Swiss Life Holding AG ($SLHN)

Ladies and gentlemen, welcome to the Swiss Life Presentation of the Full Year Results 2025 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] Kindly note that webcast questions will be answered after the call. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Matthias Aellig, Group CEO of Swiss Life. Please go ahead, sir.

Dear analysts and investors, good morning. Thank you for joining us, and welcome to our conference call. Today, we report our results for the financial year 2025. I will give you a brief overview before handing over to our CFO, Marco Gerussi, for more details. I'm proud of the operational performance and of what we have achieved in 2025. We grew the insurance business, meaning premiums, operating results and the contractual service margin. We also grew the fee business at owned IFAs and with own and third-party products and services, and we achieved strong net new assets in our third-party asset management. Altogether, we achieved growth in profit from operations and in the return on equity as well as a strong solvency level. On top of that, we propose a higher dividend to shareholders. Our results show the great commitment of our employees and advisers. I would like to thank all of them for their strong engagement and our customers for their continued trust and loyalty. Let me provide some more color on the 2025 operational performance. Swiss Life Group increased its profit from operations by 3% in local currency to CHF 1.83 billion. Despite higher tax expenses, net profit was stable at CHF 1.26 billion. The return on equity was at 17.2%. Operating profit from insurance business grew to CHF 1.1 billion, up 6% in local currency. The fee result was at CHF 858 million, slightly below the prior year with growing contributions from owned IFAs and owned and third-party products and services. Asset Managers result was, as expected, below the very strong prior year. The SST was around 210% at year-end. Cash remittance in 2025 was CHF 1.2 billion, the prior year included one-offs as flagged before. We propose to increase the dividend per share by 4% to CHF 36.5. This corresponds to a payout ratio of 82%. And the ongoing CHF 750 million share buyback program is proceeding as planned and will run until the end of May 2026. Let us move to Swiss Life 2027. Our program takes us a step higher on our success path as we strive to reach new heights for earnings and cash returns to shareholders. We are well on track with the implementation of our Swiss Life 2027 program to achieve all our strategic actions and financial ambitions. We're highly committed to executing our program with discipline and to delivering on our promises. With that, I hand over to Marco, who will provide more details on the full year 2025 financial results and the Swiss Life 2027 progress reporting.

