Ladies and gentlemen, welcome to the Swiss Life presentation of the Q3 Results 2020 conference call. 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 presentations 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 related field. 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 Matthias Aellig, Group CFO of Swiss Life. Please go ahead sir.
Good morning, ladies and gentlemen. Thank you for dialing in and for your interest in Swiss Life. Today, we are reporting on selected top-line figures for the first nine months of 2020. Please note that all figures quoted are in CHF and are unaudited. All growth rates mentioned are in local currency. Let me start with today's key messages. Afterwards, I will provide more details on our segments. Fee and commission income was up by 10% to CHF 1.4 billion. All sources contributed positively. Asset managers grew by 12%, our owned IFAs by 8%, and our own and third-party products and services by 5%. Gross written premiums, fees, and deposits received decreased by 13% to CHF 15.4 billion. This decline was anticipated and, as previously mentioned, is due to the exceptional demand in 2019 in our Swiss group life business.
Insurance reserves, excluding policyholder participation liabilities, grew by 1% to CHF 168 billion. Swiss Life Asset Managers recorded net new assets of CHF 3.8 billion in Third-Party Asset Management. Total assets under management in our TPAM business amount to CHF 86.7 billion. Direct investment income was at CHF 3.0 billion. Non-annualized direct yield was 1.8% compared to 2.0% in the prior year period.
The net investment yield stood at 1.4%, down from 1.9% in Q3 2019, also on a non-annualized basis. Our SST ratio as of 30th of September 2020 was around 190% and therefore at the upper end of our ambition range. Our CHF 400 million share buyback program will restart on the 4th of January 2021. Total amount and end date are unchanged. I will now move on to our segment reporting, starting with Switzerland. Premiums decreased by 22% to CHF 9.1 billion. The overall market was down by 21%.
Premiums in individual life were down by 8%, while the market was down by 3%. Periodic premiums grew by 2%, single premiums decreased by 29%. Premiums in group life were down by 23% to CHF 8.1 billion, while the market decreased by 25%. Periodic premiums grew by 1%, single premiums decreased by 35%. I've mentioned on numerous occasions, we reported an exceptional increase in premiums in 2019.
Overall premiums in Switzerland in the first nine months of 2020, excluding this exceptional increase, were stable. The share of semi-autonomous solutions in our group life new business production was 46% compared to 15% in the prior year period. Assets under management in our investment foundation grew by 8% to CHF 11.9 billion compared to CHF 11.0 billion at year-end 2019. Fee and commission income increased by 8% to CHF 215 million, primarily due to our mortgage business, investment solutions for private clients, and Swiss Life Select.
Turning to France. Premiums increased by 9% to CHF 4.4 billion. In our life business, premiums were up by 11%, while the market was down by 25%. This is a very pleasing achievement, which is supported by new pension products. The unit-linked share in our life premiums was 57% compared to the market average of 34%. In health and protection, premiums grew by 5%. P&C premiums were up by 3%, driven by mortgage products. Fee and commission income rose by 7% to CHF 243 million. Unit-linked fees increased due to positive net inflows that more than offset the negative financial market effect on assets under management. Unit-linked reserves were, on average, higher in the first nine months of the year compared to the prior year period. Moreover, brokerage fees and revenues from structured products also increased. I continue with Germany.
Premiums grew by 5% to CHF 982 million due to higher premiums with modern traditional and disability products. The market increased by 1%, driven by single premiums. Fee and commission income was up by 14% to CHF 390 million, driven by the strong contribution from our owned IFAs, due to an increased number of financial advisors and productivity gains, supported by our digital platform with features such as video advice. The number of financial advisors increased by 9% year-on-year to 4,467. Moving on to our international unit. Premiums decreased by 22% to CHF 953 million, due to lower single premiums with private clients in Asia as a result of the early and lasting COVID-19 measures. This was partly offset by higher premiums with private clients in Europe and with corporate clients.
