Swiss Life Holding AG

Ladies and gentlemen, welcome to the Swiss Life presentation of the Half Year Results 2024 conference call and live webcast. I'm Sandra, the course call operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Webcast viewers may submit their questions or comments in writing via the relative field. Kindly note that webcast question will be answered after the call. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Matthias Ehrlich, Group CEO of Swiss Life. Please go ahead, sir.

Dear analysts and investors, good morning. Thank you for taking the time to join us today. And welcome to our conference call on the 2024 half-year results. Let me start with a quick overview on slide three. Our CFO, Marco Cerussi, will then comment on our performance in more detail. I'm very pleased with the development of Swiss Life in the first six months of 2024. First, fee results increased by 17% to 395 million, driven by high contributions from asset managers and friends. Cash remittance grew by 19% to well over $1.2 billion. This is a very pleasing figure. A flag that the full year 2023 call, it includes two positive one-off effects of about $0.12 billion. Taking the past two and a half years of cash remittances together, we arrive at a cumulative remittance of $3.4 billion. we have thus already exceeded our cumulative target of 2.8 to 3 billion. This is a strong achievement. Our business divisions have done a great job navigating the changes in the interest rate environment. Third, the annualized return on equity was at 17.8% and therefore well above our target range of 10 to 12%. Increase was driven by the development of shareholders' equity. net profit for the half-year was stable at $632 million. On an adjusted basis, net profit increased by 7% year-on-year. In addition, the half-year SSD ratio of around 205% remained well above the envisioned range. This is a strong set of figures, and I want to thank our customers for their trust and our employees and advisors for their continued engagement. To wrap up, we are well on track with our Swiss Life 2024 program to achieve or exceed all our group financial targets. We have already exceeded our cash remittance and share buyback targets, and we expect to exceed the return on equity and dividend payout ratio targets. As a reminder, we have the ambition to increase dividends per share. Regarding the fee result, we continue to expect to reach the lower end of our ambitious target range of 850 to 900 million. The results of asset managers over the first six months of 2024 give us confidence in this respect. The target achievement remains reliant on the further normalization of the real estate markets in Germany and France. With that, I hand over to Marco, who will take you through the half-year 2024 financial results in more detail.

Thank you, Matthias. Good morning, ladies and gentlemen. I am pleased to walk you through our 2024 half-year results, and I will start with selected P&L figures on slide 5. Half-year 2024 figures and the comparative period are both based on the IFRS 17 and 9 accounting standards. Insurance revenue increased by 1% to 4.5 billion. Higher PIA revenues from France and international were partly offset by a lower CSM release. Insurance service expenses increased in line with insurance revenue to 3.8 billion. The net investment result amounted to 491 million. It includes IFRS 17 related insurance finance expenses and VFA experience adjustments and is therefore not comparable to the net investment result under the former accounting. Profits from operations increased to 883 million. Borrowing costs were essentially stable at 66 million. The income tax expense increased to 184 million, mainly due to the impact of 32 million from an extraordinary tax provision release in the prior year period and the higher operating profit. Net profit was at 632 million. The prior year included the just-mentioned extraordinary tax provision release. Adjusted for this and for negative ethics translation effects, the net profit increased by 7%. Let me comment on some additional figures. Growth rate in premiums, fees, and deposits received increased by 3% in local currency to 11.7 billion, mainly driven by France. Fee and commission income was up by 7% in local currency to 1.3 billion, primarily due to higher contributions from France and asset managers. The net investment income of the insurance portfolio for own risk increased to 1.9 billion. Operating expenses increased to 1 billion. On slide 6, we show the adjusted profit from operations. It increased by 7% year-on-year, taking the negative FX translation effect into consideration. We are now moving to our segments, starting with Switzerland. Premiums increased by 1% to 6.1 billion. The life insurance market was up by 1%. Premiums in individual life were up by 10%, while the market increased by 3%. Periodic premiums grew by 1%. Single premiums increased by 27%, driven by a modern traditional product. Premiums in group life decreased by 1%. The market was flat. Single premiums increased by 2%, primarily due to higher new business Periodic premiums fell by 3%. Assets under management in our semi-autonomous foundations increased to 7.6 billion compared to 7.1 billion at year-end 2023. BN commission income was up by 7% to 167 million due to higher income from Swiss Life Select and the unit-linked business. The segment result decreased by 2% to 439 million due to a lower operating result from insurance business. The CSM release in the VFA business came down from a very high prior year level, but assets not acting life insurance liabilities contributed more. The fee results likely decreased to 26 million. Higher income was more than offset by investments in growth initiatives. The value of new business decreased by 5% to 190 million, mainly due to the business mix and pricing effects, as well as lower interest rates. Cash remittance was up by 31% to 699 million, driven by a higher 2023 statutory profit and by the non-remitted part of the 2022 statutory profit. Turning to France. Please note that all figures quoted are in euros for our French, German, and international segments. In