 million), approximately CHF 0.7 million of which was for actuarial advisory services and CHF 0.6 million for fiscal and financial advisory services. The remainder resulted from strategic, legal and other advisory services. The advisory services were performed in compliance with the relevant independency regulations set forth in the Swiss Code of Obligations and the Audit Supervision Act.
Swiss Life communicates actively and openly both within and outside the company. The Investor Relations and Communications areas provide up-to-date reports to private and institutional investors, financial analysts, journalists and the public.
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 and half-year reports since 1997 can be accessed on the internet at www.swisslife.com, “Investors” area, “Results & Reports” section, “Archive Reports” and “Annual Reports” subsections (www.swisslife. com/en/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.
Net gains/losses on financial instruments at fair value through profit or loss 5, 8 –820 4 250
Benefits and claims under investment contracts with discretionary participation –709 –543
Financial assets held to maturity 14, 33 5 046 5 229
Intangible assets including intangible insurance assets 18 3 722 3 982
Acquisitions of subsidiaries – – – – – – – 1 1
Share Performance and Historical Comparison 2011 was dominated by macroeconomic issues. Due in particular to the slump in interest rates in Switzerland and Germany as a result of the European debt crisis, the Swiss Life share price delivered negative performance of –36%.
Performance Swiss Market Index (SMI) (in %) –8 –2 +18 –35 –3
Market capitalisation (in CHF million) 30.12. 2 772 4 337 4 235 2 540 9 894
Gross written premiums, policy fees and deposits received 17 143 20 191 20 219 18 515 21 213
Number of employees (full-time equivalents) 7 168 7 483 7 820 8 291 8 556 1 Including reserve release of CHF 304 million due to change in Dutch law. 2 Up to 2008, traditional embedded value methodology used; from 2009, market consistent embedded value methodology applied.