Swiss Life Holding AG

Ladies and gentlemen, welcome to the Swiss Life Q3 2025 Trading Update conference call and live webcast. I am Sandra, the course call operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Webcast viewers may submit their questions or comments in writing by the relative field. Kindly note that the webcast question will be answered after the call. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Matthias Ehrlich, Group CEO of Swiss Life. Please go ahead, sir.

Good morning, ladies and gentlemen. Thank you for dialing in and for your interest in Swiss Life. Today, we are reporting on selected top-line figures for the first nine months of 2025. I will provide an overview of today's key messages and our group CFO, Marco Terussi, will give you more details. The first nine months of 2025, Swiss Life increased its fee and commission income by 3% in local currency to 1.9 billion. Gross written premiums, fees and deposits received increased by 3% in local currency to 16.3 billion. Direct investment income grew to 3.1 billion, which corresponds to a non-annualized direct investment yield of 2.2%. Swiss Life Asset Managers reported very strong net new asset inflows of 15 billion in the third-party asset management compared to 3.4 billion in the prior year period. The SST ratio was estimated to be around 205% at the end of September 2025. I am pleased with the business development in the nine months of 2025, which reflects the continuation of our operational performance in the first half of the year. We grew both the insurance and the fee businesses, with asset managers posting a strong growth of recurring fee income in TPM, next to strong net new assets. With that, I hand over to Marco.

Thank you, Matthias. Good morning, ladies and gentlemen. I'm pleased to walk you through our nine-month 2025 trading update. As usual, all figures are unaudited. Figures for the group are reported in Swiss francs and for each business division in local currency. Growth rates are also stated in local currency. Let me start with our segment Switzerland. Premiums increased by 2% to 8.2 billion. the life insurance market was flat. Premiums in group life grew by 2% to 6.8 billion, while the market decreased by 2%. Periodic premiums declined by 2%, single premiums increased by 6%, driven by higher premiums from existing clients and new business. Assets on the management in our semi-autonomous foundations were at 8.1 billion, compared to 7.8 billion at year-end 2024. Premiums in individualized grew by 2%. The overall market was up by 4%. Periodic premiums increased by 1%. Single premiums grew by 4%. PM commission income was up by 5% to 265 million, mainly due to higher income from unit-linked and mortgage businesses, as well as investment solutions for private clients. Turning to our French, German and international segments that all report in Euro. Let me begin with France. Premiums grew by 4% to 5.9 billion. In our live business, premiums increased by 6%, the overall market rose by 9%. Unitlink chair in our live premiums remained at the high level of 66% compared to the market average of 38%. We generated life net inflows of 1.9 billion. Total market net inflows were at 39.4 billion. Health and protection premiums grew by 1%, driven by price increases. The market increased by 5%. P&C premiums declined by 1%. Fee and commission income rose by 5% to 439 million. Unit-linked fee income grew based on higher average unit-linked reserves. Income contribution from structured products remained at the pleasing, somehow lower level compared to the very strong prior years. I continue with Germany. Premiums grew by 2% to 1.1 billion, driven by modern, modern traditional and disability products. The market increased by 9%, driven by higher single premiums. Fee and commission income rose by 5% to $634 million, driven by both a higher productivity at owned IFAs with a marginally lower 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. Turning now to international. Premiums increased by 8% to 1.6 billion due to higher premiums with private clients. Premiums from corporate clients slightly decreased. P&C income declined by 1% to 282 million. Higher income from owned IFAs was more than offset by lower income with corporate clients, in particular from elite life. Let's move on to asset managers, which 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 rose by 3% to 719 million. In our PAM business, commission income increased by 1% to 264 million. Higher recurring income was partly offset by lower non-recurring income. In our TPAM business, commission income grew by 4% to $455 million. This was driven by a strong increase of 6% in recurring income due to a higher average asset base. Non-recurring commission income was below the prior year period. To make figures comparable to half- and full-year disclosures, the share of total non-recurring income for TPM, meaning commission income and other net income from real estate project development, was 11% of total TPM income. This compares to a very high share of 31% in the prior year period. As mentioned at the 2024 Investor Day, we expect to achieve a share of non-recurring TPM income of, on average, around 25%, over the period from 2025 to 2027. For the full year 2025, we confirm to expect this share to be also around 25%, and this expectation is based on progress we have achieved in our project development pipeline. Net new assets in our TPM business increased to 15 billion compared to 3.4 billion in the first nine months of 2024. We saw continuous strong inflows with a share of about 60% driven by our equity and bond-related index business, similar to what we have seen at half-year. Inflows in real assets grow to 1.3 billion. Reminder came from active mandates in bonds, money markets and multi-assets. Assets under management in our deep-end business are at 142 billion, compared to 125 billion at year end of 2024, driven by the positive net inflows and performance. Turning to our investment result. Direct investment income increased by 49 million to 3.13 billion, compared to 3.08 billion in the prior year period, driven by higher income from infrastructure, real estate, and equity investments, which was partly offset by lower income from bonds, including negative ethics translation effects. The non-annualized direct investment yield was stable at 2.2%. And as you know, real estate continues to be an attractive and important asset class for backing our long-dated liabilities. We hold real estate because of the regular rental income it provides and not because of appreciations. real estate fair value changes were positive at 1.0%. 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. Vacancy rates remained unchanged at 3.1% compared to year end 2024. Moving to solvency, capital, and cash. At the end of the third quarter of 2025, the SST ratio was estimated to be around 205% and therefore at June 2025 level. In Q3, we had positive contributions from equity and real estate market developments and the issuance of 250 million of Swiss francs hybrid debt. This was largely offset by lower interest rates in Switzerland and the widening of interest rate differentials at longer maturities. With a ratio of around 205%, we are well above our ambition range of 140 to 190%. Liquidity at holding at the end of September 2025 amounted to around 0.85 billion. Our 750 million share buyback is well on track. We repurchased shares worth 466 million as of the 7th of November 2025. The program will run until May 2026. Let me sum up. We are pleased with the performance of Swiss Life in the first nine months of 2025. We expanded both our insurance and fee businesses. Moreover, net new assets in our third-party asset management business were very strong. And finally, our SST ratio also remained at the strong level. With regard to our Swiss Life 2027 program, We continue to see ourselves to be on track to achieve all of our group financial targets. With this, I hand 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 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 two. Questioners 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 the relative field. Kindly note that webcast questions will be answered after the call. Anyone with a question may press star and one at this time. Our first question comes from David Barmer from Bank of America. Please go ahead.