Assets under control for private clients declined by 7% to CHF 19.6 billion compared to year-end 2019, as negative financial market performance and surrenders more than offset new deposits. Fee and commission income was down by 10% to CHF 207 million. This is due to COVID-19 impacts on the business with private clients, given lower assets under control, as well as due to fewer client interactions at the owned IFAs.
Let's continue with asset managers. Asset managers' commission income was up by 12% to CHF 630 million. As usual, the update on asset managers in Q1 and Q3 focuses on commission income and does not include other net income from real estate project development. In our PAM business, commission income increased by 3% to CHF 274 million. This is primarily due to a higher average asset base. In our TPAM business, commission income was up by 20% to CHF 357 million.
Recurring fees increased by 19% based on higher average assets under management. Non-recurring commission income, such as transaction and performance fees, increased by 23%. The share of total non-recurring income for TPAM, meaning commission income as well as other net income, for example, from project development, was 28% of total income.
Other net income includes gains on ongoing and completed real estate development projects. So far, we have not seen material delays in our real estate development projects. Net new assets in our TPAM business amounted to CHF 3.8 billion, compared to CHF 6.5 billion in the first nine months of 2019. We achieved inflows of CHF 2.0 billion in real estate, CHF 0.7 billion in bonds, CHF 0.5 billion in balanced mandates, CHF 0.4 billion in infrastructure, and CHF 0.3 billion in money market funds. Inflows in real estate and infrastructure were thus at prior year level.
Excluding money market funds, net new assets amounted to CHF 3.5 billion in the first nine months 2020, compared to CHF 5.8 billion in the prior year period. Overall, assets under management in our TPAM business were up to CHF 86.7 billion, compared to CHF 83 billion at year-end 2019. Turning to our investment result. Our direct investment income decreased by around CHF 0.3 billion to CHF 3.0 billion.
We had lower income on bonds due to past bond realizations and lower reinvestment yields, as well as negative FX impacts both on translation and coupons. We also had lower income on equities due to a reduced exposure and due to lower dividend payments in the COVID-19 environment. Income from real estate declined year-on-year, primarily due to the movements in our real estate funds in the first six months of 2020, which we discussed in August in our half year disclosure.
The non-annualized direct yield decreased to 1.8% compared to 2.0% in the prior year period. Coming to the net investment yield. Our non-annualized net investment yield decreased to 1.4% from 1.9%. It includes net capital losses composed of COVID-19-related realized losses on equities, revaluation losses on derivatives of our equity hedging strategy, as well as impairments on equities and bonds. Those were partly offset by realized gains in bonds and positive real estate revaluations.
Moreover, It also includes FX hedging effects, including losses resulting from the hedging costs as interest rate differentials narrowed this year in Q1 2020. This narrowing led to a decrease of hedging costs by around CHF 140 million -CHF 440 million and will lead to substantially lower hedging costs going forward. At the end of September 2020, unrealized net gains on equities amounted to CHF 1.1 billion, compared to CHF 1.6 billion at year-end 2019. Unrealized net gains on bonds amounted to CHF 17.5 billion, compared to CHF 15.1 billion at year-end 2019. Please note that there are legal quote mechanisms in most of our insurance businesses.
This means that the investment gains and losses are subject to sharing with the policyholder. Let me conclude the yield discussion with a forward-looking statement. For the 12 months of 2020, we expect to achieve a net investment yield of slightly below 2%. I'm saying this with the usual disclaimer of any unforeseen developments in financial markets for the rest of the year. The asset mix remained in line with the full year 2020. The real estate exposure amounts to 21.1%. Let me give some additional color on the real estate portfolio. We had real estate revaluation gains of 1.3% compared to 1.8% a year ago, both on a non-annualized basis.
Given our high-quality portfolio in attractive locations, our vacancy rate continues to be very low at 3.9%, compared to 3.7% at year-end 2019. Moreover, in the first nine months of 2020, rent collections amounted to around 96% of rental income due. The majority is due to rent deferrals, as rent losses amounted to less than CHF 10 million. Please note that the rent collection differs from the P&L and accounting view.
