Ladies and gentlemen, welcome to the Swiss Life presentation of the half-year results 2023 conference call and live webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing via the relevant field. Kindly note that webcast questions will be answered after the call. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Patrick Frost, Group CEO. Please go ahead, sir.
Dear analysts and investors, good morning, and thanks to you all for joining this call. Today, we publish our financial results for the first half of 2023. Those are reported under the new IFRS 17 and 9 accounting standards. Our CFO, Matthias Aellig, will walk you through the details in a couple of minutes. Prior to that, I'll start with an overview on the key figures on slide 3. Swiss Life achieved a 12% growth in net profit and a 2 percentage points growth in return on equity. On a comparable basis, this means comparing both years under IFRS 17 and 9. I'm very proud of our teams across the group, as this growth was achieved despite the subdued real estate markets. Those put a drag on the net investment income, given negative real estate fair value changes.
Also, Swiss Life Asset Managers reported a lower segment result due to a lower contribution from real estate transactions and real estate project developments. Still, we managed to increase the operating result from insurance business and kept the fee result almost stable, given the higher contribution from owned IFAs in Germany and the other fee businesses in France and international. The SST ratio was stable at around 215%. Cash remittance increased by 9% to well over CHF 1 billion. This development is based on the current year upstreaming of local profits achieved in 2022. As already mentioned, in our full year results communication in March, we expect to structurally exceed our cumulative cash remittance targets set at our Investor Day in 2021. Why? Because the higher level of rates is beneficial for Swiss Life.
We continue to see reserve releases on the local statutory accounting, which is the basis for cash remittance to the holding company. Such effects are only visible over the long run under IFRS 17 and IFRS 9 accounting. Cash remittance is important. It's the key driver of dividend payments, and we have the ambition to continue to increase dividends per share. Cash remittance is also relevant in the context of additional total shareholder returns, as shown on Slide 4. Over the past decade, we've continuously increased dividends per share. Since our first share buyback in recent history in 2018, we've added additional cash returns to shareholders, by having implemented three buyback programs totaling CHF 2.4 billion. Striving for and achieving higher cash returns to shareholders was and is an important financial ambition of our Swiss Life 2024 program.
Share buybacks are not implemented by any automatism, even if the two well-known conditions of, A, having enough cash at the holding level, and B, being above our SST ambition range, are favorable. If the conditions are met, we assess the situation. Based on that, today, we announce a new share buyback program of CHF 300 million running from October 2023 to March 2024. To wrap it up, as initially mentioned, we have some headwinds from the subdued real estate markets, especially at asset managers. We expect a clear improvement in their fee result contribution next year. We also expect broadly stable real estate valuations in 2024, even if some weakness of this year might leak into next year.
I can therefore say that we are very well on track with our Swiss Life 2024 program, and we expect to either achieve or exceed all our group financial targets. With this, I hand over to Matthias, who will take you through the financial results in more detail.
Thank you, Patrick. Good morning, ladies and gentlemen. I will start with some introductory comments on Slide 6, that echo what we mentioned in June at the IFRS 17 call. We have applied the IFRS 17 accounting standard retrospectively from 1st of January , 2022. The IFRS 9 accounting standard for financial assets is applied from1st of January , 2023, without restating the comparative periods in the financial report, which is disclosed under IAS 39, that will be replaced by IFRS 9, starting 2023. Within this presentation, we will also show comparable half-year 2022 profit from operations and net profit under IFRS 17 and IFRS 9, to allow for a like-for-like comparison. As usual, half-year figures are unaudited. Let me now deep dive into selected P&L and other figures. Insurance revenue increased by 21% to CHF 4.5 billion.
More than half of the increase is due to the acquisition of elipsLife. The remainder stems from additional PAA revenues in France and from higher expected claims and insurance service expenses. CSM release also increased to CHF 666 million. Insurance service expenses increased in line with insurance revenue to CHF 3.7 billion. Net investment result was CHF 70 million. Please note that this is not comparable to the net investment result definition of prior years, as it includes IFRS 17-related insurance finance expenses and VFA experience adjustments. Moreover, the CHF 70 million pertain to the result under IFRS 17 and IFRS 9, while the prior year is reported under IFRS 17 and IAS 39. Profit from operations amounted to CHF 836 million.
In the prior year period, it amounted to CHF 999 million under IAS 39, or on a like-for-like basis, to CHF 801 million under IFRS 9. Borrowing costs increased to CHF 65 million. This is mainly due to higher refinancing costs. Income tax expense fell to CHF 141 million. The reduction is mainly due to a positive tax one-off of CHF 32 million in the context of a final tax assessment and a change in the geographic profit emergence. Net profit amounted to CHF 630 million. This compares to the prior year number of CHF 700 million under IAS 39, or on a like-for-like basis, CHF 560 million under IFRS 9. We continue to disclose premiums, fee and commission income, net investment income, and operating expenses, as we did in prior reporting.
Gross written premiums, fees, and deposits received increased by 8% in local currency to CHF 11.5 billion. The increase is primarily due to elipsLife. Fee and commission income was up by 6% in local currency to CHF 1.2 billion, due to high contributions from Germany, International, and France, that outweighed lower income from asset managers in Switzerland. Net investment income of the insurance portfolio for own risk was CHF 1.7 billion. We renamed it to net investment income to distinguish it from the net investment result in the IFRS 17 P&L. Again, the prior year is reported under IFRS 17 and IAS 39, while the current period reflects IFRS 17 and IFRS 9. Operating expenses, excluding variable costs, came to CHF 945 million. On Slide 8, we show the adjusted profit from operations, taking the negative FX translation effect into consideration.
