3 Information by Market Unit

3.1 Market units

Swiss Life’s covered business is subdivided according to market units as follows:

  • Life, pension and assumed external reinsurance business in Switzerland
  • All businesses in France, mainly life, health and pension business
  • Life and pension business in Germany
  • Life and pension business in Luxembourg, Liechtenstein and Singapore (together referred to as International)

This breakdown by market unit essentially coincides with the IFRS insurance segments in the annual report. There are some differences since the MCEV classification generally follows the legal structure. A divergence from the IFRS insurance segment reporting is the treatment of distribution units such as Swiss Life Select, which are reported for MCEV purposes under noncovered business, and Swiss Life Asset Management in France, which is reported for MCEV purposes under France.

Swiss Life’s main business in the Swiss market is group life business with a full range of offerings. The individual business includes modern savings and retirement products with flexible and lower guarantees, risk and annuity products, as well as traditional savings products. Swiss Life’s own sales force plays the major role in distribution, followed by brokers and Swiss Life Select. The business for assumed external reinsurance is included here.

Swiss Life offers savings, annuity and risk products, as well as health insurance. New business for life insurance focuses on multi-support products, combining unit-linked and traditional savings components. The main distribution channels are brokers, tied agents and own sales force. Additionally, Swiss Life in France has developed strong relations with independent financial advisors and private banks.

Swiss Life focuses its offering on comprehensive disability insurance and modern products with flexible and lower guarantees in individual and group life business. The main distribution channels are independent brokers, followed by financial advisors such as Swiss Life Select.

Swiss Life International provides life and pension solutions for High Net Worth Individuals (HNWI) in Europe and Asia through its Private Clients business with insurance carriers in Luxembourg, Liechtenstein and Singapore. For multinational corporations, Corporate Clients business, together with its network, offers local employee benefit and expatriates solutions out of Luxembourg.

3.2 Results by market unit

MCEV by market unit for the year 2015

In CHF million      
SwitzerlandFrance 1GermanyInternationalTotal
NET ASSET VALUE1 6401 3793531433 514
Free surplus1 158223-45311 367
Required capital4821 1553971122 147
VALUE OF IN-FORCE BUSINESS5 0591 4152992787 050
Certainty equivalent value5 4012 1785353728 487
Time value offinancial options and guarantees251-441-154-18-363
Cost of residual non-hedgeable risks-373-247-70-57-746
Frictional costs of required capital-221-75-11-20-327
MCEV6 6982 79365242010 564


MCEV by market unit for the year 2014

In CHF million     
NET ASSET VALUE1 7761 4694011103 755
Free surplus1 31323734391 622
Required capital4631 232367722 133
VALUE OF IN-FORCE BUSINESS5 2401 4053802907 315
Certainty equivalent value5 5572 2115823848 735
Time value offinancial options and guarantees261-470-143-21-373
Cost of residual non-hedgeable risks-363-274-55-55-748
Frictional costs of required capital-214-61-4-19-298
MCEV7 0162 87478140011 071

The MCEV of Swiss Life in France, Germany and International was negatively affected by the impacts of foreign currency translation into group presentation currency CHF.

The positive operating earnings including the value of new business, were offset by the negative capital market development, which led to a decrease of the MCEV by CHF 318 million.

The reduction of the free surplus is driven by further balance sheet strengthening. The value of the in-force business decreased following the adverse capital market development. This was partly offset by sustained business growth and in-force management. In group life, characterised by variable guarantees, the business-inherent shareholder options drive the time value of options and guarantees.

The MCEV increased by CHF 204 million excluding the currency translation effect, notably due to an enhanced financial margin and the correspondingly revised profit-sharing for life business, as well as the increased new business value.

Swiss Life in France is subject to a tax of 3% applied to dividends paid to Switzerland, which is considered for the actual payment.

Mainly due to the unfavourable capital market development, the MCEV decreased by CHF 49 million excluding the currency translation effect. This was counteracted by revised surplus sharing.

The MCEV increased by CHF 20 million despite adverse foreign currency translation effects, driven by a strong value of new business. In addition to the good annual profit, a capital transfer contributed to the increase of the net asset value.

