Swiss Life Holding AG

Ladies and gentlemen, welcome to the Swiss Life presentation of the Half Year Results 2026 conference call and live webcast. I am Moira, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Webcast viewers may submit their questions or comments in writing via the relative field. Kindly note that webcast questions will be answered after the call. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Matthias Aellig, Group CEO of Swiss Life. Please go ahead, sir.

Dear analysts and investors, good morning. Thank you for joining us and welcome to our half-year 2026 conference call. I will give you a brief overview before handing over to our CFO, Marco Gerussi. I'm pleased with the operational performance and with what we have achieved in the first half of the year. We grew the fee income and the fee result across all businesses, meaning asset managers, IFAs and the unit-linked business. We grew the insurance business, its operating result and the contractual service margin. Our strong results show the great commitment of our employees and advisors. I would like to thank all of them for their strong engagement and our customers for their continued trust and loyalty. Let me provide some more color on our performance in the first half of 2026. The fee result amounted to 430 million, 11% above the prior year period. The growth is prop based and includes a gain from the transfer of the international network to a partner earlier this year. Profit from operations increased by 8% in local currency to 967 million Swiss francs. Net profit was also up 8% to 649 million despite a higher tax rate. Return on equity was at 20.2%. Cash admittance to the holding company was 1.2 billion, up 5% year on year. As previously announced, the acquisition of the Thales Group was successfully completed on 1st of July, 2026. This means that Thales will be reflected in the figures starting in the second half of the year. Let me move on to Swiss Life 2027. We are in the middle of our three-year strategic program and are highly committed to execute it with discipline. We are well on track to deliver all our strategic actions and achieve all our financial ambitions. In May 2026, we completed our 750 million share buyback. and we are pleased to announce today a new buyback of 250 million, which runs from October 2026 to March 2027. Looking beyond our 2027 program, we aim to further expand our business profitably, exploit market opportunities and increase operational efficiency, among others by leveraging the advancing digitalization. This also includes a reduction of around 600 positions by the end of 2028, largely through natural attrition. Roughly half of the positions are at Swiss Life in Switzerland and half at Swiss Life asset managers, mainly abroad. This measure is expected to generate annual cost savings of around 150 million in 2029 and beyond. With that, I hand over to Marco, who will provide more details on the half-year financial results and the Swiss Life 2027 progress reporting.

