Ladies and gentlemen, welcome to the Swiss Life presentation of the full year results 2019 conference call and live webcast. I am Shari, the conference 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 relative 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 of Swiss Life. Please go ahead.
Dear analysts and investors, welcome to our call on our 2019 annual results. Thank you for giving us the opportunity to present our business performance. As usual, I shall first mention a few key aspects of the results before handing over to our CFO, Matthias Aellig. He will go through the figures for 2019 in detail, after which we will both be available to questions and answers. Swiss Life can look back on a very successful financial year. Overall, net profit came to CHF 1.2 billion, which was 12% higher than the previous year. Our adjusted profit from operations rose by 10% to CHF 1.69 billion.
Furthermore, the main driver was our fee result, and all segments contributed to the increase in profit from operations, which I naturally find especially gratifying. Fee income rose by 16% to CHF 1.82 billion. This produced a fee result of CHF 553 million, up 15%.
Swiss Life Asset Managers, with net new assets and third-party asset management of CHF 8.9 billion, and our independent financial advisors were the main contributors. We were also able to improve our risk result with an increase of 3% to CHF 417 million. We were able to increase the value of new business by 45% to CHF 561 million. This is primarily due to the exceptional new business production in the group life business in Switzerland. A large, extraordinary, and one-off increase in single premiums last year that we've already mentioned several times in the past resulted from the withdrawal of a competitor from the full insurance business. We expect overall premiums to be lower in 2020. Other KPIs set out in our Swiss Life 2021 group-wide program indicate that performance has been very positive. We again improved operational efficiency, as you can see on slide four.
We estimate our SST ratio to be slightly above 200% at the beginning of the year. We increased the cash remittance to the holding company by 8% to CHF 752 million. Our success is also paying off for our shareholders. At the AGM, the board of directors will propose a dividend increase from CHF 16.50 to CHF 20 paid in cash, bringing our dividend payout ratio, another target figure for Swiss Life 2021, to 53%, which is within the target range of 50%-60%. The strong solvency, as well as the cash situation and development at the holding company, enable Swiss Life to launch a new share buyback program totaling CHF 400 million. We'll start this new share buyback this March and plan to complete it by May of next year. Ladies and gentlemen, I'm very happy with these results.
The strong commitment of our employees enabled us to make progress in all strategic thrusts of the Swiss Life 2021 program. I now hand over to our CFO, Matthias Aellig .
Thank you, Patrick. Good morning, ladies and gentlemen. I will now provide more details on our 2019 results. Please note that all figures quoted are in Swiss francs unless I state otherwise. Let me start with an overview of our P&L on slide seven. Gross written premiums, fees, and deposits received increased by 22% in local currency to CHF 23 billion. This exceptional growth was mainly driven by our Swiss group life business. Fee and commission income was up by 16% in local currency to CHF 1.8 billion, primarily due to the strong contributions from asset managers, our own IFAs, and also due to our unit-linked business. The net investment result of the insurance portfolio for own risk slightly decreased to CHF 4.6 billion, mainly due to the slightly higher FX hedging costs and higher investment expenses. Net insurance benefits and claims increased to CHF 17.8 billion due to Switzerland.
This includes further reserve strengthening of around CHF 900 million, which leads, among other factors, to a lowering of the average technical interest rate. Policyholder participation slightly decreased to CHF 1.1 billion, mainly due to a reduction in France that was partly offset by an increase in Germany. Operating expenses were up by 9% to CHF 3.5 billion, primarily due to higher commission expenses and expenses related to newly consolidated businesses. Profit from operations grew to CHF 1.7 billion, with a positive contribution from all profit sources.
This includes the profit contribution from the exceptional premium increase in Switzerland. As mentioned on previous occasions, this contributed a very low double-digit CHF million amount. Borrowing costs decreased to CHF 123 million. This includes the effects of the refinancing in 2018 of a matured hybrid bond with a comparatively high coupon. Our income tax expense slightly increased to CHF 324 million and includes a positive CHF 49 million one-off.
This is a non-cash accounting effect in the context of the implementation of the Swiss Corporate Tax Reform in several cantons. Our effective tax rate was around 21%, including this one-off item. We expect the tax rate in 2020 to be at the level of around 24%, essentially in line with prior years, depending on the geographic split of profit generation. Finally, our net profit went up by 12% to CHF 1.2 billion, including the just mentioned positive tax one-off of CHF 49 million. Slide eight shows the adjustments to our profit from operations. On the left-hand side, you can see last year's adjustments, including a CHF 21 million FX translation effect relating to the decrease of the EUR by EUR 0.04 in 2019. On the right-hand side, we adjusted the 2019 profit from operations to reflect restructuring charges and the program costs related to a new accounting standard.
