Swiss Life Holding AG

Webcast viewers may submit their questions or comments in writing via the relative field. Kindly note that webcast questions 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.

Good morning, ladies and gentlemen. Thank you for dialing in and for your interest in Swiss Life. Today, we are reporting on selected top-line figures for the first nine months of 2024. We will focus, as usual, on fee income, premiums, and direct investment income. I will provide an overview of today's key messages, and our group CFO, Marco Terussi, will walk you through the segments. In the first nine months of 2024, Swiss Life increased its fee and commission income by 6% to 1.9 billion. All sources contributed positively. Cross-written premiums, fees, and deposits received increased by 4 percent to 15.9 billion. Direct investment income grew from 3.0 to 3.1 billion, which corresponds to non-annualized direct investment yield of 2.2 percent. The SST ratio at the end of September was around 205%. With that, I hand over to Marco.

Thank you, Matthias. Good morning, ladies and gentlemen. I'm pleased to walk you through our nine-month 2024 trading update. All group figures are in Swiss francs and figures for each business division are in local currency. All figures are unaudited and growth rates are stated in local currency. Let me start with our segment Switzerland. Premiums increased by 1% to 8 billion, while the life insurance market was flat. Premiums in individual life grew by 8% to 1.4 billion, while the market increased by 1%. Periodic premiums were up by 2%. Single premiums grew by 19%, driven by a modern traditional product. Premiums in group life were stable at 6.7 billion, while the market decreased by 1%. Periodic premiums fell by 2%. Single premiums grew by 2%, mainly due to higher new business. Assets on the management in our semi-autonomous foundations were at 7.7 billion, compared to 7.1 billion at year end 2023. Fee and commission income grew by 5% to 252 million due to higher income from Swiss Life Select and the unit-linked business. Turning to our French, German, and international segment that all report in Euro. I will begin with France. Premiums increased by 12% to 5.6 billion. Life premiums grew by 15%, which is in line with the markets. Unitlink share in our live premiums was 67%, while the market was at 37%. Live net inflows were at 1.7 billion versus total market net inflows of 21.3 billion. Health and protection premiums grew by 4%, driven by price increases. P&C premiums increased by 6%. P&C income rose by 16% to 416 million. More than half of the increase was due to unit-linked fee income based on higher average unit-linked reserves. The remainder was due to the banking business. Overall, we recorded continued high revenues from structured products. Let me continue with Germany. Premiums grew by 4% to 1.1 billion, driven by modern, modern traditional, and disability products. The market decreased by 1% due to lower single premiums. Fee and commission income rose by 10% to $602 million, mainly due to our own IFAs and the endurance business. The number of financial advisors remained essentially stable at 6,017. Turning to international, premiums decreased by 7% to $1.5 billion. We recorded lower premiums with private clients, while premiums with corporate clients increased. Fee and commission income was down by 3% to 283 million. Higher income from our own IFAs and from private clients was more than offset by lower income with corporate clients in particular from Ellipse Life. As a reminder, the acquired Ellipse Life business was fully re-insured. The renewed and the new business is partially re-insured and therefore we see over time a shift from free income to risk premiums as expected. Moving to asset managers which reports in Swiss francs. As usual, the update in Q1 and Q3 focuses on commission income and does not include alternate income from real estate project development. Asset managers' commission income rose by 5% to 699 million. In our PAM business, commission income increased by 11% to 263 million, driven by higher recurring and non-recurring income. In our TPAM business, commission income was up by 2% to 436 million, driven by higher average assets under management. Non-recurring fee income, including negative ethics translation effects, slightly decreased. To make figures comparable to half and full your disclosures, the share of total non-recurring income for TPAM, meaning commission income and other net income from real estate project development, increased from 14% prior year period to 31% of total TPM income. Three quarters of the total non-recurring income in the current period relate to revaluation gains, which are non-cash. For the full financial year 2024, we continue to expect the share of non-recurring income to be around 30%. Net new assets in our TPM business amounted to 3.4 billion compared to 8.4 billion for the first nine months of 2023. We achieved net inflows in real assets of 2.1 billion, thereof 1.7 billion in real estate. Net inflows were 1.1 billion in bonds and 1.2 billion in money market funds. Excluding money market funds, net new assets amounted to 2.2 billion compared to 8 billion in the prior year period. By the end of October 2024, total net new assets amounted to 4 billion, of which half was in real assets. We continue to expect total net new assets to be around 7 billion by year-end 2024. Overall, assets under management in our deep-end business were at 119 billion compared to 112 billion at year-end 2023, driven by net inflows, positive performance, and ethics translation. Turning to our direct investment income. Direct investment income increased to 3.8 billion compared to 2.99 billion in the prior year period. Bonds, equities, and real estate contributed more, but this was partly offset by lower income from alternative investments and negative ethics translation effects. The non-annualized direct investment yield increased to 2.2% compared to 2.1% in the prior year period. As you know, real estate continues to be an attractive and important asset class for backing our long-dated liabilities in the context of our disciplined ALM. And we hold real estate because of the regular rental income it provides and not because of appreciation. Vacancy rates marginally increased from 3% at year-end 2023 to 3.1%. For the year-end 2024, we expect vacancy rates at this level. Fair value changes remained unchanged at minus 0.7% compared to half year. For the full year 2024, we continue to expect negative real estate fair value changes to remain in the range of minus half and minus one percentage point. Moving to solvency and cash. By the end of September 2024, our SST ratio was around 205%, and therefore above our ambition range 140 to 190%. This compares to a level of around 205% at half-year. Equity at holding amounted to 1 billion at the end of September 2024. With that, I hand back to you, Matthias.

