Ladies and gentlemen, welcome to the Swiss Live Presentation of the Half Year Results 2021 Conference Call and Live Webcast. I'm Hayley, the Chorus Call operator. I would like to remind you that all participants will be in a listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. Webcast viewers may submit their questions or comments in writing via the relative field.
Kindly note that webcast questions will be answered after the call. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Patrick Frost, Group's CEO of Swiss Life. Please go ahead.
Dear analysts and Welcome to the Twistlife Half Year Conference. Thank you for taking the time to join us today. As usual, following my initial appraisal of our half year results, Our CFO, Matt Verlikh, will go through our reporting in more detail. We will then open the floor for questions. Swiss Life can look back on a successful first half year.
The results show that we are making excellent progress towards achieving all our goals under the Swiss Life 2021 corporate program. We again showed significant improvements in our insurance advice and asset management businesses. So we've come through the pandemic well as a company. We were able to grow in the areas of strategic relevance to us such as the fee results, cash remittance and profit from operations, not only compared to the first half of twenty twenty, but also compared to the first half of twenty nineteen before the COVID crisis. Let me provide some specific key figures from the first half of twenty twenty one to support my statements.
Net profit rose by 15% For CAD618,000,000 the adjusted return on equity was 11.3%, which was significantly above our ambition in the context of our Swiss Life 20 21 program. We grew fee income by 15 percent to around €1,080,000,000 The fee result was up by 14% to €309,000,000 This is very pleasing and compares to a level of $260,000,000 in the first half of twenty nineteen. The value of new business came to CAD252,000,000 an increase of 24%. The new business margin increased to 3.1% against And finally, the cash remittance to the holding company rose yet again by 7% to $798,000,000 We're very well on track with the Swiss Life program and confirm the corresponding financial targets. We're thus creating a strong foundation for the further development of our group over the coming year.
I now hand over to Mark Just to provide more detailed account of our figures.
Thank you, Patrick. Good morning, ladies and gentlemen. I will start with selected P and L figures on Slide 6. Broadwritten premiums, fees and deposits received decreased by 7% in local currency to SEK 10,900,000,000 mainly due to Switzerland. Fee and commission income was up by 15% in local currency to SEK 1,100,000,000.
All sources contributed positively. Asset managers, our owned IFAs and the business with own and third party products and services. The net investment result of the insurance portfolio for own risk increased to €2,200,000,000 Net insurance benefits and claims were down to €7,700,000,000 as a result of premium development. Household participation increased to €1,100,000,000 to Switzerland, Germany and France. We strengthened reserves by about €100,000,000 As usual, Final policyholder participation and reserve strengthening is determined at the end of the financial year.
Operating expenses were CHF 1,800,000,000 Profit from operations increased to CHF 876,000,000 This is mainly due to higher savings in fee results, which more than offset a lower risk result. Borrowing costs increased slightly to €62,000,000 due to the early refinancing of a hybrid bond in March, The call date is September. Our income tax expense was CHF196,000,000. Effective tax rate was 24% and thus at prior year level. Our net profit increased by 15% CHF618,000,000 Slide 7 shows the adjustments to our profit from operations.
We adjusted the profit from operations to reflect finance transformation expenses, which are the program costs related to the new accounting standards and systems. The adjusted profit from operations increased by 13% to €889,000,000 Moving now to the segment results, starting with Switzerland on Slide 8. Premiums decreased by 20 percent to CHF5,900,000,000 primarily due to the GroupWise business. The market was down by 11%. Market figures are provided as usual by the Swiss Insurance Association.
Effective 2021, the figures exclude 1 large competitor, which decided to leave the association. Premiums in Individual Life were down by 1% to €689,000,000 while the market increased by 4%. Periodic premiums grew by 3%, while single premiums were down by 13%. Premiums in Group Life were down by 22 percent to CHF5,200,000,000 while the market decreased by 14%. Periodic premiums fell by 4%.
Signal premiums decreased by 38%. About three quarters of this decline in single group life premiums can be attributed to fewer new accounts, The remaining quarter relates to lower entries of employees in existing schemes. We continue to focus on disciplined underwriting to protect and improve the quality of our full insurance book. In this context, assets under management in our semi autonomous foundations increased to €5,400,000,000 compared to €4,800,000,000 at year end 2020 or €4,400,000,000 at the end of June 2020. The shift to growth in Semi Autonomous Solutions results in lower reported premiums.
This development is in line with our full range provider strategy and our established focus on quality before growth. Fee and commission income was up by 12% to $157,000,000 primarily due to Swiss Life Select And our businesses with Unit Linked and Investment Solutions for Private Clients. Our mortgage and real estate brokerage businesses also Operating expenses increased by 4% to CHF 200,000,000 driven by the in sourcing of mortgage administration and investments in growth projects such as further digitalization of the advisory model and Process Optimization. The segment result increased by 10% to 458,000,000 primarily due to higher savings results supported by more friendly markets. The risk and cost results were marginally higher.
