Swiss Life Holding AG

Ladies and gentlemen, welcome to the Swiss Life presentation of the Full Year Results 2024 Conference Call and Live Webcast. I'm Sandra, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being 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 by their 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 meet Mr. Matthias Ehrlich, Group CEO of Swiss Life. Please go ahead.

Dear analysts and investors, good morning. Thank you for joining us and welcome to our conference call. Today, we report our results for the year 2024 which also marks the end of our Swiss Life 2024 program. I will provide you with a brief overview before handing over to our CFO, Marco Cherusi, for more details. I'm very pleased with Swiss Life in 2024, and I'm proud of what we have achieved. First, we delivered a strong set of full-year results. Second, We successfully completed our three-year program, Swiss Life 2024. And third, we prepared an ambitious new program, which we presented last December, Swiss Life 2027. Let me start with the highlights of our 2024 financial results. The fee result was up by 33% to 875 million. which is right in the middle of our 850 to 900 million target range for 2024. The increase was largely driven by a strong contribution from asset managers. They delivered more TPAM non-recurring income than what we indicated to you throughout the year. The operating result insurance business increased by 12% driven by the rebound in health and protection in France. The strong operating performance of both the fee and insurance businesses resulted in a 20% growth of profit from operations to 1.78 billion. Net profit grew to 1.26 billion, which is an increase of 13%. Return on equity was at 16.6%, up three percentage points. and well above our target range of 10 to 12%. Cash remittance in 2024 grew by 14% to 1.3 billion based on local statutory accounts. As flagged throughout the year, it included one-offs of about 0.12 billion, as well as positive timing effects at asset managers, which together add up to 0.14 billion. With respect to payout, we propose to increase the dividend to shareholders by 6% to 35 Swiss francs per share. This corresponds to a payout ratio of 81%, well above the target. This brings me to the Swiss Life 2024 program. I'm proud of what Swiss Life has achieved and would like to thank our employees and advisors for their strong commitment and support. which is key to our success. We delivered a fee result in the middle of the Swiss Life 2024 target range thanks to the strong development of asset managers, especially related to real estate project developments. We exceeded all other group financial targets. This is the return on equity, cash remittance, dividend payout ratio, and share buyback. Regarding the cash remittance, We delivered cumulatively 3.5 billion over the course of the past three years. As mentioned at the investor day, this included one-off effects of 0.2 billion, which we do not expect to repeat. The successful completion of one program marks the start of another one. Last December, we announced our new Swiss Life 2027 program. Three strategic actions will drive business growth. Simply speaking, more customers, more advisors, and more efficiency. Those are the cornerstones of Swiss Life 2027. They underpin our financial ambitions. We will continue to drive earnings quality and earnings growth, and we will aim to deliver attractive cash returns to shareholders. Swiss Life 2027 takes us a step higher on our success path as we strive to reach new heights for earnings and cash returns to shareholders. Our new financial targets are well known and also shown on the slide. I look forward to embarking on this journey with my team. We are highly committed to execute the program with discipline and to deliver on our promises. With that, I hand over to Marco, who will take you through the full year 2024 financial results in more detail.

Thank you, Matthias. Good morning, ladies and gentlemen. I'm pleased to walk you through our 2024 results. Let me start with selected P&L figures on page seven. Insurance revenues decreased by 1% to 8.7 billion. Higher PAA revenues from France and international were fully offset by a lower CSM release and ethics effects. Insurance service expenses increased to $7.6 billion in line with higher PAA revenues and non-viable expenses. The net investment result amounted to $1 billion. This is an IFRS 17 accounting figure as it includes VFA experience adjustments and insurance finance expenses. In view of our investment performance, we continue to focus on the net investment income, which we will discuss later. Profit from operations strongly increased to 1.8 billion. This strong operating performance is mainly driven by asset managers and by the French insurance business. Borrowing costs increased to 146 million, including refinancing effects. Income tax expense increased to 376 million. As a reminder, we had an extraordinary tax provision release in 2023. Net profit increased by 13% to 1.3 billion. Adjusted for the mentioned prior year tax impact of 33 million and for negative ethics translation effects, the net profit increased by 18%. Turning now to further selected figures. Gross written premiums, fees, and deposits received increased by 3% in local currency to 20.3 billion. This increase was driven by France and Germany. Fee and commission income was up by 5% in local currency to 2.5 billion, mainly due to higher contributions from Germany, asset managers, and France. The net investment income of the insurance portfolio for own risk increased significantly from 2.6 to 3.7 billion, largely due to a positive swing of real estate fair value changes. Operating expenses, excluding variable costs, increased to 2.1 billion. The ethics adjusted profit from operations strongly increased by 20%. I will now move on to our segment reporting, starting with Switzerland. Premiums were stable at 9.9 billion. Premiums in group life decreased by 2%. Periodic premiums declined by 2%. Single premiums decreased by 2%, primarily due to fewer new employees entering existing full insurance schemes. Assets under management in our semi-autonomous foundations increased to 7.8 billion compared to 7.1 billion at year end 2023. Premiums in individual life were up by 6%. Periodic premiums grew by 1%. Single premiums were up by 15% driven by a modern traditional product. Fee and commission income was up by 4% to $339 million, mainly