Moving to the segments, starting with Switzerland. Premiums increased by 2% to CHF 6 billion. Life insurance market was up by 1%. Premiums in individual life were up by 26%, while the market increased by 9%. Periodic premiums grew by 2%. Single premiums more than doubled, driven by new modern traditional products. Premiums in group life decreased by 1%, while the market decreased by 2%. Single premiums increased by 2%, primarily due to high new business. Periodic premiums fell at 3%. Assets under management in our semi-autonomous foundations increased to CHF 6.9 billion, compared to CHF 6.2 billion at year-end 2022. Fee and commission income was down by 4% to CHF 156 million due to Swiss Life Select.
Segment result increased by 6% to CHF 448 million, driven by higher operating results from the VFA business. Assets not covering liabilities, which are outside of the VFA business, also contributed slightly more. The fee result declined by 10% to CHF 27 million. Value of new business increased by 8% to CHF 125 million, mainly due to higher volumes in individual life. Cash remittance was up by 27% to CHF 535 million. This was due to the higher 2022 net profit in the context of increase, of increasing interest rates. Please note that we remitted the vast majority, but not the entire 2022 statutory profit to the holding. This decision was taken in view of lower interest rates at a time when we upstreamed the statutory profit compared to the interest rate level at year-end 2022.
Turning now to France. Please note that all figures quoted are in euros for our French, German, and International segments. In France, premiums decreased by 4% to EUR 3.4 billion, while the total market, including banks, was up 6%. Now, life business premiums were down by 7%, following strong growth in prior years. The market was up by 6%. Since 2019, we have outperformed the market. Our premiums increased at a CAGR of 10% compared to 2% for the market. Unit-linked share in our life premiums was 63%, while the market was at 40%. Life net inflows were EUR 0.9 billion versus total market net inflows of EUR 4.1 billion. Health and protection premiums increased by 8%. Both the group and the individual businesses contributed positively. The market was up by 6%.
P&C premiums were down by 2%, primarily due to motor products. Fee and commission income rose by 9% to EUR 229 million. We had a strong contribution from the banking business, given continued high revenues from structured products. Unit-linked fee income also increased based on higher average unit-linked reserves compared to the prior year period. The segment result grew by 26% to EUR 163 million. This is due to a higher fee result and a higher operating result from the life business. P&C business also contributed more due to an improvement of the loss ratio, including lower net cat events. The operating results from the health business declined despite tariff increases, due to the negative claims development.
Both non-life operating results were affected by negative real estate fair value changes, while positive fair value changes on equities would only partly flow through the P&L, as we are using the fair value through OCI option more widely, as mentioned in our IFRS 17 call in June. Fee result was up by 18% to EUR 80 million, primarily driven by the banking business. The unit-linked business also contributed slightly more. The value of new business increased by 3% to EUR 85 million due to higher volumes in the health business. Together with the positive development of interest rates, this more than offset lower volumes in life. Cash remittance increased by 20% to EUR 154 million, due to the prior year fee result development. Moving on to Germany. Premiums were up by 3% to EUR 719 million.
The market was down by 8%, driven by lower single premiums. Fee and commission income grew by 18% to EUR 379 million, primarily due to the strong productivity of owned IFAs, while the insurance business also contributed to this increase. The number of financial advisors increased year-on-year by 3% to 6,016. The segment result was up by 13% to EUR 115 million. This is essentially due to a particularly strong half year 2023 contribution from owned IFAs to the fee result. The operating result from insurance business was slightly down. The value of new business increased by 7% to EUR 37 million. The focus on capital light business continued with a higher production of modern traditional products. Cash remittance increased by 37% to EUR 94 million.
The increase stems from the insurance business, for which ZRR-related constraints regarding dividend upstreaming no longer apply in the current interest rate environment. Turning now to the international segment, which includes effects from the acquisition of elipsLife, consolidated at the beginning of July 2022. Premiums increased to EUR 1.4 billion due to higher premiums with corporate clients. About 95% of the increase was due to elipsLife. Fee and commission income was up by 20% to EUR 198 million. The increase was due to the corporate business. Income from private clients declined based on lower average assets under control. Owned IFAs also reported a small decline in fee income, partly related to negative FX translation effects. Segment result was up by 13% to EUR 55 million.
This was due to a higher fee result and a slightly higher operating result from insurance business with corporate clients. Fee results increased by 12% to EUR 44 million, mainly due to the business with corporate clients. Owned IFAs reported a decrease in fee result due to the aforementioned FX translation effect and expenses related to the rebranding of the tecis advisory business into Swiss Life Select. The value of new business significantly increased to EUR 33 million, driven by higher volumes in the group risk business, which was supported by the inclusion of elipsLife. Cash remittance was stable at EUR 54 million, despite a higher full year 2022 segment result. This is due to acquisition-related effects and a slightly higher tax rate. Let's move now to our asset manager segment, which reports in Swiss francs.