The adjusted profit from operations increased by 10% to CHF 1.69 billion. Moving now to the segment results. I will start first with Switzerland on slide nine. Premiums increased substantially by 41% to CHF 13.5 billion, while the overall market increased by 1%. In individual life, premiums were up by 9%, while the market was up by 2%. Single premiums increased by 29%, primarily with modern and modern traditional products. Periodic premiums grew by 1%. Premiums in group life were up by 47%, while the market remained stable. Periodic premiums grew by 11%.
Single premiums increased by 76%. This exceptional increase was driven by additional demand as our largest competitor pulled out of the full insurance business. We maintained our strict underwriting discipline to support capital efficiency. Overall premiums in group life, excluding this exceptional development, are above the prior year level. In 2020, we expect a substantial decrease of single premiums.
New business production with semi-autonomous solutions was up by 39%. Assets under management in our investment foundation grew by 29% to CHF 11 billion, compared to CHF 8.5 billion at year-end 2018. Fee and commission income was up by 7% to CHF 265 million, with an increased contribution from Swiss Life Select, our mortgage business, and investment solutions for private clients. Operating expenses decreased by 1% to CHF 419 million, due to our continued cost management. Please note that starting half-year 2019, we report operating expenses on all our business review slides on an unadjusted basis. The segment result improved by 3% to CHF 892 million due to higher cost, risk, and fee results. The savings results decreased in line with the lower net investment income. The cost result increased due to higher cost premiums and a reduced DAC amortization, since DAC amortization was exceptionally high in 2018.
The fee result was up by 11% to CHF 20 million. The drivers are the same as for the income development. The risk result increased by 4% to CHF 261 million, mainly driven by the growing group life business with full insurance and semi-autonomous solutions. The value of new business increased by 90% to CHF 308 million, mainly due to the group life business and also positive contributions at individual life unit-linked and the assumed reinsurance businesses. The new business margin decreased from 2.8%- 1.6% due to the extraordinary high share of full insurance solutions and lower interest rates. Turning now to France. Please note that all figures quoted are in euros for our segment France, Germany, and International. In France, premiums increased by 5% to EUR 5.3 billion. Overall, the French market was up by 4%.
In our life business, premiums were up by 5%, while the market was up by 4%. The unit link share in our life premium was 49%, substantially above the market average of 27%. In health and protection, premiums increased by 4%, whereas the market increased by 5%. Premiums in our group business were up by 5%. Premiums in our individual business increased by 3%, with individual protection up by 8%. P&C premiums were up by 7%, driven by motor products, supported by new partnerships. The market was up by 4%. Fee and commission income increased by 9% to EUR 293 million. Unit link fees increased due to higher unit link reserves in line with positive inflows and positive capital market developments. This was partly offset by lower banking fees due to a low turnover of structured products.
Operating expenses increased by 4% to CHF 341 million, due to business growth and investments in growth projects, such as digital client solutions. Segment result rose by 3% to CHF 247 million, with a positive contribution from the savings, fee, and risk results. The savings result increased due to a high financial margin in the life business, and a high net investment income in the non-life businesses. The cost result decreased in line with a strong new business production. In the context of Loi PACTE, we successfully launched new individual pension products in October 2019. Those will be complemented by group pension products in 2020. The fee result was up by 11% to CHF 75 million. The higher unit-linked fee result was partly offset by a lower result in the banking business. The risk result increased by 2% to CHF 97 million.
The positive contribution from the life and P&C businesses was partly offset by a low risk result in health and protection due to higher claims. The value of new business increased by 1% to CHF 131 million. High volumes in life and health and protection were partly offset by the impact from a strong decrease in interest rates. The new business margin decreased to 2.4%. Moving on to Germany on slide 11. Premiums were up by 2% to EUR 1.2 billion. We achieved higher periodic premiums with disability and modern traditional products, both in group and individual life. The overall market was up by 11%, driven by single premiums. Fee and commission income grew by 14% to EUR 448 million, driven by a positive contribution from our own IFAs due to an increased number of financial advisors and productivity gains.
The number of financial advisors amounted to almost 4,200, up 10% year- on- year. Operating expenses increased by 5% to CHF 224 million, because of business growth as well as ongoing investments in growth initiatives, such as the digital client portal for our own IFAs and digital interfaces to intermediaries in the insurance business. The segment result was up by 35% to CHF 167 million, primarily due to the positive development of the savings and fee results, with broadly stable cost and risk results. The savings result was unusually high.
In the context of the ZZR financing, we had an extraordinarily high net investment result, including gains on interest rate derivatives. We expect a lower savings result in 2020. The fee result was up by 11% to CHF 66 million, driven by a stronger contribution from owned IFAs. The risk result slightly increased to CHF 33 million due to a continued positive claims experience.
