The committees of the Board of Directors sometimes call on the services of external consultants and assess their own work once a year. If the Chairman of the Board of Directors is not a member of a committee of the Board of Directors, he has the right to attend meetings (without voting rights).
In addition, the Investment and Risk Committee is free to decide itself on investments at a particular level and specifies the terms of significant intra-Group financing.
In July 2006 Patrick Frost was appointed Group Chief Investment Officer (Group CIO) of the Swiss Life Group and Member of the Corporate Executive Board.
Manfred Behrens has been a Member of Swiss Life’s Corporate Executive Board since May 2008.
The salary is determined according to the employee’s function and skill set, and is annually re-assessed and adjusted if appropriate. Salary comparison studies and recognised job evaluation systems are used to check appropriateness and to ensure internal and external comparability.
Two members of the Board of Directors resigned in the 2009 financial year. Bruno Gehrig resigned from his position as Chairman of the Board of Directors of Swiss Life Holding after the General Meeting of Shareholders on 7 May 2009 due to his election to the Board of Directors of UBS AG in October 2008. After serving for six years, Pierfranco Riva stepped down from the Board of Directors at the 2009 General Meeting of Shareholders after reaching the statutory age limit. Two new members were appointed: Frank Schnewlin and
In the 2009 financial year, the composition of the Corporate Executive Board changed as follows: Reto Himmel, Group Chief Technology & Operations Officer (Group CTO), left the Corporate Executive Board with effect from 31 March 2009 due to the discontinuation of the Group CTO function. Thomas Buess joined the Board as of 1 August 2009 as Group Chief Financial Officer (Group CFO), replacing Thomas Müller who resigned from the Corporate Executive Board with effect from 30 June 2009.
SHARE OWNERSHIP — On the balance sheet date of 31 December 2010, acting members of the Board of Directors and the Corporate Executive Board (including closely linked parties) held the following number of Swiss Life Holding registered shares: SLH shares
UTIVE BOARD — As Group CEO, Bruno Pfister received the highest total compensation for a member of the Corporate Executive Board in the period under review.
The net asset value (NAV) of the covered business is the market value of assets allocated to the covered business, which are not backing liabilities. Goodwill and intangibles are not included in the net asset value, with the exception of France (see section 4.7). The required capital (RC) is that part of the net asset value whose distribution to shareholders is restricted. The free surplus (FS) is calculated as the difference between the total net asset value and the required capital. The decrease in free surplus is mainly a consequence of reassessments performed during 2010. These include reserve strengthening in Switzerland (driven by low interest rate environment) and France (retirement age reform).
PRESENT VALUE OF NEW BUSINESS PREMIUMS (PVNBP) 3 396 4 652 1 587 4 755 14 390
The value of new business of a period represents the effect on the MCEV as at end of period from writing new business, i.e., it is the difference between the actual closing MCEV and the closing MCEV which would result if no new business had been written during the period. This is known as the “marginal” approach to value of new business. It applies to every MCEV component: CEV, TVOG, CNHR and FC. Legal constraints – e.g. “legal quotes” – or management rules often apply to books of contracts as a whole instead of individual contracts. That is why the value of new business can be dependent on the business in force before the writing of new business.
INSURANCE LIABILITIES — Liabilities are calculated 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.
Economy 1 year 2 year 5 year 10 year 15 year 30 year 5.1.2 VOLATILITY ASSUMPTIONS — Volatility assumptions for the year-end 2010 and 2009 calculations are derived from market data as at 31 December 2010 and 2009.
Economy 1 year 2 year 5 year 10 year 15 year 30 year 5.1.5 REAL WORLD ASSUMPTIONS — These assumptions are used for the step “expected business contribution in excess of reference rates” introduced in 2010.
Net profit attributable to equity holders of Swiss Life Holding 557 278 non-controlling interests 3 –1
BALANCE AS AT END OF PERIOD 385 1 697 –25 –216 –41 5 408 7 208 37 7 245
Because there is a direct effect on the measurement of DPF liabilities when asset gains or losses are realised, changes in these liabilities are recognised directly in equity when, and only when, the valuation differences on the assets arise from gains or losses recognised directly in equity (“shadow accounting”).
GOODWILL — The Group’s acquisitions of other companies are accounted for under the purchase method. Goodwill acquired prior to 1995 was charged directly to equity.
Goodwill on associates is included in the carrying amount of the investment.
The amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. The Interpretation will be effective for annual periods beginning on or after 1 January 2011. The Swiss Life Group is currently not affected by the amendment.
The sensitivity analysis with regard to insurance risk and market risk is set out in note 5.
The Swiss Life Group uses certain assumptions relating to the calculation of the defined benefit liabilities. These assumptions comprise the expected return on plan assets as well as future salary increases and future pension increases which have been derived from estimates based on past experience. The expected return on the plan assets takes into consideration the investment policy relating to the assets and their projected returns.
Impairment of property and equipment and intangible assets –3 – –2 –
TOTAL ASSETS FOR THE ACCOUNT AND RISK OF THE SWISS LIFE GROUP’S CUSTOMERS 21 275 18 661
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.
Current income tax assets 10 26 – – – – 10 26
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 6.95% for men (retirement age 65) and 6.9% for women (retirement age 64) for retirements in 2011 (7.00% for men and 6.95% for women for retirements in 2010). Under an amendment to the BVG legislation, which took effect on 1 January 2005, the rate will be reduced in stages
Impairment losses on debt securities available for sale 27 4 6 equity securities available for sale 27 –68 –180 loans and receivables 13 –9 –83
Net gains/losses on financial instruments at fair value through profit or loss from continuing operations include interest and dividend income of CHF 48 million for the period ended 31 December 2010 (2009: CHF 84 million). Net gains/losses on liabilities designated as at fair value through profit or loss from continuing operations include changes attributable to credit risk: nil for the period ended 31 December 2010 (2009: nil).
TOTAL ALLOWANCE FOR IMPAIRMENT LOSSES 78 113 25 15 103 128
In April 2009, 8.4% of the share in MLP, Wiesloch, was sold. The investment in MLP was thus reclassified to financial assets available for sale.
Property, Plant and Equipment led to the reclassification of property under construction or development for future use as investment property from property and equipment to investment property as at 1 January 2009. The amount reclassified came to CHF 92 million.
Investment contracts with discretionary participation with deposit accounting 9 694 10 566
Liabilities released for payments on death, surrender and other terminations during the year –164 –111
Income tax expense on result from ordinary activities from discontinued operations – – – – – –
Net cash flows from financing activities – – – – – –
Assets under unit-linked/private placement life insurance business –16 109 –13 814
net gains/losses on financial instruments at fair value through profit or loss 2 19 – – – 0
Later than 1 year and not later than 5 years 10 10
The Group has entered into various operating leases as a lessee. Rental expenses relating to continuing operations recognised in income for these items totalled CHF 43 million for the year ended 31 December 2010 (2009: CHF 48 million). Minimum lease payments totalled CHF 43 million in 2010 (2009: CHF 48 million).
AWD Allgemeiner Wirtschaftsdienst AG, Zug AWD 100.0% 100.0% CHF 5 600
Swiss Life (Liechtenstein) Services AG, Schaan, Branch Zürich, Zürich Ins. Other 100.0% 100.0% – –
Swissville Commerce Holding AG, Zürich Ins. CH until 17.06.2010 – –
Swiss Life Partner AG, München Ins. DE until 16.12.2009 – –
Swiss Life Insurance Solutions S.A., Strassen Ins. Other 100.0% 100.0% EUR 18 450
COMPENSATION IN 2010 — 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 chapter and in the Consolidated Financial Statements (Notes 24 and 31).
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 CHF 402 994 in the year under review.
We further confirm that the proposed appropriation of profit complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
The Financial Statements are available in German and English, and contain additional information on Risk Management, Market Consistent Embedded Value (in English only), Corporate Governance and the Annual Accounts. The English text is definitive for the Consolidated Financial Statements.
Is it not true that the risk to the customer is reduced by having a stricter SST? Absolute security is an illusion. More stringent regulations do not automatically mean a more secure system. For instance, if you want to get absolute security in aviation, you need to ground all the planes. Exaggerated regulation could force private insurance out of certain lines of business, because the economic rewards are gone. Private insurers like Swiss Life have an important role to play in society. Our solutions offer our clients protection for such risks as death, disability and longevity. If we stopped offering this possibility, these risks would not vanish from the system. Instead, there would be an even greater risk burden on the individual. Even on those unable to bear the risk themselves. This is how social problems arise, which ultimately have to be resolved by the public as a whole. By this I mean the taxpayers.
“Absolute security is an illusion. More stringent regulations do not automatically mean a more secure system. For instance, if you want to get absolute security in aviation, you need to ground all the planes.”