Asset Managers' total income was down by 13% to CHF 441 million. About 20% of the decline is due to negative FX translation effects. The remainder can be attributed almost equally to the sale of Livit facility management services in Q4 2022, and to the real estate business, with lower transaction volumes and lower income from project development. In our PAM business, total income was down by 16% to CHF 154 million. About half of the decline is due to the sale of Livit facility management services. The other half is due to lower average assets under management and lower real estate transaction fee income.
In our TPAM business, total income declined by 11% to CHF 288 million, due to the impact of the aforementioned sale, as well as lower non-recurring income from real estate transactions and project development. Negative FX translation effects also contributed to the decline. The share of total non-recurring income for TPAM, meaning commission income as well as other net income, was 11% of total income, and therefore below the prior year half year level of 16%. For the full financial year, 2023, we expect the share of non-recurring income to be almost in line with our Swiss Life 2024 indication. Segment result decreased by 23% to CHF 119 million. The sale of Livit's facility management services had a low single-digit million CHF impact.
The contribution of PAM was down by 11% to CHF 84 million, largely due to lower asset valuations on average. The TPAM segment result contribution fell by 41% to CHF 35 million, driven by the lower contribution from the non-recurring business and also by negative FX translation effects. Cost-income ratio was 81%, largely due to lower net commission income. Cash remittance declined to CHF 218 million. 2022 cash remittance included a special dividend of about CHF 25 million and was thus exceptionally high. In 2023, cash remittance was strongly impacted by a time lag between full year 2022 income recognition and distributable cash remittance related to real estate project developments. Net new assets in our TPAM business amounted to CHF 6.9 billion, up from CHF 3 billion. We achieved inflows in real assets of CHF 2.3 billion.
Next to real assets, we also had strong inflows from bonds. Including money market funds, net new assets amounted to CHF 6.3 billion, compared to CHF 3.7 billion in the prior year period. Overall, assets under management in our TPAM business were at CHF 112 billion, compared to CHF 105 billion at year-end 2022. Let's move back to the group. Operating expenses increased by 4% in local currency to CHF 945 million. Those are unadjusted figures and include effects from acquisitions and disposals, as well as from business growth. Coming to the investment income slide that we disclose, as we did in prior year reporting. Direct investment income on slide 16 increased to CHF 2.1 billion. Bonds, alternatives, and real estate contributed more.
This was partly offset by lower distributions from investment funds within our insurance portfolio, by the swing in repo contribution, and by negative FX translation effects. The non-annualized direct investment yield was 1.4%, compared to 1.2% in the prior year period. The net investment income was down to CHF 1.7 billion due to the negative net capital gains and losses. The non-annualized net investment yield was 1.2% compared to 1.7%. As initially mentioned, this is not a like-for-like comparison, given that the prior year is shown under IFRS 17 and IAS 39. The largest accounting difference stems from the equity instruments that are largely accounted as fair value through P&L under the new IFRS 9 standard. Net capital gains and losses amounted to CHF -96 million.
This is primarily due to negative fair value changes on real estate. Hedging costs more than doubled to CHF 490 million. We also had a lower contribution from the hedge of the FX hedging costs and lower fair value changes from infrastructure investments. On the positive side, P&L contributions from bonds and equities developed positively year-on-year. Slide 17 shows the structure of our investment portfolio, which remained essentially stable compared to year-end 2022. With respect to real estate, fair value changes were negative at CHF 426 million, or -1.0%, largely due to French real estate. In the prior year period, we had positive fair value changes of CHF 528 million, or 1.2%, also on a non-annualized basis.
Real estate continues to be an attractive and important asset class, backing our long-dated liabilities in the context of our disciplined ALM. As mentioned many times before, we hold real estate because of the regular rental income it provides, and not because of appreciation. Vacancy rates decreased to 3.1% from 4.0% at the year-end 2022. For the full year 2023, we expect vacancy rates to remain at around the half year level. Moving on to insurance reserves on S lide 18. Insurance reserves increased by 2% in local currency to CHF 177 billion, mainly driven by France and international. We continue to report the average technical interest rate in the appendix of the booklet. We released about CHF 0.2 billion of statutory reserves in half year 2023, in the Swiss group and individual life businesses.
Pre-tax CSM, as of 30th of June, 2023, amounted to CHF 15.9 billion. It indicates the level of future unknown pre-tax profits and relates primarily to our VFA business. During the first half of 2023, the sum of expected business contribution and new business resulted in an increase of the CSM of CHF 0.8 billion. Expected business contribution refers to the unwind of the discount rate, plus the expected real-world excess return on top of the discount rate. Experience adjustments reflect the impact on the CSM from the actual current period experience compared to expectations, such as pertaining to claims, profit sharing, or expenses. Additionally, changes in actuarial protection parameters, such as future surrender or biometric assumptions, are also included. Altogether, the impact was CHF -0.2 billion, driven by updated persistency assumptions for Swiss group life business.
Economic variances include changes in economic conditions, such as interest rates, credit spreads, and FX, as well as real estate and equity market movements. The impact was CHF -0.4 billion, mainly due to the interest rate development, real estate fair value changes, and FX translation effects, which were partly offset by a positive equity market performance and narrowed credit spreads. The CSM release of CHF 0.7 billion reflects the pre-tax profit that is recognized in the P&L for the period in which the insurance services are provided. The annualized pre-tax CSM release rate for Swiss Life was 8%. For the full year 2023, we expect a somewhat lower release ratio. As mentioned, the CSM release only reflects the P&L contributions from VFA and BBA businesses, and not from PAA and fee businesses. I will come to this later on.
