Investors’ Day 2015 Swiss Life 2018 – Driving performance · Swiss Life 2018 – Driving performance Thomas Buess, Group CFO Zurich, ... Swiss Life is going to strengthen the

Investors’ Day 2015Swiss Life 2018 – Driving performanceThomas Buess, Group CFOZurich, 25 November 2015

2 | Investors' Day, 25 November 2015 | Swiss Life 2018 - Driving performance

Majority of Swiss Life 2015 targets achieved in advance …

TargetStrategic thrust

3 Distribution • Fee and commission income: Increase by 20-25%

4 Efficiency and quality

• Cost savings:CHF 130-160 m (project view)

• Efficiency: Improve efficiency ratios(to 0.63%-0.68%)

5 Financialstrength

• Adjusted RoE: 8-10%

• Dividend payout ratio:20-40%

Offering• New business margin: >1.5%• New business shift: ~85% of

NBP from risk, modern and modern-traditional products

2

Customer promise

Increase quality and quantity of touch points with customers

1

Status

1.7% (HY15)

85% (Q315)

+15% (FY14)

CHF 179 m (Q315)

0.65% (FY14)

9.6% (FY14)

25% (FY14)

FY 2014Profit by source:• Savings

result <50%• Fee and risk

result 60-70%• Admin cost

result >0%

55%

54%

6%


406272

2014SL 2015 Amb2011

… based on market units’ disciplined execution

International

• Reduction of complexity and costs by focus on 2 carriers for new business

• Further develop Swiss Life Select (AT, CEE) and Chase de Vere (UK)

Germany

• New set-up in Germany enabling significant cost reduction

• Important contribution to profit diversification

Switzerland

• Overall cost discipline, allowing for investments to enlarge fee business

• Focus on margin management in individual life

France

• Overall cost discipline, allowing for investments in distribution

• Improve loss ratios in health and P&C

AssetManagers

• Increase fee volume at stable cost/income ratios

2014

61bps

SL 2015 Amb2011

68 bps

2014

47 bps

SL 2015 Amb2011

56 bps

210239

2011 2014SL 2015 Amb

113138

2014SL 2015 Amb2011

Consolidate and prepare for growth

Focuson

efficiency

Focus on growth

-18%-5-10%

-12%-15-20%

-9 bps~3-5 bps

-7 bps~10 bps

+49%+20%-30%Forecast 2015

Operating expenses excl. restructuring costs & one-offs, EUR

Life efficiency ratio,% of techn. reserves

Net fee income, CHF

Life efficiency ratio,% of techn. reserves

Fee income growth

Efficiency gains

Efficiency gains

Cost reduction

Cost reduction

Operating expenses excl. restructuring costs & one-offs, CHF


Swiss Life will continue on the successful path of Swiss Life 2015 and MILESTONE

Swiss Life 2018

Swiss Life is going to strengthen the quality of earnings and achieve earnings growth particularly by increasing the fee result

Quality of earnings and earnings growth

Operational efficiency Swiss Life further improves its operational efficiency

Capital, cash and dividend

Swiss Life will continue its disciplined capital management and increase cash remittance to its holding company and the payout to shareholders

Customer centricity and advice

Swiss Life further develops its multi-local business approach through investing in customer centricity and advice initiatives


Key financial targets of Swiss Life 2018

• Fee result FY 2018: CHF 400-450 m

• Risk result FY 2018: CHF 350-400 m

• Cumulative value of new business (2016-2018):> CHF 750 m


• Cost savings FY 2018: CHF 100 m

• Stable operating expenses1)

Operational efficiency

RoE2) of 8-10%

• Cumulative cash remittance to Holding (2016-2018): > CHF 1.5 bn

• Dividend payout ratio: 30-50%


1) Excl. Asset Managers 2) Equity excl. unrealised gains/losses on bonds



2018

55-6530

2014

Strategic focus areas by business division

131

2018

300-400

2014

47

2018

75-85

2014

21

2018

45-60

2014

459 640-660

2014 2018

Switzerland: • Maintain high discipline regarding margin,

cost and efficiency management• Main contributor for cash remittance

International: • Leverage strong position in global

insurance solutions for private and corporate clients as well as in owned IFAs

France: • Reinforce private insurer and multi-

distribution model• Accelerate growth in corporate business

Germany: • Insurance: Focus on operational efficiency,

comprehensive risk offering and modern-traditional products

• Distribution: Grow fee result by transforming owned IFAs into a modern advisory organisation