Thank you, Matthias. Good morning, ladies and gentlemen. Let me continue today's presentation by taking a closer look at our 2025 full year results. We begin, as usual, with some selected P&L figures shown on Slide 7. Insurance revenue was up to CHF 8.8 billion due to higher PAA revenues, mainly in France and international as well as a higher CSM release, partly offset by FX translation effects. Insurance service expenses were lower at CHF 7.5 billion, mainly due to lower claims and FX. The net investment result decreased to CHF 805 million. As a reminder, this is an IFRS 17 accounting figure, which also includes various other items with offsetting gains not reported in this position. In view of our investment performance, we continue to focus on the net investment income, which we will discuss later. Profit from operations increased by 3% in local currency to CHF 1.8 billion, driven by the operating results from insurance business. Borrowing costs increased to CHF 160 million. This is due to refinancing effects. Income tax expense was up to CHF 411 million, primarily due to France. As you know, the French government introduced in 2025, a higher corporate tax rate for large corporates. Net profit of CHF 1.3 billion is at the prior year level despite, as just mentioned, higher income taxes and borrowing expenses. Turning now to further selected figures. Gross written premiums, fees and deposits received increased by 3% in local currency to CHF 20.9 billion, supported by growth in all our insurance business divisions. Fee and commission income was up by 5% in local currency to CHF 2.6 billion. All sources contributed to this growth, our owned IFAs, own and third-party products and services and our Asset Managers. Net investment income of the insurance portfolio for own risk increased from CHF 3.7 billion to CHF 3.8 billion largely due to positive real estate fair value changes. Operating expenses, excluding variable expenses, increased by 2% in local currency to CHF 2.1 billion, mainly in our growing fee businesses. I will now move on to our segment reporting, starting with Switzerland. Premiums increased by 3% to CHF 10.2 billion. The life insurance market was flat. Premiums in group life increased by 3% while the market was down by minus 2%. Single premiums grew by 6%, primarily driven by new business and higher premiums from existing clients. Periodic premiums decreased by 1%. Assets under management in our semi-autonomous foundations increased to CHF 8.4 billion, up from CHF 7.8 billion at year-end 2024. Premiums in individual life increased by 5%. This is a result of higher unit-linked single premiums in the second half of the year. Single premiums were up by 13% year-over-year, while periodic premiums were flat. The market increased by 4% overall. Fee and commission income was up by 6% to CHF 359 million, mainly due to higher income from unit-linked business and from investment solutions for private clients. The segment result increased by 4% to CHF 891 million due to a higher operating result from insurance business. Income from assets not backing insurance liabilities grew driven by real estate and bonds. The fee result was flat at CHF 55 million. Higher income was offset by continuous investments in growth initiatives such as investment solutions for private clients, which we mentioned in previous disclosures. Cash remittance decreased to CHF 0.65 billion. As a reminder, the figure for 2024 included positive one-offs of CHF 0.12 billion. Turning now to France. Please note that all figures quoted are in euros for our French, German and International segments. In France, premiums increased by 4% to EUR 8.1 billion, while the total market was up by 9%. In our life business, premiums grew by 5%. The market was up by 10%. The unit-linked share in our life premiums was at the high level of 69%. This compares to a market average of 39%. We generated life net inflows of EUR 2.6 billion. Total market net inflows were at EUR 50.6 million. Health and protection premiums grew by 1% due to price increases. The market was up by 3%. P&C premiums were down by 1%. Fee and commission income increased significantly by 10% to EUR 593 million. Unit-linked fee income grew strongly based on higher average unit-linked reserves, income from structured products remained stable at pleasing levels. Segment results grew by 8% to EUR 361 million. The fee result was up by 7% to EUR 195 million due to the unit-linked business. As mentioned in previous disclosures, the contribution from structured products declined as the brokerage fees shifted to our operating results in insurance business, where it emerges over time. Operating results from insurance business was up by 9% to EUR 165 million, driven by a higher contribution from the P&C business. Cash remittance increased by 3% to EUR 191 million due to the statutory contribution. Let me address two relevant aspects of the political environment in France. First, as mentioned previously, the French government extraordinarily increased the corporate tax rate by 10 percentage points in 2025 for large corporates. For 2026, these higher corporate tax rates will apply again. And second, regarding the social security health reform, French Parliament decided in December 2025 to introduce a 2.05% charge to the health and individual disability premiums. This will impact the segment result of our health and production business in 2026. However, we remain focused on proactively navigating the environment and mitigating these impacts. Moving on to Germany. Premiums were up by 2% to EUR 1.5 billion due to modern, modern-traditional and disability products. The market was up by 5%, driven by higher single premiums. Fee and commission income increased by 7% to EUR 881 million, driven by higher productivity at owned IFAs and by a higher contribution from the insurance business. The number of financial advisers increased by 2% year-over-year and was at the end of 2025 at 6,083. As a reminder, the prior year fee income included benefits from a specific market opportunity in the context of governmental inflation compensation amounting to around EUR 25 million. The segment result was up by 6% to EUR 205 million. The operating result from insurance business increased compared to a relatively low prior year. The fee result was up by 6% to EUR 127 million driven by owned IFAs despite continued investments in harmonization and digitalization of back office systems. As mentioned at Investor Day 2024, both investments will continue throughout 2027. Cash remittance increased by 2% to EUR 106 million. Turning now to the International segment. Premiums increased by 6% to EUR 1.8 billion, driven by higher premiums from the private client business. Fee and commission income declined by 1% to EUR 379 million. Higher income from owned IFAs mainly in the U.K. was offset by lower income from corporate clients. The segment result rose by 10% to EUR 130 million due to the operating result insurance business, which was supported by higher business volumes and an improved loss ratio with corporate clients. The fee result increased by 1% to EUR 91 million. Cash remittance was up by 9% to EUR 73 million due to the statutory contribution. Let's move now to our Asset Managers, which reports in Swiss francs. Asset Managers' total income was down by 1% in both PAM and TPAM to a total income of CHF 1.1 billion. In the TPAM business, total income was CHF 795 million, recurring total income grew by 6% based on higher assets under management, while the contribution from non-recurring income was lower. The share of total non-recurring income for TPAM, meaning commission income and other net income from real estate projects development was 27% compared to a very high level of 32% in the prior year. For 