Good morning, ladies and gentlemen. Thank you for dialing in and for your interest in Swiss Life. Today, we are reporting on selected top-line figures for the first quarter of 2024. We will focus, as usual, on fee income, premiums, and direct investment income. I will provide a quick overview of today's key messages, and then I am happy that our new group CFO, Marco Gerussi, is with us today. He will walk you through the segments in a minute. In the first three months of 2024, Swiss Life increased its fee and commission income by 11% to CHF 639 million.
Drivers were our own IFAs, own and third-party products and services, and Asset Managers . Gross written premiums, fees, and deposits received increased by 2% to CHF 7.5 billion. Direct investment income grew to CHF 1.02 billion, which corresponds to a non-annualized direct investment yield of 0.7%. The SST ratio at the end of March 2024 was around 210%. With that, I hand over to Marco, who will take you through our segments in more details.
Thank you, Matthias. Good morning, ladies and gentlemen. This is my first conference call as Group CFO, and I'm very much looking forward to our discussions and to meet many of you in person in the coming months. I'm pleased we have made a good start to the financial year 2024, and that the Swiss Life 2024 program is well on track to achieve or exceed all group financial targets. Now, let's move to Q1 2024 and the segments in more detail. As usual, all group figures are in Swiss francs, and figures for each business division are in local currency. All figures are unaudited, and growth rates are mentioned in local currency. I will start with our segment, Switzerland. Premiums decreased by 1% to CHF 4.4 billion. The life insurance market increased by 1%, decreased by 1%.
Premiums in individual life grew by 9%, while the market was up by 5%. Periodic premiums increased by 2%. Single premiums grew by 22%, driven by a modern traditional product. Premiums in group life declined by 2% to CHF 3.9 billion, while the market was unchanged. Periodic premiums decreased by 4%. Single premiums grew by 3%, primarily due to higher new business. Assets under management in our semi-autonomous foundations were at CHF 7.5 billion, compared to CHF 7.1 billion at year-end 2023. Fee and commission income was up by 5% to CHF 82 million, driven by Swiss Life Select. Turning to our French-German international business divisions that all report in Europe . I will start with France. Premiums increased by 9% to CHF 1.8 billion. In our life business, premiums were up by 10%.
The overall market grew by 15%. The unit-linked share in our life premiums was unchanged at 65%. This compares to the market average of 39%. Life net inflows were CHF 0.5 billion, versus overall market net inflows of CHF 9.3 billion. Health and protection premiums grew by 8%, driven by price increases. The market was up by 7%. P&C premiums grew by 4%. As stated at our full year 2023 disclosure, for 2024, we expect operating result contribution from our French non-life businesses to improve significantly and clearly turn into positive territory. Fee and commission income rose by 19% to CHF 144 million. We had, again, a strong contribution from the banking business, given continued high revenues from structured products.
Unit-linked fee income also increased due to higher unit-linked reserves compared to the prior year period. I continue with Germany. Premiums grew by 4% to CHF 402 million due to modern traditional and disability products. The market decreased by 7%, driven by lower single premiums. Fee and commission income rose by 20% to CHF 216 million due to our own IFAs, following a successful campaign in the context of governmental inflation compensation. The unit-linked insurance business also contributed to this increase. The number of financial advisors increased by 1% to 6,011 year-on-year. Turning now to the international segment. Premiums declined by 1% to CHF 1.1 billion. Higher premiums from corporate clients were more than offset by lower premiums with private clients. Ellipse Life was the main driver of this premium increase.
The acquired business was fully reinsured. The renewed and the new business is partially reinsured, and therefore, we see a shift from fee income to risk premiums, as expected. Fee and commission income declined by 3% to CHF 97 million. own IFAs reported an increase in fee income due to higher recurring income with Chase de Vere . Income from corporate clients declined, given the above-mentioned effects. Moving to Asset Managers , which reports in Swiss francs. As usual, the update in Q1 and Q3 focuses on commission income and does not include all the net income from real estate project development. Asset managers commission income increased by 4% to CHF 220 million. In our PAM business, commission income increased by 4% to CHF 83 million. About half of the increase is due to higher recurring income. The other half comes from higher real estate transaction income.