The fee results increased by 23% to $17,000,000 supported by Swisslight Select, Investment solutions for private clients and other effects. The value of new business is essentially stable at CHF 88,000,000. Active new business steering in this low interest rate environment led to higher shares of capitalized products In both Individual Life and Group Life, the new business margin increased to 4.4%. Turning now to France. Please note that all figures quoted are in euros for our France, Germany and the International segment.
In France, premiums increased by 27% to $3,500,000,000 The market grew by 25%. In our life business, premiums were up by 38% due to continued demand for our new pension products following an already strong growth in the prior year. The market was up by 42%, which compares to a heavily depressed first half in twenty twenty. The unit linked share in our life premiums was 58% compared to the market average of 38%. Life net inflows were €1,200,000,000 versus overall market net inflows of €10,900,000,000 Health and protection premiums increased by 6%, mainly driven by the group business.
The market was up by 4%. P and C premiums were up by 11%, primarily due to motor products. Market growth was 4%. Fee and commission income rose by 21% to CHF183 1,000,000 Unit linked fee income increased as a result of higher unit linked reserves, which grew due to net inflows and a more favorable financial market environment. We also generated high revenues from structured products.
Operating expenses increased by 1% to CHF 172,000,000 due to business growth and investments in growth projects such as Credit Life and Digital Client Solutions. The segment result increased by 6% to CHF 132,000,000 The savings result developed positively based on a higher net investment result. The cost result declined due to higher acquisition costs related to strong new business growth in Live. The risk result decreased considerably As the prior year period benefited from very low health and P and C claims in the context of COVID-nineteen. Moreover, in 2021, coverage in health increased based on a governmental prescription affecting the entire French health insurance sector.
The fee result was up by 27% to €49,000,000 in line with the income development. The strong increase in value of new business by 43% to €94,000,000 was driven by higher volumes in both Life and Health and Protection. The new business margin decreased slightly to 2.3%, mainly due to the higher health coverage mentioned before. Moving on to Germany on Slide 10. Premiums were up by 5% to $661,000,000 due to modern, modern traditional and disability products.
The market was down by 2%. Field commission income grew by 19% to €295,000,000 due to strong contribution from our owned IFAs based on an increased number of financial advisers. This top line development also included, as mentioned in the last Q1 call, an extraordinary benefit of around €15,000,000 It relates to a successful campaign based on the solidarity surcharge,
which has
discontinued for the majority of the German population at the beginning of 2021. Number of financial advisers increased by 18% year on year to 5,107. Operating expenses were up by 3% to €115,000,000 because of business growth as well as ongoing In growth initiatives such as digital tools and interfaces for advisers, customers and product partners. The segment result was up by 41 percent to €130,000,000 All profit sources contributed to the due to an exceptionally high net investment result based on high revaluation gains on investment. Moreover, we again realized fixed income instruments in the context of the ZZR financing for the entire financial year.
Therefore, we do not expect further Zettador related fixed income realizations in 2021. In other words, there is a front loading of the savings result of about €20,000,000 with no repetition in the second half of twenty twenty one. The fee result was up by 26% €55,000,000 driven by strong business development at our owned IFA. The value of new business increased by 36% €37,000,000 mainly due to increased volumes in modern and risk products. In addition, the guarantees of modern traditional products were further reduced.
The new business margin improved to 3.4%. Turning now to the International segment. Premiums decreased by 35% to €451,000,000 due to lower premiums with private clients in Europe that were partly offset by higher premiums with private clients in Asia and with corporate clients. Field commission income was up by 15% to CHF 151,000,000 driven by higher contribution from our owned IFAs, both in the U. K.
And CEE, while the income with private and corporate clients was stable. Operating expenses increased by 4% to CHF 50,000,000 due to investments in process optimization and digitalization. The segment result was up by 17% to €42,000,000 with a high contribution from all lines of business. The fee and savings results developed positively, while the other profit sources were essentially stable. The fee result increased by 23 percent to €32,000,000 This is due to our owned IFAs Achieving higher revenues and productivity gains, resulting, as an example, from virtual advice.
The value of new business increased by 7% to $19,000,000 mainly driven by higher volumes in risk business. The new business margin advanced to 4.7%. Let's move now to our Asset Managers segment Asset Managers' total income was up by 6 to €445,000,000 The increase was driven by higher recurring income. In our PAM business, total income was up by 3% to CHF183 1,000,000. Higher recurring income due to higher average Asset base was partly offset by lower real estate transaction fees.
In our TPAM business, Total income was up by 8% to CHF262 1,000,000. Recurring income increased by 18% given a higher average asset base. Nonrecurring income was down by CHF 13,000,000 Due to lower other net income from gains on ongoing and completed real estate development projects. Other nonrecurring income, such as performance and transaction fees, was stable. The share of total nonrecurring income for TPAM was 16% of total income compared to 23% in the prior year period.