2026 and 2027, we expect to achieve a share of non-recurring TPAM income of around 25%. I think the previous year, about 3/4 of the total non-recurring income for TPAM, relates to revaluation gains, which are non-cash. Segment results decreased by 7% to CHF 414 million. Contribution from PAM was down by 3% to CHF 186 million, driven by the lower income and higher project-related expenses. The TPAM contribution decreased by 10% to CHF 229 million due to lower non-recurring income compared to a very high prior year level. The TPAM cost-income ratio improved to 81% largely due to the higher commission income outgrowing expenses. Cash remittance grew by 3% to CHF 250 million. As a reminder, in the prior year, we had a positive one-off of CHF 20 million. Net new assets in our TPAM business strongly increased to CHF 17.7 billion compared to CHF 9.5 billion in the prior year. We saw continued strong inflows with about 65% of equity and bond related index business. The remainder was contributed by active mandates with inflows of CHF 3.8 billion in bonds, equities and multi-assets. Inflows in real assets amounted to CHF 2.6 billion, with CHF 2.1 billion from real estate. Assets under management in our TPAM business increased to CHF 146 billion compared to CHF 125 billion at year-end 2024, driven by positive net inflows and performance. Let's move back to the group. Operating expenses increased by 2% in local currency to CHF 2.1 billion, reflecting continued investments in business growth, as mentioned, for example, in Switzerland, the back office digitalization in Germany, and project-related expenses in our asset management business. As I outlined at our Investor Day 2024, we aim to keep life absolute costs stable by 2027 at CHF 0.75 billion. For the full year 2025, life absolute costs amounted to CHF 735 million. Coming to the investment income. Direct investment income remained unchanged at CHF 4.1 billion, and the direct investment yield was stable at 2.9%. The net investment income increased to CHF 3.8 billion because of net capital gains, which amounted to CHF 143 million compared to CHF 71 million in the prior year. Increase was driven by positive real estate fair value changes. The net investment yield was up to 2.7% compared to 2.6% in 2024. Let's continue with our insurance investment portfolio on Slide 16. Assets under management decreased to CHF 143 billion, mainly due to unrealized losses in our bond portfolio and lower cash assets in the context of lower repo positions. Real estate fair value changes were positive at around 1.3%, driven by our Swiss real estate portfolio. Real estate continues to be an attractive and important asset class for backing our long-dated liabilities in the context of our disciplined ALM. We hold real estate because of the regular rental income it provides and not because of appreciation. Vacancy rates were stable at 3.1%. Moving on to insurance reserves on Slide 17. Insurance reserves increased 1% in local currency to CHF 182 billion, driven by France. On a statutory basis, we released in total about CHF 0.3 billion of statutory reserves in the Swiss Group and Individual Life businesses as we did in the previous years. Moving on to the CSM development. As I outlined at our Investor Day 2024, our ambition is to increase the CSM through operating growth. In 2025, this growth amounted to a strong CHF 0.5 billion. Expected business contribution at new business together contributed CHF 1.2 billion. We generated another CHF 0.5 billion, mainly from the back book and CSM release increased to CHF 1.2 billion. In addition, economic variances contributed CHF 0.4 billion. This increase was driven by the strong equity market and real estate performance and the higher interest rate with a narrowing differential to the U.S. dollar. This was partly offset by Swiss franc appreciation against other currencies. The pre-tax CSM release ratio was 7% and therefore, slightly lower than in the prior year. In total, the CSM after release representing future profit contribution grew from CHF 14.4 billion to CHF 15.3 billion. Shareholders' equity decreased by 3% to CHF 7.1 billion compared to year-end 2024. This is due to the dividend payment and the ongoing share buyback, partly offset by the profit for the full year. Our total outstanding financing instruments amounted to CHF 5.9 billion. Leverage ratio remained stable at 23% year-over-year and therefore, within our reference level of 20% to 30%. The SST ratio was estimated to be around 210% at the end of 2025 and thus, well above the ambition range of 140% to 190%. Compared to the SST ratio of 201% at the end of 2024, increase was driven by the positive performance of equity and real estate markets. In addition, credit spreads decreased and the U.S. dollar and Swiss franc interest rate differentials narrowed. These positive effects were partly offset by a net reduction in hybrid debt of CHF 500 million which lowered the SST ratio by 3 percentage points. Let me add that, as of today, the SST ratio is estimated to be at the same level as at year-end 2025. That brings me to our Swiss Life 2027 program and the progress reporting. As mentioned by Matthias, we are well on track to achieve all our 2027 financial targets. Let's go through the details, and I will start with the fee income on Slide 23. Fee and commission income increased by 5% in local currency to CHF 2.6 billion. Own and third-party products and services as well as our owned IFAs were both up by 5%. Asset Managers grew by 2%. Profit from operations was up by 3% in local currency to CHF 1.8 billion as a result of a 6% growth in the operating result insurance business. The fee result was down 1%. Strong growth in our owned IFAs and from own and third-party products and services was offset by the lower fee result from Asset Managers. The operating result from insurance business increased strongly by 6% in local currency to CHF 1.1 billion. The main drivers were the higher CSM release as well as higher additional contributions primarily driven by higher income from assets not backing life insurance liabilities and the French non-life business. The return on equity was 17.2% compared to 16.6% in the prior year and within our target range of 17% to 19%. Earning capital, cash and payout. Cash remittance to the holding company decreased by 7% to CHF 1.2 billion. And as mentioned, we had one-off effects totaling CHF 0.14 billion in 2024. At the end of 2025, liquidity at holding amounted to around CHF 750 million. Our share buyback is well on track. We repurchased shares worth CHF 631 million as of 6th March 2026. The program of CHF 750 million will run until May 2026. Coming to the dividend. For the financial year, 2025, the Board of Directors will propose a dividend of CHF 36.5 to the AGM up 4% from CHF 35 in the previous year. This will result in a payout ratio of 82%, consistent with our target of higher than 75% and the ambition to increase the dividend per share. The dividend will be paid upon approval from the AGM on the 13th of May 2026. Let me summarize. In 2025, we achieved growth in premiums, fee and commission income and in our operating profit. Additionally, we saw strong net new asset inflows in TPAM. Life absolute costs were stable, and our operating results from insurance business grew by 6% in 2025, while the CSM was significantly up. Our return on equity is within our target range, cash remittance, dividend payout ratio and our share buyback are well on track, and our SST ratio is on a strong level. Having said that, we are well on track with our Swiss Life 2027 program and we are convinced that with our determination, our diligence, and our discipline, we will achieve all our group financial targets. With this, I'm handing back to you, Matthias.

