Swiss Life Holding AG

Ladies and gentlemen, welcome to the Swiss Life presentation of the Half Year Results 2025 conference call and live webcast. I am Moira, the course call operator. I would like to remind you that all participants will be in listen-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 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 Mr. Matthias Hellig, Group CEO of Swiss Life. Please go ahead, sir.

Dear analysts and investors, good morning. Thank you for joining us and welcome to our conference call. Today, we report our results for the half-year 2025. I will provide you with a brief overview before handing over to our CFO, Marco Geruzzi, for more details. Swiss Life delivered a pleasing operational performance in the first six months of the year. We grew the insurance business, meeting premiums, operating results, and the contractual service margin. We also grew the fee business and achieved strong net new assets in our third-party asset management. In a nutshell, I am pleased with the business activity and the progress we have achieved. Altogether, we report growth in profit from operations and a strong solvency level. Our results show the great commitment of our employees and advisors. I would like to thank all of them for their strong engagement vis-à-vis our customers. Let me provide some more color on the financial results. Profit from operations increased by 3% in local currency to $903 million. This is due to the operating result insurance business, which grew by 6%. The result was stable at $392 million, despite the lower contribution from asset managers, in line with the lower share of non-recurring income, as expected. Net profit declined by 5% to $602 million, as we include higher tax expenses. For example, in France, where the government increased the corporate tax rate for 2025. The return on equity was at 17.6%, and thus marginally below the prior year level. Cash remittance decreased by 8% to $1.17 billion. As flagged, the 2024 figure included one-offs of about $0.14 billion. Adjusted for those, cash remittance growth amounts to 4%. The SST is around 205% and continues to be above the ambition range of 140 to 190%. Moreover, the ongoing 750 million share by bank is proceeding as planned and will run until the end of May 2026. Those results mark a successful start to the Swiss Life 2027 program that we announced last December. 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. You can see our strategic actions and our financial targets on this slide. We are on track. Marco will take you in more detail through the Swiss Life 2027 progress reporting, and before that, through the half-year financial results.