Operating expense This increased by 6% to CHF 267,000,000 due to further growth, process optimization and investments in digitalization. This included the discontinued use And thus the recognition of a brand asset of €7,000,000 in the context of the merger of Corpus Sireo into Swiss Life Asset Managers Germany. The segment result increased by 4% to 140,000,000 PAN was roughly stable at CHF 97,000,000 Higher income was more than offset by higher expenses related to long term real estate projects, such as a large development project in Basel. TPAM increased its segment result contribution by 16% to CHF 43,000,000 Due to growing recurring income, combined with an improved costincome ratio, which partly offset We expect other net income to catch up in the second half of the year. Net new assets in our GPAM business amounted to DKK4.6 billion compared to DKK1.4 billion in the first 6 months of 2020.
We achieved strong inflows in real assets of CHF 2,200,000,000 They are of SEK 2,000,000,000 from real estate and SEK 200,000,000 from infrastructure. This is above the 2020 level when we achieved inflows in real assets of CHF 1,600,000,000. Inflows in other asset classes amounted to SEK 1,700,000,000 in money market funds, €400,000,000 in bonds and pounds mandates and €300,000,000 in equities. Excluding money market funds, net new assets amounted to CHF 2,900,000,000 compared to CHF 2,400,000,000 in the prior year period. Overall, assets under management in our TPAM business were up to €98,900,000,000 compared to €91,600,000,000 at year end 2020 and SEK 82,900,000,000 by midyear 2020.
The drivers were strong net new assets, Supported by market performance and favorable FX effects, total assets from management came to CHF274,400,000,000 Let's move now back to the group on Slide 13. Total operating expenses increased by 11% to $1,800,000,000 primarily due to high commission expenses. Operating expenses adjusted increased by 3% to 863,000,000 Direct investment income on Slide 14 decreased by around 55,000,000 to 1,970,000,000. Our non annualized direct investment yield was 1.1%. Income on bonds was down due to past bond realizations and lower reinvestment yields.
Income on equities was also lower due to reduced average exposure in nominal terms compared to the prior year period and thus lower dividend payment. This was partly offset By higher rental income that increased by CHF 45,000,000 About half of this increase was related to new fund Consolidation. The other half was due to higher rental income on a growing real estate asset base. Rental income included effective rental losses of less than CHF 10,000,000 in the context of COVID-nineteen as well as higher operating expenditures, which are always netted in our total rental income. The net investment results increased to CHF2.2 billion.
The non annualized net investment yield was 1.3% compared to 1.1% in the prior year period. Net capital gains amounted to $422,000,000 This increase compared to the prior year is primarily due to Higher revaluation gains in real estate and net capital gains on loans and alternative investments as well as Substantial improved FX hedging effects, including a decrease in hedging costs to 174,000,000 from CHF 336,000,000 in the prior year period. Those positive effects were partly offset By lower gains and bonds and negative P and L contributions of the hedged equity portfolio, including valuation losses Equity hedging derivatives in the context of a positive market environment. Unrealized gains within equity portfolio are recognized as other comprehensive income. Unrealized net gains on equities were CHF 2,900,000,000 compared to $1,600,000,000 at year end 2020.
Unrealized net gains in bonds amounted to DKK13,200,000,000 compared to DKK18,200,000,000 at year end 2020. Our total investments results, including changes in unrealized gains and losses on investments, fell to minus 0.9% as a result of higher interest rate. Slide 15 shows the structure of our investment portfolio. The asset mix remained essentially in line with the year end 2020. The share of bonds declined primarily due to lower valuations resulting from higher interest rates.
The real estate exposure increased to 22.6% and includes further real estate revaluations $500,000,000 and further net acquisitions of $300,000,000 The share of equities increased In line with favorable financial markets, our net equity exposure after hedging amounted to 4.4%. Let me give some additional color on the real estate portfolio. Our vacancy rate decreased to 4.2% compared to 4.7% at the end of the Q1 of the year. This was due to reletting activities As mentioned in the Q1 2021 call, we expect vacancy rates for the year end to remain at around the current level. Rent collections amounted to around 98% of rental income due compared to 95% in the prior year period.
The majority of uncollected rents in the context of COVID-nineteen Insurance reserves, excluding points holder participation liabilities on Slide 16, increased by 2% in local currency to $155,700,000,000 primarily due to France, international and Germany. Shareholders' equity decreased by 6% to CHF 15,700,000,000 compared to year end 2020. This is due to lower net unrealized gains in bonds, the share buyback completed in May and the dividend paid, which was partly offset by the net profit attributable to shareholders. Our total outstanding financing instruments amounted to $4,900,000,000 including an overlap from the early refinancing of hybrid bond in March with a call date in September this year. That brings me to the 3 slides 2021 financial targets and how we have progressed.