due to higher income from the unit-linked and mortgage businesses. The segment result grew by 2% to $854 million, driven by a higher operating result insurance business. Net investment income from real estate assets not backing insurance liabilities increased. This was partly offset by a lower CSM release. The fee result was stable at 55 million. Higher income from unit-linked business was fully offset by investments in growth initiatives. The value of new business decreased by 19% to 189 million, mainly due to lower volumes and business mix effects. Cash remittance was up by 31% to 741 million, driven by a higher 2023 statutory profit and by the non-remitted part of the 2022 statutory profit. Turning now 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 7.8 billion in line with the overall market. In our live business, premiums were up by 14% in line with the market. The unit link share in our live premiums was 67% compared to the market average of 38%. It generated net inflows of 2.4 billion. Total market net inflows were 29.4 billion. Health and protection premiums grew by 3%, mainly driven by price increases to restore profitability. The market was up by 9%. P&C premiums were up by 5%, mainly due to motor products. Fee and commission income rose by 12% to 541 million, mainly due to higher unit-linked fee income based on higher average unit-linked reserves. Although the bank contributed positively. The segment result strongly grew by 64% to 335 million. The operating result insurance business increased substantially, mainly due to measures taken in health and protection. P&C also contributed positively. The fee result was up by 13% to 182 million, essentially driven by the top line development. In addition, In the second half of 2024, there was a shift of brokerage fees from structured products to the distributing entity, which is our insurance business, and therefore its operating result. This will also apply going forward. The value of new business increased by 6% to 196 million. Higher volumes in the live business with higher unit link share were partly offset by lower volumes in health and protection. Cash remittance increased by 16% to 186 million due to a higher 2023 statutory contribution. Moving on to Germany. Premiums were up by 3% in line with the market to 1.5 billion driven by modern, modern traditional and disability products. Fee and commission income grew by 12% to $821 million, mainly due to our owned IFAs. The income is net of intercompany effects, and it can vary with the volumes of Swiss Life products sold through our owned IFAs. On a standalone basis, owned IFAs grew their commission income by 7%, with the number of financial advisors being stable at 5,984 year-on-year. Fee income from the insurance business also increased. The second result was essentially stable at 193 million. The fee result increased by 5% to 120 million, driven by owned IFAs, despite investments in the harmonization and digitalization of back-office systems. As announced at the investor day, those investments will continue throughout 2027. The value of new business decreased by 24% to 46 million as a result of lower unit link volumes in the context of managing acquisition cost efficiency. Cash remittance was 104 million. As a reminder, we benefited from a special dividend of 50 million from owned IFAs in the second half of 2023. Turning now to the international segment. Premiums decreased by 4% to 1.7 billion. Higher premiums from business with corporate clients were more than offset by lower premiums with private clients. Fee and commission income was down by 1% to $381 million. Higher income from owned IFAs and private clients was more than offset by corporate clients, in particular from Ellipse Life. The segment result was up by 18% to $118 million. This is due to the fee result, which increased by 26% to $90 million, driven by a higher contribution from private clients and owned IFAs. The value of new business decreased by 19% to 46 million, mainly due to business mix effect. Cash remittance was up by 5% to 67 million, driven by the business with corporate clients. Let's move now to our asset managers with reports in Swiss francs. Asset managers' total income was up by 22% to 1.2 billion. In our PAM business, total income increased by 9% to 356 million, driven by higher recurring fee and real estate transaction income. In our TPAM business, total income was up by 29% to 802 million, mainly driven by substantially higher alternate income from real estate project development. Recurring income increased in line with a higher average asset base. The share of total non-recurring income for TPM, meaning commission income as well as other net income, increased from 16% to 32% of total TPM income. This is due to a pleasing development in the second half of the year, contributing to a strong 2024 fee result. About three quarters of the total non-recurring income for TPM relate to valuation gains, which are non-cash. As mentioned at our investor day in December 2024, we expect the share of non-recurring income to be on average around 25% over the period from 25 to 27. Segment result increased by 64% to 446 million. The contribution from PAM was up by 16% to 192 million, driven by the top line development. TPAM contribution increased by 140% to 254 million, driven by substantially higher other net income. The TPAM cost income ratio was 85%. Higher commission income was more than offset by investments in growth initiatives, such as the new index business and the energy as a service offering. Cash remittance increased by 6% to 242 million as a result of time lags between the income recognition and cash generation from real estate project developments. This supported cash remittance with 20 million in 2024, as we mentioned at our half-year 2024 call. Net new assets in our TPM business amounted to 9.5 billion compared to 9.8 billion at year-end 2023. Inflows in real assets were at 2.6 billion. Moreover, We had strong inflows in equities driven by our new index business, having a good momentum and gaining a lot of traction in the fourth quarter of 2024. Overall, assets under management in our deep end business increased from 112 billion at year end 2023 to 125 billion driven by net inflows and positive performance. Let's move back to the group. Operating expenses increased by 6% in local currency to 2.1 billion due to business growth and investments in growth initiatives such