Good morning. Thanks for taking my questions. Firstly, on CPAM, please, the fee margin came down a little bit in the third quarter. Can you talk about that, please, and also about your confidence in achieving 25% of non-recurring income for the year? It would be very helpful if you could share some color on the mix between transactions, project development, revaluations, et cetera, within that 25%. And then secondly, on solvency, it would seem the interest rate differential had a negative impact in Q3, and I think it widened again in Q4 so far. Are you able to give us a rough sensitivity for the impact of that on your SST ratio so that we can better prepare for it, please? And then lastly, on France, the fees were really strong in the quarter. Could you please come back on the comments you made in the... the opening remarks, Marco, on the sales trend there and how both the structured products and unit link sales are faring. Thank you.

Okay, I think Marco will give the answer on the SST and on France, and I will then, in the end, say a couple of words on TPM.

Okay, good morning, David. Let's start with the question on the French business. And as you know, also from earlier reporting, we had very strong inflows in structured products, in particular in the prior year. And we also flag that to be expected on a still high and pleasing but rather slower growing level in the current year. And now in this year's year-to-date development and also in the first nine months, Unitlink contributed, was the main contributor to the increase, to the very positive increase in the fee income in France because of new business and also performance on the underlying reserves and structured products. As I said, pleasing level, but rather stable, not growing as much as we have expected. In terms of the SST, I think here it's important year-to-date, the interest rate differential, and I'm now particularly speaking about the differential between the Swiss franc and the U.S. dollar, has positively tightened and positively impacted our ratio, but from half-year to Q3, this interest differential widened a bit. One of the more negative contributors to our ratio, we do not disclose a very detailed or a detailed sensitivity on that. If you get the sensitivity, we disclose and send the remainder. You might have an idea of those movements also on the ratio. But overall, as I said, market developments in real estate and equities are positive, also the hybrid debt. helped a bit. And on the other side, the Swiss interest rate, the level of the Swiss interest rate, and the differential I just mentioned, were on the more negative side, leading them to a stable ratio of around 205%.

