Swiss Life Holding AG

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 quarter of 2025. We will focus, as usual, on fee income, premiums, and direct investment income. I will provide a quick overview of today's key messages, and our group CFO, Marco Gerussi, will walk you through the segments. We had a good start to the year. In the first three months of 2025, Swiss Life increased its fee and commission income by 3% to $659 million. Drivers were owned and third-party products and services, as well as asset managers. Cross-written premiums, fees and deposits received increased by 6% to $7.9 billion. All business divisions contributed to the growth. Direct investment income grew by 6 percent to 1.1 billion, which corresponds to a non-annualized direct investment yield of 0.8 percent. Swiss Life Asset Managers had a very strong net new asset inflow of 9.3 billion in third-party asset management compared to 0.7 billion in the prior year period. The SST ratio was estimated to be around 200% at the end of March 2025. With that, I hand over to Marco.

Thank you, Matthias, and also good morning from my side, dear ladies and gentlemen. I am pleased with our good start into the financial year 2025, and with that also the good beginning of our Swiss Life 2027 program. As usual, group figures are reported in Swiss francs and for each business division in local currency. Figures are unaudited and growth rates are mentioned in local currency. Let me start with our segment Switzerland. Premiums increased by 3% to 4.5 billion, while the life insurance market remained unchanged. Premiums in group life increased by 3% to 4.1 billion, while the market decreased by 1%. Periodic premiums declined by 4%, single premiums increased by 12%, mainly due to higher new business. Assets under management in our semi-autonomous foundations were at 7.8 billion, a similar level compared to year-end 2024. Premiums in individual life grew by 3%, essentially in line with the overall market, which was up by 4%. Periodic premiums increased by 2%. Single premiums grew by 6%, driven by a new unit-linked product. Premium commission income was up by 11% to 91 million, mainly due to higher income from unit-linked and mortgage businesses. Turning to our French. German, and international segments that all report in euro. Let me begin with France. Premiums increased by 11% to 2.1 billion. In our live business, premiums were up strongly by 14%. The overall market grew by 4%. The unit link share in our live premiums remained unchanged at the high level of 65% compared to the market average of 41%. We generated life net inflows of 0.7 billion. Total market net inflows were 14.4 billion. Health and protection premiums grew by 5%, driven by price increases. The market was up by 6%. P&C premiums decreased by 2%. Fee and commission income rose by 7% to 154 million, mainly due to higher unit-linked fee income based on higher average unit-linked reserves supported by the higher net inflows mentioned just before. We achieved strong growth despite the lower revenues from structured products. As mentioned on earlier occasions, it reflects a more normalized income contribution from structured products compared to very strong prior years. I continue with Germany. Premiums grew by 3% to 412 million due to modern and modern traditional products. The market increased by 16% driven by higher single premiums. PM commission income rose by 5% to 227 million due to the higher contribution from the insurance business. Income from owned IFAs was stable compared to a very strong prior year period. As a reminder, Q1 2024 included benefits from a specific market opportunity in the context of governmental inflation compensation. This one-off contributed around 25 million to the fee income in the prior year period. The number of financial advisors remained stable year on year. Turning now to international. Premiums increased by 7% to 1.1 billion, driven by both private and corporate clients. P&C income declined by 5% to 92 million. Higher income from owned IFAs was more than offset by corporate clients, in particular from elite life. Moving to asset managers with reports in Swiss francs. As usual, in Q1 and Q3, we report on commission income, which does not include other net income from real estate project development. Asset managers' commission income increased by 5% to 232 million. In our PAM business, commission income increased by 3% to 86 million, mainly due to higher recurring income. In our TPAM business, commission income was up by 6% to 146 million, driven by higher recurring income due to a higher average asset base. To make figures comparable to half and full year disclosures, the share of total non-recurring income for TPAM, meaning commission income and other net income from real estate project development, was 6% of total TPAM income. This compares to a high share of 31 percent in the prior year period, which was largely due to revaluation gains on an ongoing development project in Germany. We confirm our guidance from the 2024 investor day to achieve a share of non-recurring TPM income of, on average, around 25 percent over the period from 2025 to 2027. Also, for the full year 2025, we expect this share to be around 25% given our pipeline. Net new assets in our TPM business amounted to 9.3 billion compared to 0.7 billion in the first quarter of 2024. These very strong inflows are driven by our new index business as well as active mandates. Out of the 9.3 billion, two thirds were generated by our index offering mainly in equities and bonds. Inflows in real assets amounted to 0.3 billion. The remainder came from active mandates in bonds, money markets, and multi-assets. Assets under management in our deep-end business were at 135 billion compared to 125 billion at year-end of 2024, driven by net inflows and positive FX translation effects. Turning to our investment results. Direct investment income increased by 61 million to 1.1 billion, driven by higher income from infrastructure, real estate, and equities. The non-annualized direct investment yield was at 0.8% compared to 0.7% in the prior year period. Real estate continues to be an attractive and important asset class for backing our long-dated liabilities. Vacancy rates were unchanged at 3.1 percent compared to year-end 2024. Real estate fair value changes were positive at around 0.2 percent. This is a non-analyzed figure. For the full year 2025, we expect further positive real estate fair value changes driven by our Swiss real estate portfolio. Moving to solvency, cash, and payout. At the end of the first quarter of 2025, the SST ratio was estimated to be around 200%. As of today, we estimate our SST ratio to be at around 200% as well. Please note, the scheduled repayment of a 750 million hybrid in June 2025 will lower the SST ratio by around minus 4 percentage points. Also, when taking this into consideration, the SST ratio is above the ambition range of 140 to 190%. At the end of the first quarter of 2025, liquidity at holding amounted to around 1.4 billion. This is a temporary high figure related to the recent issuance of Swiss franc denominated senior bonds. It must be seen in the context of upcoming redemptions such as the 250 million senior bond in June 2025. Our 750 million chair buyback is on track. We repurchased chairs worth 230 million as of 16th of May 2025. The program will run until May 2026. With that, I hand back to Matthias for his remarks before going into the Q&A session. Thank you, Markov.