Thank you, Marco. We will now open the Q&A session. Who would like to start?

[Operator Instructions] Kindly note webcast questions will be answered after the call. [Operator Instructions] Our first question comes from David Barma from Bank of America.

Firstly, on remittances, please. I see you expect remittances from Swiss Life AG to come down slightly in 2026. Can you give us a broader outlook for remittances this year, including Asset Management where I suppose the result was down in '25, and we have the effect of the non-cash items to consider? So that would be my first question. And then secondly, on non-life in France, please. Can you come back on the developments in the second half of the year, please, where the performance deteriorated a little bit. And if you could give us some color on '26 renewals and how you expect that to develop for the P&C parts? And then lastly, on real estate revaluations, for '26, do you expect the share of revaluations to be the same within 25% of non-recurring income in Asset Management?

Thank you, David. I think the first question goes to Marco. I can take a couple of words on the second one. And I think the third one goes to Marco again.

Starting with the remittances. I mean, overall, we have our program, Swiss Life 2027. There are our targets aggregated CHF 3.6 billion to EUR 3.8 billion. All our business divisions -- Switzerland, you mentioned, and also Asset Managers with a number CHF 750 million to CHF 800 million as a target for 2027 are on track to achieve both targets, and that is how we have planned and then set up and going on. So we are on track to reach that. And to add, the third question on real estate, the share, I've mentioned at '27 non-recurring comparing to the very strong 32% in the prior year. On average for the Swiss Life program, we said we want to have that at 25% on average. And as I said in my presentation, for 2026 and 2027, we expect this average, this share to be on average also around 25% just mentioned. So same level.

Sorry, what I meant on that was just the share within that of revaluation. You mentioned 3 quarters for 2025, I think.

Yes. So I mean, we don't guide in particular on those details. What we have said at the Investor Day is that the program overall for Asset Management '27 is less of cash in it as the '24 program, because of different timings of those project development projects that is considered in the plan also in how to being set up for the CHF 3.6 billion to CHF 3.8 billion. So it's nothing to worry about. We don't guide on details on that for the future.

And to come to the French non-life businesses. I mean, if I look at where we stand, I mean, the P&C business that really has developed positively. We're not fully satisfied yet the way it presented itself in 2025. So there, we clearly ask and work with our colleagues and friends to improve the P&C result going forward. On the health and protection business, you may recall that we had really difficulties in 2023, sometime ago. We achieved a very, very significant rebound in '24 , 2025 results. If I look at it, there, we are operationally really in good shape. As Marco mentioned, we expect there some pressure from this premium charge of 2%. But as we say, look, we are used to navigating, let's say, these, let's say, territories of, let's say, the French businesses, particularly also the French health and protection business, and we're really working hard to make sure that also the French health and protection business delivers a nice contribution. If you refer to this H2 thing in 2025, there are certain seasonalities. So I think there's nothing particular to mention other than it's kind of a seasonal stuff.