And to come back on the question on TPAM, maybe first on the flows on the NNAs. I mean, we confirm what we said in the previous disclosures that for the full year 2025, we expect NNAs in the upper teens. So this is quite an uptick from the mid-teens that we now have reported. And as usual, we say that in view of the pipeline of the business that we have. And in terms of, let's say, the composition, I think that's what you were referring to in the numbers that we've reported in the 15 billion year to date, around 60% that relates to index business. This is essentially in equities and bonds. And yes, this has a lower margin than the rest, but we are very happy that we have entered that business. We're pricing that business at market levels. And for us, it's kind of on top business that allows us also to see clients we haven't had an offer for previously. You can also see that, by the way, if you compare that with our prior year figures. Now, in terms of the non-recurring income for full year 2025, I think Marco was very clear. We expect around 25% also for the current year. We also, again, confirm previously mentioned expectation that we will be there We do that, again, looking at the pipeline, the progress we have achieved. And in terms of, you know, the rough shift, I mean, we will clearly see quite an increase of the other net income that relates to project development. This, as we also said, at half-year will most likely be non-cash, so those will be revaluation gains. And what is also important, now we always talk quite a lot about those non-recurring things, and those are important elements, but as we've also mentioned, I mean, the recurring income in TPM was also increasing by at least six percentage points. I hope this has clarified a bit of your questions. It has, yes. Thank you. Thank you, David.

The next question comes from Michael Hutner from Birnberg. Please go ahead.

Fantastic.

Thank you.

I had three questions. One is just a clarification. You mentioned on NNA flows, high teens versus mid-teens. I don't know what that means. Is it percentage or is it billions or something? I didn't understand that. I'm sorry. And then on the cash, can you give us a feel for where we might land at the year end? Because you've got a little bit still of... I mean, the buyback is continuing, so it's clearly... But just to get a feel for... Because I seem to remember your target range was to be above 700 million, but this is really old memory, so any help on this would be fantastic. And then... The other question is on the real estate revaluation. So clearly you're optimistic for the full year. I was actually hoping, I was a bit greedy, I'm afraid, 1.1% at nine months, and one is my figure. But I just wondered whether you can give us a feel for where you think we might land at the full year. Thank you.

Thank you, Michael. I clarify on the NNA, the cash goes to Mark, and I can't say a word on the real estate at the end. The NNAs, I was referring to billions. So we had the 15 billions at Q3, and for the full year, we expect a high T number in billions.

On the cash, I mean, as of today, it's 0.85%. billion at the holding, our comfort range, and we talked about that at the investors' days, between 0.5 and 0.7. We have now, for the remainder of the year, I mean, ongoing share buyback, a number between 40 and 45 million each month. There is some fees upstream coming in, and with that, I think you have a an idea where we might land at the end of the year, which is obviously above our comfort range.

Thank you. And in terms of the fair value change of real estate, I mean, as you said, we have this one percentage point that we reported year to date with the clear drivers of positive contribution from Switzerland, you may recall, we had 0.6%, I think, in the half year overall. And we also report stable valuations for the non-Swiss real estate. And what we have seen until now, I think it's fair to say, we expect that to continue for the full year.

So if I do the math, 0.61, would it be stretching it a little bit to hope for one and a half?

I wouldn't go into the details of the numbers, but the trend is what we expect to continue.

Philip, thank you.

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

Hi, everybody. Thank you very much. I really only have one question, which is, could you just talk about the low interest rate environment that we're seeing in Switzerland in particular and how this may impact reserving and cash flow going forward, or if it has any impact at all. Thank you very much.

Yeah, that's for Mark. We can confirm what we have said at the investor days and also at the reporting in between. I mean, for us, important is the yield on our portfolio and also the reinvestment rate. We see both well above the levels we would consider to be comfortable for that. So, we confirm that levels and also the numbers of release we have mentioned, that's 0.3 billion, two-thirds of it referring to the group life business where we have the policyholder share, just to keep that in mind, and to remind that point one, even in the individual life, there is also a smaller policyholder share, and it's pre-tax, and that's something we also see to be continued.

So, in essence, no news, so to speak. Thank you. Thank you.

As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Thomas Bateman from Mediobanca. Please go ahead.

Hi, good morning. Could you just comment on, thank you for the guidance on the 25% non-recurring. How much of that was cash this year? I think you might have given the number, but I missed it. And if it is a little bit low on the cash side this year, what does that mean for cash remittance next year from asset managers? or maybe even the year after. And the second question, it's just really a follow-up on, I guess, the low interest rate reserve releases. The direct investment income yield is flattening, I would say. I guess we've had two periods of basically it's flat at 1.5% and 2.2% year-on-year. How would you expect this to develop going forward, I guess, especially given that the mortgage reference rate was cut at the end of last quarter? Thank you.