The value of new business increased by 32% to CHF 55 million. We achieved high volumes and a higher share of modern products driven by the launch of a new unit-linked product. As a result, the overall guarantee level decreased significantly. The new business margin remains strong at 3.3%. Turning now to the international segment. Premiums decreased by 3% to CHF 2.1 billion due to lower premiums with private and corporate clients. In the fourth quarter of 2019, however, we achieved increasing premiums year- on- year. Assets under control for private clients increased by 12% to CHF 19.5 billion. Fee and commission income was up by 25% to CHF 282 million. All business lines contributed to this. Main drivers were Fincentrum, acquired in October 2018, and organic growth at Chase de Vere, as well as its private insurance clients. Operating expenses increased by 13% to CHF 103 million.
This is due to the mentioned acquisition, while operating expenses in other businesses were essentially stable. The segment result increased by 25% to EUR 73 million, due to the positive development of all profit sources. The fee result grew by 28% to EUR 53 million, primarily as a result of the positive organic contribution from existing businesses. The risk result slightly increased to EUR 11 million, given a continued positive claims experience. The value of new business improved by 77% to EUR 48 million. This was driven by high volumes at attractive margins in our risk business. The contribution from our business with private clients remained stable. The new business margin increased to 2.4%. Let's now move to our asset managers segment that reports in CHF. Asset managers figures include BEOS acquired in August 2018, and Livit FM Services that is reported on a gross basis starting in 2019.
Asset managers total income rose to CHF 853 million, due to higher management fees on a growing asset base and higher transaction fees. This is an increase of 16%, or excluding Livit FM Services, of 11%. In our PAM business, total income increased by 17% to CHF 377 million, or by 9% excluding Livit FM Services, as a result of a higher asset base, primarily due to lower interest rates and tighter credit spreads. Moreover, we also have higher real estate transaction and management fees. In our TPAM business, total income was up by 15% to CHF 476 million, or by 12% excluding Livit FM Services.
This is due to higher recurring fees on growing assets under management and higher real estate transaction fees. While the increasing contribution from the acquisition of BEOS was partly offset by the lower other net income driven by the well- flagged temporary reduction of project development contributions.
The share of total non-recurring income for TPAM, meaning transaction fees and other net income, was at 27% of total income, compared to 33% in the prior year period. Operating expenses increased by 20% to CHF 480 million, due to BEOS and Livit FM Services, as well as further organic growth, primarily in real estate. Excluding Livit FM Services, operating expenses would have grown by 11%. The segment results increased by 14% to CHF 309 million. PAM was up by 12% to CHF 223 million, mainly as a result of the growing asset base and higher real estate fees. TPAM increased its contribution by 17% to CHF 86 million. This reflects operational progress that is partly offset by lower other net income. Other net income from real estate project development is expected to pick up again in 2020, as we have mentioned on previous occasions.
Net new assets in our TPAM business amounted to CHF 8.9 billion, compared to CHF 8.4 billion in 2018. We have broadened our client base again in 2019. Net new assets split by asset class were 33% real estate, 20% balanced mandates, 16% bonds, 13% money market funds, 12% equities, and 6% infrastructure. Excluding money market funds, we generated net new assets of CHF 7.8 billion, compared to CHF 10.6 billion in 2018. Overall, assets under management in our TPAM business now amount to CHF 83 billion.
The split by asset class is 40% real estate, 20% balanced mandates, 20% bonds, 8% equities, 7% money market funds, and 4% infrastructure. Total assets under management were up by 9% to CHF 254 billion, mainly due to higher asset valuations in PAM and net inflows in TPAM. Let's move back to the group on slide 14 and have a look at our operating expenses.
The overall cost base increased by 9% to CHF 3.5 billion, mainly due to higher commission expenses and expenses related to newly consolidated businesses. Operating expenses, adjusted for restructuring charges, program costs for a new accounting standard, scope changes, and FX, increased by 6% to CHF 1.6 billion. In our insurance segments, adjusted operating expenses increased by 4% to CHF 1.2 billion. As explained, this is primarily due to Germany and France. Turning now to the investment result on slide 15.
Our direct investment income was up by CHF 29 million to CHF 4.4 billion. Higher rental and dividend income was partly offset by lower coupons. Our direct investment yield decreased by eight basis points to 2.8%, also due to the basis effect from higher asset valuations. The net investment results slightly decreased on a non-FX adjusted basis to CHF 4.6 billion, which led to a net investment yield of 2.9%.