Thank you, Matthias. Good morning, ladies and gentlemen. Let me continue today's presentation by taking a closer look at our pleasing 2025 half-year results. We begin with some selected P&L figures shown on slide six. Insurance revenue was down to 4.5 billion IRPAA revenues from France and international were fully offset by negative ethics effects and the lower CSM release. Insurance service expenses were flat at 3.8 billion. The net investment result decreased to 254 million. As a reminder, this is an IFRS 17 accounting figure, which also includes VFA experience adjustments and other effects. with offsetting gains not reported in this position. In view of our investment performance, we continue to focus on the net investment income, which we will discuss later. Profit from operations increased by 3% in local currency to 903 million, driven by the operating result from insurance business. Borrowing costs increased to 82 million. This is primarily due to the early refinancing of maturing bonds, leading to double-carry expenses in the first half of the year. In June 2025, we repaid bonds worth about 1 billion. Income tax expense was up to 220 million. Slightly more than one-third of this increase is due to an extraordinary higher corporate tax rate for 2025 implemented by the French government. The remainder stems from a German-specific tax effect on real estate funds, as well as from structural optimizations and other effects. Net profit was at 602 million. This is a decrease of 5% or, adjusted for ethics translation, of 4%. Turning now to further selected figures. Gross written premiums, fees, and deposits received increased by 5% in local currency to $12.1 billion. driven by positive developments in all our insurance business divisions. Fee and commission income was up by 2% in local currency to 1.3 billion. All sources contributed to this growth. Our asset managers owned IFAs as well as own and third-party products and services. The net investment income of the insurance portfolio for own risk was at 1.6 billion. Operating expenses were at 1 billion. I will now move on to our segment reporting, starting with Switzerland. Premiums increased by 4% to 6.3 billion. The life insurance market was flat. Premiums in group life increased by 4%, while the market was down by 1%. Periodic premiums declined by 2%. Single premiums grew by 12%, primarily driven by higher premiums from existing clients and new business. Assets under management in our semi-autonomous foundations increased to 8 billion, up from 7.8 billion at year-end 2024. Premiums in individual life are stable. The market increased by 3%. Periodic premiums increased by 1%. Single premiums decreased by 2% compared to a very strong prior year levels. Fee and commission income was up by 5% to $176 million, mainly due to higher income from unit-linked business and from investment solutions for private clients. The segment result increased by 4% to $458 million due to a higher operating result from insurance business. Income from assets not backing insurance liabilities grew, driven by real estate. The fee result increased by 3% to $27 million. Higher income was largely offset by continuous investments in growth initiatives, such as investment solutions for private clients, which we mentioned in previous disclosures. Cash remittance decreased by 13% to $609 million. As a reminder, the figure for the first half of 2024 included positive one-offs of $0.12 billion pertaining to the non-remitted part of the 2022 local statutory profits and to an extraordinary tax provision release. 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 7% to 4 billion, while the total market was up by 6%. In our life business, premiums grew by 9%, the market was up by 5%. The unit link share in our live premiums was essentially stable at a high level of 65%. This compares to a market average of 38%. We generated live net inflows of 1.3 billion. Total market net inflows were at 26.6 billion. Health and protection premiums grew by 2%, driven by price increases. The market was up by 4%. P&C premiums were down by 3%. Fee and commission income was stable at 295 million. Unit-linked fee income grew based on higher average unit-linked reserves. This was fully offset by lower income from structured products, which was very high in prior years. The second result grew by 9% to 209 million. The fee result was up by 4% to 106 million due to the live unit-linked businesses. The contribution from structured products declined due to the lower income and as flagged during the 2024 full-year call due to a shift of brokerage fees from structured products to the distributing entity, which is our insurance business. This will continue to apply. The operating result from insurance business was up by 14% to 103 million due to a higher contribution from the P&C business. Cash remittance increased by 2% to 182 million due to the statutory contribution. Let me briefly address two relevant aspects of the political environment in France. As mentioned, for 2025, the French government extraordinarily increased the corporate tax rate by 10 percentage points. In addition, there is headwind from a social security health reform, which is likely to impact our health and protection business in the second half of 2025. While the French government has not yet finalized the outcome, we remain focused on proactively navigating the environment. Moving on to Germany. Premiums are up by 3% to 758 million, driven by modern, modern traditional and disability products. The market was up by 11% due to higher single premiums. Fee and commission income increased by 6% to $422 million, driven by both higher productivity at owned IFAs with an essentially stable number of financial advisors and by a higher contribution from the insurance business. As a reminder, the prior year fee income included benefits from a specific market opportunity in the context of governmental inflation compensation amounting to around $25 million. The segment result was up by 8% to 121 million. The operating result from insurance business increased compared to a relatively low prior year. The fee result was up by 5% to 81 million, driven by owned IFAs, despite continued investments in harmonization and digitalization of back-office systems. As mentioned at Investor Day 2024, those investments will continue throughout 2027. Cash remittance increased by 1% to 102 million. And I'm now turning to the international segment. Premiums increased by 7% to 1.4 billion due to higher premiums with private clients. Premiums from business with corporate clients slightly decreased. Fee and commission income declined by 2% to 189 million. Higher income from owned IFAs was more than offset by lower income from private and corporate clients. The segment result rose by 1% to 64 million. The fee result increased by 5% to 46 million, primarily driven by higher contribution from owned ISAs. This positive development was partly offset by a lower operating profit from insurance business, which was impacted by slightly higher claims. Cash remittance was up by 9% to 61 million, due to the statutory contribution. Let's move now to our asset managers, which reports in Swiss francs. Asset managers' total income was down by 2% to 496 million. In our PAM, business total income decreased by 3% to 172 million. Higher recurring income was outweighed by lower non-recurring income. In our TPAM business, total income was down by 1% to $325 million. Recurring income increased based on higher assets under management. Income from real estate transactions was also up. This