France, premiums increased by 11% to 3.8 billion. The total market was up by 12%. In our live business, premiums were up by 12%. The market was up by 13%. The unit link share in our live premiums was 66%, while the market was at 38%. Live net inflows were at 1 billion versus total market net inflows of 16 billion. Health and protection premiums grew by 6%, driven by price increases. The market was up by 9%. E&C premiums were up by 7%, mainly due to motor products. Fee and commission income rose by 29% to 295 million. About two-thirds of the increase was due to higher unit-linked fee income based on higher average unit-linked reserves. The remainder was due to banking business with continued high revenues from structured products. The segment result grew by 18% to 192 million. The operating result from insurance business increased due to health and protection, partly offset by P&C. The fee result was up by 28% to 102 million, driven by both the unit links and the banking business. The value of new business increased by 15% to 98 million. Higher volumes in the live business with a higher unit link share were partly offset by lower volumes in health and protection. Cash remittance increased by 15% to 178 million due to a higher 2023 statutory contribution. Moving on to Germany. Premiums were up by 3% to 739 million driven by modern, modern traditional and disability products. The market was down by 3%, driven by lower single premiums. Fee and commission income grew by 5% to 400 million, mainly due to owned IFAs. The number of financial advisors was stable at 6,020 year-on-year. The segment result was down by 2% to 113 million. Fee results slightly increased to 77 million following strong growth in the prior year period. This was outweighed by a slightly lower operating result from insurance business. The value of new business decreased by 31% to 26 million, driven by a lower unit link contribution and interest rate effect. Cash remittance increased by 7% to 101 million due to the 2023 fee result development. Turning now to the international segment. Premiums decreased by 6% to 1.3 billion. Higher premiums from business with corporate clients, in particular from Elite's Life, were more than offset by lower premiums with private clients. Fee and commission income was down by 3% to 192 million. Income from private clients and owned IFAs increased. This was more than offset by lower income from corporate clients, in particular from Elite's Life. As mentioned in the Q1 call, the acquired business from Elite's Life was fully re-insured. The renewed and the new business is partially re-insured and to risk premiums as expected. The segment result was up by 15% to 63 million, mainly driven by a higher operating result from insurance business. The fee result decreased by 2% to 44 million due to a lower contribution from the business's corporate clients, which was partly offset by owned IFAs. The value of new business decreased by 15% to 28 million due to business mix and volume effect. Cash remittance was up by 3% to 56 million, driven by the business with corporate clients. Let's move now to our asset manager segment, which reports in Swiss francs. Asset manager's total income was up by 15% to 506 million. In our PAM business, total income was up by 15% to 177 million. About half of the increase is due to higher recurring income, and the other half is due to higher non-recurring income. In our TPAM business, total income increased by 14% to 329 million, mainly driven by higher other net income from real estate projects developed. Three-quarters of the increase relates to revaluation gains, which are non-cash. Recurring income was up, even a higher average asset base, and was offset by lower non-recurring income from real estate transactions and negative FX translation effects. The share of total non-recurring income for DPAM, meaning commission income as well as other net income, was 20% of total income and therefore above the prior year-hard year level of 11%. For the full year, For the full financial year 2024, we expect the share of total non-recurring income to be around 30%, given our pipeline. The segment result increased by 30% to 154 million. The contribution of PAM was up by 11% to 93 million, driven by top-line developments. The DPAM contribution increased by 73% to $61 million, driven by higher other net income, which was partly offset by investments in growth initiatives. The cost-income ratio was 90% largely due to lower net commission income and investments in growth initiatives. Cash remittance increased by 9% to $239 million. Despite the lower 2023 annual net profit, this increase is driven by time lags between recognition of net income from project development and the distributable cash. As a result of different lags from several projects over time, there is some averaging in their contributions to the overall cash remittance, which supported cash remittance in 2024, as outlined during our full year 2023 call. Assets under management in our TPAM business were at $117 billion compared to $112 billion at year-end 2023, driven by positive performance and ethics translation. Net new assets in our TPAM business amounted to $1.2 billion compared to $6.9 billion in the prior year period. Inflows in real assets were at $0.9 billion. Over the summer, we attracted additional mandates. As of end of August 2024, total net new assets amounted to 3.5 billion, of which half was in real assets. For the full year 2024, we expect the NNAs to be around double the August figure. Let's move back to the group. Operating expenses increased by 8% in local currency to 1 billion. Those include effects from investments in business growth, such as the new index-based investment offering from asset managers. Coming to the investment income. Direct investment income on slide 14 increased to $2.1 billion. Bonds, equities, and real estate contributed more, while this was partly offset by lower income from alternative investments and negative FX translation effects. The non-analyzed direct investment yield increased to 1.5% compared to 1.4% in the prior year period. The net investment income was