In our TPAM business, commission income was up by 3% to CHF 137 million, driven by higher average assets under management. Non-recurring fee income slightly increased in local currency, but was fully offset by negative FX translation effects. To make figures comparable to full and half year disclosures, the share of total non-recurring income for TPAM was 31% of total TPAM income, compared to 7% in the prior year period. Total non-recurring income includes commission income and other net income, essentially from project development. Three quarters of the increase relates to a revaluation gain on an ongoing development project in Germany. This positive TPAM development underpins what we already mentioned at full year 2023 disclosure. For 2024, we expect the share of total non-recurring income to be around 30%.
This is in view of our project development pipeline, and it remains reliant on the expected normalization of real estate markets in Germany and France. Net new assets in our TPAM business amounted to CHF 0.7 billion, compared to CHF 2.5 billion in the first quarter of 2023. We achieved inflows in real assets of CHF 0.3 billion, thereof CHF 0.2 billion in real estate. Inflows in other asset classes amounted to CHF 0.2 billion in bonds, CHF 0.1 billion in equities, and CHF 0.1 billion in money market funds. By year-end 2024, we expect total net new assets to be above the 2023 level of CHF 9.8 billion, given our pipeline. Overall, assets under management in our TPAM business were at CHF 117 billion, compared to CHF 112 billion at year-end 2023.
Increase is driven by positive performance from securities and positive FX translation effects. Turning to our investment results. Direct investment income increased by CHF 87 million to CHF 1.02 billion, driven by higher income from bonds, loans, equities, and real estate. This was partially offset by negative FX translation effects. The non-annualized direct investment yield was at 0.7%, compared to 0.6% in the prior year period. Regarding real estate, real estate continues to be an attractive and important asset class to back our long-dated liabilities. Vacancy rates overall marginally increased to 3.2% from 3.4% at year end 2023. For the full year 2024, we expect vacancy rates to remain at about today's level. Real estate fair value changes were negative at around -0.4%.
For the full year 2024, we expect negative real estate fair value changes to be in the range of -0.5% and -1% point, as communicated during our full year 2023 disclosure. Moving to solvency, cash, and payout. Our SST ratio was 212% on the first of January, 2024. At the end of the first quarter, 2024, we estimate our SST ratio to be around 210%. Therefore, we continue to remain well above our target range of 140%-190%. At the end of the first quarter, 2024, liquidity at holding amounts to around CHF 0.75 billion, after we have completed the CHF 300 million share buyback by the end of March 2024. With that, I hand back to you, Matthias, for the wrap-up.
Thank you, Marco. Let me sum up. Swiss Life has made a good start to the 2024 financial year. We achieved a significant increase in fee income in the first quarter of 2024. Now, let's look forward to the entire year, year 2024. In terms of the fee result, we expect to reach the lower end of our ambitious target range of CHF 850 million-CHF 900 million. The developments of Asset Managers give us confidence in this respect, while the target achievement remains reliant on the expected normalization of the real estate market in Germany and France. Regarding the other financial targets, we are confident that we will exceed the targets for return on equity, cash remittance, and dividend payout ratio. In addition to that, we have already exceeded our share buyback target.
We're therefore well on track to achieve or exceed all of the group financial targets of our Swiss Life 2024 program. Thank you for listening. We are now ready to take your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested with only handset and eventually turn off the volume of the webcast. Webcast viewers may submit their questions or comments in writing via the relevant field. Kindly note that webcast questions will be answered after the call. Anyone with a question may press star and one at this time. Our first question comes from Peter Eliot from Kepler Cheuvreux. Please go ahead.
Thank you very much. Three from me, if I may. Apologies, I didn't fully hear what, exactly what you said about the revaluation gain in Germany. I think you said that three quarters of the non-recurring comes from that. So do I understand that it would have been 7% without that, and therefore, in line with last year? And if so, I'm just wondering if you can give us any more insights into the near-term pipeline, or whether we are basically just waiting for Q4 and for, hopefully, a pickup in markets? That'd be the first one. The second one, you mentioned the government inflation-related tax incentive in Germany. Should we expect that to continue past Q1?
Thirdly, you also mentioned the improvement you expect in your French health or non-health business. Can you give us an update on where we are on that? Thank you very much.
