Investors’ Day 2015 Swiss Life 2018 – Driving performance · Swiss Life 2018 – Driving...
Transcript of Investors’ Day 2015 Swiss Life 2018 – Driving performance · Swiss Life 2018 – Driving...
Investors’ Day 2015Swiss Life 2018 – Driving performanceThomas Buess, Group CFOZurich, 25 November 2015
2 | Investors' Day, 25 November 2015 | Swiss Life 2018 - Driving performance
Majority of Swiss Life 2015 targets achieved in advance …
TargetStrategic thrust
3 Distribution • Fee and commission income: Increase by 20-25%
4 Efficiency and quality
• Cost savings:CHF 130-160 m (project view)
• Efficiency: Improve efficiency ratios(to 0.63%-0.68%)
5 Financialstrength
• Adjusted RoE: 8-10%
• Dividend payout ratio:20-40%
Offering• New business margin: >1.5%• New business shift: ~85% of
NBP from risk, modern and modern-traditional products
2
Customer promise
Increase quality and quantity of touch points with customers
1
Status
1.7% (HY15)
85% (Q315)
+15% (FY14)
CHF 179 m (Q315)
0.65% (FY14)
9.6% (FY14)
25% (FY14)
FY 2014Profit by source:• Savings
result <50%• Fee and risk
result 60-70%• Admin cost
result >0%
55%
54%
6%
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406272
2014SL 2015 Amb2011
… based on market units’ disciplined execution
International
• Reduction of complexity and costs by focus on 2 carriers for new business
• Further develop Swiss Life Select (AT, CEE) and Chase de Vere (UK)
Germany
• New set-up in Germany enabling significant cost reduction
• Important contribution to profit diversification
Switzerland
• Overall cost discipline, allowing for investments to enlarge fee business
• Focus on margin management in individual life
France
• Overall cost discipline, allowing for investments in distribution
• Improve loss ratios in health and P&C
AssetManagers
• Increase fee volume at stable cost/income ratios
2014
61bps
SL 2015 Amb2011
68 bps
2014
47 bps
SL 2015 Amb2011
56 bps
210239
2011 2014SL 2015 Amb
113138
2014SL 2015 Amb2011
Consolidate and prepare for growth
Focuson
efficiency
Focus on growth
-18%-5-10%
-12%-15-20%
-9 bps~3-5 bps
-7 bps~10 bps
+49%+20%-30%Forecast 2015
Operating expenses excl. restructuring costs & one-offs, EUR
Life efficiency ratio,% of techn. reserves
Net fee income, CHF
Life efficiency ratio,% of techn. reserves
Fee income growth
Efficiency gains
Efficiency gains
Cost reduction
Cost reduction
Operating expenses excl. restructuring costs & one-offs, CHF
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Swiss Life will continue on the successful path of Swiss Life 2015 and MILESTONE
Swiss Life 2018
Swiss Life is going to strengthen the quality of earnings and achieve earnings growth particularly by increasing the fee result
Quality of earnings and earnings growth
Operational efficiency Swiss Life further improves its operational efficiency
Capital, cash and dividend
Swiss Life will continue its disciplined capital management and increase cash remittance to its holding company and the payout to shareholders
Customer centricity and advice
Swiss Life further develops its multi-local business approach through investing in customer centricity and advice initiatives
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Key financial targets of Swiss Life 2018
• Fee result FY 2018: CHF 400-450 m
• Risk result FY 2018: CHF 350-400 m
• Cumulative value of new business (2016-2018):> CHF 750 m
Quality of earnings and earnings growth
• Cost savings FY 2018: CHF 100 m
• Stable operating expenses1)
Operational efficiency
RoE2) of 8-10%
• Cumulative cash remittance to Holding (2016-2018): > CHF 1.5 bn
• Dividend payout ratio: 30-50%
Capital, cash and dividend
1) Excl. Asset Managers 2) Equity excl. unrealised gains/losses on bonds
Customer centricity and advice
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2018
55-6530
2014
Strategic focus areas by business division
131
2018
300-400
2014
47
2018
75-85
2014
21
2018
45-60
2014
459 640-660
2014 2018
Switzerland: • Maintain high discipline regarding margin,
cost and efficiency management• Main contributor for cash remittance
International: • Leverage strong position in global
insurance solutions for private and corporate clients as well as in owned IFAs
France: • Reinforce private insurer and multi-
distribution model• Accelerate growth in corporate business
Germany: • Insurance: Focus on operational efficiency,
comprehensive risk offering and modern-traditional products
• Distribution: Grow fee result by transforming owned IFAs into a modern advisory organisation
Asset Managers:• Grow the asset base from TPAM business• Grow net fee income at stable C/I ratio
Cash remittance
CHF m
Fee resultgrowthEUR m
Total income growthCHF m
Fee & risk result growth
EUR m
Fee & risk result growth
EUR m
Cash remittancein %
Segment result
Share of risk and fee result
France
Germany
Asset Managers
International
Switzerland
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Overview of key performance drivers and ambitions
• Protect savings result through disciplined ALM