Thank you. I will start with the direct investment income, and Marco may take the other question on the project development. Now, you know, we have seen, and we rather think about the direct yield in terms of millions, and as Marco said, we have seen it increase year over year by 50 million, so I think that's something that we are... really enjoying to see that the direct yield has, in millions, the investment income has come up. That's really positive. Going forward, with the prospect of this reference rate that now has been lowered twice in Switzerland, we expect a marginal impact from that. Because, you know, there are a couple of things that enter the equation there. But for the full year 26, we expect from this lowering of the reference rate, maybe 10 million net effect of lower rental income. And please keep in mind, I mean, this effect is then subject to policy shareholder sharing as well. So we're not overly concerned about, or we're not concerned at all with this effect. lowering of the rates, of the reference rates.

On a 25% non-recurring and the project development, I mean, basically, we see over time and these projects develop and they take many, many years. There are value changes on the way and once We exit, we sell, and there is the cash flowing in. We, let's say, estimate, a rough estimate, is three-quarters being non-cash this year. This year, in terms of cash, I think that's important in the investor day and also in our plan for SwissLeft 2027. And the targets for asset managers, we took that into consideration, and what we've set as a target. And what we said there, I mean, that already incorporated that. So we are still well on the way to achieve those goals. So there's no direct link in between.

Thank you. I think you said it was three quarters non-cash last year as well, and then three quarters non-cash this year. To me, that feels like you're trending a little bit below kind of the normal run rate of it. I guess I'm looking at the conversion of cash remittances for asset managers. When do you expect that to kind of inflect? Because as you say, over time, they should trend to the same number, right? So have you got any kind of key, maybe key projects in mind or timelines in mind when those cash remittances will step up again?

Yeah, I mean, it's fair that in prior years, ever higher shares of cash, maybe it's a bit lower compared to those years. We always have the overall portfolio in mind. There is quite a number of projects, larger projects, smaller projects. And with that in mind, we see over time, there's quite, let's say, an averaging of that, but there's always higher numbers, lower numbers, because it depends on the individual project. And when we exit, and there's even situations when we believe it's not the right moment in time to exit, so we take that and, let's say, take the rental income before we exit, and at the price, we believe it's the best offer. There is ups and downs or plus and minuses. I think that's better for averaging over time, depending on the individual project. That's why the pipeline and the portfolio behind it, that gives us visibility on that.

The next question comes from Michael Hutner from Birnberg. Please go ahead.

Thank you. I was curious on Germany, the advisor numbers are a little bit lower. Can you tell us a little bit more what's happening there? I think I seem to remember there are two kind of sets of advisors. There's a kind of big pool and then there's those which are actually converted. I think it allows you to see a little bit forward. what may be happening. And then the other question is, you're being so helpful, so I'm kind of pushing my luck a little bit here. On the fee, so it was nice. For me, it was a beat nine months, even though the project development, well, they exclude it anyway at nine months. But it feels like the unit-linked portion or the kind of asset management portion of it is doing a little bit better than I had hoped. How do you see that developing over the rest of the year? Can we still be hoping for a fee number of, I think it was 5% or something at the nine months? Thank you.

I think Marco will take first the question on Germany and then say a couple of words on the fee income afterwards.

On the advisors, I've said it while presenting, we have a marginally lower number of financial advisors, so that's the certified part of the overall pool. There's always people coming in, people we recruit, and some leaving the company. Maybe that's a bit the price of our success, that good people are attracted also from other companies. We invest a lot in our services and in recruitment and training and so on. I mean, there is, as I said, some periods where we have more inflows and some where people leaving us a bit more. Now, the third quarter, there was a bit more people leaving us. I think that's a fair point, but I would like to point also on the productivity gain. I mean, the 5% increase in the fee and commission income in Germany, even adjusted then for the situation I mentioned, this opportunity we had last year, it's a 10 percentage point. growth, which is quite positive and pleasing in terms of productivity. And on the overall pool, you mentioned that number is stable. We are also recruiting and this is people we train and get to the qualification and over time they become then part of the financial advisor pool. So we are working with the management team, is working on it. We are positive on the numbers, on the financial numbers, and also in view of the outlook. Just continuing.

And in terms of the fee income, as you said, we have seen good momentum in the unit-linked business, specifically in France. We continue to attract funds there. We have net inflows. So without giving detailed numbers, you know us, Michael. I mean, we clearly see, as we speak, good business dynamics. And also what I said in the beginning, that we have seen the recurring BPAM income grow by 6%. I mean, that's a good basis to go into the last quarter. So we have seen these high levels of AUMs, both in the unit-linked business and the asset management. So that gives us, let's say, good visibility on the fee income from those businesses in the last quarter.

And may I just ask, would you have, I'm really pushing it here, you mentioned visibility, a kind of update on the NNA?