Asset Managers:• Grow the asset base from TPAM business• Grow net fee income at stable C/I ratio

Cash remittance

CHF m

Fee resultgrowthEUR m

Total income growthCHF m

Fee & risk result growth

EUR m

Fee & risk result growth

EUR m

Cash remittancein %

Segment result

Share of risk and fee result

France

Germany

Asset Managers

International

Switzerland


Overview of key performance drivers and ambitions

• Protect savings result through disciplined ALM

• Enhance fee result to drive earnings growth

• Defend high margin risk business in a competitive environment

• Generate substantial new business value

• Implement further cost savings to finance investments

• Disciplined capital management to optimisecapital efficiency

• Manage in-force business for value

• Maintain healthy solvency ratio

• Increase payout ratio based on enhanced cash remittance to Holding


1

2

3

4

5 6

7

8

9

Quality of earnings and earnings growth Operational efficiency Capital, cash and dividend


Profit by source (FY 2014 adjusted, CHF m)

Protect interest rate margin through disciplined ALM

Defend high margin risk business in competitive environment

Significantly grow fee result in all business areas

Further improve admin cost result

1 249

689

269

395

-15146

Savings result

Risk result

Fee result

Cost result1)Others & eliminations

Swiss Life 2018 targets

CHF 350-400 m

CHF 400-450 m

Continue to strengthen the quality of earnings

1) Thereof admin cost result gross: CHF 73 m


Net investment yield excl. gain realisations, after FX-hedging costs

0.0%

3.0%

3.5%

2.5%

4.0%

2014

in %

of t

echn

ical

rese

rves

201320122010 2011

Interest rate margin before policyholder sharing

Interest rate margin remained stable as a result of disciplined ALM• Long asset duration supports yield

• Narrow duration gap protects interest rate margin

• Reserve strengthening and focus on profitable new business lower guarantees and improve product mix

• Risk and fee income not consideredGuaranteesincl. conversion rate expenses

Aggregated view, IFRS basis

Disciplined ALM has safeguarded theinterest rate margin in past years and …

Quality of earnings and earnings

growth1


… will continue to protect the interest rate margin and savings result

• Interest rate margin resilient for more than three decades even if rates stay low

• Policy adjustments in non-mandatory group life and reserve strengthening could further extend this period

• Risk and fee income not considered


growth1

Aggregated view, statutory basis (October 2015)

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2010 2020 2030 2040

Estim

ated

figu

res

(bef

ore

PH d

ivid

ends

) in

% o

f tec

hnic

al re

serv

es

Net investment yield

Guarantees and Quasi-Guarantees

Guarantees and Quasi-Guarantees if non-mandatory Group Life CH at 0%

Interest rate margin before policyholder sharing

In %

of t

echn

ical

rese

rves

PROJECTION

Net investment yieldGuarantees and quasi-guaranteesGuarantees and quasi-guarantees if non-mandatory group life CH at 0%


Enhance fee result to drive earnings growthFee result, CHF m

269

2018 PInitiatives

400-450

FX2014

~-20

Initiatives

• Strengthen Swiss Life Select’s market presence• Push real estate brokerage business• Launch investment solutions for retail customers

• Further grow unit-linked business• Leverage private insurer positioning• Expand banking partnerships and offering for HNWI customers

• Increase advisors’ productivity capitalising on proprietary advisory software and through digitalisation

• Adjust career and remuneration models in owned IFAs

• Form strategic partnerships at private clients and owned IFAs• Internalise parts of value chain at owned IFAs• Implement new target operating models

• Grow particularly in TPAM business by broadening customer base and by increasing higher margin asset classes

CH

FR

DE

IN

AM


growth2


395

2018 P

350-400

Margin pressure

~-20

FX2014 Initiatives

CH

IN

FR

DE

Initiatives

• Push semi-autonomous solutions and pure risk solutions in group life

• Launch new product with integrated biometric risk component in individual life

• Increase credit life business and protection• Implement measures to protect profitability in health business

• Push industry-specificsolutionsandtargetgroup-specificofferings• Optimise in-force book, e.g. claims management

• Promote higher risk coverage for U/HNWI solutions

Risk result, CHF m

Defend high margin risk businessQuality of earnings

and earnings growth

3


702

2012-2014 2016 P -2018 P

Value management

Capital market

environment

~-40

> 750

FX

~-250

Initiatives

• Modern product concepts with lower guarantees in individual life

• Pricing adjustments in group life and individual life

• Increase financial margin and reduce guarantees for new business

• Continue with private insurer strategy, push banking partnerships, HNWI and credit life offering