The new business margin increased to 4.0%, driven by higher volumes, the favorable interest rate development, and business mix effects. The value of new business increased by 9% to CHF 277 million. Compared to the CSM new business, this is after tax and includes non-allocated expenses. It also reflects a more comprehensive scope of insurance businesses. The bridge from VNB to the new business CSM is disclosed in the appendix. Shareholders' equity decreased by 8% to CHF 7.8 billion compared to year-end 2022, largely driven by the dividend payment and the completed share buyback. Our total outstanding financing instruments amounted to CHF 5.7 billion, of which CHF 250 million pertained to senior bonds that will be redeemed this October. As mentioned in June, in terms of capital structure, we consider post-tax CSM along shareholders' equity.
The share of senior and hybrid bonds amounted to 22% at the end of June 2023, with a reference level of 20%-30%. Our Swiss Solvency Test ratio was estimated to be around 215% at the end of June 2023. It is well above the ambition range of 140%-190%. The updated half-year sensitivities are mentioned on the right-hand side of this slide. That brings me to our Swiss Life 2024 program and the progress reporting. I will start with the fee income development on slide 25. Fee and commission income increased by 6% in local currency to CHF 1.2 billion.
The decline in commission income at Swiss Life Asset Managers was more than compensated for by high local currency income from owned IFAs and from own and third-party products and services. The result decreased by 2% to CHF 343 million. The main driver was the lower other net income from real estate project developments. We disclosed the fee result by source on the right side of this slide. The fee result accounted for about 40% of the profit from operations of CHF 836 million at half year 2023. The remainder stems from the operating results from insurance business. This increased by 10% year-on-year. The main driver was the high CSM release. It includes the contribution of the unit-linked business in scope of IFRS 17.
This is, however, deducted from the operating result of the insurance business as it is mapped to the fee result. The portion of the release pertaining to the intragroup margin from insurance asset management services is essentially eliminated within the insurance service result and thus, the operating result. Non-allocated insurance operating expenses are directly charged to P&L outside of the CSM release, thereby offsetting the corresponding portion of the release. The remaining other profit contribution stems from the PaA insurance service result and from the net investment result, including assets not covering liabilities. We incurred negative fair value changes on equities in the prior year period. In 2023, this position has only marginal contributions from the equity market development, even we use the fair value through OCI option more widely. However, we had an impact from negative fair value changes on real estate.
The remainder of other also includes the risk adjustment release and the VFA net investment result, which comprises net insurance finance expenses and VFA experience adjustments. The return on equity, which is one of our Swiss Life 2024 group financial targets, increased to 15.8% on an annualized basis, compared to 13.6% in the prior year period. Turning to capital cash and payout. Cash remittance to the holding company increased by 9% to CHF 1.1 billion. I've mentioned the drivers when discussing each business division. We are very, we are very well on track in terms of cash remittance, and we expect to structurally exceed the group's cumulative cash remittance target under the Swiss Life 2024 program. Liquidity at holding amounted to CHF 0.85 billion at the end of June 2023.
Today, we announced a new CHF 300 million share buyback. As in the past, this buyback will be executed by a partner bank through a second trading line over the course of 6 months. We will start repurchasing shares on October 2, 2023, and plan to complete the share buyback by the end of March 2024. The shares repurchased under this program will be proposed for cancellation to the coming AGMs. The impact on the SST ratio is around 2 percentage points. Now to the financing. About half of the share buyback will be financed from existing cash at holding. The remaining part is financed by cash remittance to holding in the second half of the year and by additional repatriations. Let me sum up. We are pleased with the half year 2023 results.
We managed to grow the cash remittance and like for like, our profitability and the return on equity, despite headwinds from the real estate markets, that affected both the fee result and the operating result from the insurance business. We are very well on track with all our Swiss Life 2024 group financial targets and expect to either achieve or exceed them, as we are ahead in terms of return on equity and cash remittance. With this, hand back to you, Patrick. Thank you.
Thank you as well to you, Matthias. We're now ready for our Q&A session. Who'd like to start?
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. Questioners on the phone are requested to use only the handset and eventually turn off the volume of the webcast. Webcast viewers may submit their questions 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. The first question comes from Andrew Sinclair, from Bank of America. Please go ahead, sir.
Thank you very much. I think from me as usual, please. First was just on a holding company, cash and the buyback. So I mean, I think it's CHF 0.85 billion of liquidity in June, CHF 300 million buyback pro forma kind of puts you below the CHF 0.7-0.9 billion target range. So just really, kind of first, why now for the buyback? And can you give us any color on those additional repatriations you mentioned? And just given the size of the buyback, should we now think about that as being something perhaps more annual rather than the larger one-offs we've had in the last few years? Second question was on debt, debt leverage.
Just looking at the 20%-30% target under IFRS 17, you've talked about 22% today. It looks to me like you've got a bit more headroom under IFRS 17 than you had under IFRS 4. Is that something you'd be interested in using to access more liquidity? And then third was just on the CSM, about CHF 0.1 billion, I think, organic growth. I guess that's about 1% annualized rate. I think previously you said you'd expect the CSM to be about stable. Is that still the message, or do you think there can be some growth in the CSM? Thank you.