The Swiss life insurance market showed a slight upturn in growth of 2%. While the prevailing economic situation had a positive impact on the group insurance market, individual life business lost growth momentum, with premium volume declining by 6%.
– The company also succeeded in reducing its dependency on investment performance, thanks among other things to the lower cost base and the sustained improvement in AWD’s profitability.
All areas of AWD contributed to the improvement in the result. In the core market of Germany, efficiency improvements such as the merger of the back offices of Horbach and AWD Deutschland GmbH, together with the downsizing of the holding company, made a very significant contribution to the overall result of the AWD Group. The operating result (EBIT) amounted to EUR 58.4 million (2009: EUR 28.8 million). As a result of the restructuring undertaken in previous years and the improvement in advisor quality, AWD UK increased EBIT from EUR 1.2 million the previous year to EUR 6.3 million. In Austria, a restructuring of the business model was initiated in 2009. A number of comprehensive cost-cutting measures have already been put into effect as part of this project. The increased focus on life insurance and risk protection policies brought about a tangible improvement in results in 2010. The presence of group companies in the CEE region (Central and Eastern Europe) is to be further optimised. A return to profitability remains the objective for the Austria & CEE region, which posted an operating loss of EUR 4.5 million (2009: EUR –42.3 million ). At AWD Switzerland, rigorous cost discipline resulted in an improvement of the operating result from EUR 6.2 million to EUR 7.8 million.
PERFORMANCE CULTURE — The efficiency-enhancing programme produces its first results — The Group-wide initiative “My Milestones” launched in 2009 gathered pace in 2010. The goal is to accentuate Swiss Life’s values and employee competencies so as to strengthen the performance culture. Every country and market unit launched a programme of measures to address these issues.
In France, Swiss Life gave all of its approximately 2000 employees an individual social balance sheet for the first time. This shows every employee what he/she personally receives from the employer as a combination of salary and non-pecuniary benefits. This personal social balance increases the employee’s identification with the employer, with 94% of employees regarding it as a positive development.
TALENT DEVELOPMENT — Target-oriented development of junior staff with potential and the “55+” generation — One of Swiss Life’s priorities is to offer opportunities for further development to employees and management on an ongoing basis, and to motivate them to remain with the company. Every year the company nominates employees who demonstrate a high level of performance and potential for talent development locally (manager pool or MP). These future first- and second-level managers (team leaders and department heads) are prepared for their future roles during 18 months of training modules and project work.
their custody for the account of the beneficial owners. Professional asset managers may also be registered as nominees if, in a fiduciary capacity, they have deposited Swiss Life Holding shares for the account of third parties with Swiss or foreign banks or securities brokers in their own name. Nominees are required to be subject to banking or financial market supervision.
AL Paul Embrechts received his master’s degree in mathematics from the University of Antwerp (Belgium) in 1975 and his doctorate (Dr. sc. Math.)
personal goals. On the one hand, these personal goals are linked back to the company’s success, in that each Corporate Executive Board member has to meet personal quantitative objectives contributing to the company’s success in relation to his division. On the other hand, the personal goals cover qualitative factors, namely project targets, risk management and compliance goals, as well as requirements relating to leadership and to supporting and further developing corporate culture.
Total compensation 2009 4 in cash and shares 2 178 553 including annual contribution to occupational provisions of CHF 175 801 2 354 354 1 Including cash bonus of CHF 1 200 000 for the 2010 financial year, determined at the beginning of 2011, and other compensation in cash (child allowances, company car, premium contribution).
OF THE LEAD AUDITOR — The Articles of Association stipulate that the external auditor is to be elected by the General Meeting of Shareholders for one financial year at a time. When Swiss Life Holding was established in 2002, PwC was named as statutory auditor and Group auditor. Since then PwC has been re-elected without fail. PwC has also acted as statutory auditor and Group auditor for Swiss Life Ltd since 1994. The partner at PwC in charge of auditing the Swiss Life Holding annual financial statements and consolidated financial statements (lead auditor ) has held that function since the 2004 financial year. 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, it has appointed a new lead auditor who will take over responsibility for auditing the Swiss Life Holding annual financial statements and consolidated financial statements as of the 2011 financial year.
Reduction in par value 27 –160 1 – – – – –159 – –159
Dow Jones STOXX 600 Insurance Index (in EUR) 31.12. 154.45 31.12. 152.08