was more than offset by significantly lower net income from real estate project development. The share of total non-recurring income for TPAM, meaning commission income and other net income from real estate project development, 14% compared to 20% in the prior year period. As mentioned at the 2024 investor day, we expect to achieve a share of non-recurring TPM income off on average around 25% over the period from 2025 to 2027. As indicated in Q1, we continue to expect this share also for the 2025 financial year to be around 25% given our pipeline. The second result decreased by 6% to 145 million. The contribution of PAM was up by 2% to 96 million based on increased operational efficiency. The TPAM contribution decreased by 19% to 50 million due to the significantly lower other net income. The TPAM cost income ratio improved to 82% largely due to higher commission income outweighing expenses. Cash remittance remains stable at 239 million. As a reminder, in the prior year, we had a one-off of 20 million from positive timing effects between income recognition and distributable cash related to real estate project development. Net new assets in our deep-end business strongly increased to 13.2 billion compared to 1.2 billion in the prior year period. We saw continued strong inflows with about 60% driven by our equity and bond-related index business. The remainder was contributed by active mandates. We had inflows of 3.9 billion in bonds, money market funds, and multi-assets. Inflows in real assets amounted to 1 billion, with 1.1 billion from real estate, which was partly offset by an infrastructure outflow due to an anticipated portfolio exit. Assets under management in our deep-end business increased to 138 billion compared to 125 billion at year-end 2024, driven by these positive net inflows. Let's move back to the group. Operating expenses increased by 2% in local currency to 1 billion, reflecting continued investments in business growth, for example in Switzerland, as well as in back-office digitalization in Germany. As outlined at our investor day 2024, we aim to keep life absolute costs stable by 2027. These amounted to 356 million in the first half of 2025, stable compared to the prior year. Coming to the investment income. Direct investment income increased by 46 million to 2.2 billion, driven by higher income from infrastructure and real estate that outweighed lower income on bonds. The non-annualized direct investment yield was stable at 1.5%. The net investment income decreased to 1.6 billion. The non-annualized net investment yield was at 1.2% compared to 1.3%. Net capital losses amounted to minus $317 million. The decrease of $270 million year-on-year is due to infrastructure, equities, and ethics hatching effects, partly offset by positive real estate value changes of $258 million compared to negative real estate value changes of minus $280 million. Let us continue with our investment portfolio on slide 15 and focus on real estate. Real estate fair value changes are positive at around 0.6%. This is a non-annualized figure. For the full year 2025, we expect further positive real estate fair value changes driven by our Swiss real estate portfolio. Real estate continues to be an attractive and important asset class for backing our long-dated liabilities in the context of our disciplined asset and liability management. We hold real estate because of the regular rental income provides and not because of appreciation. Vacancy rates were essentially stable at 3%. Moving on to insurance revenues on slide 16. Insurance reserves slightly decreased to 179 billion in local currency. On a statutory basis, we released in total about 0.15 billion of statutory reserves in the Swiss group and individual life businesses. Moving on to the CSM development. As outlined at our investor day 2024, our ambition is to increase the CSM through operating growth. In the first half of 2025, expected business contribution and new business together contributed 0.6 billion and the position experience adjustments and updates of actuarial assumptions added another 0.2 billion. The operating CSM growth is net of the CSM release of 0.6 billion, resulting in an operating CSM growth of 0.2 billion, as shown on the slide. In addition, economic and other non-operating variances contributed 0.2 billion to the CSM increase. This increase is driven by higher Swiss interest rates and by narrowing of the US dollar and Swiss franc interest rate differentials. real estate value changes also contributed positively. The annualized free tax CSM release ratio remained essentially in line with the prior year level. In total, the CSM after release representing future profit contribution grew by $0.4 billion to $14.8 billion. Shareholder's equity decreased by 10% to $6.6 billion compared to year-end 2024. This is due to the dividend payment and the ongoing share buyback, partly offset by the profit for the first half of the year. Our total outstanding financing instruments amounted to $5.6 billion after we repaid about $1 billion of bonds in June 2025 that were refined early on. The SST ratio is estimated to be around 205% at the end of June 2025, compared to 201% at the end of December 2024. This increase was driven by higher Swiss franc and euro denominated interest rates, a narrowing of the US dollar and Swiss franc interest rate differential, and the positive performance of equity and real estate markets. These positive effects overcompensated The 750 million hybrid repayment in June 2025, which led to a reduction of 4 percentage points of the SST ratio. The SST ratio remains above the ambition range of 140 to 190%. That brings me to our Swiss Life 2027 program and the progress reporting. I will start with the fee income on slide 22. Fee and commission income increased by 2% in local currency to 1.3 billion. Adjusting for the mentioned specific prior year market opportunity effect in Germany, the fee and commission income growth was at 4%. Profit from operation was up by 3% in local currency to 903 million, driven by the insurance business. The operating result from insurance business increased by 6% to 583 million. The lower CSM release year-on-year was more than positively offset by higher additional contributions, primarily driven by higher income from assets not packing life insurance liability and by the P&C business. The return on equity was at 17.6% on an annualized basis compared to 17.8% in the prior year and therefore within our target range of 17 to 19%. Turning to capital, cash, and payout. Cash remittance to the holding company decreased by 8% to 1.17 billion. As mentioned in earlier disclosures and commented today on the business review slides of Switzerland and asset managers, we had one-off effects totaling 0.14 billion in 2024. Adjusting for those effects, cash remittance increased by 4%. At the end of the first half of 2025, liquidity at holding amounted to around 1 billion. Our 750 million share buyback is on track. We repurchase shares worth 373 million as of 29th of August 2025. The program will run until May 2026. Let me conclude. In the first half of 2025, we continue to grow both our insurance and our fee businesses. We achieved growth in our profit from operations and strong net new asset inflows in TPAN. Our SST ratio remained at the strong level. With that, we had a successful start to our Swiss Life 2027 program and are on track to achieve all our group financial targets. As we continue to deliver on our promises, we maintain our commitment to disciplined execution. With this, I am back to you, Matthias.