Okay, thanks, Andy. First, the question on the share buyback. You're right, we have CHF 0.85 billion of cash at the holding as of June. And as we said, the CHF 300 million buyback have various sources of financing. So the first source, half of it, as we said, comes from cash at the holding, so that's CHF 150 million. That everything else being equal, would bring us to CHF 0.7 billion. Then we said: Look, we have also cash remittance in the second half of the year. That will be also part of the financing, and the last element are smaller repatriations that we undertake.
As said, smaller repatriations are a normal course of business of a holding company, as we said many times before, that serves as an inter-group financing instrument, if you wish. No, sorry, and you asked about, you know, whether this small buyback indicates a move away from what we have done in the past, and the answer is no. You know, we have this set of criteria, the two points that Patrick mentioned. If you wish, I can repeat them, but I think they are well known. You know, it's the SST, and it's the cash at holding, which are relevant criteria, which we consider. There's no automatism, so everything is, in this respect, as we have done and said in the past, since many years.
In terms of the question on debt leverage, you're right. If you translate, you know, the debt leverage that the 20%-30% in additional, let's say, capacity, you would notice that in the past, under IFRS 4, we said, look, the range that we had then was CHF 1 billion. If you now translate the 20%-30% into current IFRS 17 situation, it would be theoretically CHF 3 billion odd, but that's for something theoretical. It was important for us to maintain the 10 percentage point range in the transition from the old accounting standard to the new one. Now, in terms of the question on the CSM, you know, we said it may be stable. Now, it was a bit on the positive side.
You know, we said many, many years ago, the clear, let's say, growth ambitions we have are in the fee business, in the capital life business. But clearly, we are also, let's say now, trying to take advantage of let's say, the opportunities that we have in the insurance space and also in the modern traditional space. You know, you have seen we have increased VNB as well. And clearly, if there are opportunities to grow also the insurance business, the new business, we clearly go after them.
Super helpful. Very detailed as always. Thank you.
The next question comes from Nasib Ahmed from UBS. Please go ahead.
First question on reserve releases. You mentioned you've done CHF 0.2 billion in the first half. You did CHF 300 million in 2022. Given where interest rates are, do you expect more reserve releases over the coming years if interest rates stay elevated for longer? And if you can split out the CHF 200 million reserve release in 2021, between individual life and group life. And then final sub-question on that, what is the profit sharing on individual life for policyholders? Second question on full insurance. Full insurance solutions for clients. Do you expect with the high rate environment for those to be for clients to ask for more full insurance? And also given the market uncertainty for clients to get more full insurance products as opposed to semi-autonomous.
Final question on the senior debt redemption in October. Do you expect to refinance that, or keep the debt stack lower and just redeem it? Thank you.
Okay, thanks for the questions. In terms of the reserve release, let me try to elaborate here a bit in detail. The CHF 0.3 billion from last year were essentially a part outside of the BVG business, so in the area with lower profit sharing. And it related to this type of reserves, additional reserves, that is very highly linked to the capital market conditions, namely to the interest rate levels prevailing at the valuation date. And we said back then that in 2022 in the full year, that we didn't have any releases from what we call, I think, high technical reserves, the more traditional book, where we expect it and still expect a release over time. And what is driving this release over time?
The release is driven by the fact that over time, we expect the higher reinvestment income and the rental income on real estate increases to feed through on a local statutory basis, and also first have a higher investment income, less pressure on the reserving, meaning releases that will flow through over time into the statutory P&L. And what I said implicitly, but then I also state explicitly, so the CHF 0.2 billion are split into group and the individual life, let's say, essentially in line with the total amount of strengthening, which means about 30% in individual life and the rest.
In group life, you know, that the profit sharing, there is some in individual life, so that's not the full amount that flows through the statutory result, but it's much smaller than the one in the group life. I think that should cover the first question. Now, in terms of the second question. Sorry, and the outlook, maybe I forgot to do that. We clearly reassess the situation for the reserving for the statutory reserving, also, at all the closings. And as you can infer from what I said, the effects that I've mentioned will come through over time. And as we said, we clearly expect here further reserve releases over time. This will, as mentioned already at the full year disclosure, be a gradual process.
You recall, it was also a gradual process in the build-up, and we now expect that also to happen in an extended period of time. Now, to the full insurance, you may recall that we said in the very low interest rate environment that we have had, let's say underwriting criteria tightened as a result of the low interest rates, you know, as we have had this drag from the conversion rate losses. Clearly, this has been relaxed, given, first of all, that rates are higher and we have changed the conversion rate for old age annuity.
So, there is clearly a more accommodating underwriting that we have, but clearly, those are client demands, and we still see clear demand, let's say, for semi-autonomous solutions. You know, if there are corrections at the stock exchange, people may favor a bit more the security of full insurance, but in principle, we're here to accept high volumes in full insurance. Now, in terms of the senior debt refinancing, we already refinanced this October 2023 redemption, I think, in January this year. And by the way, these CHF 250 million that we will use for the redemption, they are already subtracted from the CHF 850 million cash that we've mentioned.
Perfect. Thank you.
The next question comes from Peter Eliot of Kepler Cheuvreux. Please go ahead.