Let me start with the development of our fee business on Slide 20. Fee and commission income increased by 15% in local currency to CHF 1,100,000,000 Commission income at Swiss Life Asset Managers was up by 9% in local currency. This was primarily due to TPAM. As usual, commission income on this slide excludes Other net income, such as income from real estate projects development. Commission income from owned IFAs increased by 19% in local currency, while commission income from own and third party products and services was up by 17%.
The fee result increased by 14% to CHF 309,000,000. This is very pleasing and compares to a pre COVID level of CHF260,000,000 in the first half of twenty nineteen. Let me also briefly comment on the other profit sources. The savings result increased year on year Due to a high net investment result, primarily due to France and Germany, it is now essentially back The risk result, as I mentioned earlier, decreased primarily due to France. It is around the half year twenty nineteen level.
The cost result remained stable year on year and is also around the level of the first half of twenty nineteen. The half year twenty twenty one profit from operations was CHF 876,000,000 as initially said. This compares to a pre COVID level of €830,000,000 in the 1st 6 months of 2019. As just explained, the growth stems essentially from the fee results. Slide 22 shows our non annualized direct and net investment yields.
This compares to an annualized reinvestment rate of 1.2% in the 1st 6 months of 2021. Our average technical interest rate on Slide 23 decreased by 2 basis points to 1.03 percent driven by business mix effects. Slide 24 shows our new business margin of 3.1%. This compares to 2.1% in the prior year period and to our ambition level of 1.5%. The increase is primarily due to an improved business mix with a focus on capitalized business with low or no guarantees at all.
In this persistently low interest rate environment, our value of new business increased by 24% to €252,000,000 Let me now move on to operational efficiency. In life insurance, the efficiency ratio was essentially stable at 18 basis points. At our owned IFAs, The distribution operating expense ratio improved to 21%, primarily due to Germany and the benefits from the solidarity surcharge as well as due to international. In our TPAM business, the cost income ratio improved to 84%, in line with growing net commission income and improved operational leverage. The half year twenty twenty one ratio included the derecognition of the brand asset.
On an adjusted basis, the ratio was 80% compared 86% in the prior year period. As usual, the cost Income ratio tends to be higher in the first half of the year, but the operating expenses are more linearly incurred, but the income is more back end loaded within the year. Turning to capital, cash and payout on Slide 26. By the end of June 2021, our Swiss solvency test ratio is estimated to be around 205%. As of today, the SST ratio is at about the same level.
This compares to an QA show of 197% at the beginning of the year shown on Slide 27, together with the SSD sensitivities as of January 1, 2021. In the 1st 6 months of 2021, Cash remittance to the holding company increased by 7% to 798,000,000 Cash at holding as of today amounts to €800,000,000 compared to slightly more than €1,000,000,000 at year end 20 20. The current cash level includes the cash remittances to the holding company just mentioned as well as outflows for the dividend payment of CHF 21 per share, including the withholding tax. It is also net of the completed CHF 400,000,000 share buyback and the DOJ payment of CHF 70,000,000 Our past cash contract level of CHF 0.8 To SEK 1,000,000,000 was taking into consideration a potential DOJ payment. Our new cash comfort level going forward is €700,000,000 to €900,000,000 Let me sum up and reiterate Patrick's earlier comments.
I'm very pleased with the strong performance of Swiss Life 2021 so far, especially with the development of the fee business. We have again improved the quality of our earnings and demonstrated the resilience and strength of our business model In an environment that remains challenging, we are very well on track with our Swiss Life 2021 program And I can again confirm all Swiss Life 2021 financial targets. We will report new targets for the next program this fall on November 25. We look forward to welcoming many of you in Zurich. Thank you for listening, and back to you, Patrick.
So thank you, Matthias. We're now ready for your questions. Who'd like to go first?
We will
now begin the question and answer session. Questioners on the phone are requested to use only handsets. Webcastees may submit their questions or comments in writing via the relative field. Kindly note that webcast questions will be answered after the call. And the first question is from the line of Andrew Sinclair of Bank of America.
Please go ahead.
Thanks. Good morning, Steve, for me as usual, if that's okay. Firstly, just on remittance, really helpful details that you've given us. Just really wanted to check, I know remittance tends to be H1 weighted. Just really wondered if you're expecting any more in H2 this year.
Secondly, it was just on your debt You mentioned the refinancing of the €450,000,000 call it 1, September, but I think you've also got about €200,000,000 of Senior maturing in H2, just really wondered if you could give us your thoughts on whether you'd like to refinance that or would you be bringing debt A bit lower in your leverage range. And thirdly, we just I just really wondered if you could give us the actual numbers for the risk And saving results at half year, it seems to have been pretty strong savings results. So in Germany, Maybe a bit tougher in RISC and France, but just for a group level would be useful. It would just be really useful to have that split the half year as well as full year. Thanks.