Thank you, Marco. We will now open 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 one on their touch-tone telephone. You will hear a tone to confirm that you've entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets and eventually turn off the volume from 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 who has a question may press star and 1 at this time. The first question comes from the line of Michael Hotner from Burenberg. Please go ahead.

Fantastic. Thank you very much, and thank you for the lovely results. I had three questions, one which isn't really about the results, but maybe you can help me. One on the development fees and one on investments more generally. My kind of general question, so if I look at the cash remittance target 3.6 to 3.8 billion and clearly H1 1.17, you're fully on track and that's lovely. If I compare that to the dividends, I just looked on Bloomberg, 37 DPS. I know the share count will go down a bit, but I just took the count one, 28.5. So that's just over 1 billion, 1.054. And then you've got, of course, the buyback, and I'm not quite sure how to treat it. And it's more a puzzle. It's not a criticism. But you're paying out all of your cash. I don't know. How do you run the business? In other words, that links to my third question, which is where are the investments for growth? So it's a puzzle. It's not a criticism. It's just so I can understand better and relate better to investors. And then the middle question, development fees. So you're wonderful, I am. helped me out a little bit, you know, down from 50 million last year to 23, I think, this year, in half a year. Does it mean we should expect them to come down now, or should we still think them flat on the year? What does the profile look like? Thank you. Sorry for the long questions.

Thank you, Michael. I may start with the first one or two questions that... You're right, and Marco will take the last. I think, you know, on how we run the business and how we make sure that we continue to grow the business, I mean, what we clearly say, and I think you have seen ample evidence in that at Investors Day, I mean, there are significant investments into efficiency, into further growth at the business division level. So, I mean, that's where... cash is generated and they use it to further develop the business. And clearly, they also upstream that to the group. I mean, that's what we really say that this is the driver of the growth. And you may go back to what we said also at Investors Day. There is primarily the growth financing done at business division level with the non-remitted cash. And if there is additional, let's say, need, clearly the group steps in. So I think that's important to keep in mind that this is how we think about, let's say, investment into business. And I think Marco gave really also in this speech quite a number of examples where we continue to further invest. I hope that helps to shed some light on the on this question and then I hand over to Marco for the development fees.

So the question on the development fees, the project development fees in T-PAM, you're right and I've said that in the speech, so for the half year 2025, the chair of that of that part of the business is 14%, so the non-recurring part representing to a large amount the project development business. That compares to 20% in the prior year period by half year 2024, so that's a lower percentage there and also the number, I mean, you can calculate it out of the presentation, is around half of it. You are pretty close to the number you just mentioned. Our goal, I mean, for the program, Swiss Life 2027, is to have that share on average over the years, 25%. And we also confirmed today and we're committed that 25% also for the financial year, actually year 2025, is what we guide for. So that is something, a business that is developing, that has some timing and it takes some time to develop those businesses. But that's what we can say, yes. Brilliant. Thank you very much.

The next question comes from the line of David Barmer from Bank of America. Please go ahead.

Yes, good morning. Firstly, on the contribution from assets not backing insurance liabilities, that continues to be really strong. Can you explain, please, what's going on there and how impactful were real estate revaluations in that line in the first half, please? And then secondly, on P&C, so the non-life result in France continues also to be really strong. Can you give us some call on the performance there? Maybe a sense of the combined ratio. And lastly, on net flows into TPAM, apologies if I missed this in the intro, but could you give us some color on flows in the last two months, please? Thank you.

I think I will go for the first question, and Marco can give some, let's say, color on the P&C result, where we stand there, and probably also on the TPAM flows. Now, in terms of the assets not backing liability, as you say, the real estate is quite an important driver back there. You may recall that I'm talking about the entire real estate portfolio in our PAM business, so on the balance sheet. In the half year 2020-2024, we had, I think, a negative fair value change of minus 0.2%. Now we have had a positive 0.6%. So this swing, and clearly it's not exactly this swing. It depends which assets are in those assets not backing liabilities. But this was clearly one important driver of this improvement. You may recall, by the way, that in the second half of 2024, we already have seen an improvement of the fair value changes in aggregate. You know, we had 0.2, as I said, half a year. 2024, we had for the full year, I believe, 0.2. So, I mean, we have seen really quite significant improvement there. So, to cut the long story short, yes, this was a real and important driver for that improvement.

How much was that in absolute terms, the 0.6 in the first half, out of the 151 million reported?

Well, you know, the 0.6, that goes to the entire 40 billionth In millions, that was $260 million. And I think as a rule of thumb, I believe it's about a couple of billions worth of real estate that is not backing liabilities. But we do not provide further details on, let's say, which assets exactly and what the performance of the assets the real estate not backing liabilities was. But this should give you an indication.

On your question on the P&C business, you might remember back in 2023, the non-life area was, let's say, at a rather lower level. And we have put some plans in place to rebound the profitability in those areas of the business with health and protection. We have seen that already in the 2024 result with a strong rebound. TNC was a bit lagging behind, so to say, and now comparing period on period, I mean, this is mainly driven by a lower combined ratio, so we really improved that area of the technical result of the business, leading them to this positive contributions in half-year 2025. And the question on the NNAs, you might remember, obviously I commented on the half-year results and said that around 60% were coming from the index business, and that number or that share was in the first quarter around two-thirds. So the other areas of the business active mandates contributed and obviously a bit more to the overall net inflows. And we still see strong inflows in all areas, also in real assets. I mentioned that during the presentation and confirmed, so to say, what is said during the Q1 call that we see the year end in the upper teams in overall net new assets in TPAM. a very strong and continued successful journey here, so to say.