Thank you, Matthias, and good morning, ladies and gentlemen. Let me continue today's presentation by taking a closer look at our 2026 half-year result. We begin with the selected P&L figures shown on slide 6. Insurance revenue was stable at 4.5 billion. Higher CSM release of 617 million and high revenue contributions from Switzerland and Germany were largely offset by FX translation effects. Insurance service expenses were stable at 3.8 billion. Higher expenses in line with business growth were offset by favorable FX effects. The net investment result increased to 290 million. As a reminder, this is an IFRS 17 accounting figure, which includes various items. 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 8% in local currency to 967 million, driven by both a higher fee result and a higher operating result from insurance business. Borrowing costs decreased to 75 million, primarily due to some double-carry expenses in the prior year period. Income tax expense increased to 243 million, mainly due to the step-up in the corporate tax rate for large corporates in France and a higher taxable profit base. Net profit increased to 649 million, up 9% in local currency, despite the higher tax rate. As shown on the slide, profit from operations and net profit include a gain from the transfer of the network business in international to a partner earlier this year, amounting to 29 million and 23 million respectively. Turning now to further selected figures. Gross written premiums, fees and deposits received increased by 3% in local currency to 12.3 billion, supported by strong growth in Switzerland. The fee and commission income increased by 7% in local currency to 1.3 billion. Growth was achieved across all businesses, meaning asset managers, owned IFAs, and owned and third-party products and services. The net investment income of the insurance portfolio for owned risk strongly increased from 1.6 billion to 2.4 billion, driven by equities, infrastructure, and ethics hedging effects. Operating expenses excluding variable expenses slightly increased to 1 billion, including investments in growing fee businesses and expenses related to efficiency measures. I will now move on to our segment reporting, starting with Switzerland. Premiums increased by 7% to 6.8 billion, whereas the life insurance market was flat. Premiums in group life increased by 7%, while the market was down by 2%. Single premiums grew by 16%, driven by higher premiums from existing clients and new business. Periodic premiums decreased by 1%. Assets under management in our semi-autonomous foundations increased to 8.6 billion from 8.4 billion at year-end 2025. Premiums in individual life increased by 7%, the market increased by 5%. Our growth is the result of higher unit-linked single premiums up 20% year on year, while periodic premiums were down 1%. Fee and commission income was up by 11% to 196 million, mainly due to higher income from unit-linked business and from investment solutions for private clients. The segment result increased by 2% to 469 million due to a higher operating result from insurance business. A higher CSM release in the individual life business is partly offset by lower income from assets not acting insurance liabilities. The fee result was flat at 27 million. Higher income was offset by investments in continued growth initiatives, such as investment solutions for private clients, which we mentioned in previous disclosures. Cash remittance was slightly lower at 602 million in line with the statutory profit in 2025. Turning now to France. Please note that all figures quoted are in euros for our French, German and international segments. In France, premiums were flat at 4 billion while the total market was up by 9%. In our live business, premiums grew by 2% driven by the pension and protection business. The overall market grew by 10%. The unit-linked share in our live premiums increased to 73% compared to the market average of 39%, reflecting our focus on unit-linked solutions. Overall, we generated live net inflows of 1.2 billion. Total market net inflows were 36.5 billion. In health and protection, our focus on profitability before growth resulted in a 5% decline in premiums. The market was up by 6%. P&C premiums were flat. Fee and commission income rose significantly by 14% to $336 million due to a higher unit-linked fee income based on higher average unit-linked reserves. The contribution from structured products also increased. The segment result grew by 9% to 228 million. The fee result was up by 10% to 117 million due to the unit-linked business. As mentioned in previous disclosures, the segment result contribution from structured products continues to be largely reflected in our operating result in endurance business, where it emerges over time. The operating result from insurance business was up by 8% to 111 million, supported by the contribution from the health and protection business. Cash remittance decreased by 12% to 160 million due to the step-up in the corporate tax rate in France impacting the 2025 statutory profit. Moving on to Germany. Premiums were up by 3% to 777 million, driven by higher periodic and single premiums. The market was down by 4% due to lower single premiums. Fee and commission income increased by 10% to 465 million, driven by our own IFAs. The number of financial advisors increased to around 6,300, 5% higher compared to the prior year period. Our insurance business also contributed positively. The segment result was up by 4% to 125 million. The fee result increased by 6% to 85 million, driven by owned IFAs, despite an increase of the commission ratio and continued investments in the back office digitalization. Operating result from insurance business was stable. Cash remittance increased to 166 million and includes a special dividend of 60 million, resulting from a legal structure optimization. As previously announced, the closing of the acquisition of the Thales Group was successfully completed on 1st of July 2026 and Thales is therefore not reflected in the 2026 half-year figures. Turning now to the international segment. Premiums decreased by 8% to 1.3 billion. Premiums from corporate clients increased by 3% more than offset by lower premiums from the private client business. The fee and commission income was stable at 190 million. Higher income from owned IFAs, mainly in the UK, was offset by the network business transferred to Generali earlier this year. The segment result rose by 43% to 92 billion. This is largely due to a gain of 32 million in the fee result from the mentioned transfer. Please note that the gain is a non-cash item. Related cash proceeds are expected over the coming years, starting from 2027. The operating result in June's business increased by 11% to 20 million, driven by corporate clients. Cash remittance was up by 16% to 70 million due to the 2025 statutory profit. Let's move on now to our asset managers, which reports in Swiss francs. Asset managers' total income increased by 5% to 519 million, driven by both PAM and TPAM. In PAM, total income grew by 5%, mainly reflecting higher non-recurring income from real estate transactions. In the TPAM business, total income increased by 4% to 339 million. Recurring income across all asset classes grew strongly by 7%. Non-recurring commission income also increased. This is part of the offset by lower other net income from real estate project developments. The total non-recurring income had essentially zero non-cash items compared to a share of three-quarters non-cash components in the prior year. The share