Thank you very much. Sorry for one more on the share buyback, first of all. But, I mean, just to follow up on the earlier question, with half coming from the second half of the year and a normal sort of H2 remittance of being, I don't know, sort of CHF 40 million, it sounds like you're expecting, you know, just over CHF 100 million in terms of repatriations. I mean, are you saying that that's the sort of normal amount that you expect each year, or is there, you know, a sort of any sort of particular anything that's driving that? And on your comfort zone, you know, I guess, you know, sitting at 0.85, you're within the CHF 0.7 billion-CHF 0.9 billion range.
So, I mean, one interpretation would be that there isn't any excess. It sounds that you're sort of very much taking anything above the CHF 0.7 billion as excess. So I guess the question is, you know, is we should really just think about the CHF 0.7 as being the important level going forward. And then, different subject, on real estate flows, the CHF 1.3 billion that you got in H1 was still a good level.
I know you don't have a crystal ball, but I'm just wondering if you can give us sort of any insights into the sort of the pipeline and, you know, whether that CHF 1.3 billion is all, you know, fully new money, or whether it's the result of decisions that have been taken in the past, and what, you know, what clients are thinking at the moment. Because I guess, I mean, I guess the, you know, the difference between real estate yield and government bond yield in your various... that you operate is not as attractive as it was. So yeah, any insights on that would be very helpful. Thank you.
Okay. Thank you, Peter. Maybe first, you know, on the question of the buyback. You know, it's, well, as I said, it's a very usual thing to have repatriations here and there. And let me reassure you, I mean, we're working hard to optimize, let's say, cash remittance, the repatriation to the holding. And we're working hard that we can get the cash that we need to the holding or the cash that is not needed at the divisional and the opco level, to bring that to the holding company.
And at the end of the day, you know, it doesn't really matter whether it is cash, as cash remittance or repatriation, whether that is coming either way to the holding. I think key is that we will coordinate to bring it up there. Now, in terms of. And by the way, repatriations do not count to towards the cash remittance. Cash remittance is what is kind of P&L relevant at the holdco, and cash remittance is one element, but repatriations also can provide cash, obviously, and that's the second lever we will pull for the financing. Now, in terms of the question, around the the comfort level, the comfort level is CHF 700 million-CHF 900 million, and that continues to be in place.
Yes, and we're now, let's say, in the current situation, let's say, willing to go a bit to the lower end, but it is no change to the CHF 700 million- CHF 900 million that we indicated also some years ago.
Okay, then on the real estate question, some of the inflows we had in the first half of the year was based on decisions which were taken last year already. I mean, there are these type of lags. We also expect that this year, I mean, yes, we do expect further inflows this year from real estate. Sorry. But we also have some outflows in some of our public mutual funds. So, but net, net, we do expect some further inflows, not as much as in the first half of the year, and some of that might also flow into 2024.
Great. Thank you very much.
I, Markus just told me I should say something about the yield differentials and the way we look at it. We see, you know, especially in the Eurozone, now attractive opportunities given that, you know, commercial real estate now is printing yields, you know, net yields above 4%, which are real yields. It would need to be compared to Bund, so government, German government bond real yields of below 0.5%. So the pickup is of course quite substantial. Okay. Granted, there are also some risks here, of course, but we do see real estate on a real yield basis to be attractive.
I'll also remind you on the Swiss situation here, we expect now to finally have residential rent increases, which will come through now in Q4. Will start to come through in Q4 of this year, and will also continue to come next year. In addition to that, we have, you know, new buildings coming on, which will pay now additional rental income. So we, we really expect a very good support of the Swiss real estate market by now increasing rental income, in addition to the fact that rates have not risen as much in Switzerland as they have in our neighboring countries.
The next question comes from Michael Huttner from Berenberg. Please, go ahead.
Hi, good morning. Thank you very much for all you answered the questions so far. I was just interested in your comments that you made on both the Swiss cash remittances and the asset management and cash remittances. I think you were saying that on Switzerland, you did not, we met all of it last year. I guess I was wondering if that implied there was more to come this year, especially given some of the reserve releases. Could you also clarify the comments you gave on the asset management? I appreciate there was a large special dividend last year, but I think you were saying that there's also a time lag this year. If you could just clarify that, that would be helpful.
And then just moving back into real estate, could you give us a bit of color of where the negative revaluations came from? For example, was that Switzerland, other parts of the EU, and also residential versus kind of commercial? Thank you very much.
So let me start with the real estate question again. Well, as Matthias said, we've primarily seen that in French real estate, mainly on the commercial side, so offices and retail space. But we've also seen it in Switzerland, same thing here, also on the commercial side, mainly on retail space, but also some offices. Despite continuing to see a good demand on take- up of office space, but we've seen some smaller corrections also here in Switzerland. But we also had positive fair value changes in the residential space in Switzerland. So again, mainly in France, but also some in Switzerland.
And let me comment, let's say, on the cash remittance. And again, please keep in mind that the cash remittance is driven, let's say, by statutory accounting, essentially of Swiss Life AG. You see here, on the business division slide, kind of the Swiss portion of it. And what we meant was to say, look, we have had this CHF 300 million reserve release in 2022, that was driven essentially by the interest rate level as at the year-end, 2022. And they were quite high, the interest rates at the year-end, 2022, then they came back a bit, you know, in the course of the first month, 2023.
