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Management Report

Swiss Life Holding generated a profit of CHF 314 million in the 2017 financial year (2016: CHF 359 million).

The annual profit of Swiss Life Holding consisted mainly of dividends, guarantee fees and interest income within the Group, as well as investment income. Dividend payments from subsidiaries to the holding company increased from CHF 519 million to CHF 555 million during the year under review. Guarantee fees including processing fees on new loans came to CHF 44 million (previous year: CHF 49 million). New loans totalling EUR 41 million were awarded to Group units in Germany and France to finance new real estate projects. The volume of loans to Group companies increased from CHF 708 million in the previous year to CHF 758 million. Interest earned on loans to Group companies amounted to CHF 24 million (previous year: CHF 32 million). The decline in interest income is due to new loans awarded at lower rates in accordance with the current interest rate environment.

As at the end of the year Swiss Life Holding had assets (liquid funds, debt securities, investment funds and equities) of CHF 1743 million. Liquid funds reduced from CHF 119 million to CHF 65 million, and debt security, investment fund and equity holdings increased from CHF 1321 million to CHF 1647 million. All debt securities are eligible for repo transactions. Earnings from investments in bonds and fund units rose from CHF 36 million to CHF 44 million.

All loans granted internally and external investments in foreign currencies are fully hedged with currency futures. The cost of hedging during the reporting period was CHF 18 million (2016: CHF 16 million). The investment book value decreased from CHF 3716 million to CHF 3416 million during the reporting year due to an allowance of a subsidiary.

Swiss Life Holding’s profit distribution to shareholders in the period under review came to CHF 356 million, or CHF 11.00 per share, and was made out of the capital contribution reserve. The par value of the Swiss Life Holding share stands unchanged at CHF 5.10. The company’s nominal share capital rose from CHF 164 million to CHF 175 million. In 2017, Swiss Life exercised its right to conclude an early buyback of a convertible bond issued in 2013 and due to mature in 2020. Almost all the bond holders exercised their right to convert their bonds into Swiss Life Holding shares. Bonds with a principal of CHF 499 160 000 were converted, which led in turn to the issue of 2 141 905 new shares in Swiss Life Holding from conditional capital. The remaining convertible bonds, with a principal of CHF 805 000, were repurchased on 27 December 2017.

The conversion of the convertible bond reduced the long-term debt capital from CHF 919 million to CHF 424 million. This consists of two senior bonds in the total nominal amount of CHF 425 million, comprising a tranche of CHF 225 million with a six-year maturity (coupon 1.125%; maturing 2019) and a tranche of CHF 200 million with a ten-year maturity (coupon 1.875%; maturing 2023). These debt financing instruments were issued in 2013. Interest on the bonds came to CHF 7 million.

Staff costs and operating expenses including taxes came to CHF 21 million (2016: CHF 15 million). The increase is due to the stamp duty on issues resulting from the convertible bond conversions.