of total non-recurring income for TPAM, meaning commission income and net income from real estate project development, was 11% compared to 14% in the prior year period. As mentioned at our full year result disclosure, for each year 2026 and 2027, we expect to achieve a share of around 25%, which is in line with our Swiss Life 2027 targets. The segment result increased by 4% to 152 million. The contribution from PAM increased by 6% to 101 million, driven by the higher income. The TPAM contribution increased by 2% to 51 million. Higher commission income was partly offset by lower income from real estate project development and expenses related to efficiency measures. The TPAM cost-income ratio stands at 72% compared to 82% in the prior year period, driven by a higher commission income. Cash remittance decreased by 3% to 232 million, in line with the lower 2025 statutory profits. New assets in our TPAM business amounted to 7.2 billion in the first half of 2026 compared to 13.2 billion in the prior year period. We saw continued strong inflows with real assets contributing 1.4 billion. The rest of inflows are mainly driven by equity and money markets. Assets under management in our TPAM business increased from 146 billion at year end 2025 to 158 billion driven by positive net inflows and performance. Let's move back to the group. Operating expenses increased by 2% in local currency to 1 billion, reflecting growth, continued investments in business growth and expenses related to efficiency measures. As outlined at our investor day 2024, we aim to keep life absolute costs stable by 2027 at ¾ of a billion. For the half year 2026, life absolute costs amounted to 355 million and were slightly below the prior year level. With that, we are well on track with our 2027 target. Coming to the investment income. Direct investment income was at 2 billion. The reduction was due to lower income from infrastructure and FX rate movements. And real estate income was down primarily due to a lower asset base. The non-annualized direct investment yield was at 1.4% compared to 1.5% in the prior year period. The net investment income strongly increased to 2.4 billion due to net capital gains driven by equities, infrastructure, and FX hedging effects. The net investment yield was up to 1.7% compared to 1.2% in the prior year period. Let us continue with our insurance investment portfolio on slide 15. Assets under management remained stable at 143 billion compared to year-end 2025. Real estate fair value changes were positive at around 0.4%, driven by our Swiss real estate portfolio, Partly offset by lower fair values outside of Switzerland. For the full year, we expect overall positive fair value changes to double compared to the current level. 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 it provides and not because of appreciation. Vacancy rates were lower at 2.8% compared to 3.1% at the end of 2025. Moving on to insurance reserves on slide 16. Insurance reserves increased 1% in local currency to 183 billion compared to the end of 2025. On a statutory basis, in total, we released about 0.15 billion of statutory reserves in the Swiss group and individual life businesses as we did in the previous years. 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 2026, this growth amounted to 0.2 billion. Expected business contribution and new business together amounted to 0.7 billion. We generated another 0.1 billion in experience adjustments, mainly from work on our portfolio. CSM release increased to 0.1 billion. The pre-tax CSM release ratio was at 7.6% and therefore slightly lower than in the prior year period. In total, the CSM after release, representing future shareholder profit contribution, grew from 15.3 billion at year end 2025 to 15.6 billion at half year 2026. Shareholder's equity decreased to 6.3 billion largely due to the dividend payment and the completed share buyback, partly offset by the profit for the first half of the year. Our total outstanding financing instruments amounted to 6.2 billion. The average ratio stood at 25% for the half year 2026 at the midpoint of our reverence level of 20 to 30%. The SST ratio was estimated to be around 215% at the end of June 2026, and with that well above the ambition range of 140 to 190%. Compared with the SST ratio at 213% at the end of 2025, the ratio increased, reflecting the positive performance of equity and real estate markets, partly offset by the widening of the interest rate differential between Swiss franc and the US dollar. That brings me to our Swiss Life 2027 program and the progress reporting. As mentioned by Matthias, we are well on track to achieve all our 2027 financial targets. Let's go through the details and I will start with the fee income on slide 22. Fee and commission income increased by 7% in local currency to 1.3 billion. Own and third-party products and services were up 9% and both our own IFAs as well as asset managers grew by 8%. Profit from operations was up by 8% in local currency to 967 million as a result of growth in both the fee result and the operating result insurance business. The fee result includes the gain from the transfer network business in our international division. The operating results from the insurance business increased by 4% in local currency to 600 million. The main drivers were the higher CSM release as well as higher additional contributions, primarily driven by the French health and protection business. The return on equity was at 20.2% on an annualized basis compared to 17.6% in the prior year period. Turning to capital and cash. Cash remittance to the holding company increased by 5% to 1.2 billion, which includes the mentioned special dividend in Germany. At the end of June 2026, liquidity at holding amounted to around 1.1 billion. Today, liquidity at holding stands at around 0.65 billion, reflecting the 500 million Euro senior bond issued for the daily purchase price payment and business growth. Our share buyback, which we started in December 2024, was completed in May 2026. We repurchased shares worth 750 million. And we are pleased to announce today a new share buyback program of 250 million. We will start repurchasing shares on 1st of October 2026 and expect to complete the share buyback by the end of March 2027. The buyback will be executed by a partner bank through a second trading line over the course of six months. Shares repurchased under this program will be proposed for cancellation to the upcoming AGM. Now to the financing. More than half of the share buyback will be financed from cash at holding. The remaining part is financed from repatriations. Let me summarize. In the first half of 2026, we achieved strong growth in premiums as well as in fee and commission income. Fee result, operating profit from insurance and our net profit all increased significantly. Return on equity is on a high level, cash remittance is on track and our SST ratio is well above our ambition level. Looking at our Swiss Life 2027 program, all our financial targets are well on track. and today we announced a new share buyback. We are convinced that with our determination, our diligence and our discipline, we will achieve all our group financial targets. And with that, I'm handing 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 touchscreen 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 use only handsets and eventually turn off the volume for 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 one at this time. The first question comes from the line of Michael Hotner from Burenburg. Please go ahead.