Rent collections simply reflect the cash collected compared to the rent due. Rent deferrals and rent not yet collected are recognized as income in the P&L with the respective account receivable on the balance sheet. I can confirm that we had no impairments on rent receivables apart from the just-mentioned rent losses of less than CHF 10 million. Moving to solvency, cash, and payout. Our SST ratio was around 190% by the end of September 2020.
As of today, the SST ratio is at the same level and therefore at the upper end of our ambition range of 140%-190%. Cash at holding amounts to CHF 1 billion as of today, compared to CHF 0.9 billion at year-end 2019. Both our solvency and cash position continue to remain strong. As communicated in March, we temporarily suspended our share buyback in line with all other major listed banks and insurance companies in Switzerland.
We now reassessed the situation as we communicated in August and decided to resume the CHF 400 million share buyback program on 4th of January 2021. Total amount and end date are unchanged. In other words, we will repurchase shares for the remaining amount of CHF 371 million by the end of May 2021. Let me sum up. Our business model proved resilient and sustainable in this challenging environment.
Overall, we report solid results for the nine months of 2020 despite COVID-19 headwinds. Especially our fee income developed strongly despite financial market developments and lockdowns. As mentioned on several occasions, the main effects from COVID-19 for us arise from negative financial market developments and the related impact on our savings result. We expect the savings result to be below the 2019 level in the anticipated U-shaped economic recovery.
We continue to be on track with our Swiss Life 2021 program, despite headwinds from COVID-19, and I can confirm Swiss Life 2021 targets. This also pertains to those targets, like the return on equity of 8%-10%, that are valid for each and every year, including 2020. This brings me to the end of my speech with a save the day for 2021. Swiss Life will host an Investor Day next year to disclose a new strategic and financial program. The Investor Day is planned to be held on November 25th, 2021. Thank you for listening. I am now ready to take your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on the touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star two. Questioners are requested to mute only hands that they're asking a question. Webcast viewers may submit their questions in writing via the relative field. Kindly note that webcast questions will be answered after the call. The first question comes from Peter Eliot from Kepler Cheuvreux. Please go ahead.
Thanks very much. Great results and very good news on the share buyback. I'm going to sound greedy with my first question, but I guess, given that you've decided to launch the share buyback, I'm just wondering whether you can shed any light on the thinking of the timing of the start date? Was there any reason for not doing it immediately if you've got the cash and you've decided to do it? That was the first question.
Second question was on asset management. I'm just wondering if you can give us the split of recurring, non-recurring fee income and any insights into the outlook there. Final question, very strong results from the financial advisor channel in Germany. Just wondering if you can talk about your current recruitment and whether that drive can continue. I guess it comes from efficiency and higher number of advisors. Yeah, just wondering about the outlook over the coming year, given both of those trends currently. Thank you very much.
Thanks, Peter, for the question. I start with the question on the timing, on the thoughts behind that. As mentioned, thinking back to March, we said then that we suspended the buyback temporarily in line with other major Swiss banks and insurance companies. That was the reason that was driving the consideration back then. Now, we assessed the situation, as mentioned, and we decided to restart the share buyback on the 4th of January. This is also in line with major banks in Switzerland. Besides that, I think what you also said is the timing in terms of end date and the volume remains unchanged compared to the original plan. That's about the thinking about the timing of the resumption of the share buyback.
In terms of the split of the income of the commission and fee commission income, as well as the other net income, we have had 28% in Q3. We always say this is typically a bit backend-loaded within the year. The non-recurring business, there are always a bit uncertainties when and how much it will come, but I think it's fair to assume that we are, for the year-end, on a similar level. The 28% is that important on a year-to-date basis. This compares to 23% at half year. You already see a bit this typically occurring fact that it is backend-loaded within the year. In terms of the IFAs, yes, we continue to see growth in the number of financial advisors in Germany. We have there 9% year-on-year.