Thank you, Marco. Let me conclude. In the third quarter of 2024, Swiss Life continued the positive development of the first half of the year. Growth in both the fee and insurance business is broad-based. In terms of the Swiss Life 2024 program, we expect to exceed the return on equity and dividend payout ratio targets. In addition to that, we have already exceeded our cash remittance and share buyback targets. Regarding the fee result, 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 nine months of 2024 give us confidence in this respect. The achievement of this target remains dependent on the further normalization of real estate markets in Germany and France. To sum up, we are well on track with our Swiss Life 2024 program to exceed or achieve all our group financial targets. We're now ready for the Q&A session. Who would like to start?

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questions on the phone are requested using only handsets and eventually turn off the volume of the webcast. Webcast viewers may submit their questions or comments in writing via the relative field. Kindly note that webcast questions will be answered after the call. Anyone with a question, may press star 1 at this time. Our first question comes from Ahmed Nasib from UBS. Please go ahead.

Thank you. Thanks for taking my questions. Firstly, on the guidance on the fee result, the bottom end of the range, the 850 million, you say there's further normalization in Germany and France real estate markets, and you've been consistent in that message. We've only got Six weeks left until the full year 24. How confident are you in kind of achieving the A50 million? There's not a lot of time left until full year 24. So just try to get a sense of your confidence in achieving that. Second question also on kind of confidence around the $7 billion net new assets. How confident are you? Of course, in September, you had a net surplus of minus $0.1 billion. And then finally, if I can add a third one on TPAM as well. How is the margin progress versus last year on the TPAM business? It seems like with more money market funds, it is a little bit weaker. But any thoughts on that margin as well in TPAM? Thank you.

Okay, thanks, Offman, for the question. I will go with the fee result one, and Marco will go then for a tool regarding TPAM. And coming to the fee result, you know, as you said, we mentioned that we see ourselves back to reach the 850 to 900. And we, as you pointed out, say this remains reliant on this further normalization of the real estate markets in Germany and France. set of macro consideration that support the real estate market you know that was things like the interest rate cycle coming to an end real estate funds trading above nae nav higher interest from investors in real estate proposition and the like and we see that happening i think that's a one comment i i can make and we also said that we expect to achieve a share of non-recurring income of around 30% in T-PAM for the full year 2024. And here are the results of asset managers, as Marco pointed out, over the first nine months of 2024 gave us confidence as well.

So I got to answer your second question on the NNA. I mean, we have seen and just mentioned during the speech that by the end of October, we have 4 billion NNAs in our accounts, half of it in real assets. So we see numbers are picking up in particular compared to the 1.1 billion we reported during half year. And given that development, given the RFPs, Let's say going around our people being very close to our clients and the underlying pipeline we have in that part of the business that makes us quite confident for reaching the around 7 billion by year end 2024. And in between, for sure, there have been some plus and some smaller minuses. You just mentioned in your question there were some in and some small outflows, mainly due to FX effect, that is one thing, and outflows, some smaller outflows in money market funds. But as I said, picking up already being at 4 billion by the end of October. And then the third question you had in terms of the margin progress versus last year, I think there is a link to the just mentioned half of real assets. Within the NNA, so mainly real estate and infrastructure, I think overall it's fair to say that securities in particular, so that's a rather lower margin business driven by volumes. But in the real assets area, we need to be close to the market, having a lot of extensive know-how, be close to the clients. I think that's a higher margin business for sure. Competitive markets are, as always,

some some pressure on that but overall we are not concerned with that perfect thank you can i just kind of get a follow-up on are you seeing from from the sense i get from your answers money market funds to real assets there's a trend in tpm is that correct in my uh in my understanding thank you no i wouldn't i wouldn't say that i think there is

always some swings in particular in money markets and in particular by the end of the quarters when clients are reviewing their portfolios and allocating their assets. So I wouldn't say that that's a trend, absolutely not.