Fantastic. Thank you very much. And thank you for... I spoke to some investors and I was thinking they're OK. Solid pluses. I was always hoping for more. Three questions. One on tennis, one on the 600 and... The other one on the fee and commission results. On tennis, can you remind us what the contribution will be in terms of revenues, in terms of operating profit? How do we factor in that in the earnings? Because you're also paying more interest on debt. The second question is on the 600 FT or position reduction. Can you give us a little bit of background on this? To me, it feels like you grew impatient, and I'm laughing, but it's not funny. I mean, these are real people with the progress of the... Non-recurring outside of Switzerland. And you kind of said, well, if that's all you can do, you know, a few of you can do it. But I don't know, it feels... And also the more precise question is, have you already booked the restructuring costs? And then finally, on the fee without the 430 million, they're doing lots of maths and it's probably completely wrong. I get to a run rate of 1.2 billion. You're going to say, well, this is nice. So what I've done is I've taken the 11% off, then doubled that, and then added 25%. Now, obviously, I'm very optimistic. But I just wondered whether you can give us a feel for the math compared to your over 1 billion target. Thank you.

Thank you, Michael. I hand over to Marco for the Thales question, and I will take the other pose.

Good morning. On the Thales acquisition overall, more from a top-line view, that's what we said at the last call, we'll add 1,800 advisors to our operating unit. I think that's one. Excellent, thank you.

and maybe adding in that you know that's clearly the positive as we mentioned the Q1 we said that the purchase of Aellig was financed largely by the 500 million bond that we issued and there are obviously some financing costs to be taken against that B-result contribution that Marco just mentioned and the coupon was somewhere around 3.5% or something like that to help you a bit on that. Now on the 600 positions to give you a I think I mentioned it in my speech in the beginning. I mean, you've heard it from me, you've heard it from Marco. We are well on the way with the current program Swiss Life 2027, but we look today already beyond 2027 and we want to continue our success beyond 2027. And that's why we want to continue to pursue Growth opportunities, profitable growth opportunities, we want to increase our efficiency and that's why we have now undertaken this cut. Most of that, and I think that's also important, of that reduction will be achieved by natural attrition. and out of those 600 we have until today already reduced 100 by using this natural attrition by selective refilling of positions and there will be another 100 positions that will be reduced until the end of 2026 and those that are affected by that we will support on an individual basis to help them find new positions. So I think that's the background of it. In terms of restructuring costs, I think Marco mentioned that in the half year we have incurred some efficiency related expenses, I would say. That's a high single digit amount that we have have all incurred so far for the full year. We expect probably a bit more than doubling this amount. And clearly, there will be more to come relating to those efficiency gains in 2027 and 2028. And maybe to already give some indication there, if we look now at 2027 and 2028 in aggregate, The ramp up of the cost savings will essentially be, as I said, in aggregate be offset by expenses that are related to achieving those efficiencies. So expect this amount that I've also mentioned in what the 150 millions to be incurred as cost savings in 2029 and beyond on a recurring basis. and to also expand on that, if we think about those 150, maybe a bit less than half of that will be incurred in Switzerland, subject to the policyholder sharing and a bit more than half will be in the asset management division. Maybe that's kind of a lengthy answer of the background of the 600 and the the financial impact on that and the question on the fee result that you've mentioned not sure whether I fully understood the math you have done but I may offer kind of an alternative approach to think about it you know Marco said that we have had an 11% share in the half year of non-recurring and for the full year 2026 we confirm the guidance of a non-recurring income of around 25%. So that means for the full year asset managers second result will obviously more than double and that's something we have observed in prior years. At least we talked about it, we also contribute in the second half of the year and we also talked about international. This will obviously not double. We have had this one-off that is in there and as you know in the other divisions we have some seasonality so we would not expect full doubling for example in France or Germany and this may help you a bit going through the numbers for 2026. Super.