• Increase new business (risk, modern-traditional) and push target group-specific offerings

• Grow U/HNWI business• Promote new employee benefit solutions

• Expand reinsurance business

CH

IN

FR

DE

Group

Value of new business, CHF m

Margin management to generate substantial new business value

New business margin ambition of 1.5% and minimum hurdle rate of 1.0% remain in place


growth4


2014 FX adjusted

Cost savings

~-100

2014(as reported)

~30~60

~1 110

1 191

2018 PInvestmentsActivity growth

Non-variable costs adjusted, without Asset Managers(excl. restructuring & one-offs), CHF m

Our ambition is to keep the cost base stable …

• Grow third party asset management with stable cost/income ratio

Operational efficiency5

Insurance segments Asset Managers


Non-variable cost savings, gross CHF m (project view), vs. cost base FY 2014

12-17

15-20

35-40

3-8 ~100

FR DE IN

25-30

Target 2018

CH AM

Initiatives

• Further optimisation of systems and digitalisation of processes

• Digitalisation of processes• Optimise IT and other overhead expenses

• Harmonisation of end-to-end processes to increase productivity• Industrialisation and digitalisation of processes and systems

• Centralise major insurance functions in Luxembourg• Capitalise on new IT platforms

• Enhance processes and systems, mainly in real estate• Align funds’ business organisation

Restructuring costs 2015-2018: CHF 25-35 m(3 m booked by Q3 2015)

CH

IN

FR

DE

AM

… and to compensate growth and invest-ments by CHF ~100 m in operating cost savings

Operational efficiency5


Proven risk management framework, monitoring processes and …

Board of Directors / Investment and Risk Committee

Executive Board / Group Risk Committee

Local ALM committees

Set priorities of concurring targets

Risk budgeting per division

• Allocation of risk capital to risk drivers (target and range per asset class)

• Set exposure limits for net equity and currency

Strategic asset allocation

Set overall risk appetite: SST ratio limit

Risk budgeting

• Optimised investment income respecting risk budget and limits

• Sound capitalisation

Planning and monitoring

Capital planning

Mid-term planning

Monthly tracking of SST ratio and limit control

Economic scenarios

Clear priorities

Statutory equity capital

SST

IFRS P&L

S&P capitalisation

Capital, cash and dividend6


Efficient and balanced use of capital to ensure healthy capitalisation

… disciplined capital management ensure healthy capitalisation

• Earnings growth

• Value of new business

• Manage in-force business to free up capital

• Balanced capital structure with adequate share of hybrid capital

• Increase focus on capital-efficient products, especially in new business

• Maintain disciplined ALM by focussing on capital-efficient investments

• Pool cash at holding level for buffer and financial flexibility

• Add-on acquisitions only selectively

• Ensure sustainable dividend distributions


Capital generation Capital allocation


Managing the in-force business will continue to add value


Main benefits

• Support cash/solvency

• Optimise capital efficiency

• Increase margin and leverageexisting value

Initiatives on existing business contribute to safeguarding

our business model

Primary levers Focus

Costs/claimsReduction of admin. costs and de-risking of in-force business, claims management, consolidation of funds

Re-pricing /steering

Regular parameter review and lapse rate steering, conversion/migration/ termination programmes

Policyholder participation /guarantee level

Target-oriented surplus sharing and disciplined reserve strengthening

Asset allocation & ALM

Capital-efficient asset classes and further B/S measures


Reserve strengthening and disciplined product management largely lowered guarantees

30.06.2015estimate

~1.70%

30.06.2015

1.85%

01.01.2012

2.35%

• Change in guaranteed rateof CH group life1) +4 bps

• Change in business mix -17 bps• Reserve strengthening

of CHF 4.7 bn -35 bps• FX -2 bps

Total -50 bps

Average technical interest rate (statutory basis)


After impact of lowered guaranteed rates from 2016 for• CH mandatory group life: 1.75% to 1.25%• CH non-mandatory group life: 1.25% to 0.75%

1) Guaranteed interest rate for mandatory group life business from 2014: 1.75% (+25 bps)


• Required target capital driven by market and credit risk

• Insurance risk diversifies – However, significant contribution

to market value margin2)

• Key differences to Solvency II – Scenarios require capital in SST;

more demanding calibration of market risk and credit risk in SST

– No charge for operational risk and lower capital requirement for insurance risk in SST

– As a result, larger capital requirement for life insurance under SST overall

CONCEPTUAL

Risk-bearing capital1)