Thank you. Are you able to share the combined ratio for non-life, please?

Well, it's below 100%. Okay.

Thank you.

The next question comes from the line of Amit Nassid from UBS. Please go ahead.

Thanks for taking my question. So firstly on TPAM, I am trying to work out the revenue margin. So if I take the average assets, get about 25 basis points for the first half. Typically in the second half, you do 10 basis points higher, so let's say 35. Is that kind of the right level to think about? Because I think the revenue margin comes down a little bit as you grow the index business. Is it stabilized at 25 basis points now going forward for the first half? And then just a little bit more around the index fund growth, 60% of the net new assets, it's coming down. Is the growth slowing down a little bit or is it still growing as much as you've grown it since you actually entered the business or have you reached scale? And then third question on leverage, your leverage is still around the midpoint of your target range. Do you expect to kind of replace some hybrid bonds with senior bonds, given the coupon on those is pretty low and also your solvency is at a very strong level? Thanks.

Let me start with the leverage question. As you say, we are essentially in the middle of our target range. I think we have 23 or 24% in our range of 20 to 30%. So I think we're comfortable there. And, you know, in terms of, let's say, that senior versus hybrid, I mean, we decide here on a case-by-case basis, you know, taking into account, you know, relative pricing, solvency considerations and the like, presence in the market. You know, there are many, many considerations we undertake. So I wouldn't here be in a position to say, you know, formulate a policy. We just look at each and every refinancing situation individually. Now, in terms of the TPAM, you know, in the TPAM, we have, let's say, various businesses. I mean, we have clearly the asset management, but we also have, you know, our property manager in there, Livid, which has... obviously not an AUM-based charging. There is more rental income that is the basis for the charging. We have been growing also this property management in Switzerland quite significantly in Q1. And then we obviously have the entire, let's say, Project development, the non-recurring part, so there are many moving parts. So we do not think about, you know, these basis points. We rather look at the segment result contributions in millions and the dynamic there, because that's really what is driving the numbers you derive from simply dividing top and bottom lines. Now, what you said clearly is that with the index business, which we think about having as an additional, let's say, on top of business that we have, we have something that is thinner in margin. But as mentioned in previous calls, we are here – in a competitive offer at market level, so we are not undercutting the market there. We have an attractive offer, and we are clearly having the ambition to further grow that business. I mean, we have something to bring to the table, and that's why we really want to further grow that business, because we earn money on it.

One more follow-up on the index business. Are the assets within that business all managed by TPAM, or do you have some third-party managers as well within that?

No, that's TPAM. That's in-house. Thank you.

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

Hi. Thank you very much. I've got two questions. Firstly, around tax. Can you, I mean, you talked about the corporate tax impact in France, but there were also some other factors that you mentioned. Can you tell us a little bit about your expectations for the full year in terms of, you know, one-off tax effects that are still to come? And then whether you think in 2026, this will be more normalized. And then secondly, in the CSM, can you give a little bit more detail on the positive experience adjustments that you saw and whether you believe, you know, there's some sort of recurring element here that you can see in CSM growth. Thank you very much.

I think Marco will give some more color on the tax. I will say a couple of words on the CSM.

So on the tax, I mean, the first thing is the tax hike in France by the French government. And we had a second effect I mentioned during the speech. This is Germany-specific tax. handling of taxes in the area of real estate funds. And then there is other effects. And I want to mention there is this optimization, structural optimization we have done, which is, by the way, to save then expenses in the future of having a tax effect now in the current period. So obviously the French effect from the government, that's something we will see also in the second half. In our understanding, it's extraordinary for 2025. You never know. The others are related to the first half of 2025. So we'll have an effect on the overall year, but it's not expected to double. And in terms of an outlook, what I can say is we expect the tax rate to be lower than the current one. And I mean, it's difficult to say about 2026. It might be more normalized, but let's talk about that when we are there.

And maybe on the CSM, a couple of points to consider. First of all, to elaborate a bit why we consider this experience variance as part of the operating growth of the CSM. That's because we want to create an incentive to also work on the back book. So back book management is something That is clearly part of these $0.2 billion that we have shown. And that, you know, back book management entails various things. That is in the area of profit sharing optimization. There may be some elements of lapse prevention and the like. But this half year, it was primarily on the surplus sharing optimization.

So just... On that point, would you suggest to us that this is an area that you will continue to look at every year in terms of optimization, which may have a CSM impact as policy?

I mean, back book management is clearly an important topic that will continue throughout the program. We mentioned that also at Investors Day, that this shall be an area where we generate CSM growth. What the number is that comes out, I mean, we keep working on it. We really look at that period by period. But the efforts behind it are ongoing.