Thank you very, very much.

You're welcome.

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

Hi there. Thanks for the opportunity. I just want to clarify before I ask my questions. Did you say your cash at holding now post-June was 0.65 or 1.65? I just wanted to check if I heard correctly. And then my question. So can you tell us a little bit more about The timing and phasing of buyback because normally in the past you've given us a longer period with a bigger buyback program and you spread it over a longer period of time. This is like a six month period that you're targeting for a 250 buyback. What's your expectation that you will come at full year with a new proposal and then at half year? Is that going to be the new mode? We're talking about the buyback. My second question is the really, really large jump in French non-life profit. I mean, I think it's a record profit in 1H26 compared to its history. So I just wanted to understand what's going on there and whether there are any one-offs or whether we're just seeing really good profit measures that you've put into place, which has obviously hit your premium. And then my last question is, if we look at the non-recurring element, of TPAM Commission in 2H. How much of this is likely to be cash? Thank you very much.

Thank you, Farouk. I think Marco goes with the cash question. I will go for the buyback and Marco will have then the other two questions.

So the first one, cash at holding level... I said 1.1 was at half year and as of today 0.65 after consideration of the 500 million euro bond we issued. So 0.65 cash at holding. And then on the French non-life business, I think here is important to consider where we come from. So this is, I would even call it now a turnaround situation we were in. So having really, let's say, weak results some years ago and putting a plan in place to get a recovery out of that. So there's a lot of different measures on profitability to work on that. and over time we're getting now better and better technical profitability which now shows up in the result. I mean that is a steep and a significant increase which will be positive also for the way forward but not to be expected just to continue like that. But this is basically the outcome of working on the profitability, technical profitability coming from a rather low level two or three years ago. You also go on for the... Again on the first question, the non-recurring income now in half year. So this was full cash, so to say, comparing to three-quarter non-cash in the full year 2025. And for the, let's say, remaining part of the year, we expect that to be, let's say, more balanced, more balanced between cash and non-cash components. Should give you some of guidance.

Can I ask one question on the French non-life? Is there a premium associated with this? I mean, is there a combined ratio or some metric that we can think about in terms of the margin that you're making there?

Yeah, I mean, we have two businesses there, right? So the P&C business there, we got a bit of a, let's say, increase of the ratio. It's slightly above 100 because of some claims. So there's more volatility in that part of business. And the P&C business, by the way, is a Smaller part of our non-life business in France. In the health and protection area, we increased the ratio by around 2 percentage points from 94 to 92, somewhat around those numbers. Thank you very much.

And if I may come to your second question on the buyback, I mean, you may recall at Investors Day, we put our Let's say thinking around the framework on paper, we applied that framework that is well established and has already been used in the past. We continue to apply that so there's no change in policy or thinking about the buybacks. So it means that we have, in addition to the payout ratio goal and the ambition to increase TPS, This perspective on buyback and that we consider, and I stress that we consider additional capital management actions on top of those two things mentioned. If the SST is above the ambition range and if we have a comfortable cash situation at holding, there's no automatism, you know that. And we communicate such things generally at half year, full year on, for example, at This is the framework that has been in place, that is applied, that continues to be applied, so no change in policy, and that will guide us forward. Just as a reminder, for example, in the last program we had one large buyback that we announced with the Investors Day, and there was an additional one, I think, 0.3 billion buyback that ran from October 2023 to March 2024. So you see also from looking back that this is nothing new that we have done here. I hope this gives you some answers to the questions. Thank you very much. You're welcome.