The next question comes from Thomas Bateman from Mediobanca.

I think you said the holdco cash number was 0.75. I might have missed that. Can you just talk through some of the moving parts there, because it was a little bit lower than my estimate. Second question is just on the changes to mortgage payment deductibility. I understand there's some changes going on in Switzerland, but there's some offsetting factors. Maybe if you could just explain exactly what's happened and the impact that you expect on your business and real estate prices, if any? And the third question is just a question about capital allocation. Historically, obviously, the group has always done share buybacks, but I guess you've never traded at such a high valuation. How are you thinking about share buybacks in comparison to inorganic growth opportunities?

I think Marco goes for the first question, and I may take the second and the third one.

Yes. You're right. I've mentioned that the CHF 0.75 billion cash at holding at year-end and the moving part, mainly that's the ongoing share buyback, the number around CHF 40 million to CHF 45 million a month. We see there. There is almost no income in the first quarter of the year. And then in Q2, normally, we got the dividend upstream into the holding company. So that's the main moving parts, so to say, at the cash at holding level.

And you know the popular vote that you were referring to, I think, took place in September. First and foremost, before we go into all the details for us, we do not expect it to have a very significant impact or not a significant impact at all. There may be small minuses, small pluses, but all in all, for us, this is not a major topic if you wish, I can elaborate a bit in more detail, but I think that's the key message. In terms of the third question, the capital allocation, the framework we have in place established last time, I think, put in paper at the Investor Day in 2024. That is unchanged in place. So I think there's probably nothing to add. I mean, we are very much aware of potential, let's say, growth opportunities. And if there are, let's say, opportunities for growth in the business divisions, that may either be refinanced by non-remitted cash or if needed, let's say, with the support from the holding. So nothing new to add to cut it short.

The next question comes from Farooq Hanif from JPMorgan.

I just wanted to ask three questions. First one on the fee result momentum, which obviously it's not positive. And when I look at the breakdown, it feels like, obviously, your fee and commission income is up but your costs are higher, particularly in Asset Management. So I was wondering if you could just talk about the direction of travel on all of those elements of the income and the cost and whether you're expecting that cost level in Asset Management to reduce or if there are any non-recurring items in that? So just again, I guess the idea behind the question is to get the confidence that you get to the over CHF 1 billion level. Second question is what actions would you take to mitigate the health premium tax in France? So I mean, are you just going to directly pass it on to consumers? And then the third question is in the CSM move, can you talk about some of the experience adjustments that you made? What were they? And is this a sort of thing that may repeat in the future?

Let me maybe start with the first question on the fee result. I'm sure Marco may chip in on the details on asset management. I think I will then also go for the CSM and your second question, I think on the health and protection, I'll leave again to Marco. First to put the fee results into context. I mean, two out of the three components, as we have shown, have this nice growth momentum. And in terms of the various measures that lead us to believe that we are on track to achieve the fee result that what we have presented at the Investors Day. What we have said there fully applies again, we are working on those initiatives in terms of the fee results in the IFAs business, in the French businesses, in the Swiss businesses. For example, you may also recall that on the German IFA business, we said due to those investments into the back-office systems that there the development of the fee result is a bit back-end loaded within the program. So there, I think that's to be said directly to, as I said, the IFAs and the own and third-party products and services. The Asset Managers fee result is a bit different. We expected this reduction of the fee result. You may recall that we have mentioned during the year 2025 that we expect for 2025 a share of non-recurring income in TPAM of around 25%, which is lower than the 32% that we have achieved in 2024, which is a very strong result as we said back then. Now going forward in terms of the asset management fee result, we have, again, those measures in place that Per Erikson presented at Investors Day. So this is really further growth in the third-party Asset Management business. We have the ambition to grow the AUM to CHF 170 billion in the third-party space. So that's where we are -- have now the CHF 145 million. And also in terms of the project development, we keep working on that. And maybe Marco can say a couple of words on the cost because that was, I think, one of your questions regarding Asset Managers.