Let me sum up. We are pleased with the performance of Swiss Life in the first three months of 2025, which also marked the start of our Swiss Life 2027 program. We expanded both the insurance and fee businesses. Net new assets in our third-party asset management business were very strong. Thank you for listening. We are now ready to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the 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 to disable the loudspeaker mode and eventually turn off the volume of the webcast while asking a question. 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 and 1 at this time. Our first question comes from David Barna from Bank of America. Please go ahead.

Good morning. Thanks for taking my question. Firstly, on the flows into TIP, you gave a few numbers there on the breakdown by asset class in Q1. Can you just come back on the breakdown within the real assets, please? I'm not sure I got this number correctly. And also, would you be able to to give us some color on the flows you're seeing so far in the second quarter? That's my first question. And then, secondly, on solvency also, just a bit more detail on the market movements in Q1. I would have expected that to be positive. And when we spoke at the full year result, it sounded like it was positive. So can you just come back on what changed between early March and the end of March? Is this mostly the interest rate gap between CHF and UASZ. And then lastly, so we've had higher rates and then lower rates again in Switzerland, and we're now back to a similar level as year-end 24. But we've also had a growing interest rate differential with the U.S., especially in the second quarter. Do you expect these items to be net negative for experience variances in the CSM and H1? Thank you.

Thanks, David. Marco will take the first and the third question, and I will elaborate a bit on the SST.

Good morning, David, on the TPAM net assets inflows or the breakdown. The breakdown for real assets overall is 0.3 billion, so that is in line with the first quarter. With real estate, the number is more than doubled compared to that. Infrastructure is slightly negative, and this relates to a portfolio exit. We've had a successful portfolio exit, which was in line with our business case. As you said, in the fourth quarter in 2024, and now also taking it over in the first quarter, we had strong inflows. in net new assets around two thirds coming from the index business and a reminder from active mandates. I'm going not into detail in the second quarter, but I think it is important we continue to be positive on that. Please do not quadruple the number by year end because we have strong momentum, but we see in terms of an outlook number by the year end 2025 in the upper teens of billion overall for the net new assets.

Now, the second question in terms of the SST And before I go into the drivers during the first quarter, just let's remind that the SST that we disclosed for the year end, the 201%, and also obviously what we now have disclosed for end of March, has the full buyback deducted. I think that's the first point to keep in mind. And yes, we have some market movements, and you rightly recall that when we were disclosing the full year, and that was around mid-March, we said that the Swiss franc, US dollar rate, interest rate differential has narrowed significantly, and that this was an uplift until mid-March, and it was still, and it's still an uplift if we look at it here to Q1. It's Having said that, a significantly lower uplift than what we mentioned in mid-March at the full year disclosure. So that was one positive thing that happened within Q1, and clearly we had also two negatives. One was the spread widening of the credit spreads. And there was also from the equity markets a marginal negative. So that's the reason why we come as at the end of March around 200 with the SST.