up to 1.9 billion, driven by the direct investment income and supported by the development of net capital gains and losses. The non-analyzed net investment yield was 1.3% compared to 1.2%. Net capital gains and losses amounted to minus 46 million compared to minus 96 million in the prior year period. This improvement was due to real estate and infrastructure investments while the equity contribution declined. Slide 15 shows the structure of our investment portfolio. The share of equities and equity funds increased mainly due to higher valuations. Our net equity exposure after hedging amounted to 4.2%. With respect to real estate, fair value changes were negative at 280 million or minus 0.7%, while in the prior year period, we had negative fair value changes of 426 million or minus 1%. For the full year 2024, we expect real estate fair value changes to remain in the range of minus 0.5% at minus 1%. Real estate continues to be an attractive and important asset class for backing our long-dated liabilities in the context of higher disciplined asset and liability management. As you know, we hold real estate because of the regular rental income it provides and not because of appreciation. Vacancy rates were essentially stable at 3.1%. For the full year 2024, we expect vacancy rates to remain at around this level. Moving on to insurance reserves on slide 16. Insurance reserves were stable at 180 billion in local currency. On a statutory basis, we released about 0.15 billion of statutory reserves in half-year 2024 in the Swiss group and individualized businesses. The pre-tax CSM at the end of June 2024 amounted to 15.3 billion and relates to a large extent to our VFA business. During the first half of 2024, the sum of expected business contribution and new business increased to CSM by 0.7 billion. The experience adjustments and actuarial assumptions were at plus 0.1 billion, while the impact from economic variances was minus 0.3 billion. The latter was mainly due to the widening of interest rate differentials and lower Swiss interest rates. This is partially offset by the positive equity market performance and positive ethics translation effects. The CSM release, reflecting the pre-tax profit that is recognized in the P&L, was at 0.6 billion. The annualized pre-tax CSM release ratio was around the full year 2023 level. The new business margin was at 3.8% compared to 4% due to lower interest rates, volume, and business mix effects. The value of new business decreased by 4% to $266 million. Shareholder's equity decreased by 7% to $7 billion compared to year-end 2023, largely driven by the dividend payment and the completed shareback in March 2024. Our total outstanding financing instruments amounted to $5.6 billion, of which $425 million pertained to a hybrid bond that will be redeemed end of September. The SST ratio was estimated to be around 205% at the end of June 2024. It decreased compared to January 2024, mainly due to the widening of interest rate differentials and the deduction of the mentioned 425 million hybrid bonds, which will be repaid end of September 2024. The SST ratio remains well above the ambition range of 140 to 190%. That brings me to our Swiss Life 2024 program and the progress reporting. I will start with the fee income on slide 23. Fee and commission income increased by 7% in local currency to 1.3 billion. Income from owned and third-party products and services was up by 16%, primarily to France. Income from Swiss Life asset managers increased by 4% and from owned IFAs by 2%. Profit from operations was up by 7% to $883 million. The fee result increased by 17% to $395 million. Two-thirds of the increase was driven by asset managers and one-third by France. The operating result from insurance business increased by 1% to $553 million. The lower CSM release was offset by higher additional contributions. about half of them pertaining to assets not backing life insurance liabilities. The other half of the increase came from the French non-life business. This is in line with our statement earlier this year that we expect a significant improvement compared to the full year 2023. The return on equity increased to 17.8% on an annualized basis compared to 15.8% in the prior year period. turning to capital cash and payout. Cash remittance to the holding company increased by 19% to 1.3 billion. This includes the mentioned positive one-off effects of about 0.12 billion pertaining to the tax provision release in 2023 and to the upstreaming of the non-remitted part of the 2022 local statutory profit from Swiss Life AG. Let me also remind you that the cash remittance of asset managers included effects from the outlined time lags, leading to a 20 million increase of the crash remittance in 2024, despite a lower 2023 net profit. On the right-hand side of the slide, we present the cumulative cash remittance since 2022. This amounts to 3.4 billion, exceeding the group's cumulative cash remittance targets of the Swiss Life 2024 program. Liquidity at holding amounted to 1 billion at the end of June 2024 after we completed the 300 million share buyback at the end of March 2024. To conclude, we are very pleased with our half-year 2024 results as we grew the fee result and the operating profit as well as cash remittance to holding and the return on equity. In terms of the Swiss Life 2024 program, we continue to expect to reach the lower end of our ambitious fee result target range of 850 to 900 million. The results of asset managers over the first six months of 2024 give us confidence in this respect, while the target achievement remains reliant on the further normalization of the real estate market in Germany and France. Regarding our other financial targets, we expect to exceed the return on equity and dividend payout ratio targets. And as a reminder, we have the ambition to continue to increase dividends per share. In addition to that, we have already exceeded our cash remittance and shareable back targets. Overall, we are well on track with our Swiss Life 2024 program to achieve or exceed all our group financial targets. With this, I hand back to you, Matthias. Thanks for listening.