Yes. Regarding the development of the absolute cost operating expense development on Asset Management increased there. I mean, it's on one side, it's growing with the business overall. I think that we've mentioned that the recurring part of the business is growing overall in Asset Management, but also in the TPAM area. There have been some additional project-related costs I mentioned in the speech, that's several different projects be it into the area of digitalization. There is some efficiency projects that is going on overall on the cost base and mainly to add on that, also the cost/income ratio now talking about the TPAM business, I mean, that has a positive -- has a positive development. It's going down to 81%. There we have a strong target in the Swiss Life 2027 program. So there is a set of measures feeding in grow -- growing the business, investing in growth, but also into the area of being more efficient within Asset Managers. And then if I may, the second question you asked in regards to the health premiums, one part of the business relating to the individual business there. I think that's too early to tell in all the details. It's a set of measures we are working on with the team in France to mitigate those impacts. And as I said also during my presentation, we are positive mitigating the -- navigating the environment and mitigate those impacts as good as possible. But too early to tell all the details we are working on.

And coming to your third question about this CSM, this CHF 0.5 billion worth relating to back book management. I think it was at half year when we said we want our businesses to work on the back book to extract additional value from the back book by doing this back book management. So we clearly have the ambition that we have their positive numbers in each and every single year. That's what we really strive for. You may also recall on a broader scale that we want to grow the CSM operationally and this experience variances are one element of that, let's say, growth ambition. Will it be CHF 0.5 billion every year? We don't guide on that. And if we look back, we also had some years, for example, in 2024, even a negative because there were some significant specific contracts that lapsed. But as I said, strategically, we want to have a positive there in each and every year. Now in terms of what were the drivers for the CHF 0.5 billion, as you can imagine, there are many, many measures behind that. If I would like to, let's say, highlight too, it's an optimization of the policyholder sharing and maybe the second and maybe also a third one, as you know, the fact that we work hard on making sure renewals happen, that top-ups happen that really these little things that are relevant to maintain and extract value from existing contracts are really captured.

May I come back, if possible, just on one point. So just going back to asset management and the cost. So I mean your commission income level was kind of flat. I mean, obviously, recurring offset the non-recurring reduction, but the cost base was higher. I mean, you talked a little bit about there being some kind of non-recurring elements in that cost base. So I just wanted to understand if I take the CHF 620 million cost operating expense and asset management in 2025, is that a level that might come down? Or would you say it's a level that will kind of stay or grow from here?

Yes, I think I can add two points on that. One is that the cost base and the non-recurring element. Now I'm not talking about the project-related costs, but the non-recurring income and the business. This is something very simply that coming on top. So we have a cost base, recurring business and non-recurring, the better it is, the better the business scales, so to say. Relating to the cost itself, so the CHF 620 million you mentioned and having in mind those projects mentioned where we work on digitalization, but in particular also on efficiency measures, I think you could expect the number getting smaller in the future, yes.

The next question comes from Ahmed Nasib from UBS.

Firstly, on repatriation. Can you talk about how much stock of potential internal loans or capital buffers you have in the subsidiaries at Swiss Life? And are you expecting any repatriations over this current plan in '26 and '27? Second question on kind of the mix shift in the NNAs. You've got a lot more equities last year because of the index business. Is there still expected to be more growth in that business in '26, '27? Or are we kind of thinking about a more normalized mix on the NNAs on real estate and infra as well contributing? And then finally, on leverage. It's 23%. Do you expect yourselves to kind of be in the middle of the range of 25%? I guess the question is, is there room to add more debt to the capital stack here?

I think Marco can start with the first one.

So the first one, overall, I think we don't guide in all the details. There is some potential. We are always working on, let's say, optimizing upstreams and using cash for the best possible usage. So we don't give guidance in all the details. I mean we have not planned those things into the plans to reach our strategic goals.

And maybe to add on that, I mean, we talk about that every now and then, these, let's say, internal loans, they support growth. As we also have shown at the Investor Day, we also, if needed, provide, let's say, support from the holding to achieve growth in the business divisions. On the second question on the NNAs, yes, we talk about index now, I think, for the second year. One way to think about the index businesses, yes, this is kind of an incremental element that is coming on top. And we have the ongoing ambition to further attract NNAs in '26 as well. It's always a question at which, let's say, pace. But for us, this is an area where we see opportunities to further grow. And as a result of that, there is -- how should I say, there is, let's say, a different share of real assets compared to the business mix that we had prior to establishing the index business. Having said that, we are clearly still actively pursuing real assets in the NNA.