The next question comes from the land of Ian Pearce from BNP Paribas. Please go ahead.

Hi, morning. Thank you for taking my questions. The first one was just a couple on cash. So, 0.65% post the TELUS acquisition, you guided the 250 million share buybacks to be completed at the end of March and then half of that coming from remittances. So, is this the sort of guidance that you expect to be at 500, sort of post the completion of the buyback for cash at holding. And are you happy running at that level? I think that's sort of the bottom end of your target range. And then the second part, I think you said half of the 250 million share buyback to be funded from remittances in H2. That looks like quite a high remittance number for the second half versus what we've had in previous years. Is there anything one-off in the H2 remittance number that you wanted to flag? And my second one was just on the operating expenses. So just looking at the operating expense growth over the last few years, it's only been about 100 million over the last three years. So just trying to sort of think about the operating expenses X variable with this 150 million of cost savings. Are you expecting that number to be sort of flat or even slightly down by 2029? Is that sort of what you're targeting with the 150 million cost saving guide? Thank you.

Marco, I think we'll take the three questions. I may jump in.

I think the first one on the cash at holding, we've always, I'm sad and also elaborated on that at Invest Today, we have a comfort level or comfort range at holding level being 0.5 to 0.7 billion. So this gives you a bit of guidance, but this is not a regulatory requirement. So something like this is an internal requirement. Thank you very much. I think that's what we can say on terms of cash remittance at the second half of the year. In earlier years, the number in the second half was always around an average between 60 and 70 million and there is nothing in view of any one-offs, as the names say, to be flagged. On that and the third question on the operating expenses and the growth, I think here basically that's part of our strategy. We aim on improving scalability and efficiency, operating efficiency. That's one part of our goal. and we have a clear goal on scaling the fee business that's part of our strategy and we have a clear goal and have related to that in the speech on the life absolute cost so in the life insurance business keeping cost flat so that's basically how we think about cost and being efficient and scaling and now having this 150 million Matthias alluded to it and with less than half coming from Switzerland going through the legal quote and the policyholder sharing and the remaining part with more of it being within asset management starting from 29 is an effect we will see in the operating expenses but from a result point of view because of the sharing is the policyholder only one part of it mainly will show up in the result and I think that's how to think about it.

If I may add on the remittances question, I think that's an important one. I mean, as Marco said, more than half is funded from cash at holding and it's less than half that relates to repatriation. I think it's important also to understand cash remittance and repatriations are not the same. So when we talk about repatriations, this can be maturing Thank you very much.

The next question comes from the land of Hamed Nassib from UBS. Please go ahead.

Hi, Monique. So first question on the network business. What's the cash component and when are you expecting for it to come through? I think you mentioned 27. Is it similar to the IFRS result? Secondly, on the French health tax, I think you said you're going to manage that. Is that done? Is that within the first half? We shouldn't expect anything more from that component. And then finally, Vita Foundations from Zurich is going independent. Is there any thought of your foundation also running independently? What's the earnings contribution from that business? Thank you.

I think Marco can start with the The first question I will take, the second and the third.

So the network business and the transfer to a partner, this is IFRS accounting, so that the gain we already account, we have to account for it in our books and the cash, let's assume it's the similar amount for that gain coming in over the next few years starting in 27, so 27, 28, 29, let's put it like that.