And I have, sorry, I had one more question. I'm really sorry. You mentioned social security legislation in France being a negative headwind in 2H. Can you talk about that? And is that something that could affect the combined ratio in future years as well?

I mean, the background is the same one that also led to the increase of the corporate tax rate. The French state needs money. In the case of the Social Security, however, nothing has been voted at this point in time. When there will be something coming out, it will clearly affect the entire market. And at this point in time, we don't even know what the shape or form is of that charge. We could imagine or we could even expect that it will take the form of a premium charge, meaning that if this premium charge comes, it will also hit the profit from operations. And with all the caveats I've just mentioned, not knowing when and if it comes, But still, with all those caveats, we could imagine this could affect the half year or the second half year with something around 20 to 40 millions. But again, we don't know at this point in time.

Thank you so much. Thank you.

You're welcome.

The next question comes from the line of Thomas Bateman from Mediobanca. Please go ahead.

Hi, morning all. Thanks for taking my question. And just looking again at slide 22 and kind of looking at the growth in local currency there, which is about 2% of the fee and commission income, I guess this seems to be lagging. Well, I think your guidance is kind of mid to high single digits here. Should we expect that to kind of pick up again or maybe just a little bit more colour on why we seem to be lagging the guidance there? The second question is, could you just remind us of the whole co-liquidity and the moving part So I think it was quite high, 1.4 billion at Q1 and where we are now. And then finally, could you just, I think you talked about the investment in Germany. Could you just talk about the shape of this spend, given that you said it would continue for 2027, and maybe how much it is so we could get a gauge of kind of the underlying profitability for the German fee result? Thank you.

I think Marco can make the whole co-cash and determine investment topic, and I will then do at the end the outlook of the field commission income.

Starting with the third question on investment in Germany. So this is a multi-year investment in digitalization, as we have done already recently. in the area of the more customer-facing system landscape. This is now optimizing the back office, really helping to automate things and support with that scalability. I think that's something important. We have talked about that on the investor day 2024, what kind of shape that we'll have. So the result at the end in the German area is then, so to say, more of a back-end load. And I think it's important that even or despite those investments we take, and these are large investments, but you will understand that I don't say any number to that, but we still wrote a few results in our German segment, so I think that's something in parallel we do, combined or in parallel, there's some growth that is expected to happen that the curve I've just mentioned. In terms of the liquidity or the cash at holding, let me take you through that starting with Q1. Q1, we have reported 1.4 billion that included some, let's say, some cash we refinanced early on, used to repay our debt instruments. And some of that repayment we have done in June. There's a bit left for future repayments, but something we gave into a company, to an operating company, so put the money at work there and getting it back when you use it for the repayment. And minus that, and then the consideration of the upstream dividends and the dividends we paid out and the share buyback, we are at 1 billion cash at holding by half year. And when you think about the current level, it just needs to keep the running share buyback in mind. I hope that helps.

And in terms of the question on the fee and commission income, you refer to this page 22. And let me maybe start with the notion that we also said in Marco's speech, we had in the 2024 fee and commission income this, what I would call, special effect from a specific German opportunity that added maybe 25 millions of fee and commission income. So adjusting for that, we have achieved in the last year more four percentage point growth. And as you see, we have clearly the ambition to further grow across all divisions. I mean, that's what we also have shown at the Investors Day, and clearly we want to grow the business to achieve the 1 billion fee result that we also mentioned today that we are on track to reach. And as I said, this growth is really across all the business divisions. Clearly, asset managers will deliver, let's say, the biggest share of that, larger than 1 billion. They have a goal of more than 500. millions. If we look at the business activity there, you have seen nice net new assets, really strong growth there. We expect to go to 25% share of non-recurring commission income. The French division, we had for well-flagged reasons of reduction of structured products, we had a flat fee and commission income, and despite that, we could increase the fee result in Germany for all the reasons that Marco just elaborated on the investments. We also had an increase of the fee result. Clearly, we also mentioned it will be the fee result in Germany back and loaded with the program, but we see ourselves here on track, and similar things apply to international and Switzerland. Hope this gives some color on, let's say, the business environment and the ambitions we have in that environment.

Yeah, just on Germany, what's the number of the investment? Because I completely agree the full result growth was good there despite this investment. So I'm just trying to understand how much that is. And, you know, I guess I'm looking to see where the upside is in Germany, given, you know, growth in fee income is so strong.

Look, I mean, we gave the numbers for the 2027 fee result target. I think there we say for the 150, and that's where we are on the way to.

The next question comes from the line of Ian Pierce from BNP Paribas. Please go ahead.

Hi. Morning, everyone. Thanks for taking my questions. The first one is just on the new business, CSM. Could you just provide a bit of detail around the decline in the new business CSM that you've seen and particularly talk about the CSM margin and if this current level of CSM margin by division is sort of appropriate if interest rates stay where they are? And then the second one was just on the non-recurring revenues in the asset management division. If you could just provide a bit of detail on the pipeline that you're seeing, give us some confidence as to why you think you'll reach that 25% level for the full year, and if that's expected to be driven by a transaction, so actual disposals of projects, or if it's revaluation-led. Thank you.