Thanks, Andy. Happy to take your questions. In terms of the remittances, we have the typical pattern that you mentioned that We get most of it in the first half of the year and there's essentially no big remittance to be expected in H2. There is stuff like some fees, interest in loans and the like, but there's probably nothing More to expect than what has come in the prior year, so that's around maybe CHF 35,000,000 CHF 40,000,000 with this that order In terms of the debt position, yes, we have refinanced The hybrid due in September in already March, taking advantage of The environment and we tend to have this tendency of early refinancing and that's What has happened to the debt, to the hybrid debt position is also something to be expected for the senior bond Coming due in December. And given the only refinancing, and I think that's what you probably referred to, There was a slight deviation in the reference level with the call The hybrid in September, we expect to be within the range.
Now in terms of The PDF, the profit by source, we have an established practice of Closing the full year numbers, including the business division slides, but I think what has been very Particular, this year was that the prior year was very strongly affected, as mentioned, By the COVID-nineteen situation, which meant for 2020 a strong reduction in savings result given The development in the Capital Markets back in 2020. As mentioned, We are now back essentially on a level of pre COVID-nineteen in terms of savings result Despite the ongoing lower interest rate level, in terms of risk result, and I think that's important to stress, We had mentioned before, essentially nothing to report in the life insurance part of the risk result, but we had Excess gains in Health and P and C in France in the prior half year, you may recall In the full year, it is normalized as these benefits got taxed away by the French government. But half year 2021, We had really an extraordinary high risk result, which now has come back in the more normalized situation.
The next question is from the line of Michael Huttner of Berenberg. Please go ahead.
Thank you very much. And Again, lovely results. Thank you. And I have three questions. Cash guidance, expenses and COVID-nineteen.
On cash guidance, so you've reduced your comfort guidance range. And I was just wondering, it's a very Does this mean we're more likely to see buybacks at some stage in next In the medium term, given that Solvency is extraordinary and now you've reduced the And if you reduced the hurdle or the benchmark for cash to be retained. And the second is on expenses. I was just wondering, so expenses to me seem to have grown a lot. You've mentioned in various countries, investment in digital process and what it's Various bits, which is lovely.
And I just wondered how much of the growth in expenses can be related to these kind of Investments in longer term projects rather than the day to day. It's just to get a feel For what growth might come from these extra investments? And then the last one is COVID-nineteen. So this is a real very vague question. It seems as if there's no crisis anymore.
It's almost back to normal. And I just wondered, if I think very high level, how can I picture How do you see the world post the pandemic? How different is it? And how does that would that affect your strategy? It's really an open question.
I don't know the answer. Obviously, I don't know the answer. We all imagine more working from home and
So
I'll
take the last question first. So I mean, as most others, we're not sure how the whole thing will spell out, but we're quite optimistic That will continue to do well in this post pandemic world. Yes, of course, there are some discussions around Vacancies in the real estate portfolio, but we're confident and we still don't see Any issues for our office portfolio? Why? Because we have these very good locations and the inner cities Still see strong demand.
Of course, we'll have a bit more working from home than pre crisis. Of course, we've had some benefits in our especially last year in our IFA business because people were willing to listen to our advisors. So maybe going forward, once everything is normalized, we'll see less growth here. But I think The main impact from the pandemic came from the savings results and the level of rates. This is by far More important for us how the post pandemic world will affect financial markets than Let's say what the impacts are on home office or the IFA business, etcetera.
So we continue to Depend on financial markets. I'll hand over to Mattias for the other two questions.
Thank you, Patrick. Let me start first With the question on the cash level, as mentioned, we have the reduction of the cash comfort level, Which is driven by the settlement of the DOJ payment. In the past, we have earmarked, if we wished, So it's an amount for a potential claim. This now has been settled. The cash that was at holding has been reduced.
That's the reason for this adjustment of the cash comp level. So the settlement that We reported about in May this year. And coming, let's say, to the more broad question you raised In terms of share buyback, we have the established framework we talk about every call. I will not go through the details, but the 2 criteria that we have in place, the SSD and the cash level, That's completely unchanged and there's nothing new to report there. In terms of The expenses, as you mentioned, we have strong business activities, and some of the expenses Are more or less directly related to the business activities?
There are phone calls that need to be taken, Transfers that need to be organized. So there's one driver, which is really very operational increase, which goes with the business activities. And as you mentioned, we also continue To invest into the further development of the business, and I think we find here A good balance between, let's say, profit and investments into growth. Clearly, those investments We focused in terms of strategic growth areas that we have going forward. I think what is probably also important to note, and I mentioned that in the speech, On the Page 13, where we show the expenses, the larger part of the increase It's driven by commission.
So the new business activities and on an adjusted base, scope, FX and the like, The growth is 3%.
Brilliant. Thank
And the Next question is from the line of Pete Elliott of Kepler Cheuvreux.