And maybe on the French health business, I'm not sure whether we fully captured your questions, but let me mention what we have been doing over the past years. We had a year, I think it was 2020. 3 or 24 where we really had significant issues. I believe the entire market had similar challenges back then. And we have been repricing. We have been doing many, many measures to restore profitability. And you may have seen that in the first half, we had in the health and protection business a lower top line. So that means we are really Prioritizing, as in the past, profit over growth. And this is what we have been doing for the past quarters and years almost. And that's what I think we can say. Mark also mentioned a bit, and I now switch to the P&C business. Here we had... In France, as you can imagine, some large claims, so the combined ratio is above 100%, and there we have the same thought. We want to make that business profitable, but that's a different starting position than the health and protection business. That, as you have heard, has improved the profitability from a combined ratio from the mid-90s to even lower levels. which I think is a pleasing level. Now, on the Vita Foundation and what you could read in the newspaper, obviously we do not comment on competitors and what their things are, but let me maybe make a couple of comments on our situation. Our approach to the Swiss PVG business is that we have a really wide range of offerings clearly we have the full insurance which is the largest part of our offering where we have the full set of risks being covered by Swiss life so meaning the savings the risk and the cost part and here as you can imagine if somebody wants to come to the Swiss Life Full Insurance. He or she wants us to provide these services. We have also this semi-autonomous offer. I think Marco mentioned also the growth we achieved there. And we have additional offerings such as pure risk coverage for semi-autonomous foundations outside, let's say, Let's say Swiss Life Offering. So that gives you a bit our position. And we are, I would say, in good shape with having this wide range of offerings to the client. So the client can choose what fits best for their risk appetite or the risk appetite of their business, if I may say so.

Thank you very much. You're welcome.

Next question comes from the line of Kaya Batikhan from Kepler Schubert. Please go ahead.

Hi there. Thank you for the opportunity. I have one question related to TPAM inflows. So we have seen some normalization in TPAM net new assets from the exceptionally high level last year. Could you give us some color on how flows have developed Since the end of June and your expectations for the remainder of the year and going forward. Thank you.

So on the NNA and the inflows in the TPAM business of the 7.2 billion, we reported on, I think here, pleasing the real asset share. So real estate and infrastructure amounted to 1.4 billion. And then the other asset classes just mentioned the equities and also in the money markets. In view of the inflows, I mean, we don't guide on details for the second half of the year. So far, we are happy with the inflows. We have a strong pipeline. We also intend to further increase the amount of the real assets in our inflows, and we can confirm, and I think that's the most important point in view of the total assets on the management, the 170 billion being the target of Swiss Life 2027, but we are well underway. to reach the target and also in the area of the recurring income in TPAM based on the higher underlying, on the higher asset base, I think the growth of 7% of the recurring income in TPAM also gives you a bit of a view on how the development is. So we are constructive and positive in that area.

Perfect, thank you. Can I have one more question related to direct investment income? It seems like Direct investment income is declined. How much of this decline reflects timing or volatility? And what would be the reasonable run rate for the second half?

I mean, the decrease in the investment yield, there is different, let's say, reasons for that. One being a bit lower asset base in real estate. impacting the direct investment income. We had in the infrastructure area an exit in the prior year period, which was very positive in the prior year. Numbers, then there is ethics effect, mainly the US dollar on the coupons coming from US dollar investments. So there is several reasons why the number is lower. There has been in relation, relatively seen an improvement compared to the first quarter and we are positive for the second half to get that closer back to the numbers we have seen in earlier or in prior year reportings. So it has some timing and some volatility in it and also some effects showing up in the net investment income which is very positive up by 800 million.

Cool, thank you.

Next question is a follow-up question from Michael Hotner from Burenberg. Please go ahead.

Thank you very much. I had three. One, maybe a little bit on the tax rate, which seems to be going up due to France, and I just wondered whether you can give us a feel for what numbers we should use going forward. On real estate, you mentioned again that you've got less of it. And I just wondered, it seems to be in contrast with your remark saying that real estate is a lovely asset and I just wondered if you can give us a bit more color on this. And then a general question on German pension reform with your kind of 8,000 IFAs I guess now. How much benefit do you expect from that going forward? Thank you.

Marco will give you some indications on the tax rate and then talk a bit about real estate and the German reform.

Yeah, tax rate is up, you're right, and we mentioned that in the presentation, more than 27% main driver, the higher profit base, but then the step up of the tax rate in France and maybe two things to mention here. For the second half of the year, or for the full year 2026, we expect the number to be somewhere between 25 and the current rate. I think that's something we can say. And looking a bit more into the future, current discussions and also signals and information we get from all the discussions in France, it might be expected that the step up will roll over also into the next year so that the French tax rate will remain at the level we see This year also, also in the next year.