15-25

Insurance risk

Target capital

Scenarios Market value

margin

10-20

Diversification of insurance

risk with MR/CR

5-15

Marketrisk

(MR)

45-65

5-15

Credit risk(CR)

20-30 5-15

Diversifi-cation of

MR with CRR

equi

red

Avai

labl

e

Buffer

Key elements of SST Capital, cash and dividend8

1) Including hybrid debt 2) Corresponds to risk margin in Solvency II; included in target capital in SST

33%

80%

100%

Internal model (as of 1.1.2015)in % of target capital

Ratio


Sensitivities of internal SST model(as of 1.1.2015)

SST internal model partially approved by FINMA

140-160%

Solvency IIexcl. any transitional measures,incl. volatility adjustment

Solvency I = 257%3)

abolished as per 1.7.2015

> 200%

Real estate -10% -9 ppts

Credit spreads1) +100 bps -12 ppts

Interest rates2) -50 bps -7 ppts

Equities -30% -5 ppts

Insurance 1 in 10 year event -6 ppts

Swiss Life Group: Economic solvency(as of 1.1.2015)

Maintain healthy solvency ratiosCapital, cash and dividend8

1) Corporate bonds and GIPS (excluding covered / guaranteed bonds) 2) MCEV based; excludes benefit of dynamic duration management 3) As of 30.9.2015


Coping with regulatory and macro-economic developments


1.1.13 1.1.151.7.12 1.1.14 1.7.151.7.141.7.131.1.12

Since 2012 continuous buffer building

Buffer building ongoing to protect us from regulatory and macroeconomic developments

Regulatory developments could consume some of the buffers – Expiration of temporary reliefs– Lowering of UFR– Increased emphasis on

standard model

SST developmentSwiss Life Group internal model


18%

50%

20152012 Average 2016-2018

~35%

~65%

~65%

Average 2016-2018

Increasing cash remittance to Holding

Cash remittance to Holding(in % of previous year’s IFRS net profit)

Cumulative cash remittance to Swiss Life Holding 2016-2018

> CHF 1.5 bnLife insurance

AM, distribution,health, P&C



Cash generation and remittance support dividend payout to shareholders

Cash generation ~80% of IFRS

net profit

Dividend payout30-50%

Non-cashIFRS net profit

~20%

100%

Cash generated Dividend

~15%

~15-35%

Swiss Life Holding financial

flexibiltiy

Retained at business units

Growth / buffer building



Dividend policy

5.504.504.504.50

6.50

2015 P

25.8%

2010

23.8%

2013

22.5%

2012 2014

25.4%

2011

21.1%

Dividend per share (CHF)Payout ratio

Dividend history

Executive Board to propose to the Board of Directors a dividend per share of at least CHF 8 for the financial year 2015



Swiss Life will continue on the successful path of Swiss Life 2015 and MILESTONE

Swiss Life 2018

Swiss Life is going to strengthen the quality of earnings and achieve earnings growth particularly by increasing the fee result


Operational efficiency Swiss Life further improves its operational efficiency


Swiss Life will continue its disciplined capital management and increase cash remittance to its holding company and the payout to shareholders


Swiss Life further develops its multi-local business approach through investing in customer centricity and advice initiatives


Cautionary statement regarding forward-looking informationThis presentation is made by Swiss Life and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Swiss Life. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Swiss Life. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Swiss Life as being accurate. Neither Swiss Life nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Swiss Life nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this presentation. Neither Swiss Life nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this presentation. This presentation may contain projections or other forward-looking statements related to Swiss Life that involve risks and uncertainties. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. All forward-looking statements are based on information available to Swiss Life on the date of its posting and Swiss Life assumes no obligation to update such statements unless otherwise required by applicable law. This presentation does not constitute an offer or invitation to subscribe for, or purchase, any shares of Swiss Life.


Contact details and financial calendar

Contact

Heidi Hinterhuber Phone +41 (43) 284 67 67Head of Investor Relations E-mail [email protected]

Rolf Winter Phone +41 (43) 284 49 19Senior Investor Relations Manager E-mail [email protected]

Financial calendar

Full-year results 2015 01 March 2016Annual General Meeting 2016 26 April 2016Interim Statement Q1 2016 12 May 2016

Visit our website for up-to-date informationwww.swisslife.com

The future starts here.

Documents

Investors’ Day 2015 Swiss Life 2018 – Driving performance · Swiss Life 2018 – Driving performance Thomas Buess, Group CFO Zurich, ... Swiss Life is going to strengthen the