• Enhance fee result to drive earnings growth
• Defend high margin risk business in a competitive environment
• Generate substantial new business value
• Implement further cost savings to finance investments
• Disciplined capital management to optimisecapital efficiency
• Manage in-force business for value
• Maintain healthy solvency ratio
• Increase payout ratio based on enhanced cash remittance to Holding
Customer centricity and advice
1
2
3
4
5 6
7
8
9
Quality of earnings and earnings growth Operational efficiency Capital, cash and dividend
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Profit by source (FY 2014 adjusted, CHF m)
Protect interest rate margin through disciplined ALM
Defend high margin risk business in competitive environment
Significantly grow fee result in all business areas
Further improve admin cost result
1 249
689
269
395
-15146
Savings result
Risk result
Fee result
Cost result1)Others & eliminations
Swiss Life 2018 targets
CHF 350-400 m
CHF 400-450 m
Continue to strengthen the quality of earnings
1) Thereof admin cost result gross: CHF 73 m
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Net investment yield excl. gain realisations, after FX-hedging costs
0.0%
3.0%
3.5%
2.5%
4.0%
2014
in %
of t
echn
ical
rese
rves
201320122010 2011
Interest rate margin before policyholder sharing
Interest rate margin remained stable as a result of disciplined ALM• Long asset duration supports yield
• Narrow duration gap protects interest rate margin
• Reserve strengthening and focus on profitable new business lower guarantees and improve product mix
• Risk and fee income not consideredGuaranteesincl. conversion rate expenses
Aggregated view, IFRS basis
Disciplined ALM has safeguarded theinterest rate margin in past years and …
Quality of earnings and earnings
growth1
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… will continue to protect the interest rate margin and savings result
• Interest rate margin resilient for more than three decades even if rates stay low
• Policy adjustments in non-mandatory group life and reserve strengthening could further extend this period
• Risk and fee income not considered
Quality of earnings and earnings
growth1
Aggregated view, statutory basis (October 2015)
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2010 2020 2030 2040
Estim
ated
figu
res
(bef
ore
PH d
ivid
ends
) in
% o
f tec
hnic
al re
serv
es
Net investment yield
Guarantees and Quasi-Guarantees
Guarantees and Quasi-Guarantees if non-mandatory Group Life CH at 0%
Interest rate margin before policyholder sharing
In %
of t
echn
ical
rese
rves
PROJECTION
Net investment yieldGuarantees and quasi-guaranteesGuarantees and quasi-guarantees if non-mandatory group life CH at 0%
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Enhance fee result to drive earnings growthFee result, CHF m
269
2018 PInitiatives
400-450
FX2014
~-20
Initiatives
• Strengthen Swiss Life Select’s market presence• Push real estate brokerage business• Launch investment solutions for retail customers
• Further grow unit-linked business• Leverage private insurer positioning• Expand banking partnerships and offering for HNWI customers
• Increase advisors’ productivity capitalising on proprietary advisory software and through digitalisation
• Adjust career and remuneration models in owned IFAs
• Form strategic partnerships at private clients and owned IFAs• Internalise parts of value chain at owned IFAs• Implement new target operating models
• Grow particularly in TPAM business by broadening customer base and by increasing higher margin asset classes
CH
FR
DE
IN
AM
Quality of earnings and earnings
growth2
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395
2018 P
350-400
Margin pressure
~-20
FX2014 Initiatives
CH
IN
FR
DE
Initiatives
• Push semi-autonomous solutions and pure risk solutions in group life
• Launch new product with integrated biometric risk component in individual life
• Increase credit life business and protection• Implement measures to protect profitability in health business
• Push industry-specificsolutionsandtargetgroup-specificofferings• Optimise in-force book, e.g. claims management
• Promote higher risk coverage for U/HNWI solutions
Risk result, CHF m
Defend high margin risk businessQuality of earnings
and earnings growth
3
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702
2012-2014 2016 P -2018 P
Value management
Capital market
environment
~-40
> 750
FX
~-250
Initiatives
• Modern product concepts with lower guarantees in individual life
• Pricing adjustments in group life and individual life
• Increase financial margin and reduce guarantees for new business
• Continue with private insurer strategy, push banking partnerships, HNWI and credit life offering
• Increase new business (risk, modern-traditional) and push target group-specific offerings
• Grow U/HNWI business• Promote new employee benefit solutions
• Expand reinsurance business
CH
IN
FR
DE
Group
Value of new business, CHF m
Margin management to generate substantial new business value