A few follow ups, please, actually. Firstly, on coming back to the risk result, I mean, a great set of results overall, but that was probably the one area where I was maybe a little bit optimistic. And if I Look back, I guess last year for 2020, you were sort of ended at the lower end of your range and it Seems like you're maybe a little bit behind the sort of 2020 run rate, especially in France. So I'm just wondering how I should think about The outlook there, is there room to sort of improve that? Yes.
I mean, I guess, in France, in particular, you had a run rate of about $100,000,000 a year pre COVID. Is that an appropriate level going forward? Or any more sort of And detail you could give us there would be very helpful. Secondly, coming back to the capital structure, I appreciate the refinancing, etcetera. If I make that adjustment, then I think you're basically at 70% or 70 Point something, but towards the bottom of the range.
So I'm just wondering, how does that how do you think of your sort of flexibility there? Yes, that would be great. Any thoughts? And then finally, on the cash holding the Comfort, the 700 to 900 Is that something we should now think of as a long term level? Or is there anything else That's sort of in your thinking there that might change over the near term.
I mean, I guess the EOG was an obvious one, so maybe there is nothing else, but useful to think of that to understand whether there's anything that might drive that to change in the future. Thank you very much.
Okay. Let me start with the last question. Yes, the SEK 700,000,000 to SEK 900,000,000, that's something we think about as a long term Levels given the business structure that we have and we have said what The trigger was to actually review and adjust the cash comp level in the current period. In terms of the adjustment to the reference level, if you adjust that, we are at 71%. And clearly, the reference level, it's called reference level and there is a range.
It's not the point. We give 70% to 75%. And as an example, at full year 2020, we were at 72%. So there is A range and we also say there is a range for it. This means it's not an extremely tight thing.
In terms of risk result, let me first start with the fact that we have confirmed all Swiss Life 2021 targets, Including the risk result, which we have with a goal of SEK 400,000,000 to SEK 450 1,000,000 for the full year 2021. I think in terms of France, Which you rightly point out as the pivotal point here in the risk result discussion, 2020 was certainly not a year where we had a normal run rate. There were so many effects That affected the 2021 2020 results. And let me Remind us of the key drivers. In the first half of the year, we had, as mentioned, That excess gains in Health and P and C.
Why was that? People It's not drive anymore to the same level as before the pandemic. There was less claims In home insurance and particularly people could go less often to see dentists, The opticians and the physicians. So as a result, we had a much lower Claims level in the half year twenty twenty. Those benefits, cost then, as mentioned, taxed away by the French government.
They impose A premium tax in health, which essentially cost us, I think, euros 42,000,000 In the second half of the year, the CHF 42,000,000 refer to both The 2020 and the 2021 Health Business, but the full amount of CHF 42,000,000 was recognized In the financial year 2020, what we also have in France that comes a bit to the current year outlook, There was the introduction of a new governmental prescription in the health business that is 100 percent Health or Saint Paul Sansante, as the French colleague, which puts The burden for the health claims more on the French state and the insurance sector. And this has Already last year, but more prominently this year, led to a worsening of the claims ratio in the Health business. As a result, we see the French risk result clearly under pressure this year, and this will Also have an effect on the group's total risk results for 2020. One, but as mentioned, we confirm the goals of €400,000,000 to €450,000,000
Great. Thank you very much.
The next question is from the line of Liang Fulin of Morgan Stanley. Please go ahead.
Thank you. I've got two questions, please. The first one is, I noticed there isn't much Reserve enhancements during the first half of twenty twenty one. Just wondering, Does that mean actually the is the whole kind of interest rate downward pressure on your liability side is approaching an end And looking forward, what's your expectation on that one? So the first one.
The second question, just so I just want to clarify one number. So your cost income ratio of TPAP and business is 70 5, end of this year, while your current cost income ratio is 80% for the half, 1st half adjusted by the brand write off issue. And does that mean that we should be expecting Roughly 60% kind of cost income ratio in the second half of 'twenty one? Thank you.
Okay. Let me start with the first question on reserving. We assess the reserves always For each valuation date and we apply here and we have to apply the guidance of the Swiss Actuarial Association. And what is driving, I think we've spoken, the reserving assessment is clearly Yes, as we hold, the returns we expect on the assets we hold, but also clearly the yields at which We reinvest and simply speaking, again, the results of that aggregate It's then the statement whether we need and by how much to further strengthen the results. What now has happened in the first Half of the year until 30th June is that rates in Swiss franc and euro have increased Considerably, and this has clearly eased the pressure on the reserving positions.
But to be frank, we do not know how capital market interest rate will develop Over the past, so I think it's difficult to in the future. So we don't know how This will develop going forward. But that said, we do this reassessment at each and every closing. Now in terms of the cost income ratio, the target that we give For the Swiss Life 2021 program is around 75. So around 75 is the goal that we have said, and we have confirmed that level.