I'm talking about the CSM. You know, it's an IFRS number, and we don't disclose that in our Q1 reporting. overall i mean you refer to the economic variances where we had a on a qualitative basis an update during the full year um disclosure um now as of today and that's mainly driven by the level of interest rates in switzerland and also the interest rate differential to the us dollar also matthias referred to and we see it flat flat dish as of today may a bit slightly positive just because since mid-March the differentials also widened again a bit, but I think it's important year-to-date. It's narrowed down compared to what we have seen last year. I think that's what we can say to the CSM on the economic variances. Thank you. You're welcome.

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

Hi there, thanks very much. Firstly, just on the SST ratio, I mean, you mentioned a smaller positive, but it feels like a bigger negative from the market movements on spread and equities. Was the sensitivity that you guided at full year 24 a good guide, or was there some convexity or other factors that made that a little bit more negative? The only reason I'm asking is because it seems like it's still quite a big miss, or it's what people were expecting. So just wanted to understand that. And then second question is, on the net new assets, obviously guided to teens, high teens, I think you said, net new assets for the year. At what point do you think there might be a normalization in net new assets because clearly, you know, acquiring the index business, uh, from, from credit suites has been a, an up list and you're, you're gaining there. Um, do you, do you think that the net new assets is kind of occurring? Um, or do you think there's been a kind of a boost, uh, due to the kind of inorganic nature of that shift that you made? Um, so that, that's my kind of, uh, second question. Uh, and then just looking at, um, the growth that you see in France. I mean, very, very good growth, I think, in health and protection, but also in life. I mean, do you see this as sustainable? And can you comment on kind of what's driving that? Thank you very much.

Thank you, Farouk. I think now Marco can take the SST questions. I go for the NNA, and he goes then back to France.

On the FST, I mean, the guidance we gave on the sensitivities, we disclosed, or disclosed, I think it's pretty much in line what we have seen also in the numbers. I think what you don't see in the sensitivities is the differential. I think overall in the plus and minuses, I think the positive of the lower interest rate differential, I think, And I also said that in context of the DSM, it has increased compared to the full year, 24 disclosures, and equities and credit spreads overall were in the negative, so the minuses in these numbers. So I think overall it's in line with what we would have expected.

And maybe to follow up on that, I mean, volatility that we have seen in the interest rates and specific goals in the interest rate differentials uh let's say in march and now april has been quite uh significant i said if you look at what the rate differential uh the 10-year swissie versus the treasury was mid-march and 14 days after i mean it is very very volatile as you can see and i think that may explain Let's say also the numbers around the SEC, but let me be clear, we still despite that volatility at around 200% and above our ambition range. Now, in terms of the NNAs and what you call normalization, I mean, what can clearly be said and we talked about that in 2024 also in the full year. I mean, this was an opportunity for us with the index business to enter that new business that was clearly driven by the fact that one large bank was taken over by another one. There was an extraordinary large number of RFPs out in the market, and I can tell you, not only in the index business, but also in the other mandates, in the active mandates, and in the In the real asset mandates, our asset managers, they are really going after the business. They are pushing hard to keep that NNA coming in. How long this will last will be seen. I think what we clearly say that for the full year 25, we expect NNAs to be in the upper teens and therefore significantly above what we have seen in the 2024 flows. And in terms of France, I hand over to Marc.

In terms of France, I mean, we have seen also in the first quarter very strong numbers, plus 14% in life, plus five in health and protection. Health and protection, it's important to note, and I've said that this is mainly or it is driven by price increases to the restored, based on the restored profitability. We also reported during 2024, so profitability is very important to us in that area. In the life business, this is driven by the unit-linked business and the high share of unit-linked business we see there. I've said it. In the presentation and also at the investor day, we flagged that we had very strong inflows in structured products in the prior years. So that's expected and was expected to come down a bit at a very good level, but a lower growth rate and shifting it a bit more into the other areas. Overall, I think we are at the level where we continue to see positive development and also confirming and seeing it again

in view of our of our um targets we have set for swiss life 20 uh 27. okay that's really kind thank you very much the next question comes from amelie from deutsche bank please go ahead yes hello good morning this is amelia from deutsche bank um thank you so much for taking my questions i just have one um and it's sort of um whether or not you're expecting a change in competitive landscape that could result from the Helvetia and Baloise merger. And here I'm in particular talking about sort of from the life side of things. So, yeah, I'm just curious to hear your thoughts around that. Thank you very much.

Thank you for the question. Obviously, we notice what's going on in the market. And what I can tell you, I mean, we're not commenting what happens at other companies. We're focusing on the clients, on the markets, and on the opportunities that we see in that market. And just as a reminder, in life, you mentioned that market, we are the leader. We have a market share of 40%. And what happens behind us changes it a bit. That said, we focus on the market and its opportunities.