New business margin ambition of 1.5% and minimum hurdle rate of 1.0% remain in place
Quality of earnings and earnings
growth4
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2014 FX adjusted
Cost savings
~-100
2014(as reported)
~30~60
~1 110
1 191
2018 PInvestmentsActivity growth
Non-variable costs adjusted, without Asset Managers(excl. restructuring & one-offs), CHF m
Our ambition is to keep the cost base stable …
• Grow third party asset management with stable cost/income ratio
Operational efficiency5
Insurance segments Asset Managers
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Non-variable cost savings, gross CHF m (project view), vs. cost base FY 2014
12-17
15-20
35-40
3-8 ~100
FR DE IN
25-30
Target 2018
CH AM
Initiatives
• Further optimisation of systems and digitalisation of processes
• Digitalisation of processes• Optimise IT and other overhead expenses
• Harmonisation of end-to-end processes to increase productivity• Industrialisation and digitalisation of processes and systems
• Centralise major insurance functions in Luxembourg• Capitalise on new IT platforms
• Enhance processes and systems, mainly in real estate• Align funds’ business organisation
Restructuring costs 2015-2018: CHF 25-35 m(3 m booked by Q3 2015)
CH
IN
FR
DE
AM
… and to compensate growth and invest-ments by CHF ~100 m in operating cost savings
Operational efficiency5
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Proven risk management framework, monitoring processes and …
Board of Directors / Investment and Risk Committee
Executive Board / Group Risk Committee
Local ALM committees
Set priorities of concurring targets
Risk budgeting per division
• Allocation of risk capital to risk drivers (target and range per asset class)
• Set exposure limits for net equity and currency
Strategic asset allocation
Set overall risk appetite: SST ratio limit
Risk budgeting
• Optimised investment income respecting risk budget and limits
• Sound capitalisation
Planning and monitoring
Capital planning
Mid-term planning
Monthly tracking of SST ratio and limit control
Economic scenarios
Clear priorities
Statutory equity capital
SST
IFRS P&L
S&P capitalisation
Capital, cash and dividend6
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Efficient and balanced use of capital to ensure healthy capitalisation
… disciplined capital management ensure healthy capitalisation
• Earnings growth
• Value of new business
• Manage in-force business to free up capital
• Balanced capital structure with adequate share of hybrid capital
• Increase focus on capital-efficient products, especially in new business
• Maintain disciplined ALM by focussing on capital-efficient investments
• Pool cash at holding level for buffer and financial flexibility
• Add-on acquisitions only selectively
• Ensure sustainable dividend distributions
Capital, cash and dividend6
Capital generation Capital allocation
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Managing the in-force business will continue to add value
Capital, cash and dividend7
Main benefits
• Support cash/solvency
• Optimise capital efficiency
• Increase margin and leverageexisting value
Initiatives on existing business contribute to safeguarding
our business model
Primary levers Focus
Costs/claimsReduction of admin. costs and de-risking of in-force business, claims management, consolidation of funds
Re-pricing /steering
Regular parameter review and lapse rate steering, conversion/migration/ termination programmes
Policyholder participation /guarantee level
Target-oriented surplus sharing and disciplined reserve strengthening
Asset allocation & ALM
Capital-efficient asset classes and further B/S measures
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Reserve strengthening and disciplined product management largely lowered guarantees
30.06.2015estimate
~1.70%
30.06.2015
1.85%
01.01.2012
2.35%
• Change in guaranteed rateof CH group life1) +4 bps
• Change in business mix -17 bps• Reserve strengthening
of CHF 4.7 bn -35 bps• FX -2 bps
Total -50 bps
Average technical interest rate (statutory basis)
Capital, cash and dividend7
After impact of lowered guaranteed rates from 2016 for• CH mandatory group life: 1.75% to 1.25%• CH non-mandatory group life: 1.25% to 0.75%
1) Guaranteed interest rate for mandatory group life business from 2014: 1.75% (+25 bps)
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• Required target capital driven by market and credit risk
• Insurance risk diversifies – However, significant contribution
to market value margin2)
• Key differences to Solvency II – Scenarios require capital in SST;
more demanding calibration of market risk and credit risk in SST
– No charge for operational risk and lower capital requirement for insurance risk in SST
– As a result, larger capital requirement for life insurance under SST overall
CONCEPTUAL
Risk-bearing capital1)
15-25
Insurance risk
Target capital
Scenarios Market value
margin
10-20
Diversification of insurance
risk with MR/CR