as wealth solutions for affluence in Switzerland or the index business at asset managers. Coming to the investment income. Direct investment income increased to 4.1 billion. The higher contribution from bonds equities and real estate was partly offset by lower income from alternative investments. The direct investment yield increased from 2.8 to 2.9%. The net investment income significantly increased to 3.7 billion, driven by the positive development of direct net investment income and net capital gains. Net capital gains increased to 71 million, This is mainly due to a positive swing of real estate fair value changes. The net investment yield was up to 2.6% compared to 1.8%. Let's have a look at the structure of our investment portfolio on slide 17. The share of equities increased due to higher valuations and further investments, while the share of bonds came down. With respect to real estate, our value changes were positive at 73 million or plus 0.2%. In the prior year, we had negative fair value changes of minus 991 million or minus 2.5%, mainly due to Germany and France. Real estate continues to be an attractive and important asset class for backing our long-dated liabilities. Vacancy rates were essentially stable at 3.1% by year end 2024. Moving on to insurance reserves on slide 18. Insurance reserves increased by 1% in local currency to 181 billion, mainly driven by France. On a statutory basis, we released a total of around 0.3 billion of statutory reserves in the Swiss group and individualized businesses, as we did in 2023. The pre-tax CSM amounted to 14.4 billion at year-end 2024. The expected business contribution and the new business increased the CSM by 1.3 billion. Experience adjustments and actuarial assumptions was at minus 0.2 billion. The impact from economic and non-operating variances was at minus 1.0 billion. Around half is due to the widening of the interest rate differentials. The remainder is due to lower Swiss interest rates and the minor non-operating variances offsetting the positive equity market developments and ethics effect. The CSM release was at 1.1 billion with a release ratio of 7.3%, which is below the 2023 level. The value of new business decreased to 460 million, mainly driven by volume and business mix effects. The new business margin decreased to 3.6%, which is well above our ambition level of 1.5%. Going forward, we replace the VNB and we will report on the new business CSM on a half-year basis. Shareholder's equity decreased by 3% to 7.3 billion, largely due to the dividend payment, the change in other OCI and the share buybacks. Our total outstanding financing instruments at year-end 2024 amounted to 5.5 billion with a balanced share of senior and hybrid debt. The SST ratio was estimated to be around 200% as of 31st December 2024. Compared to the prior year, the decrease is mainly due to the widening of interest rate differentials and the full deduction of the 750 million share buyback that we started in December 2024. The SST ratio remains well above the ambition range of 140 to 190%. That brings me to our Swiss Life 2024 program. Fee and commission income increased by 5% in local currency to 2.5 billion. Income from own and third-party products and services was up by 7%. Income from asset managers and own IFAs were both up by 5%. Profit from operations strongly increased, ethics adjusted by 20% to 1.78 billion, driven by a very pleasing operating performance in both the fee and the insurance businesses. The fee result increased by 33% to 875 million. This is very pleasing and primarily driven by a strong development in the second half of the year at asset managers and by the unit-linked business. The operating result insurance business increased double digit by 12% to 1 billion. This was driven by additional contributions. We will show the details on the next slide. For the operating result insurance business, let's start with the CSM release. We deduct, as usual, the release pertaining to the intra-group margin, non-allocated insurance operating expenses, and the unit-linked fee result in scope of IFRS 17. We add, as usual, additional contributions coming from insurance business which is outside the CSM. These contributions came in strongly at 357 million. About two-thirds relate to assets not backing life insurance liabilities driven by real estate fair value changes. The remainder came from the significant improvement in the French non-life business, which we expected for 2024. The return on equity increased to 16.6% up from 13.7% in the prior year. Turning to capital, cash, and payout. Cash remittance to the holding company increased by 14% to 1.3 billion based on local statutory accounts. Let me comment on the following effects we have flagged throughout 2024. First, Cash remittance included 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. Second, the cash remittance of asset managers included extraordinary 20 million from the outlined positive time lapse. These effects contribute to a 0.14 billion higher cash remittance in 2024 and are not expected to repeat it in 2025. Equity at holding amounted to 1 billion at the end of 2024. Our 750 million share buyback is on track. The repurchase shares worth 133 million as of 7th March 2025. The program will run until May 2026. Coming to the dividend. For the financial year 2024, the board of directors will propose a dividend of 35 Swiss francs to the AGM up from 33 Swiss francs in the previous year. The payout ratio is 81%. The dividend will be paid up in approval from the AGM on the 20th of May 2025. Let me sum up. I'm very pleased with the strong performance in 2024, and I am also very pleased with the successful completion of our Swiss Life 2024 program. We delivered a fee result in the target range of 850 to 900 million. We exceeded our ROE target range of 10 to 12%. We clearly exceeded the cumulative cash remittance target of 2.8 to 3.0 billion, and we also exceeded our payout target ratio of over 60%. Moreover, with a total of 1.3 billion, the share buybacks also clearly exceeded the 1 billion communicated at the start of the program. After the successful completion of the 2024 program, we are looking forward to executing on our new strategic program. With Swiss Life 2027, we strive to continue on our successful path by further driving our earnings quality and our earnings growth and increase cash returns to our shareholders. With this, I hand back to you, Matthias.