And coming to the real estate question, yes, absolutely. Real estate continues to be an attractive asset class. At the same time, you know, and we mentioned that before, we are actively managing our portfolio. We may not be best owner for each and every single object. that we hold. Some objects may be owned by T-PAM clients, you know, due to size considerations and the like. As you know, we are going or we're preferring higher or larger objects that are easier and more efficient to maintain. So we are actually on both sides. And now I think in the first half of the year, we had a net outflow of real estate. We had years where we had net inflows. So the outflow that you have seen is by no means a statement about real estate as an asset class. In terms of the pension reform, I'm sure you know what's going on. I will not go into all the things that the German government is now putting forward. I think what I could say is if you look at everything that the German government says there will be a start of this new pension reform on 1st of January 2027 so that's where if I may say so the market is reshuffled and that's where we clearly with our now 8,000 IFAs which have this entrepreneurial mindset will certainly have some opportunities to cease. On the other hand, the second half of 2026 will be a bit more quiet because in the area of, you know, pensions, people, clients, advisors are now waiting for what's going on in 2027. Having said that, as you know, the pensions business, if you wish, in our German IFAs is only one of the product lines among many others that we advise our clients on. I think what's also important, I've now mentioned specifically the IFAs, in our insurance business, I would say, given the products we offer, this is a non-event anyway, because we're not in tourism.

Okay, thank you.

Welcome.

The next question is a follow-up question from Farouk Anis from JP Morgan. Please go ahead.

Hi there, thanks again. Sorry, just a bit of a clarification on Ian's question and another question of my own. So you mentioned that half of the 250 buyback will be funded by cash remittances or cash of some sort. So if we take the 60 to 70 million, that means roughly a similar amount again will come from repatriation of cash, so internal loans. Can you tell us about the capacity to keep doing this? So presumably you do have a larger balance of internal loans that you could use. So if you could talk about that, just so that, you know, I mean, the reason I'm asking is obviously people are worrying that your cash will fall to a low level as a result of this. We just need to know whether, you know, you have capacity to keep, you know, supporting from a cash point of view that buyback going forward. and then my second question is going back to the other result in the insurance operating result as well as a very good French non-life result. I think it was quite a good return on surplus assets as well which I think in 1H was a similar level to 2H25. So I just want to understand is this actually quite a good run rate for modeling going forward in that line or is there some kind of one-off positive in there? Thank you very much.

Let me try to give you the answer on the buyback. So we said there is 250 million buyback. And more than half of that 250 million is financed by cash we have at the holding today. So with that, what we have today at the holding, that's the 0.65 billion that Marco mentioned. and the rest of it is financed by repatriations, as we said, for example, maturing loans that are upstreamed back to the holding, for example, because they're not used anymore at the opco for operating purposes. I think the financing of the 250 millions. Now, regarding the repatriations, I think we keep talking about them every now and then. I don't know the exact amount, but as you may recall, the dominant part of those internal loans are kind of permanent financing, if you wish. Past acquisitions that were financed by pushing down the purchase price into the operating companies and these are loans that are here to stay. We earn money on them from the coupons and obviously the acquired businesses or the businesses that we have been growing deliver in addition to that coupon on the loan obviously their profits as a cash remittance. And I think the last point on cash and buyback was the cash level falling below 0.5 billion. And there, as I said, we have the 0.5 to 0.7 billions as a cash comfort range. And if we want to feel comfortable, we stay obviously within that range. And if I may go to the first A comment I've made, we have 0.65 billion. If I say more than half is fines from cash at holding, you can infer that we want to stay in that comfort range. Second and last point, or last point in that, also keep in mind that we have a revolving credit facility of half a billion, which at this point in time is not drawn at all. I hope this gave some clarification and I would hand over to Marco for the other result.

In the operating result, insurance business did these additional or further contributions. Basically, it's two elements in it. One is the non-life business in France, which we already discussed with the health and protection business and the P&C business. And then the other part is assets not backing insurance liabilities and As the name already says, the additional contributions, this is something from the accounting standards by construction, doesn't go through the CSM. So there is, I design a bit more of volatility in the results. So there is always various movements. What we have seen and what I can say is in the first half, last year, 2025, the number was rather low. Thank you very much. Welcome.

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

Ladies and gentlemen, thank you for your questions and for joining us today. Before we close the call, let me recap. We continued on our growth path across all divisions and am pleased with our operational performance in both the insurance and fee businesses. We are well on track with the implementation of our Swiss Life 2027 program. Thank you again and we wish you a nice day. Goodbye.

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