Now what is the dynamics? There is typically and it's past that we observe every year that the first Half of the year typically has higher cost to income ratios like that. Many of the, let's say, transactions that contribute to nonrecurring income such as Development fees, transaction fees and the like, they are coming more towards the end of the year, Well, the expenses are incurred more linearly. So yes, we expect a similar trend this year.
Thank you.
And we have a follow-up question from the line of Michael Huttner. Please go ahead.
Thank you so much. So I was going to ask you on that topic, how much could we expect because You gave us the mix 16% in the first half of kind of transaction fees, so it's 23% last year. So I just wondered whether you have an amount in mind or some guidance. The second is the amazing new business margin in Switzerland, the 4.4%. Is there anything unusual in there?
Or is it just how sustainable is it? Because this is this doesn't look like Switzerland, which is a low interest rate country. It looks like I don't know Italy or something. And then the last question is On I'm hesitating, but on the IFA, so you grew in Germany 18% to 5,100. Is there any kind of limit?
Or can you just keep going?
Okay. Let me start first with the new business margin. Switzerland, the 4.4% It's really driven by both an improved business mix within the Swiss individual and Swiss group life business. So in the Swiss individual business, we now have a further increased share of capital Light products, that's one product that even has a negative interest rate guarantee. And On the other part of the business or the product, even a unit linked share of maybe 60%, 70%.
So it's a hybrid product. And also in the Group Life business, we This reduction of the full insurance part in the new business, which you also have seen as a premium reduction. On the other hand, we also have written a lot of semi autonomous risk business in the Group Life business. This one is less visible in the premiums I've mentioned. And this is this clear, Let's say, shift towards capitalized business that has driven this increase of new business margin 4.4%.
So to come to your initial question, no, there's nothing funny in it. It's just the change in the business mix, if you wish. How sustainable is it? The 4.4% is essentially 3x the ambition level. So Per se, there's no problem if this margin comes back.
As mentioned on previous occasions, we do not optimize The margin per se, but we want to maximize the value of new business and then over time, clearly the P and L Contribution of the business, so it's perfectly conceivable that this margin can also come down a bit. So this is Kind of the way we also see the business. Now in terms of the nonrecurring income, It's a bit stating the obvious and sorry for that. As mentioned, we expect the share of nonrecurring clearly to be higher Versus the end of the year, those activities are back end loaded within the year. As an example, in the last Here, we had the 23.5 year.
At full year, we were at 30. The nature of the business It's that it's a bit difficult to predict. We are a half year bit behind last year, and this It's likely also to be the case in terms of share for the full year. Coming to the third question, we are growing nicely. In Germany, we have added 18 And of IFAs and clearly, we are working hard to continue the growth.
Clearly, we also need to make sure that we can maintain the quality of the education, the processes and the like, but That's probably the stuff I can mention here.
Wonderful. Thank you.
The next question is from the line of Rene Loecker of Stifel. Please go ahead.
Yes. Good morning all. Four questions, if I may. So the first one is a simple one on Slide 8. You're showing here that the market in group life Decreased by 14%, partially, I think this is only traditional full insurance in Switzerland.
The second question is on Slide 10. And here also for my understanding, I mean, we can see very strong Fee income, I was wondering how do you finance the ZZR? Is this just Out of the insurance business or can you use part of the strong fee result to finance the That's it. Or then on Slide 28. Here again, I guess, Sorry, but I'm misunderstanding from my side, but I always thought that the current year Cash remittance depends on the net profit achieved last year.
So now last year's net profit Was down from 13%. And despite that, the cash remittance is up by 7%. So, yes, most kind of a misunderstanding from my side, I guess. And then last but not least, on Slide 36, I see you have very strong direct investment income in real estate and also the re Valuation gains are substantially up year over year. So yes, Perhaps you can shed some light here on this positive development in real estate.
And perhaps you can also elaborate what is the impact from
So give it a try. So yes, on the premium development, of course, primarily driven by our BVG business. That's also the reason why we had this 20% reduction in premiums. Of course, the individual life market has done better And especially the periodic premiums, but you're right. I mean, it's primarily driven by the BVG Group Life business.
That's both the overall market and, of course, our figures. Now on Germany, the ZZR, That is only financed within the insurance portfolio. So it doesn't have anything to do with the See results here what happens and remember the reason why this increases the IFRS Figures, if we do gains realization, is because the liabilities, Statutory liabilities created by the ZZR are not reflected in the IFRS best estimates. So that's the reason why there is basically a neutral statutory effect by realizing bonds And increasing the ZZR, but there is a positive IFRS impact, which Matthias quantified as being around €20,000,000 Then on the Remittance question, there is a very similar effect there. The cash remittance, of course, it depends on the results of last year, It depends on the statutory results of last year.
Primarily, that's one of the key drivers. That's why You have some discrepancies of the IFRS results and the cash remittance. And cash remittance was driven by AM, asset managers, the German IFAs and International. Then the last question was on the Page 36, So around investment income. And here, I guess, the positive Point is that we have a bounce back now of rental income of around 50,000,000 And there, we've already included some income from Circle, which is the development, which was completed almost completed towards the end of last year.