Perfect, thank you.

The next question comes from Amelie Dodriac from Deutsche Bank. Please go ahead.

Yes, so good morning. This is Amelie from Deutsche Bank. Thank you so much for taking my question. I just have one. in Germany I believe you're so you you were targeting 6,500 advisors by the end of full year 24 and I was just wondering sort of how you're how you're progressing on that and sort of how you're thinking about that target for full year especially given numbers of a number of advisors was around 6,000 I believe at nine months thanks

Okay, I may take this one, and you pointed out we had more than 6,500 advisors in Germany by the end of 2024. We have been reporting now something slightly above 6,000, and that is also consistent with what we have been reporting over the past quarter. We consider that 6,500 to be out of reach for the year end. I think what is more relevant is that, you know, in the fee result and the fee top line, and I refer when it comes to the fee result to the half fee disclosure, that this is a different thing and it's at the end of the day, more relevant that we have the fee income and the results rather than the advisors.

Thank you.

The next question comes from Farouk Hanif from JP Morgan. Please go ahead.

Hi, everybody. Thank you very much. Just going back to fee income in France and Germany, which is really strong growth, what risks do you see to this given what's going on in the world, you know, volatility, um you know in particular i mean can you just talk about some of the drivers uh you mentioned in france of course uh unit linked uh growing um but in germany given your advisors were relatively flat you're still growing free income what what are the drives that have driven that and what are the risks to it given market thank you start

I'm going to start with Germany, where we have seen a 10% growth in the income. And I think overall, as Matthias just alluded to that, there is, I mean, the advisors, the underlying advisors, but also increasing productivity leading to that growth. What we can say about the market itself, I mean, first of all, we have quite a resilient business model underlying that development and on the other side all the movements we see in particular also with let's say the German government, some unsecurity with the retirement model, the public retirement model in Germany as well. This is all pressure points for our customers leading to the need, the increased need and demand for some advice and that advice can be served by our advisory network and our own IFS, the advisory power we have. So at that scale, that even helps to get in touch and to develop the business. And as I said, the resilient model helps that the global developments are not impacting our business. In France, when we reported a double-digit, I mean, a 16% growth now in the third quarter, I think it's fair to say that we had a very strong second half year, 23, and a very strong first half year, 24, particularly coming in the fee income from the unit-linked business and the bank. That is, on one side, also a very resilient and proven business model behind that. Private insurer model observing those clients behind that, versus individuals in France. I think that helps to grow the business. And on the other side, for sure, the market development, so the performance of the underlying also helps. That's something we always said. I mean, we are really strong and growing. That has some impact. But overall, I think the business model and the products we offer, that helps. And it's not that, again, or like in Germany, not that impactful. on the numbers in France.

Thanks. If I could just follow up. So in Germany, it looks like your actual discrete 3Q numbers were very strong. So just wondering what might be going on there in particular in 3Q. But in France, the numbers are down in 3Q. So it feels like the strong growth that you had in the first half is waning. Could you comment on those two and just, you know, maybe put us at ease on the trends for the full year in both France and Germany?

I think in Germany there is some volatility in the numbers from quarter to quarter. We have seen a very strong first half year, particularly the first quarter, and it depends for sure on the overall development. I think it's more or less in line, maybe to some extent, a bit picking up now in the third quarter. And France, as I said, very strong first half year still, 16%. So double-digit growth being dependent a bit also on the market environment. So it's nothing that concerns us. And in view of the year end, I mean, we do not give detailed guidance on that, but I think overall the development is in line with our expectations.

Maybe to add on that, as Marco said, I mean, sometimes we and you shouldn't probably read too much into quarter discrete numbers because, you know, there are basis effects and things like that. One point that I may add also to what Marco just said, you know, in France we have talking about the structured product performance for quite a while, and there we really had also strong evidence H1 in 2024, I think something to keep in mind as well. And here, we talked about that many, many times before. It's really also the stock market performance that is, let's say, triggering or auto-calling those structured products. And here we have this, let's say, direct, let's say, linked to the stock market, if I may add that.

Thank you very much.

As a reminder, if you wish to register for a question, please press star followed by one. Gentlemen, so far there are no further questions. Back over to you for any closing remarks.

Thank you. This brings us to the end of the call. We look forward to seeing you in person at our investor day on the 3rd of December. when we will present our new strategic program. Thank you for listening and for your interest in Swiss life. Have a nice day and goodbye.

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