Value of new business by market unit – premiums and margins for the year 2015

Amounts in CHF million     
New business strain 1-100-51-6-8-165
Value of new business before new business strain2441272141433
Annual premiums360285547706
Single premiums2 6222 0561212 2287 026
Average annual premium multiplier16.16.815.29.212.2
New business annual premium equivalent (APE)622491662301 408
NEW BUSINESS MARGIN (%PVNBP)1.7%1.9%1.6%1.4%1.7%
New business margin (%APE)23.2%15.4%23.2%14.3%19.0%


Value of new business by market unit – premiums and margins for the year 2014

Amounts in CHF million
New business strain 1-71-50-3-10-133
Value of new business before
new business strain
Annual premiums237315528612
Single premiums2 4992 0791992 1426 919
6 9394 3269382 21114 414
Average annual premium multiplier18.
New business
annual premium equivalent (APE)
487522722231 304
NEW BUSINESS MARGIN (%PVNBP)2.2%1.4%1.2%1.2%1.8%
New business margin (%APE)31.8%11.9%16.3%11.6%19.5%

New business consists of new contracts and new coverages on existing contracts. Within group life business, replacements and newly insured persons entering existing group life contracts are not accounted for as new business.

The pressure on margins due to the challenging interest rate environment following the decisions of the Swiss National Bank from January 2015 was counteracted by comprehensive repricing measures in individual life and mitigated by further reduced guarantees in group life. Combined with increased volumes in both group and individual life and a strong contribution from assumed reinsurance business, the value of new business remained at a high level.

Ongoing margin management led to an increased value of new business and at the same time the volume increased on a local currency basis by 3%.

The new business margin in life improved substantially thanks to the enhanced financial margin and the revised profit-sharing, a further increased share of unit-linked business and cost efficiency gains. Along with the higher new business volumes this led to a significant increase in new business value.

In health, the general shift of the offering to group business and some niches in individual business led to stable margins, although volumes decreased.

New business margin and value increased as a result of continued pricing discipline, revised surplus sharing and the shift towards modern-traditional products with flexible and lower guarantees. On a local currency basis, volumes increased by 10% with a maintained high share of risk business.

Both new business value and margin could be expanded in International. This is due to increased volumes in Private Clients business and a higher share of risk business in Corporate Clients business.

Because of the weight of Private Clients business within International, by far the biggest share of new business premiums consists of single premiums.

Analysis of earnings by market unit for the year 2015

In CHF million
OPENING MCEV7 0162 87478140011 071
Opening adjustments-134-76-16-1-227
ADJUSTED OPENING MCEV6 8822 79876439910 844
New business value144761533268
Expected existing business contribution
(reference rate)
Expected existing business contribution
(in excess of reference rate)
Experience variances12519-7128
Assumption changes-983-37239
Other operating variance39135769259
Economic variances-613-135-100-19-866
Other non-operating variances-2513-08-4
Closing adjustments12-285-79-18-370
CLOSING MCEV6 6982 79365242010 564

All market units contributed positively to the value creation with their operating earnings.

Opening adjustments reflect the dividend payment to the Swiss Life Holding net of dividends received.

Operating earnings of CHF 441 million correspond to a return of 6% on MCEV.

The positive experience variances relate to portfolio true-ups including improved persistency. Also balance-sheet strengthening, such as a reduction of technical interest rates, had a positive impact.

Assumption changes mainly relate to group life and are influenced by the regular inclusion of the demographic and persistency experience, which had minor opposite effects.

The positive other operating variances stem mostly from changes in the asset allocation and the reduction of the minimum interest rate for non-mandatory group life business, slightly reduced by the effect of hybrid debt issued in the reporting period.

Economic variances are influenced by the significantly lower interest rates in Swiss francs following the decisions of the Swiss National Bank in January 2015 and widened credit spreads, mitigated by a good real estate performance.

Opening adjustments reflect dividend payments of CHF 76 million.

Operating earnings of CHF 402 million correspond to a return of 14% on MCEV. In addition to the expected business contribution and the positive new business value, this is driven by an enhanced financial margin and the correspondingly revised profit-sharing for life business, a favourable longevity development and efficiency gains for the life operations.

Economic variances reflect mainly the increased credit spreads, positive real estate and equity performance, and related changes of the asset allocation.

Other non-operating variances are positive tax variances.

Closing adjustments relate to the depreciation of the Euro against the Swiss franc.

Opening adjustments reflect dividend payments of CHF 16 million.

Operating earnings of CHF 67 million correspond to a return of 9% on MCEV.

The assumption changes mainly reflect updated lapse and capital take-up parameters.

Other operating variances include effects from a revised surplus sharing approach and the handling of bond realisations.

The negative economic variances result mainly from increased credit spreads and more than offset the operating earnings.

Closing adjustments relate to the aforementioned effects of foreign currency translation.

Operating earnings of CHF 50 million correspond to a return of 12% on MCEV. This was driven by a strong value of new business, the operating profit and overall positive true-up effects on the in-force business relating to mortality, persistency and expenses.

Economic variances mostly relate to the performance of the assets under management, which are the basis for the fees earned in the Private Clients business.

Other non-operating variances reflect the reduction of the applied tax rate in Luxembourg.

Closing adjustments include foreign currency translation effects of CHF –40 million and capital transfers of CHF 23 million.

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