I think Marco will go with the CSM, and I talked in about the non-recurring income.

On the new business, CSM, which we have discussed in the CSM development, in the positive CSM development, so the 0.3 billion, you're right, that's a decrease compared to the prior year period. And let's say the main reason for the slightly lower number is because of the Swiss business where we had a different business mix, so more of the group life food insurance business and less of individual life business, which is the main reason for the decline of the new business CSM. As we said, and it's part of our program, that we want to grow the CSM also from an operating point of view. New business is an important part of that. We are continuously working on the margin. I think that's something that is important. To us, we are pleased with the margin we have reported, but obviously we continue to work on that, and that's something that is, as I said, important to us. And yes, mix and interest rates have an impact on it across all our insurance divisions and, let's say, currencies and interest rate environments, something we will see in the next update. We are working on it, and As I said, increasing the CSM is very important to us.

And the question on the non-recurring income for the full year 2025, I mean, if we confirm today the around 25% non-recurring share of TPM, that's clearly driven by a view on our pipeline, and our pipeline means what we see coming in terms of transaction fees, you know, construction fees and the like, but also and more importantly in terms of the project development. And there, we mentioned it on previous occasions, we mentioned it today, we really look at each and every single project individually, whether it makes sense to exit the project or not. This year, I think it's more likely than not we will see first and foremost revaluations, but still we may even exit some projects. Too early to tell, I would say, but more likely than not, it will be revaluations.

Thank you.

You're welcome.

For any further questions, please press star and 1 on your telephone. The next question comes from Michael Baladore from KPW. Please go ahead.

Yes, thank you for taking my question. It's just, sorry if I missed this, but it's just on the development of the SSD. If I remember correctly, you had a negative impact from some debt recall, something like four percentage points, I remember. So, I mean, the strong development, can you maybe tell me more about, you know, the developments there, key developments?

Yeah, you're right. The repayment of the hybrid in June this year reduced or had a negative impact on the asset ratio by 4 percentage points. It was overcompensated by positive development in the area of the interest rate, so higher rates in Swiss francs and euro. The differential between the Swiss franc and the US dollar has narrowed down in that time and also equities and real estate contributed positively as I said and overcompensating the M4 percentage point leading to a ratio of around 205%. Okay, thank you. You're welcome.

We now have a question from René Locher from Oddo. Please go ahead.

Yes, good morning Oddo. I want slide 33 to see the investment income. So two questions here. So the first one is on, I have seen an increase in the rental income from 540 to 594. So yeah, I'm just wondering what was the reason for the storm of 10%? And then in this context, I don't know if you can comment a little bit on the legal framework we have here in Switzerland. So, for example, what could be the impact of the so-called, you have an idea that the imputed rental value, you also have an initiative in the canton of Zurich, which could result in a rent cap. So, yeah, I'm just wondering if this causes you any headaches. And the second question is on the bond portfolio I have seen. bond income is down from 1.2 billion to 1.1 billion. So I was just wondering, given the low yield on risk-free interest returns, what kind of a reinvestment will you have now in your bond portfolio? Thank you.

I may start with the last question and on, you know, what you call the political framework, and Marco will then take the remaining questions. In terms, you know, of the reinvestment rate that you mentioned, you know, if I look back in the first half year, we had overall a reinvestment rate of something below 4%. For the full year, we expect something between 3.5% and 4%. Again, that's on the full portfolio. And that's what, let's say, the outlook on that is. In terms of, you know, you called it a legal framework. You know, this popular vote on the eigenmietweg, as you said, we are not affected. I wouldn't say not at all, but we are hardly affected by this popular vote. So, This is something that we look, let's say, from the side. You know, there is this, let's say, initiative in Zurich. I mean, clearly there we have, let's say, we look at this and we do not think it makes sense to intervene if the state intervenes in the real estate markets. Examples we have seen in Switzerland do not favorably for such interventions, meaning what we observed in Geneva in the residential area and in Basel, you know, that's up to the popular vote. And maybe the last thing you may have a touch on that as well, you know, the reference rate in Switzerland, which has come down Yesterday, I believe, or the day before yesterday, we do not expect here significant impacts on our rental income based on what we have observed, let's say, recently when such changes have happened.

The rest I hand over to Marco. So your questions on the investment income or the direct investment income first on real estate, so the increase We have seen and reported this is coming from rental income, higher rental income. It's, let's say, different positive positions contributing to that. There are some constructions we have finalized and now rent the building, so there is additional rental income. That's something that is a smaller effect from indexations on those rentals. and also our real estate funds contributing higher income to the direct investment income leading to the, let's say, the increase, the growth you've just mentioned. On the bond portfolio and the returns there, I think it's on one side asset reallocation, so some reinvestments we have done, some shifts also from corporate funds to fixed income funds. They have different yield patterns, also in terms of I think that's something to keep in mind that there is other effects, ethics, for example, just to mention one which had an impact on that number. Okay. Thank you very much. You're welcome.