That was the reason why we said, look, this position, this reserving, that gave a P&L contribution, statutory wise, would reverse, given that rates came down a bit. And that's the reason why we said, look, at the time we decided to upstream the dividend, that we didn't want to remit the full amount of, let's say, statutory profit. If you wish, that was kind of an element of caution. It didn't happen to that extent we concluded at the point in time. So, there is something from, let's say, if you wish, that 2022 stat result that may come through over time.
In addition, as we said, back in the full year of disclosure and now confirmed today, given the reserving situations, we will expect to see a structurally enhanced cash remittance. So there's no change to what we said then, back then. Now, in terms of the asset managers cash remit, to—as you said, the prior year had this around CHF 25 million special effect. I mean, now you can deduct that kind of to if you look at the run rate. Now, what has happened in 2022, you know, on a couple of project developments, that they are all very individual, highly specialized and, and what have you.
So there's not a one-size-fits-all thing, but in a couple of instances, we had to make a markup on projects, really large projects, even before there was a completion of the project. So we had kind of a gain in the 2022 segment result of asset managers without having completed or sold off the project at this point in time. So that meant we had a gain without the cash coming in, and we now expect that cash to come in, let's say, over the coming quarters. In some cases, it also may take a couple of years, as this is kind of stretched over time.
But this is this kind of, let's say, very large projects that have such, let's say, specific features. I would call that.
That's very helpful. Thank you so much.
The next question comes from Bhavin Rathod from HSBC. Please go ahead.
Hello, good morning. I have two questions from my side. The first one would be on the CSM release. You pointed out that the full year release ratio should be slightly lower than the rate we have seen at the first half. So could you comment if there is some seasonality between the first half and the second half, or do you see some structural impact in the second half, which would bring down the overall release ratio in the end? The second one would be, again, sorry to come back on the illiquid topic, but how comfortable do you feel with respect to your 28% exposure within your asset mix, given what we are seeing across the different geographies that you have in terms of the exposure?
Within that, are you willing to reallocate capital between the different countries like Switzerland, France, and Germany? Since you've already mentioned that we are seeing some pressure in France, so are you willing to reassess that situation and relocate capital to other geographies like Germany or Switzerland, or you feel comfortable with that exposure? Thank you, sir.
Okay, let me take the first question first. On the CSM and the and sorry to get a bit technical, I mean, on that topic. You know, the CSM is a new element of the IFRS 17 and IFRS 9, and I think, when talking about the additions to the CSM, you know, the new business or this unwind, this is, I believe, pretty straightforward. But the release and the mechanics of the release are substantially more complicated. And even the implementation of the IFRS 17 standard, and sorry again for getting a bit technical. The actuarial modeling of that release depends on one side, on the total amount of future services provided to the client.
That's an accounting term, and also to the amount of services provided to the client in the current period. So it's kind of this ratio that is relevant, and these quantities depend via proxies to a number of operational and economic variables. One example are the surrender rates. And an increase of the surrender rates, they reduce the amount of future services while leaving the current period amount of services unaffected, which increases gets responsible to release. And as mentioned, we had such higher interest rates in Swiss group life business, which increased from a very low level to, let's say, more normal levels. And this is this kind of mechanics that are at work.
While we do not provide, let's say, earnings guidance in general, we mentioned explicitly that we expect for the full year, for reasons such as the one just explained, that we expect a somewhat lower release ratio than the 8% mentioned for the half year. I think it's also important to remind at this point in time, you know, the CSM release is only one profit contribution to operating profit. We have also the non-life insurance businesses. Yes, it's not covering liabilities, and clearly, the fee results that are also relevant drivers of the profitability. Now, in terms of the question around real estate, I mean, we feel comfortable with those exposures we have. As we mentioned, we have. Oh, Patrick, I think wants to mention that.
Sorry.
No, but I totally agree. I mean, we feel very comfortable with the allocation we have, as mentioned before. But I'd just like to remind you again, you know, the reason why we have this whole real estate allocation, but also the real estate business, is that we expected it to do well in a low interest rate environment, when the life, you know, especially the traditional life business would be under a bit of pressure. Now, of course, last year was a bit special because we saw both outstanding life results, but also continued upticks in real estate valuations.
Now this year, it's for the first time that we get the first proof point that the life business is now doing very well in terms of statutory results, and a bit less so on the CSM. The real estate business is under a bit of pressure as you saw in the asset managers result, but also on lower fair values on the insurance balance sheets. Now, most of what we have on the balance sheet either is absorbed by policyholders or is absorbed by the CSM. But there are some effects which then also go through the P&L.
And we've experienced, as we said, this in the first half of the year, but we also expect some further pressure in the second half of the year. We even expect a little bit more of negative, net negative fair value changes in the second half of the year than in the first one. And it's too early to tell now, but possibly this also leaks a little bit into early next year. But that's too early to tell, but I'm just saying, we, as you know, we have an external valuation agent, and we take their numbers into account or on our, you know, into our accounting systems. And they, in turn, are based on the real transactions in the markets where we are.
We feel comfortable with, with, again, the allocation in France, Germany, and Switzerland. As I mentioned before, we now expect higher rental income, from all of our portfolios, because in the commercial side, we have the, the inflation link, and on the residential side, we have this special Swiss situation, which you're well aware of, which now with the lag of two years, almost, will now feed through into, higher, higher rental incomes. Which of course, shows that a model where you have nominal liabilities, but real, but asset, real assets is, of course, a very attractive one in an inflationary environment, that we have now.
That's helpful. Thank you so much.