We also have realized efficiency gains, both of which contributed to the growth of fee and commission income of 14% in the German business unit. What is, I think, worthwhile to mention is that we were able, in the first three quarters of this year, not only to continue to serve our customers during these difficult times, some of which were really lockdown periods, also in Germany, but we also could continue to recruit additional advisors, which will now undergo their certification. This is really a proof that our, let's say, business model in Germany, the platform we have built is attractive.
That's great. Could I follow up very quickly on that? Sorry, Matthias. I didn't quite catch your comment on the non-recurring. I heard that you said it was typically backend loaded. I think you made some specific comments about the outlook for this year and whether it might be more or less than usual. I didn't quite catch that. On the advisor growth, that's great news that you were still able to recruit during this period. Those comments sound to me a bit more bullish than I guess I've heard from elsewhere in the industry. I'm just wondering, do you think you're attracting more people than elsewhere? Do you feel you're taking market share there? Great. Thank you.
Coming back first to the question of the recruiters. We have, on average, a substantially younger advisory force in Germany compared to the market. Our average is maybe 37 years. That's what we also disclosed at the Investor Day 2019. I think the overall market has an average age of slightly above 50. We have a younger advisor force, which is growing, while the overall trend in Germany in the advisory, in financial advisory force is shrinking. Yes. One of the key points we have to offer to young people who want to pursue a career in that business is that we have a platform that supports them in being efficient and really to build their own kind of little business situation that makes us so successful in Germany.
It's really this combination of facts that makes us to grow continuously at that rate of, as I mentioned, 9% year-on-year. In terms of the real estate project development, what I mentioned is we had 23% at half year. That is the share of non-recurring income in the total income, including other net income. That was 23% at half year 2020. We now have 28% at Q3. That shows, as I said, the fact that the non-recurring business is typically back-end loaded within the year.
Now, if you look back to what we have shown for the full year 2019, we were there at 27% than that. If we go back one year more, we were in full year 2018 at 33%. We always said going back into 2018, we knew that 2019 was going to be a weak year because there was this historic project development pipeline of a business acquired in Germany in 2014 that would come to an end in 2019. To cut the long story short, we expect for the full year 2020, something which is at the Q3 level or a bit higher.
That's great. Very clear. Thank you very much.
The next question comes from Michael Huttner from Berenberg. Please go ahead, sir.
Perfect. Thank you so much. I guess as Peter said, well done on the buyback and well done on the overall results. Just two questions. One is on the granularity of the development, and the other one is a more general question, how you see competition from your peers in real estate asset management. Oh, yes, the last question, because I couldn't work it out and got very confused. From the granularity of the development, I think you have a development called Circle near the airport in Zurich. I just wondered if you could update us a little bit on the progress there in terms of lettings and whatever. I don't know any indications. I think it's quite a large development. The second is on the competition from peers.
Baloise said at the Investor Day last week, they want to grow more real estate asset management. They mentioned some figures which are still very small, they are clearly not. I just wondered if you see any signs of dilution of any kind from competition from them, from Baloise, from some others. The last one is on the buyback. I was trying to work out in the, I guess, five months that you will have to complete it through to May, what kind of percentage of average daily volume it could be, but I got so confused. I worked out 2%, which seemed very low, but anyway.
Okay. Thank you, Michael. I didn't understand acoustically the first question on granularity. The very first thing, what was that?
I beg your pardon. Yes. Thank you. Sorry about that. Can you hear me better now?
Yeah. It was just the granularity of what?
Yeah. I think you have a development near Zurich Airport called The Circle. Is that right? I just wondered if you can update us or whatever it's called, a big thing, which will have a hospital and hotels and things. I just wondered if you can update on progress on this and how much is pre-let and whatever.
Well, good. Thanks. I start with that one. The Circle, I have to say, is a large development at Zurich Airport. As you said, there is a hospital which is already in operation. That's the University Hospital of Zurich. We have there big companies that are moving in. We have now restaurants, shops that are opening. The official opening will be in, I think, tomorrow. That is quite imminent. The quota of letted space is at 83%. What is important to understand in context there is that while it is at the airport, there is also a large traffic, say, connection hub there, which is not dependent on air traffic. There is lots of commuter traffic that is going to The Circle as well. This is really going well, and as said, it will open tomorrow.