It's not Totally completed yet. And so we expect further increase of rental income coming from Circle this year And then again, next year. So, we'll have some tailwind here going forward. Then the other key points that Matt just mentioned, of course, we had a bit of a reduction on the bond income. Why?
Because of gains realizations last year. But of course, the slowdown of Direct investment income has slowed. So over the last 11 years, I think we had It was about 7 basis points per year, which direct investment income yields came down. Last year, it was a lot more. I think it Around 20 basis points.
So we were back to normal, more or less. So I'm always talking half year figures here. And of course, we've had a big swing in equity Contributions to net investment income, I think what is also notable is that Equity is a bit counterintuitively, have contributed negatively to net investment income. And that implicitly means we've had a big buildup of unrealized gains in the equity portfolio, which was up to €2,900,000,000 at half year, if I recall correctly. And of course, we've also had a well flagged benefit from much lower hedging costs This year compared to half year.
And I think you also saw the improvement of the real estate Revaluation gains, which by the way, again, we're in all sub segments. So residential, retail And commercial real estate all experienced positive revaluation gains, again, this year, This half year as was the case last
year.
Okay. Thank you very much.
The next question is from the line of Singh Sanand of Citi. Please go ahead.
Yes. Hi. Thanks for taking my questions. This is France, which is slightly interesting in terms of the premium growth on a continuous basis. In Q1, we saw like 17% growth.
And in this quarter also, there is a huge growth. I believe There is like easy comparator or comparable last year, but how should we think about it going forward? That's my first question. And second on international segment, if you compare the Q2 premiums, it was like 50% down year on year, largely EBITDA lower contribution from private clients. But here also how should we think it going forward in a normalized rate and what are the challenges we are facing and How do we see it going forward?
3rd, on the cash, Remington says, I believe you gave a breakup by business line In your annual slides previously,
so can
you just provide any indication of half yearly cash remittances, Given that largely the retances happening in first half only, so what is the breakup by business lines, If any indication, that will be helpful. Thank you.
Okay. Then let me take the question on France. As you said, we have achieved strong growth in the French business, particularly in the Life business in France, the driver of that started essentially in 2019, Then a new law was established in France. It is called Wabakt or Pact law. This Created the prerequisite for a new product generation in Swiss Life France was Very quick, if not the first among the first companies to offer that new Pension product, which is characterized by a very high share of unit link, that's an area where we have a Strong expertise.
And this really has been the growth driver For the past, let's say, 24 months almost, I mean, we first established The individual version of that product and then rolled out the group version of that product. And if you look at that product In isolation and dispensation box product, we have a market share in that product area That is well above, let's say, our natural market share. If you also look at the inflows That we generate the SEK 1,200,000,000 mentioned compared to the market SEK 10,900,000,000. We have An above average, let's say, market share. And to be frank, we always think at one point in time, This will attract competition from other companies.
But so far, we Managed to grow in that particular area above our natural market share. How long we can do that, I think, is difficult to assess. But so far, we Have the right ingredients if you wish to be competitive and outperform the market there. In terms of international, yes. You mentioned the dynamics.
We had discussions last year, most of the lockdowns Affecting Asia, we have things lockdown situations affecting Europe this year. This is a business where we have big tickets and 1 or 2 big tickets may really change the picture Quarter on quarter, I think It's difficult as a result to really give an indication of premium forecast, but structurally, there is demand for That product type, we are also rolling out a new version with an increased Risk coverage also in Europe, and we are positive that the market is picking up. Now in terms of the cash remittance, in terms of segments, Let me give the following indication. What has been driving the increase of cash remittance versus Prior year is AEM Asset Managers, which is a fee business. We have also seen an increased contribution from our German IFA business, so also
Okay. Thank you.
And we have another follow-up question from the line of Michael Huttner. Please go ahead.
Sorry about that. Thank you. It was just on the investment income from equities. The so this was down from 1.93 to 1.46. And but the I tried to compare with last year's figures And I may I'm probably reading them wrong, but it looks as if you had less equities last year.
So the half year Last year, 2.7% net hedges. This year, 4.4%. Gross of hedges, 8.2% last year, 9.9% this year. Has there been a shift somewhere?
I think what is always important here, of course, on the one hand, the dividend yields, But it's the underlying portfolio you mentioned and the combination of both just led to this decrease of about €50,000,000 in direct investment income if you compare half year 21 with the half year in last year. So it's really the nominal level. And what we mostly talk about is the hedged Equity levels, which is now at around 4.5%, if I recall correctly. And last year, I think it was around 3 ish.
And there are no more questions at this time. I would like to turn the conference back over to the speaker for any closing comments.
So that brings us to the end of our conference. Again, thank you for your time and I look forward to seeing you again in November. In the meantime, I wish you a pleasant