Thank you, Peter. I will take the first two questions, and Marco will give the view on the third question. Now, in terms of the non-recurring income in TPAM, and let me elaborate a bit first on it. I mean, you're aware we have this non-recurring components which are outside of the fee income. So Mark, we have commented about the fee income development. We have seen that growth as it manages, and in addition, we have this other net income, which is not part of the fee income. And the share of all the non-recurring elements of the total income in TPAM amounted to the 31% of the total income, compared to the 7% in the prior year.
There is this revaluation effect that Mark mentioned, and clearly that's part of, let's say, doing business in project development, that there are gains on ongoing and completed project. So I think that's the first important message. Now, if we were, as you have done, to eliminate, for argument's sake, that from the calculation, the share of non-recurring TPAM revenues would be around 14%, and therefore, above the prior year. Now, why is it not a quarter, as you said? It's because you changed numerator and denominator.
So I think that's the first point, and more on the outlook, I can say, look, we confirm the guidance we have given already at the full year, that we expect for the full year around 30% of non-recurring income for TPAM. And as said, based on what we mentioned, we see here really confidence given to us that we reached the target that have been indicated. So that was a bit a lengthy answer on the first question.
On the second one, on this, campaign that relates to the inflation law in Germany, clearly we expect further growth in the fee income in the German market, although I think the pace will come down. The reason is that the effects from this campaign largely accrued in Q1. For the third question I give over to Marco.
Thank you for the third one. So now, in terms of the French non-life results, so health and protection, as well as P&C, we reported at the year end 2023, in the area of the operating and the technical results, some, let's say, challenges, and also announced the plan to turn back into positive territory. So there were different drivers, regulatory drivers and also some tariff increases. We at least see that as a market phenomenon, so it's not only, so Swiss Life, we increased prices in 2023.
We increased prices again, so the growth rate you have seen, the 8% and the 4% in these business lines, they were mainly driven by these price increases. We have a set of measures in place, and that makes us very confident, as stated, that we expect the operating result contribution from the French non-life business to improve as a set significantly and then turn into positive territory within 2024 and beyond.
Great. Thank you very much.
The next question comes from Thomas Bateman from Berenberg. Please go ahead.
Hi, good morning. Thank you very much for taking my questions. I was just wondering if you could give us the cash at holdco position today, and hopefully that reflects the remittances and the dividends that have come in and gone out, and any other potential moving parts for the remainder of 2024. A second question, and thanks again for the details on the non-recurring income. I guess I'm trying to understand, if we included that non-recurring income, what would the like for like growth be? I think the fee income in asset management grew by 4% in Q1, but if I include that non-recurring income, what level of growth could we be looking at in Q1? Finally, could you just give us an update on the hedging costs, please, and any potential risk that they might pose to, I guess, the net investment yield going forward? Thank you.
Okay, let me take the questions two and three. I will go with them first, and Marco can then go to the cash at holding question. Now, in terms of hedging costs, you know, we had about CHF 1.1 billion in the full year 2023, and now with the Swiss National Bank leading the rate reductions, clearly the interest rate differential at the short end has widened, and as a result, we expect for the full year 2024, somewhat higher hedging costs, given that, as I said, the rate differential at the short end has increased.
That may be CHF 200 million higher than in the prior year, but keep in mind that this additional cost, like I say, the full amount of cost is clearly subject to policyholder sharing. Now, in terms of the non-recurring income, I may not have fully captured your question, but what I can say, and I think Mark alluded to that, if we just look at the recurring income in TPAM, we have seen a growing non-recurring income and everything else that we mentioned, the 31% compared to the 7% came on top. And then, I hand over to Marco for the holdco cash.
Okay, thank you. In terms of the cash at holding, we had around CHF 0.85 billion at the year end 2023. By the end of March 2024, so the first quarter, as said, this is around CHF 0.75 billion. As of today, we are slightly higher than in Q1 and with more dividends to come, so until the end of June 2024.
As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Nasib Ahmed from UBS. Please go ahead.
Thank you. Thanks for taking my question. So first one on TPAM. I saw the AUM grew by about 5%, and the CHF 137 million fee income grew by 3%. Just trying to understand if there is some sort of margin compression in the 0.4% that you've seen in 1Q. Thank you.
Sorry, Nasib. To be frank, we had connection difficulties. We probably got 1/3 of your question. If you could repeat it?
Sure. I was asking about the AUM in the TPAM business. So that increased by 5%, but the fee income increased by only 3%. So I'm wondering if there's some margin compression in the TPAM business, given you've got more money market funds in the AUM mix. And the second question is a breakdown of the 0.4% fair value changes on real estate into geographies.