And to the third question regarding the leverage, you mentioned the 23%, which is below the midpoint of our reference level. I mean, the absolute level of debt has increased over the many years because of growth. So we are using that to grow. And looking into the future, I mean, there is, for sure, a bit of room within that level we could move if we see further additional opportunities to grow, yes, for sure.

[Operator Instructions] The next question comes from Matteo Lindauer from Vontobel.

I have two questions. One regarding the French business. You mentioned the growth rates of the market. And if I'm not mistaken, you said you grew in your business lines below the market rates. Could you give us some more clarity on that? And the second question on the real estate gains. Can you give us some clarity about revaluation effects of your real estate portfolio outside of Switzerland?

I can go with the first question, the French business. I mean, in terms of the top line of the premiums, we are growing at quite pleasing levels. So that's a very, very good development, but below market average. But what is important here to see that the quality of the business, the unit-linked share we have in our business that we get in. So that really helps. And those inflows in the unit-linked area, they are above market average if you take into consideration our market share in France. And to add, also when comparing to the market, it's always a bit, let's say, tricky to compare the numbers, because there is insurance only, an insurance only view and then there is an overview, including banking assurance also then having banking products in that scope. So -- but overall, we are very satisfied with the growth, with the quality of the business and in particular, with the inflows and the performance of those assets.

And if I may add on that, I mean, for us, we say profit before growth. And if I may take the example of the health and protection business, I talked about before, we rather have repricings that bring us back into the aspired profitability levels rather than just growth and grow with the market. So for us, it's profit before growth as a key overall thought. Now maybe on the real estate fair value gains, if we now look at the insurance portfolio, we had this, I think, 1.3 percentage points, and this was driven by the Swiss business. So the Swiss real estate, I have to say. And that means outside Switzerland, we have seen stable valuations. And by the way, that's also the picture we expect going into 2026.

You mean stable, were they positive, flat or slightly negative?

If I say stable, they were stable, so flattish.

The next question comes from René Locher from Oddo BHF.

Yes. Hope you can hear me well? So just a follow-up on real estate was 1.3% of the total portfolio and when I compare it with the average of the Swiss listed real estate companies...

Rene, we have actually some difficulty either you are too close to the mic or away.

Is it better now?

Not a lot, but it's at least better.

Okay. Okay. So let me try again. Just on DC valuation gains, which is 1.2%, and that's at the lower end of what we have seen with Swiss real estate companies. So, I was wondering what the reason is. That's the first question. The second one, could you just remind us what the value of your real estate portfolio? On Slide 54, I was surprised to see that real estate net addition was at minus CHF 0.9 billion. Just wondering how attractive the Swiss real estate market is for you in the current market environment? And just a number crunching on Slide 25, I think you did well on the non-life business in France. It was minus CHF 34 million in 2023. Now you're up at CHF 121 million. But what really moves the needle are these further contributions was like CHF 101 million in 2023 up to CHF 226 million. Now we are at CHF 285 million. So I was just wondering if you could give us a bit more detail what are the key drivers in the further contribution?

Thank you, Rene. We try -- I believe we have understood most of the question. On the 1.3%, as you already implied, we do not value our properties ourselves. This is done by an external valuation. I think, it's Wüest Partner. And if you compare to Swiss real estate companies, they have, I assume, probably only Swiss real estate has set our portfolio and the scope of the 1.3% includes the entire book that we have. So that means the Swiss real estate and also a share, quite a significant share of non-Swiss real estate. To the question you had on Page 54, these negative net additions. First to your question, is the Swiss market attractive for us? And the answer is yes. We believe this is an attractive market. Why is it negative? I mean, first of all, this is not Switzerland only, it's the entire portfolio. And for many, many years, we have been saying we are active in the market. So we're doing, sometimes acquire objects. We are disposing of objects. So it's a buy and manage approach we have on the portfolio, and that's the reason why sometimes there may also be negative numbers. So it's not an assessment about the attractiveness of the real estate market. So Marco also mentioned that for us, it continues to be an attractive asset class. And the third question, I think, related to...