In terms of the share buyback that you mentioned, if you look at the numbers. The average volumes to five months and the remaining CHF 371 million turns out to be around CHF 75 million or something like that a month. This is essentially the same level of volume that we have done in the share buyback that we announced in 2018, the CHF 1 billion that lasted for 13 months. That's absolutely comparable to the previous buyback. In terms of competition in the real estate area here in Switzerland, we still see this as an attractive place.
We have longstanding experience. We have been entering the business of Third-Party Asset Management in the real estate area many years ago, and we have built up a track record and a reputation. We now have, in the TPAM area, essentially the same amount of real estate as on the balance sheet, which is essentially CHF 35 billion or a bit more. We are well-positioned here, and we have the track record and the experience. Given the local nature of that real estate business, we still see that the margins are attractive.
Thank you.
Our next question comes from Farooq Hanif from Credit Suisse. Please go ahead.
Hi, everybody. Good morning. Like everybody else, congratulations on some very solid results. Just three areas, if I may. Firstly, can you talk a little bit about the correlation between the fee income and your fee result in the life business, especially? I can see the link in asset management, but just whether we should expect a similar level of growth in the fee result. Secondly, I believe you made an increase in cash remittance in the first half. I think CHF 748 million.
There is always some residual in the second half, I think, and I was just wondering if you can comment on what kind of level compared to last year we may expect. The last question is on second lockdowns in the markets that you're in. Just what impact is this having on, year to date, sorry, I mean Q4 to date, net flows, real estate as well? Just the impact on your asset management business, if you could comment on that. Thank you.
Maybe starting with the question of the lockdowns. I will focus a bit probably first on the Swiss situation. If we look, measures have been imposed by the Swiss government. They are less far-reaching than those in the first wave in March and April. In Switzerland, we would not talk about a lockdown. There are clearly measures in place. In Switzerland, we do not have a lockdown. There are home office recommendations by the government and what have you, but we don't have a lockdown in Switzerland. The activities here are much less affected as we speak compared to the first lockdowns in March and April. I think that's probably the first important statement.
The second important statement I think is to make that while we have been in a position to really stay open for business, to maintain business activity in the first half of the year, as we have shown in Q2 and also now, it still took some time to get used to adjust the processes, I think we're now much better prepared for what is ahead of us. I think we have here shown to be resilient, even though I have to be transparent, we don't know how this will turn out. In terms of the fee income, let me point probably a bit to the half year results. Back then, we had a growth of the top line of 10%, that the result has increased by 6%.
As we have mentioned in the half year, we have undertaken investments into digitalization given the COVID-19 situation, which were a drag on the result in the half year. This should give you at least some indication on how things have developed. We expect to see some operational leverage come in Germany. That's probably also a statement we can make. What is important, and this is sometimes forgotten, if we look specifically at the insurance part of the business, there is a lot of business unit-linked amounts, particularly in France.
There, the amount or the underlying in the unit-linked business is more geared towards a CAC 40 rather than an MSCI World. We have there some effect also in the French business because the clients there have a home bias. In terms of cash remittance, as you said, most of the cash remittance takes place in first half of the year. We have seen this uplift versus prior year. I think it's safe to assume that the pattern will not be that different from what it has been in prior years.
Okay. That's clear. If I may just come back on one question that I forgot to add. You've seen a really good pickup in net flows in 3Q versus 2Q. Are you seeing similar pickup perhaps in October?
Well, I'd say in Q3 standalone, we had in asset managers, in TPAM business, really a strong quarter. On the other hand, we also have to say some of that business is relatively big and a couple of deals can make a big difference. We have seen a strong Q3.
Okay. Thank you very, very much.
The next question comes from Kim Shapiro from Morgan Stanley. Please go ahead.
Thanks very much. Just a follow-up question on if there were to be a second lockdown in Switzerland, would you have to offer rent concessions?