Okay, thanks. Now, I believe we got them. Let me start with the 0.4%, and those are just, let's say, indications. We will give a clearly more, let's say, precise update in half year. But that's a, let's say, general, you can think about Switzerland being the area where we still have very good valuations. You know, I'm sure we had here and there even positive gains. And I think then Germany and France on a relative basis were to follow. Just, that's a bit the picture that emerges from the 0.4%.
Now, in terms of the TPAM, AUM and the fee development, I think there's probably one point to remember. If we compare the fee income, I mean, we had a negative development from the FX. You know, we had the average FX movement quarter-on-quarter. That was clearly negative. And if you just look at the closing AUM, if we compare year-end 2023 with the Q1 closing AUM of CHF 117, they were positive, let's say, FX developments in there. So I think that's probably one way to think about this, what you call, let's say, security development of the AUM and the top line.
Thank you.
The next question comes from René Locher from KBW. Please go ahead.
Yes, good morning. First of all, just a follow-up question on Peter's questions on the French non-life business. In the full year, next slide, on slide 27, you show the non-operating loss of -CHF 34 million, and well, I have noted that you're targeting now mid- to high double-digit operating result. I mean, is this still the case? Just as a clarification. So that's the first question, and then the second one: I saw in the press that the Swiss Life Asset Managers are planning a capital increase of CHF 650 million in June, July 2024. So I was just wondering, for my understanding, are these CHF 650 million then shown as net new money for the Swiss Life Group? Thank you.
Thank you, Ronnie. In terms of the French non-life business, yes, we confirm what you just said. We mentioned that already at the full year, that this is the way we see the development. That's what the measures in place will lead to. So repeating, we will move from the -CHF 34 million in the full year 2023, to this mid- to high double-digit million for the full year 2024. Again, we said that at the full year 2023 closing, and we confirm today with all the measures taken, that we're here on the way to achieve that. On the second point, indeed, we having issued that media release, as you said, there is this capital raise scheduled for June, July. Once this is paid in into those TPAM, let's say, structures, this will be NNA.
Okay. Thank you.
But again, right now, this is not included in any of the.
Yeah.
Today. It will be reported once it's the money has flowed into those TPAM funds.
Yes. Thank you.
The next question comes from Rocky Parvin from HSBC. Please go ahead.
Hello, good morning. Thank you for taking my questions. I have three on my side. The first one would be on the fee income coming from France. Obviously, we have seen the strong development coming from a structured product, yet again. So can you just confirm if we should see the momentum continuing well into the rest of the year? The second one would be on the net flow guidance that you mentioned, should be expected above the 2023 levels. Looking at the Q1 net flows currently, can you give us some more color about as to which asset class, if we should see this stronger development over the coming nine months? And the last one would be on the share of non-recurring fee. You have retained your guidance of 30%.
Historically, from my understanding, the non-recurring fee was more back-end loaded. i.e., the bulk was more generated in the second half. Now, given you've already got a strong head start with 31% in the first quarter, should we assume this guidance to be more of a conservative in nature? Thank you.
Okay, thanks for the question. You know, on the fee income in France, again, there are two components to the growth there. There's the unit-linked business, but the larger part of the growth came indeed from structured products. You know, historically, we have been saying that we don't know how long this will continue, and structurally, this is still the case. You know, those are all the call structures with the call clearly depending on stock market developments and so forth. So, we do not know how the stock market will develop and are therefore a bit cautious to give guidance on the development of the structured products. But, as you said, we have here seen for now almost 24 months, really good and growing momentum.
But that said, I think we are always a bit cautious on the outlook. In terms of the unit-linked business, I think we clearly see continued good momentum, which is also a bit more, let's say, which certainly has a high visibility. Now, in terms of the NNA, the net flow guidance, indeed, as Marco said, we have many RFP situations this year across all asset classes, and given this pipeline, we feel comfortable to give the guidance that we will go above last year's NNA in the full year. As I said, the RFP situations are in various asset classes, so it's a bit premature to give a breakdown of what we expect in terms of asset class mix for the full year.
Now, in terms of the non-recurring guidance, you're right. In many, many years they were, in tendency, back and loaded within the year. That depends on, on many factors, you know, when transactions occur and the like. But, I confirm the guidance that we have of around 30% for the full year.