Thank you. The next question comes from Simon Fussmeier from Fontobel. Please go ahead. Good morning.

It's Simon from Fontobel. Just one question from my side. One of your friendly neighbors reported numbers last week, and there was some confusion. about the decline in insurance revenues. So you report premiums, and I was wondering if you could confirm that the growth rates in premiums are similar to the growth rates in insurance revenue. Thank you.

Thank you, Simon. I mean, again, we do not comment on what others report. I mean, we report growth rates and premiums, fees and deposits received. That's very same quantity that predates the introduction of IFRS 17 and 9. We think this is a very good measure for, let's say, business activity. We have achieved here a strong growth of 6%. All business divisions contributed to that. And, you know, on the comparison to the insurance revenues, we may refer to what we said when we introduced AFRA 17.9. You may observe in our past disclosures what the links are. Because insurance revenues do not include the savings premium, if you wish, it's a different thing. So we suggest, and that's the reason why we have stick to disclosing cross-written premiums. It is, for us, probably the more relevant measure of, let's say, business activity.

Thank you. You're welcome. The next question comes from Thomas Bateman from Mediobanca. Please go ahead.

Hi. Morning, Matthias. Hi, Marco. Thanks for taking my question. Could you just remind us, please, how important the net investment yield is? I feel like since we transitioned to IFRS 17, it's taken a bit of a backseat, but my feeling is it's still important for cash remittances and local gaps. So, yeah, just a quick reminder on the net investment yield. I was also very impressed by the real estate gains you reported. I think you said 2% non-annualized. Can you just give us a little bit of color what's going on there and maybe a little bit more color on the outlook for real estate gains? And then my third question is just on the pace of growth of the advisory business. I think you said that Germany, the advisors were flat. That for me feels like a core part of your growth. Can you just give an update on hiring there and maybe the kind of shape of growth you expect over the strategic plan? Thank you.

Let me first say one word on the fair value change, then Marco will talk through the net investment income and the urban advisory business. The fair value change we have observed in the first quarter was 0.2%. Oh, sorry.

Thank you.

I may cover the other elements of the question. That was driven by Swiss real estate, You may recall that we talked about that at the full year 24 disclosure, and we said back then we expect positive fair value changes for Swiss real estate and stable valuations for the European real estate. That's what we have seen now in Q1, and that's also what we see to continue like that.

into the full year 2025 so further fair value changes the swiss real estate stable valuations or european real estate the net investment yield i mean as the direct investment yield we've just increased non-analyzed to 0.8 percent the net investment yield remains to be very important uh to us in particular in the local statutory accounts which is relevant for the cash view. I mean, in an IFRS world, with the introduction of IFRS 17, you are aware of that, that part of that, or a large part of that, in our case, is covered by the VFA and then the CSM. So, it's a different treatment, but in terms of local stat accounts and cash, this is a very, remains to be a very important number. Talking about Germany, the growth of the financial advisor business and the financial advisors as an important underlying of that. We have reported a stable number. The number is close to 6,000. We still have ongoing activities and positive progress in terms of recruiting. I think that's something we have and we confirm that we are We'll achieve more than 7,200 by 2027. So that's our target in the new strategic program. It's important to note and also to understand to some extent overall sales representatives. We have a number around 12,500. includes guys being on track to be qualified and certified to become financial advisors. And the overall number of sales representatives has again grown by three percentage points. So the pipeline is still strong. We are working on that. Maybe a second comment on the growth. I've mentioned that in the presentation in Germany, we had back in the first quarter, 2024, one-off gain of around 25 million because of a campaign we had in the area of the governmental inflation compensation. If we adjust for that number, so also the growth in Germany, the fee income growth would be overall, then overall in group level, the growth would be around 7%. So in line with the prior years. So we are positive also in that area. Still a bit of work to do with the advisors, but positive also there.

And if I may add on that, I mean, what Marco just said, this specific market opportunity in Q1 2024, if you adjust for that and then you see that we have increased the productivity per advisor, I mean, that's one thing that is important to keep in mind. And as he said, we clearly work hard on growing the number of certified advisors as well.

The next question comes from Rasmus Eusten from Danske Bank. Please go ahead.

Yeah. Hi there. Thank you for taking my question. My question goes about the capital structure and the role of the subordinated bond that has not been called. Could you elaborate your thinking about that or should we just assume it will be taken out in September? Thank you.

Okay. It is called. We have called that. I think the agent is informed. I think he has not communicated it yet, but we called it, and we're going to repay that in June. As said, it's scheduled.

That's very clear. Thank you. It's not picked up on Bloomberg or on your website, but that's why it's a bit confusing here. But thank you. That's very clear. It's been called. Good. Thank you.