I think that's a rather hypothetical question because in Switzerland there seems to be, or there is a political consensus that a lockdown as we have seen it in the first half of 2020 has to be avoided because of the economic damage, because of the social damage. To that end, I consider that question to be a bit hypothetical. We have measures in place, where the interaction between people is reduced, and that's what the current consensus is, should hopefully be enough.
There is this parliamentary initiative about a 60-40 split of the rent for commercial tenants up to a certain amount of, I think, CHF 20,000 monthly rent. If this would become effective, this law, we would have, in expectation, a loss of maybe CHF 10 million. With the current approach that we have taken, it is less than CHF 10 million. This compares to a total rental income of about CHF 1 billion, just to give you a bit the order of magnitude.
That's helpful. Thank you.
The next question comes from Andrew Sinclair from Bank of America. Please go ahead.
Thanks. Morning, everyone. Three from me, I think if that's okay. Firstly, just again on real estate rental collections, 96%, really good number. Just really wondered if you could give us an update on differences by sector. I think you gave a bit of color on that at half year as well. Secondly, was just on solvency. Really strong number, even after allowing for the buyback, top end of the range. Just really how should we think about that number being where it is as we enter the final year of the current plan period? Third from me was just any updates on recommendations for mandatory rates into 2021 from the relevant bodies? Thanks.
Okay. Maybe I start with the rent collection. We gave some color on that, I think at the half year. The rent collection was the highest in the residential area and it was a bit less in the office space, and in the retail it was the lowest. This is essentially what we continue to see there. There's no relevant update there. Now, in terms of the solvency number, I'm not sure whether I got fully your question. I think what is important to mention is that the 190% that we disclosed already includes the full deduction for share buyback. The execution of the redemption of the share buyback on 4th of January will not have an additional effect on the SST ratio because the full amount has already been deducted. I'm not sure whether that was your question.
Really just pointing out that number remains very strong even after the buyback and how you'd think if it continues to drift up. Perhaps one that we need to wait till next year's investor day.
Good. There was another question on here.
The next question comes from Simon Fössmeier from Vontobel. Please go ahead.
Hello, everyone. Hope everyone's fine. Two questions. One is on real estate. You mentioned the rent collection, and I appreciate that. You also mentioned the positive revaluation gains, and I was just wondering if it's fair to assume that the revaluation gains year to date are anywhere between 0%-1%, if you want to disclose that. The second question is on the Swiss corporate pension business, the BVG business. If the guarantee would be lowered to, let's say, 0.75%, can you remind us of the mechanics? Does this mean that you could release reserves, which would be non-cash, but still, is this the only thing that would happen? I'm just wondering if you could. Thank you.
Maybe on the revaluation gain. Year to date, they were 1.3% on a non-annualized base. For the first nine months, this compares to 1.8% in prior year. Clearly, this 1.3% is not absolutely uniform across the portfolio, but there should not be any huge deviations from that 1.3%. There may be certainly a bit more in the residential area and a bit less in the other area. What's also important to understand, there is clearly a detailed approach to the valuation. Which is, by the way, done by an external agent. In terms of the BVG business, if this guarantee interest rate is set at a different level, it's always best to think about it like a bank account on which we have to pay a certain amount, be it 1%, be it 0.7%.
This is not something that releases reserves, neither, let's say, to the policyholder nor to the shareholder. We just pay a bit less as guarantee and then a bit more as surplus to policyholders or use it for other things like strengthening of the old age reserves in the BVG area. To cut it short, the 0.7% or whatever it is more like a credit to a bank account. The gross legal quote we have then governs the distribution of what goes in excess of that guarantee.
What is important also to keep in mind is that the mandatory part which you were referring to is only about half of the total savings account in the Swiss BVG business. The other half, which is also of the same order of magnitude, is non-mandatory, and there we have a lower rate of 0.125%. Both blocks are essentially each CHF 20 billion worth. You can find additional details on that on the half-year booklet on page 46.
That's great. Thank you.
We have a follow-up question from Peter Eliot from Kepler Cheuvreux. Please go ahead.