The next question is a follow-up question from Michael Hotner from Birnberg. Please go ahead.

Thank you very much for this opportunity. I have three. One is hedging costs. How are things moving there? And is this... any kind of concern or upside, I don't know. The second, sorry to go back on the development and other kind of exceptional fees, it's 25%. I just wondered what is the base figure. I'm sorry, I didn't, I wasn't paying enough attention. It's just to get an idea, you know, what do I multiply by to get that. And then the last one, what... I know interest rates are actually positive, so that's great. But at what stage would you start thinking again, like many years ago, of adding again to reserves or not releasing from reserves?

Thank you. Thanks, Michael. In terms of hedging costs, we have shown them. They are this year around $650 million. That's this footnote, $679 million on page 33. That's a bit higher than last year. We expect for the full year this number essentially to double. You know, the expectations on those hedging costs, that's what is implied in the forwards, and those forwards, they indicate that for 2026 we will see somewhat a reduction. We also expect such a reduction, given our view on the rate cuts in the U.S. So that's what I can say there. What's always important to keep in mind, I mean, those hedging costs, they are subject to policyholder, shareholder sharing. So the largest part of these hedging costs, like the entire investment income, is borne by the policyholder. In terms of the development fees, I think the non-recurring fees, this is the part of the total income of the third-party asset management. And total income means commission and other net income. That's what you see on the business review slide asset managers on page 11. That's the $325 million. That's the total. income, and you see their commission and other net income. So that's really the basis of that number. And in terms of the releases, I mean, we said at this rate of reinvestment, you know, 3.5% to 4% what I said before. Here we are clearly far away from thinking about... changing the sign here of the reserve releases.

Brilliant. Thank you so much.

The next question is a follow-up question from Thomas Bateman from Mediobanca. Please go ahead.

Oh, hi. Just a few thoughts. What was the contribution of the investment rate-related reserve releases to the cash remittances this year? And then the second question is just on France and I guess you talked about structured products slowing but unit linked increases going up could you just give us a guide in terms of what the structured product what the number of the fee income for structured products was down year on year I guess we had a number of years of amazing performance there I just want to understand a little bit better what kind of the pace of decline is there for structured products in France

But let me say a couple of words on the structured product, and Marco can then talk about the cash remittance contribution. You know, as you said, we had really very, very strong, let's say, productions of structured products. I think that started in 22, you know, when rates went up in the Europe. And it really continued throughout 24. It's still, to be frank, at an attractive level. But if we compare now H1 with H1-24, I would say the volumes of structured products have come down maybe around 15%. And that's the reason, by the way, why we had, despite the growing, let's say, unit-linked business, a flat fee and commission income. We also talked about, you know, the fact that there is a different kind of revenue and also profit pattern from structured product, which tends to be in the case of structured products, really more front-end loaded than in the case where we grow, let's say, the normal unit-linked business.

In regards to the reserve releases, so the 0.15 billion I've mentioned during the presentation, as in prior periods, around two-thirds of it relates to the group life business, and that's important to keep in mind. So that's for the policyholder. And the reminder, the other one-third, that's from individual life in Switzerland. There's also some profit sharing, and that's that's something you need to keep in mind. And so the, let's say, the contribution or the structure of those contributions to the releases.

Okay, so maybe just 50 million or something related to the shareholder from the interest rates. Is that the right ballpark?

Well, you know, Marco just said 150 million. And that 50 is pre-policyholder and pre-tax.

150 is pre-policyholder and pre-tax. Okay, so we need to take that. Yeah, so a bit less than 50 million for the shareholder.

We have policyholder... Okay, let me say it again. There's 150. Those are the numbers we have been mentioning, I think, since 23, and we're confirming what we said back then. 150 is... for half a year. And those 150 is around two-thirds group life. Here, 100% of those two-thirds go to the policyholder. Then we have one-third, or 50 million, remaining. And those 50 million are pre-tax and pre-policyholder sharing. And since we pay policyholder sharing and since we pay tax, it will be obviously less than 50 million.

Okay, understood. Thank you.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Matthias Ehrlich from Any Closing Comments.

Ladies and gentlemen, thank you for your questions and for joining us today. Before we close the call, let me recap today's key messages. The first six months of 2025 we continued on our growth path. And I'm pleased with the business activity and the progress we have achieved in both insurance and fee business. The half-year 2025 figures also mark a successful start to the Swiss Life 2027 program. We are highly committed to execute it with discipline and to deliver on our promises. Thank you again, and we wish you a nice day. Goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Coruscall and thank you for participating in the conference. You may now disconnect your lines. Goodbye.