Maybe I assume I understood it correctly, Rene, your question in regards to the operating result insurance business, where we have the CSM and then this additional contributions. If naming one or two main drivers for that, I mean, we need to keep in mind that back in '23, in the non-life business in France, particularly also in health and protection, we had kind of a turnaround situation and then quite a rebound and increasing numbers over the years. So in earlier years, prior years, the non-life business in France was the main driver on a year-to-year basis because of that rebound, we really worked hard on it and also have let's say, expected and communicated to rebound like that. And the second -- and now this year, P&C was on a smaller scale and also because of the positive development of the result, one of the driver. The second driver, that's the assets not backing insurance liabilities. So that's an asset portfolio behind that. There is different asset classes in it. You could assume quite a share of real estate in it, positive value changes we have heard 1.3%, and that's one of the explanations why the numbers went up from '24 to '25. And looking into '26, as we said, there is in the P&C area, some potential we see to improve profitability. Health and protection, we have this additional tax from the French government. We work on to mitigate that as good as possible. And in the area of real estate, Matthias mentioned that earlier, we see the outlook similar to what we have seen in the '25 numbers, so flattish development in Europe and in particular, in Switzerland, positive development. I think that's what we can say to the audience.

The next question comes from Michele Ballatore from KBW.

So I have two questions. The first is on the fee revenues that in the fourth quarter was quite strong in France and Germany. So if you can maybe give more color on the development in the quarter, in the last quarter. The second question is on the SST. Obviously, I mean, 210% is a strong number. Can you maybe highlight like, even qualitatively the impact, the main blocks of this development in terms of capital generation, market impact?

I can go with the first question, the second half of the year in the fee area, France and Germany. I think there is no particular reason. I mean there is some seasonality. There is sales and distribution pushing hard, working with our clients, and we had quite a strong, as I said, strong second half of the year. I think that's just the outcome of disciplined work and management of the businesses, not a particular reason for the good run in the second half.

And on the SST, we're not sure whether we have fully understood the question. But the way I understood it is we have had clearly a very strong contribution from real estate and equity performance. That was about maybe 2/3 of the uptick. And then all the movements around interest rate probably have added the remaining part when it comes to the economic, let's say, performance. And as usual, and we typically disclose that with the financial condition report, there's also, let's say, positive contribution from, let's say, what we call the typical business development from the moving forward of the SST.

We have a follow-up question from Ahmed Nasib from UBS.

Sorry, I don't have a question.

We take another follow-up question from Thomas Bateman from Mediobanca.

I note that you -- the same strategic target to keep the life cost base stable. But I guess some of your competitors are beginning to talk about potential cost savings from artificial intelligence. Is this something that you're looking at? I guess, more broadly, if you would like to speak as well on how you see AI impacting your business, more broadly?

Yes, I may say a couple of words on that. Clearly, you have seen it in the Swiss Life 2027 program already that in terms of the strategic actions, we have one strategic action that is focused on operations and increasing the operational efficiency. You may recall that in all the business divisions, we have been talking about various shapes and forms of digital initiatives in view of, let's say, efficiency in view of, let's say, additional business opportunities. So to cut it short, yes, we are clearly not only looking at that. We are using that already in the current program to become more efficient. And by the way, we have done so in the past. You probably don't put it into the, let's say, in the showcase, but for us, it's a tool to achieve our business goals and not an end in itself. I hope this answers.

We take now the last question, who is a follow-up from Farooq Hanif from JPMorgan.

I just wanted to ask, I mean, the markets have been obviously wild for obvious reasons year-to-date. But could you comment on interest rate differentials? I haven't looked, but just if you could comment on whether there's anything there to comment upon in your Swiss solvency test or CSM year-to-date?

No, I think there's nothing particular to mention. If you look at the markets and you say they are currently, as you say, wild, we don't know where things will go. But then, if we look at what the market is pricing in, it's now probably in the U.S. dollar 1.5 cuts rather than 2, what was assumed at the beginning of the year. In Switzerland, we were assuming probably no cuts at all. Nowadays, it's maybe half an increase that is priced in. So if we look forward, there's probably on a relative basis for the rate differential, no change. But as you know, we don't know anything more than you do about the markets and how they develop. But that's what we read now from the market.

And if I may add, I mean, not only in terms of the interest rate difference overall on the market, I've said that also in the presentation, the SST, very resilient. We can say the same on the economic part of the CSM as of today, we see year-to-date quite a stable development.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Matthias Aellig for any closing remarks.

Ladies and gentlemen, thank you for your questions and for joining us today. Before we close the call, let me recap today's key messages. In 2025, we continued on our growth path across all divisions. And I'm very pleased with our operational performance in both insurance and fee businesses. We are well on track with the implementation of our Swiss Life 2027 program. We're highly committed to executing it with discipline and delivering on our promises. So thank you again, and we wish you a nice day. Goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now discuss your lines. Goodbye.