As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from René Locher from KBW. Please go ahead.
Yes, good morning all. I just had an interesting discussion with a German investor, and, and he was wondering, given the distressed real estate market in Germany, wouldn't it be not better to invest some of the cash in real estate companies like you did with BEOS or Corpus Sireo, than returning CHF 300 million via buyback to shareholders, you know? As this would make it then also easier for Swiss Life to achieve the fee result of CHF 850 million-CHF 900 million by the end of next year. Thank you.
I mean, so, and those were not really real estate companies, right? Those were, primarily real estate asset managers, which you—which we bought-
Yes.
in 2014 and 2018, I believe. And you're right. I mean, well, if you have a great idea out there with, you know, with a very successful asset managers like the two we bought, and we can buy them at attractive prices, we are always have an open ear. But we feel we were very well covered with the people we have on the ground in Germany already. And so, you know, at the moment, it really wouldn't help so much with the fee result, let's say, over the next year or two. Look, because there's always, if you do an acquisition, it takes some time to onboard the people to make sure they, they are very productive in their theoretical new home at Swiss Life Asset Managers.
There's always, there are always some lag effects. And what we see now is that, we did a very good integration, of the people we onboarded, let's say, over the last 10 years, and now we're reaping those rewards. And, but again, as we said, right, we're always open to, for acquisitions which fit culturally well to us and where we, which we can acquire at attractive prices. But, as you may have guessed, we haven't found them. And so, we prefer to give back, the cash to shareholders. But you're right. I mean, if, we were to find something as successful as in the past, yes, that might be the case. But I remind you, right, I mean, these are bolt-on acquisitions.
I think the largest acquisition we did over the last decade, price-wise, was well below the share buyback that we now just announced.
Thank you. Very helpful.
We have a follow-up question from Andrew Sinclair, from Bank of America. Please go ahead.
Thank you again. Two quick ones from me. First was just on the tax rate. I saw the CHF 32 million one-off. Just wondering if you can give us any color, if there's anything else out there we should be expecting or back to kind of a more normalized tax rate. And second was just on the owned IFAs in Germany. It sounds like a really big profit jump there for only 3% increase in headcount. Just really wonder if you can dig into that a little bit more. Is that something we should see as a new base from which we can see growth or anything one-off in there? Thank you.
Maybe on the tax rate, I mean, the CHF 32 million relate to, let's say, final tax assessment. Now, what does that mean? You know, there was a question of, let's say, tax allocations between two jurisdictions, and as you can imagine, this is quite and was quite a long question to get answered. We now have enough clarity, or the clarity required, and that was the reason why we had this, I would say, significant one-off that we reported. Just to give you some flavor of what happened there.
What happened as well in the context of the tax rate, we had kind of a change, you know, a slight change on which geographies, kind of, at which tax rates profits emerged, and that was also something that helped to lower the tax rate compared to the prior year period. Now, in terms of the owned IFAs, you know, we have had, as you say, a very strong, let's say, half year. I call it extraordinarily strong, so I wouldn't double that number for the full year. I think that's important. First of all, we have a typically more cost load, you know, in the second half of the year.
We have had also, you know, special campaigns where the IFAs took advantage of, let's say, the German government offering some, let's say, inflation relief to the population. You know, they have the nice words for that. And that was an opportunity for our financial advisors to get additional business. So, to give you some flavor on, let's say, the increase of the numbers fee result and top line.
Thank you very much. Appreciate it.
The last question for today's call comes from Peter Eliot from Kepler Cheuvreux. Please go ahead.
Thank you very much. I just wanted to get a quick couple of follow-ups on the fee result actually. Just looking at France, I mean, you mentioned that the fee result was that the increase was primarily due to the banking business. I mean, I'm guessing this is, you know, still the structured products. And I mean, last year was already strong. So I'm just wondering how much longer that momentum can be maintained, how much more scope you see? And then, you know, just overall on the fee result, you know, I guess H1 2023 was down slightly on last year. And for last year, you were still CHF 100 million below the target, but you seem very confident of reaching the target.
I'm just wondering, is there anything in particular that you'd highlight as a reason for that confidence? Or is it just, you know, widespread across the whole business? Thank you.
Okay. First of all, you know, on the fee result, France, as said, the structured products in the bank really continues to perform well. But it's also the unit- linked business that contributed positively. Now, I'm aware that we keep reporting you know that the bank is performing well for half year after half year, quarter after quarter. And yes, despite of what we thought, it continues to perform well. We thought that you know with the equity the extraordinary performance of the structured products might come back a bit, but it didn't happen. So we continue to see good momentum there, continued opportunities.
But, there may be, let's say, a point at which, you know, these extraordinary high levels of structured product revenues may come back. It's difficult to say by when this will happen. But in principle, we still have a, let's say, a client base, which do not use yet, structured products as part of their investments. Now, in terms of let's say, the fee result 2024, I think we clearly confirmed those results for 2024. And, I think Patrick also mentioned, in his speech what is kind of relevant for that. I mean, the expectation that asset managers will see a high contribution to the fee result than what we have seen this year.
This is clearly also to be seen as expectation in what we said in terms of real estate markets for 2024.
Okay, great. Thank you very much.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the management for closing remarks.
Thank you very much. This brings us to the end of our conference call. Thank you for your time again, and for your questions, and I hope to see many of you soon. Goodbye.
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