The next question comes from Michele Ballatore from KBW. Please go ahead.

Yes, good morning. Thank you for taking my question. So my question is going back to the net new assets. I mean, let's say that this positive development of this opportunity lasts, you know, for the rest of the year. Maybe not at the same pace that we saw in the first quarter, but let's say we still see a positive performance there. I mean, in light of your group fee result target, was this kind of strong performance included there or is probably, you know, above your expectation? As I said, if the 2025 is confirmed as a year, you know, performance is continue to be strong. Thank you.

So, yes, indeed, that's been a strong performance of the business. We've just started back last year, I think, Overall, in our targets, it has been foreseen that we have that kind of business, for sure. On the growth rate and the outlook on 25, with the expected numbers in the teens, of billions for overall NNAs, we've just discussed earlier. In the call, I think what's worth to note is that besides the business we have, so the ordinary business we already have, This is something we have seen as an opportunity to do in addition, just to serve our clients. And it also gives us, I think it's also positive access to new clients in terms of our targets and goals. That's something we had in mind when we communicated them back in December for our new strategic program. Thank you.

As a reminder, if you wish to register for a question, please press star followed by one. We have a follow-up question from Farouk Hanif from J.T. Morgan. Please go ahead.

Hi, thank you very much. Could you remind us of Ellipse Life, the situation now in terms of what you're reinsuring and what your model is going forward? If you just remind us so that we can take this into account in our numbers. Thank you very much.

Just that we understood you correctly, you're talking about Ellipse Life and the reinsurance situation in terms of that book at the time of acquisition and the new business underwritten since then.

Exactly. You were going through a bit of a transition period with them, and now, obviously, you're taking more of that business on, just wanted to understand.

Okay, and maybe that's a relatively quick answer. You know, when we took over, I think that was July 2022, the book that was in force at the time was fully reinsured. And this is depending on the book. It has probably a three-year average and you're maybe a bit different. And the new business that was underwritten since then, a new business also means renewal of business. There is a quote to share. And you may recall that we said on a couple of occasions that there is a shift from fee to premium because of this, let's say, change of the overall reinsured part.

If I may add to the number we've just mentioned in the call and in the fee going down, but we will see that then in the insurance operating results as a positive contributor, continuing to see that in those numbers. Thank you very much for the clarification.

The next question comes from Farkar Murray from Autonomous. Please go ahead.

Good morning all. Just mainly one set of questions from me, actually. Just coming back to the NAA number, which is obviously very, very strong indeed. I just wondered if you could help us understand the way that comes through in terms of margins, in particular on the index business that you've got there coming through. What kind of revenue margins are you achieving? And more generally on that unit, does it still need to reach scale in order to be profitable? Thanks.

I mean, we don't disclose margins also not for our single asset classes. Overall, I think it's fair to say it's a volume business. It's a profitable business. We have a competitive pricing in there. And as I said earlier, it comes in addition to what we are already doing. And it is profitable, as I said, and it also gives us access to new clients, which is also a chance for the already existing and very successful offering we have in place.

What's the question about profitability? Because I think you've mentioned reaching a certain scale. Do I take it you've reached adequate scale already then? Thanks.

I think we're on a very good track there, I can say that. We have, and just to sum up what we said, we have Until now, and that's looking at the NNAs in 2024 and Q1 2025, we have in the third-party area now around 14 billion worth of index business. Thanks.

You're welcome. The last question is a follow-up from Thomas Bateman from Mediobanca. Please go ahead.

Hi, just, just a quick one, just to follow up on the, the Jeremy advisors. I just want to be clear. You're not losing many advisors here. We're just not quite seeing the growth because the hiring is going well, but the most of the advisors are still in training. Um, maybe what's the lead time for an advisor to become, go from a trainee and to becoming a full advisor.

I mean, overall, as always, in such numbers, there's some plus and minuses. Overall, recruiting is strong. From time to time, there is also some people leaving the company. That's also a bit of the price of our success because we have very, very good people and others are looking for them. So overall, let's say the transition time from starting and being then qualified and certified, It's difficult to say, but overall, let's say something between 15 and maybe 20, 22 months. Excellent. Thank you.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Matthias Elick for any closing remarks.

Thank you very much for your questions. Before we close the call, let me recap today's key messages. We had a good start to the year by delivering top-line growth in both insurance and fee businesses, very strong net new assets, and a robust direct investment yield. This demonstrates, once again, the resilience and strength of our business model in different market environments. We're highly committed to execute the Swiss Life 2027 program with discipline and to deliver on our promises. So thank you again, and I wish you a nice day. Goodbye.