No, but we confirmed that we will get in the TPAM into the upper teens in billions. Yeah, brilliant. Thank you so much. Thank you. You're welcome, Michael.

The next question comes from Ahmed Nazib from UBS. Please go ahead.

Hi, morning. So just one question for me. Can you give a sense of the exposure to CLO CDOs and secured lending within Paramount T-Pen? Thank you.

We're just not sure whether we have heard you. It was the CLOs.

And what was the other?

We have, so maybe I'm now guessing what your question was. You had some noise in the background. What we have is no CLOs. So we have no collateralized loan obligations. What we have is senior secured loans, but this is, in our understanding, something different. Not sure whether that was your question.

Yeah, and working capital farmers was the other part of the question.

Can you repeat that? I mean, either you come back with your question after the call, because you have some noise, or we cannot hear you.

Okay, no worries. Thanks.

We have a follow-up question from Thomas Bateman from Mediobanca. Please go ahead.

Hi, thanks for taking my question. Just, I remember in the past you've had, there's been kind of regulatory changes, tax changes, big campaigns that you've run that have been quite successful and relished your restrictions. I was just wondering if there are any that you want to highlight. I don't know which countries that might apply to, but any that are on your horizon over the next 12 months.

you know regulatory changes we talked about things in France at half year there's nothing new there compared to what we said in the half year I believe and other than that I would not be aware of anything relevant to mention here no I think there's always some changes regulatory changes but more from an operational point of view you know requirements and

the area of risk management and technology and so on, but not related to business.

Okay, thank you. We have another follow-up question from Michael Hutler from Birnberg.

Please, go ahead. Two questions, one on credit risk and the other one on growth in total assets to the balance sheet, I guess. On the credit risk, can you say... whether you've had exposure to the things which have happened in the U.S., and if so, maybe kind of give a feeling for it. And then the second, in total assets, I remember the half year they were down, and I was really disappointed. I'd like everything to go up. Can you give a feel for what's happening? I think the total assets, what I mean is the investment assets on the balance sheet. And the reason I like that number is, I like your real estate, and of course, if the total number shrinks, then the real estate also shrinks, and then I think, oh, that's a bit of a challenge. I just wonder if you could give a feel for what's happening there. Thank you.

Maybe on Credit Suisse, I'm not sure what you're referring to.

You know the two things which happened, First Brands and Tricolor? Tricolor? And the question really is, I've asked every company so far which has reported, so I'm not singling you out in any particular way, but it's certainly something on the investor's mind.

No, we don't have any exposure to that. And on the total assets, on the balance sheet, you probably refer to the half of your numbers where we show the insurance portfolio for own risk. That has come down significantly. that is relating, as I would say, to interest rate movements. You know, year to date, until half a year, interest rates went up, and that's what I would say was the driver for that reduction, though.

Brilliant. And there's no... Okay, so it wasn't due to net outflows at the half year or anything?

No, no net outflows. There's an effect. I think we also talked about that in half year, there is a... how to account for cash in view of repos and collaterals that also contribute to those movements you're just mentioning. But that's more, let's say, an accounting topic. It has nothing to do with real flows, so to say. Excellent. Okay, thank you.

The last question for today's call comes from Farouk Hanif from J.P. Morgan. Please go ahead.

Hi, I just wanted to follow up actually on Naseeb's question, because I think it was quite interesting. So I think what he was asking was, you know, whether you have exposure to working capital finance. I think you kind of answered that, but also unsecured private lending. Can you give a number? You don't have CLOs, but can you give us a number for your exposure to unsecured private lending to corporates? Thank you.

I mean, I'm still not sure if I understood the question correctly, but we don't have any of those exposures on our balance sheet.

And the private credit we do is through senior secured loans. I mean, that's for us very important. I mean, if we go into that market, we do it via secured loans and not this unsecured loan. We're just not an expert in that field. of private unsecured markets. The number we have for the senior secured loans is around 5 billion on the balance sheet. Again, this is secured.

That's very clear. Thank you so much.

You're welcome.

Ladies and gentlemen, this concludes today's Q&A session. I would like to turn the conference back over to Matthias Ehling for any closing remarks.

Ladies and gentlemen, thank you very much for your questions and for joining us today. Before we close the call, let me recap. In the first nine months of 2025, we continued on our growth path and increased the top line in both insurance and fee businesses. We are making good progress and are on track with the implementation of our Swiss Life 2027 program. We are highly committed to execute the program with discipline and to deliver on our promises. So thank you again and I wish you a nice day.

Goodbye.