Thanks very much for letting me come back. Two quick points, if I may. The first one on real estate. Again, you've said in the past that you still consider it to be a very attractive asset class and are still investing into it. Is it fair to assume that you see residential as more of an attractive asset class at this point? It would be natural to assume that your investment focus would be on residential and maybe less on commercial and in particular office buildings.
I was just wondering if you'd give any comments on how you're thinking about the sort of investment opportunity across the space. The second question was, again, just coming back to Germany. I guess there's a bit of a political drive there to reduce commission rates at the moment. I'm just wondering whether you think that might have any impact on you or whether there's any reason we shouldn't be worried about it? Any comments would be great. Thank you very much.
Maybe coming first to the real estate question. Residential is in our portfolio today about 44%, office 30%, 15% is retail. We have always looked that we have a good balance, that we have a high-quality portfolio in strong locations that are robust. At the end of the day, it's about risk return. Really, residential is within the real estate space, only a bit less risky. It has lower returns. Office is a bit riskier relative to residential, has a bit higher returns. For us, it's really important that we have excellent objects, as we have in our portfolio, and that this risk-return trade-off is good. To that end, we really look at the individual objects and look at their potential, at their risk, at their returns.
As you said, real estate continues to be a very attractive asset class for us, because the high pickup it provides are risk-free and the long-dated cash flows we are really looking for. In terms of the German situation, this discussion every now comes up. In our perception, we see that in Germany, there is, also within politics now, the notion or the insight that it is important that people get advice for their old age provision. That they get professional advice how to manage their financial situation, that they really do not fall to poverty once they get old.
I think German politics has also acknowledged that if there is not a commission-based model, that if it were more a fee-based model like in the U.K., many people in Germany would not get that advice anymore they need. We see there a relatively remote chance that there will be a fundamental change of that model going forward. If it were nevertheless to happen against expectation, it would affect only a part of our financial advising business, because it's not only life that we offer, it's also mortgages, non-life, health, and what have you.
Great. Thanks very much.
The next question comes from René Locher from MainFirst. Please go ahead.
Yes. Good morning all. Just follow-up question again on real estate. Sorry. That's really where I get the most pushback from clients. You have just split your real estate portfolio. I think with the 44% residential, especially in Switzerland, new flow is very positive, so rents are going up, and also prices are going up, so office is still okay. Then you have this 15% retail and 11% other. Could you just give a little bit more details? For example, what's in there in retail? That's the first one. The second one. On the second pillar business, you do have a full coverage product in place. You have a semi-autonomous product in place. This 1e solution becoming more in favor here in Switzerland. My question is, your sales force, how are they getting paid?
Is there a difference, if they are selling a full cover than a semi-autonomous pension scheme? The third question, this CHF 2.8 billion net new money in real estate. I was just wondering if this shopping center you bought for your clients, is this already included here, or will be this be included in 2021? The first one might be perhaps a bit of a naive question. I was just wondering, this net investment yield of 1.4%, so the negative impact, can be split into cash and non-cash impact? Let's say like, I do believe impairments or equities are non-cash, while hedging costs might be a cash item. Just wondering if you could give your view on this. Thank you.
Thanks a lot for this wealth of questions. On the retail first. We have there, as mentioned before also, folks in very good locations. We have there lots of grocery stores, so really shops that are catering to people that they really have a need. What is interesting to know in terms of the retail spaces that we have there within our portfolio, the lowest vacancy rate. In the retail area, our vacancy rate is slightly below 2%. That shows how diligent we are when it comes to retail objects, how well-positioned they are to attract interest. It's also worthwhile mentioning that in that area, that we have only a low exposure to hotels and restaurants. We have less than 1% of the rental income that is from hotels and restaurants.
In terms of this shopping center that we purchased for our third-party clients, for the TPAM business, this will be recorded in the fourth quarter in our expectations. It was not in the Q3 figures that we mentioned. That shopping center, by the way, is very attractive also for shops. There's actually a waiting list for shops to enter that center. We really take it very seriously that we have excellent locations that we go after.
