Results and Course of Business

Summary of Group Results — Swiss Life more than doubled its net profit in 2010 from CHF 277 million to CHF 560 million. This increase is mainly attributable to improvements at operational level, a reduction in costs and an outstanding investment result. The Group  achieved profitable growth in all key markets. Thanks to the MILESTONE revitalisation programme, Swiss Life has made further substantial progress in improving margins and in capital management.

In 2010, Swiss Life doubled its net profit to CHF 560 million (2009: CHF 277 million). This corresponds to diluted earnings per share of CHF 17.37 and a return on equity of 7.6%. In investment management Swiss Life achieved a net investment result on the insurance portfolio of CHF 4.6 billion. This represents a very strong net investment return of 4.1% (2009: 3.9%).

GROWTH — Focus remains on profitable growth — Swiss Life successfully achieved profitable growth in all units, despite the difficult market conditions. The Group generated premium volume of CHF 20.2 billion, which represents a currency-adjusted increase of 4% over the previous year. It grew in its key markets of Switzerland, Germany and France and was able to confirm its top-level position in business with high net worth individuals. In Switzerland, premium income climbed 2% to CHF 7.6 billion. Premium income (currency adjusted) in France rose by 9% to CHF 5.3 billion, and in Germany by 4% to CHF 2.1 billion. The Insurance Other segment, with premiums earned primarily through business with high net worth individuals, was able to further expand its premium volume on a currency-adjusted basis to CHF 5.2 billion compared with the previous year (+4%). Swiss Life Investment Management’s assets under management totalled CHF 120 billion (a currency-adjusted increase of 9%). These include third-party assets under management (CHF 9.9 billion in total, as in the previous year), in which the Group achieved growth of CHF 1.2 billion and was thus able to offset the negative currency effects. Insurance reserves totalled CHF 122 billion – a currency-adjusted increase of 7%. AWD improved its sales revenues by 4% to EUR 547 million.

EARNING POWER — Positive performance in all business areas — The Swiss Life Group’s profit from operations climbed from CHF 562 million to CHF 694 million. Around 80% of the increase in profits was driven by operational improvements. All segments have made a valuable contribution. In Switzerland, Swiss Life increased its segment result by 4% to CHF 488 million, chiefly as a result of major new operational improvements and a further reduction in costs of 8%. In France, thanks to a rise in productivity and a better financial margin, Swiss Life increased its result from operations by 10% (currency adjusted) to CHF 162 million and improved its new business margin. As a result of a one-off negative effect (CHF –80 million) caused by the raising of the retirement age, the segment result in France stood at CHF 82 million. Germany improved its segment result by 11% to CHF 102 million. In the Insurance Other segment, where Swiss Life made further investments last year in expanding its global business and in the product platform in Luxembourg, losses were reduced by 19% to CHF –35 million. With a 34% increase in result over the previous year, Investment Management contributed CHF 103 million to the Group result. Following its successful reorganisation, AWD posted an impressive operating profit of EUR 49 million (2009: EUR –41 million), improving its EBIT margin to 9% (2009: –7.8%).

MILESTONE — Significant advances at all levels — Swiss Life succeeded in making considerable improvements in all aspects of its MILESTONE revitalisation programme in 2010. Through consistent margin management, the Group was able to improve its new business margin to 1.4%, compared with the previous year’s figure of 0.9%, thus more than offsetting the negative impacts of historically low interest rates. The value of new business grew by 70% to CHF 209 million, representing an improvement in all units over the previous year. Swiss Life also succeeded in increasing the share of new business generated with modern and risk products from 64% in the previous year to 69%. In addition, the Group was able to reduce costs by a further CHF 121 million. Of the CHF 350-400 million cost savings announced as part of the MILESTONE programme, CHF 311 million had already been achieved by the end of 2010. Progress was also made in optimising in-force business and in balance sheet management – in asset and liability management for example, by lowering borrowings, increasing reserves and implementing a new reinsurance strategy. Thanks to MILESTONE, Swiss Life has been able to substantially reduce interest rate sensitivity.

SOLVENCY — Solid capital base and improved solvency ratio — Swiss Life has a sound capital base. Shareholders’ equity stood at CHF 7.4 billion at the end of 2010, up 3% on the previous year’s CHF 7.2 billion. The Group’s solvency ratio climbed to 172% (2009: 164%). Without taking into account unrealised gains and losses on bonds, the solvency ratio was 166% (2009: 161%). Based on its internal model, Swiss Life comfortably meets the Swiss Solvency Test requirements.

Key figures for the Swiss Life Group
Amounts in CHF million  
  2010 2009 +/–
Gross written premiums, policy fees and deposits received
  20 191 20 219 –0.1%
Net earned premiums and policy fees
  12 051 12 135 –0.7%
Commission income
  922 934 –1.3%
Financial result (without share of results of associates)
  4 368 4 588 –4.8%
Other income
  503 159 n/a
Total income
  17 844 17 816 0.2%
Net insurance benefits and claims
  –12 704 –11 884 6.9%
Policyholder participation
  –1 073 –1 539 –30.3%
Interest expense
  –311 –353 –11.9%
Operating expense
  –3 062 –3 478 –12.0%
Total expense
  –17 150 –17 254 –0.6%
Result from operations
  694 562 23.5%
Net result from continuing operations
  560 324 72.8%
Net result from discontinued operations
  –47 n/a
Net profit
  560 277 n/a
Equity
  7 437 7 245 2.7%
Insurance reserves
  122 279 122 616 –0.3%
Assets under management
  133 000 132 022 0.7%
Assets under control
  149 899 148 186 1.2%
Return on equity (in %)
  7.6 4.0 +3.6 ppts
Number of employees (full-time equivalents)
  7 483 7 820 –4.3%


Asset Allocation on Fair Value Basis as at 31 december (insurance portfolio at Group’s own risk)
Amounts in CHF million  
  2010 2010 2009 2009
Equity securities and equity funds
  4 266 3.8% 3 803 3.4%
Alternative investments
  1 083 1.0% 1 958 1.7%
Real estate
  14 139 12.6% 13 284 11.8%
Mortgages
  5 332 4.7% 5 553 4.9%
Loans
  10 078 9.0% 12 109 10.8%
Bonds
  74 849 66.6% 70 517 62.6%
Cash and cash equivalents and other
  2 586 2.3% 5 387 4.8%
Total
  112 333 100.0% 112 611 100.0%
 
Net equity exposure
  2.4% 1.8%
Duration of bonds
  10.3 years 8.5 years