5-15
Marketrisk
(MR)
45-65
5-15
Credit risk(CR)
20-30 5-15
Diversifi-cation of
MR with CRR
equi
red
Avai
labl
e
Buffer
Key elements of SST Capital, cash and dividend8
1) Including hybrid debt 2) Corresponds to risk margin in Solvency II; included in target capital in SST
33%
80%
100%
Internal model (as of 1.1.2015)in % of target capital
Ratio
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Sensitivities of internal SST model(as of 1.1.2015)
SST internal model partially approved by FINMA
140-160%
Solvency IIexcl. any transitional measures,incl. volatility adjustment
Solvency I = 257%3)
abolished as per 1.7.2015
> 200%
Real estate -10% -9 ppts
Credit spreads1) +100 bps -12 ppts
Interest rates2) -50 bps -7 ppts
Equities -30% -5 ppts
Insurance 1 in 10 year event -6 ppts
Swiss Life Group: Economic solvency(as of 1.1.2015)
Maintain healthy solvency ratiosCapital, cash and dividend8
1) Corporate bonds and GIPS (excluding covered / guaranteed bonds) 2) MCEV based; excludes benefit of dynamic duration management 3) As of 30.9.2015
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Coping with regulatory and macro-economic developments
Capital, cash and dividend8
1.1.13 1.1.151.7.12 1.1.14 1.7.151.7.141.7.131.1.12
Since 2012 continuous buffer building
Buffer building ongoing to protect us from regulatory and macroeconomic developments
Regulatory developments could consume some of the buffers – Expiration of temporary reliefs– Lowering of UFR– Increased emphasis on
standard model
SST developmentSwiss Life Group internal model
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18%
50%
20152012 Average 2016-2018
~35%
~65%
~65%
Average 2016-2018
Increasing cash remittance to Holding
Cash remittance to Holding(in % of previous year’s IFRS net profit)
Cumulative cash remittance to Swiss Life Holding 2016-2018
> CHF 1.5 bnLife insurance
AM, distribution,health, P&C
Capital, cash and dividend9
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Cash generation and remittance support dividend payout to shareholders
Cash generation ~80% of IFRS
net profit
Dividend payout30-50%
Non-cashIFRS net profit
~20%
100%
Cash generated Dividend
~15%
~15-35%
Swiss Life Holding financial
flexibiltiy
Retained at business units
Growth / buffer building
Capital, cash and dividend9
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Dividend policy
5.504.504.504.50
6.50
2015 P
25.8%
2010
23.8%
2013
22.5%
2012 2014
25.4%
2011
21.1%
Dividend per share (CHF)Payout ratio
Dividend history
Executive Board to propose to the Board of Directors a dividend per share of at least CHF 8 for the financial year 2015
Capital, cash and dividend9
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Swiss Life will continue on the successful path of Swiss Life 2015 and MILESTONE
Swiss Life 2018
Swiss Life is going to strengthen the quality of earnings and achieve earnings growth particularly by increasing the fee result
Quality of earnings and earnings growth
Operational efficiency Swiss Life further improves its operational efficiency
Capital, cash and dividend
Swiss Life will continue its disciplined capital management and increase cash remittance to its holding company and the payout to shareholders
Customer centricity and advice
Swiss Life further develops its multi-local business approach through investing in customer centricity and advice initiatives
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Cautionary statement regarding forward-looking informationThis presentation is made by Swiss Life and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Swiss Life. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Swiss Life. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Swiss Life as being accurate. Neither Swiss Life nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Swiss Life nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this presentation. Neither Swiss Life nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this presentation. This presentation may contain projections or other forward-looking statements related to Swiss Life that involve risks and uncertainties. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. All forward-looking statements are based on information available to Swiss Life on the date of its posting and Swiss Life assumes no obligation to update such statements unless otherwise required by applicable law. This presentation does not constitute an offer or invitation to subscribe for, or purchase, any shares of Swiss Life.
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Contact details and financial calendar
Contact
Heidi Hinterhuber Phone +41 (43) 284 67 67Head of Investor Relations E-mail [email protected]
Rolf Winter Phone +41 (43) 284 49 19Senior Investor Relations Manager E-mail [email protected]
Financial calendar
Full-year results 2015 01 March 2016Annual General Meeting 2016 26 April 2016Interim Statement Q1 2016 12 May 2016
Visit our website for up-to-date informationwww.swisslife.com
The future starts here.