In terms of the net investment income. We had that 1.4% at Q3, and we said for the full year, we expect something of slightly below 2%, given nothing unforeseen happens. In the 1.4%, I would consider, or we would consider the real estate depreciation to be non-cash. The equity impairments, the realized losses, this is typically close to cash, as are also hedging costs. This is a running cost situation. Also, the movements on the hedge of the hedging cost is cash-like.
Mm-hmm. Okay. Can you just, on the second pillar business, so the remuneration for the sales guys?
Well-
The 19. Mm-hmm.
We have here clearly a policy in place that we look at what is suiting the clients, which accounts we actually still want to include. In the full insurance business, we have tight underwriting criteria. We look at what is the average age, how many claimants do we expect over time. I think that's clearly a key consideration when underwriting new business. This has led to a situation that we now have more than 46% or essentially 46% of the business in the MBP. I think it's probably more important to think about that in terms of our underwriting criteria, which clearly exclude some accounts from getting into the full insurance space.
Okay. Very quickly, I saw it, I guess it was discussed in the Sunday press, a new large real estate project in Barcelona, talking like 120,000 sq m. I was just wondering, do you follow there your build and rent strategy, or what should we expect? I mean, it's perhaps still some way to go, but I was just wondering if you could be a little bit more intact here. Thank you.
Well, I have to say that's a very large project that we acquired, I think, this year. Last year. This is a development that will stretch over decades.
Yeah. Mm-hmm.
We have some existing buildings on that. It is really relatively open what we will do. This is a kind of part of the city, if you wish, that we have acquired, and it is not a project where we clearly see today this and this and this will happen. This will take times, and there may be year and date it will have, but it offers the potential to go into many directions.
No, that's fine. Thank you very much.
Next question is a follow-up question from Michael Huttner from Berenberg. Please go ahead.
Thank you. Thank you very much. On the guaranteed yield, I think the figure I last saw was 1.12% for the average of the portfolio. I just wondered if you can give a feeling for where we might land in January 2021. The second question is, given you clearly, well, you're incredibly well-run, and you've got solvency and such. Should we expect some maybe deals in asset management in the near future? Thank you.
Okay. Maybe on the first question, the 1.12% average guarantee, that's what we have disclosed in half year. That was including the reserve strengthening that we have made until half year. We do assess the reserves for half year and the full year closing. I think that's what we can say there. There are various things that go into that decision, how much to strengthen the reserves. That's this part that is very much dependent on things like bond realization, the interest rate environment, and what have you. There is also one thing that is driving a bit the average rate, so that's the government decision on what the mandatory rate will be. There are a couple of variables that play a role here. I think it's too early to tell.
Given the track record, if you look back where we have been a couple of years and how this average rate has developed, it's probably not a big surprise to say that it is more likely than not that we will be lower at the end because we have this ongoing shift to products with lower guarantees, which also show up in that average technical rate. In terms of deals and M&A, I think we can reiterate here what we always say, the plans that we have put forward, Swiss Life 2021, is an organic plan. If there is something where we have a strategic fit, if there is a rationale, if there's cultural fit, if all the rates are met, we will look at it. The plan is organic, and we have confirmed that plan for 2021.
Brilliant. Thank you very, very much. Thank you.
We have a follow-up question from Andrew Sinclair from Bank of America. Please go ahead.
Hi. Thanks again. Sorry, I think I got cut off last time. Just wanted to follow up on one quick thing, which is the 96% rent collection. Should we expect similar at the full year, do you think? I know that at half year when you did 95, you thought that you could get some catch up over the second half of the year. Just a thought there.
The facts are what they are. We had a low rent collection in the second quarter. As the numbers show, it has gone up in the third quarter. We have moved the average from 95%- 96% from year to date. I think it's a bit too early to predict what the fourth quarter will be. In a normal year, to give you an indication, we may have a rent collection of around 99%, but we are certainly, obviously not in a normal year.
Excellent. Thank you very much.
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