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Swiss Life increases profit despite dip in fee business

Swiss Life closed 2023 with a profit in the billions and is once again paying out a generous dividend. Group CEO Patrick Frost hands over a well-positioned financial group to his successor Matthias Aellig in mid-May.

"Despite a lower result in the fee-based business, we managed to increase our profit," Frost told media representatives on Thursday. Under the new accounting rules (IFRS 17/9), profit increased by 8 percent to CHF 1.11 billion, while the operating result remained at CHF 1.50 billion.

The Board of Directors is proposing a dividend of CHF 33 per share to shareholders. This is three francs more than in the previous year.

Dip in the fairy business

However, not everything shone at Frost's last results presentation. The fee business, which he helped to build up as a counterpart to life insurance during his ten years at the helm of Swiss Life, was hit by the tougher environment on the real estate market.

In Germany and France in particular, institutional investors showed less interest in real estate as interest rates rose. The Swiss Life Asset Managers unit recorded 17% less income and a 37% lower result with third-party clients (TPAM).

In addition to the write-down on an investment and negative currency effects, this was primarily due to the decline in business with real estate transactions. Across the entire Group, the fee result fell by 14 percent to CHF 664 million.

Profitable home market

Meanwhile, the insurance business developed profitably: premium income rose by 1% to CHF 19.8 billion and by 3% after adjustment for currency effects. And in Switzerland, the good performance of the insurance companies boosted the result by 8 percent to 839 million francs.

"The semi-autonomous pension business remains important for us in occupational pensions. In new business, however, we are seeing a certain shift towards full insurance due to the development of interest rates," said Aellig in an interview with AWP on further developments in the domestic market.

There is a change at the top of the Swiss business. Markus Leibundgut, who is suffering from cancer, is handing over the reins permanently to Roman Stein, who has been managing the largest Group unit on an interim basis since July.

Normalization in sight

"We expect the real estate markets in Germany and France to return to normal in 2024. This is crucial for achieving our target for the fee result," said Aellig, looking ahead. He assumes that the fee result in the three-year plan now coming to an end will be at the lower end of the target range of CHF 850 to 900 million.

"There are several factors that point to a normalization on the real estate markets, first and foremost the expected fall in interest rates," says Aellig. "In addition, demand for housing in Germany, for example, is high, construction activity is low and supply is scarce."

Aellig's first action in his new position will be to focus on the next target program, which will be presented in the autumn. It can be assumed that the Group will maintain the direction it has taken. After all, continuity was deliberately chosen in the succession planning.

©Keystone/SDA

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