Swiss Life Delivers Strong Results

Swiss Life SLHN has reported strong figures for full-year 2022. We maintain our CHF 610 fair value estimate and no-moat rating.

Gross written premiums contracted over the year by 3.6% and is worse than we expected. However, the business has kept its fee and commission income margin stable, and this is typically a good source of earnings. Swiss Life derives its fee and commission income from insurance agent and broker commissions as well as commissions from asset management. Net earned policy fees were CHF 423 million and commission income was CHF 1,947 million, and these were better than we expected. As rates of return have moved higher on fixed income the business has also benefited from an 18-basis-point uplift in its investment income margin as it has rolled into higher rate-of-return assets. That is CHF 255 million better than we estimated. However, we think where the CHF 1,450 million in net income has really been buoyed, is within the change in liability for future life policy benefits. Here, we think the business has adjusted its actuarial assumptions and there have been higher deposits and surrenders. Overall, the results have delivered a 10.9% average return on equity, higher than we expected. The board is proposing a CHF 30.0 per-share dividend.