Very helpful. Thank you so much.
We have a follow-up question from Peter Eliot from Kepler Cheuvreux. Please, go ahead.
Thank you very much. Two follow-ups, please. You mentioned the interest rate spreads, you know, continuing to move against you. So I guess, I mean, I can take from that that probably the CSM will have suffered a little bit further from that as well. But just wondering if you can give us any sort of comments on, you know, what you might be seeing in terms of that CSM development. And the second one was just coming back to the cash balance. I mean, the dividend and share buyback cost CHF 1.1 billion.
So, you know, if we've sort of fallen by CHF 100 million, then I guess, you know, the simple math would suggest, CHF 1.0 billion of remittance, in Q1, which seems a little bit lower than last year. But just, just wondering if you could, yeah, confirm that or, mention anything else I should be thinking about. Thank you very much.
Good. Maybe on the CSM, it is probably, again, a bit premature to talk about the drivers of the CSM. Clearly, there are positives and negatives. What we have seen as positive, clearly, is the equity performance year to date. You know, we have seen spread tightenings, that is clearly positive. And indeed, this interest rate differential, which I talked about, was at the short end, which is a bit more relevant for the CSM and the uncertain is the differential at the long end. Maybe as a differentiation to what you said. But we will, you know, talk about the CSM development at half year.
Now, in terms of the cash balance, I think what is important to keep in mind, the relevant, let's say, flows in Q1, as Marco said, was the cash out for the buyback and smaller items, let's say, you know, interest fees and the like. I mean, the dividends are expected. The large bulk of the dividends will take place in Q2, including clearly the one that is paid to the shareholders, which happens today, you know. And there is clearly also more to come from today's, let's say, position.
Great. Thank you very much.
Also, the next one is a follow-up from Thomas Bateman from Berenberg. Please go ahead.
Hi, thanks for taking my questions. So just on the cash balance again, I just want to be clear on what you're saying, because I think you said that it was at 0.85 at the start of the year, 0.75 at the end of Q1, and then you're saying the cash at holdco balance is higher today. And that assumes to me, tells me that remittances are a bit higher than the dividends, which come out in Q2, and you're saying there's more to come. I just want to be clear, 'cause it feels like it's a bit higher now. And the second question is just on the international dynamics. Could you give us a feel for the growth of the international life?
And also, you said that the IFA business, Chase de Vere , is doing well. Is that driven by mortgage rates in the UK, or is there anything else that's supporting the growth there? Thank you.
Okay, I go with the cash question. As I said before, as of today, we are slightly higher than the report for Q1, with more dividends to come by the end of June 2024, and then we will be even higher as at today's level. In terms of the IFA business, the cash flow dynamics, yes, the business is doing well. I think we have, let's say, various drivers there. I think it's more on the discretionary fund part rather than the mortgages, if I'm not mistaken, though.
The next question comes from Henry Heathfield from Morningstar. Please go ahead.
Good morning. Thank you very much for taking my questions. Just really some clarifications. Within the TPAM business, the fee income of CHF 137 million, does that. Could you let me know whether that only includes recurring fee income, or whether that's a mix of recurring and non-recurring fee income? And then on the TPAM real estate project development, is that only classified as non-recurring, but then goes into the 31% share? Thank you.
Maybe you could repeat the second question. Wasn't clear whether I understood.
So on the real estate project development.
Yep.
Net income within TPAM, is that all non-recurring, and therefore, and is that sort of within the 31% of, yeah, well, the 31% share of non-recurring income, in TPAM? Is it part of that?
Yes, to come to your second question, the real estate project development income, we call that other net income, is part of the non-recurring elements of the total income, so that's part of the 31%. And for the other question, Marco. Sorry, you had a follow-up?
No, carry on. Thank you.
Okay, and talking about the TPAM business, so the CHF 137 that you just mentioned, that includes non-recurring fee income, which is the larger part of that, but also non-recurring income. It's part of it, but not project development, which we report under the other net investment income, just as mentioned leading up then. So the other non-recurring includes, for example, transaction fees, just to give you an example on that.
Okay, thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Aellig for any closing remarks. Please go ahead, sir.
Thank you very much for your interest in Swiss Life and for your questions. I wish you a nice day, and 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 disconnect your lines. Goodbye.