This is about 13 basis points below the prior year level. Investment expenses increased due to growing assets under management, higher real estate transaction volumes, and transfer taxes. Net capital gains increased slightly, primarily due to higher net realized gains on equities, bonds, and real estate revaluations. This was partly offset by lower realized gains on alternative investments and loans, as well as by higher FX hedging costs and related items. FX hedging costs increased by CHF 57 million to CHF 774 million. Our total investment result, including changes in unrealized gains and losses on investments, increased to 7%, mainly due to lower interest rates and tighter credit spreads. Slide 16 shows the structure of our investment portfolio. The share of bonds slightly decreased to 57% as we shifted our portfolio further into real estate, mortgages, and equities. The share of real estate was at 20.7%.
We had further real estate revaluations of CHF 0.7 billion and further net acquisitions of CHF 2.9 billion. The risk premium on real estate remains very attractive. Our growth equity quota increased to 8.8%. Our net equity exposure was 4.1%. Our duration gap was at 1.1. Please note that our foreign currency exposure on the insurance portfolio remains hedged. As mentioned on previous occasions, we do not hedge the FX translation effects from our foreign operations and their profits. I will now move on to insurance reserves. Our insurance reserves, excluding policyholder participation liabilities, increased by 7% in local currency to CHF 167 billion. All units contributed to this. Turning now to shareholders' equity on slide 18. Shareholders' equity increased by 10% to CHF 15.9 billion. The main drivers were in unrealized gains from bonds and equities, and the net profits attributable to shareholders.
This was partly offset by the dividend paid to shareholders and the share buybacks completed in 2019. Slide 19 shows our capital structure. Our total outstanding financing instruments amount to CHF 4.4 billion. This includes CHF 600 million of green bonds issued in November 2019. Our total hybrids, including hybrid equity, amount to CHF 3.3 billion. The share of equity within our capital structure is 71%. It is calculated on shareholders' equity adjusted for unrealized gains and bonds and other financial assets, in line with our return on equity calculation. The capital structure and maturity profile remain well-balanced, with a diversified denomination of debt in Swiss francs and euros. That brings me to our Swiss Life 2021 program. On slide 20, you can see our 2021 financial targets. I will provide more details on the Swiss Life 2021 progress reporting on the following pages.
Let me start with the development of our earnings quality on slide 21. Our savings result increased to EUR 912 million. The major drivers of this increase were Germany and France, more than offsetting the decline in Switzerland. As mentioned, the level of the savings result in Germany is not sustainable. The risk result increased by 3% to EUR 417 million. All insurance units contributed positively. The fee result increased by 15% to EUR 553 million, with a positive contribution from all of our business segments. This includes the mentioned acquisition-related increase from BEOS, acquired in August 2018, and from Fincentrum, acquired in October 2018. The cost result improved mainly due to high cost premiums and lower DAC expenses in Switzerland, partly offset by increasing acquisition costs in France due to a strong new business production. The gross admin cost result increased by 10% to EUR 142 million.
Our next three slides show that we continue to benefit from our discipline as liability management. We are pleased with the resilience of our direct investment yield in this challenging environment with negative interest rates. This was supported by an increasing real estate portfolio and a reinvestment rate of around 2% in 2019. Moving on to the average technical interest rate on slide 23. We further strengthened the technical reserves, which led to six basis points decrease of the average technical interest rate. In addition, the shift to a more favorable business mix led to a further reduction of four basis points. We also lowered the guaranteed rate in our non-mandatory Swiss group life business from a 0.25%-0.125% . This contributed another two basis points.
Overall, our average technical interest rate decreased by 13 basis points to 1.12% as of 1st of January 2020. We are very pleased that we were able to reduce the average technical interest rate in Switzerland to 79 basis points. With our disciplined ALM, we have again successfully protected our interest rate margin as shown on slide 24. Please note that the initially mentioned reserve strengthening of about CHF 900 million in 2019 will have a positive impact on our 2020 technical guarantees. Is thus not yet reflected in the interest rate margin of 2019 shown on this slide. Let me now briefly comment on the development of the fee and commission income. Commission income at Swiss Life Asset Managers was up by 21% in local currency. This excludes, as usual, other net income from real estate project developments.
Commission income from our owned IFAs increased by 19%, with a positive contribution from Germany, international and Switzerland. The business with our own and third-party products and services increased by 9% in local currency, with a positive contribution from all insurance segments. Overall, our fee and commission income increased by 16% in local currency to CHF 1.8 billion. About half of that growth is organic, about 30% is due to the acquisitions of BEOS and Fincentrum, and the remainder is due to the full consolidation of Livit FM Services. Turning to the value of new business. The value of new business increased from CHF 386 million to CHF 561 million. This is mainly due to the volume increases in all segments, primarily the exceptional new business production of full insurance solutions in Switzerland, as well as our active new business steering and cost efficiency gains.
The decline of the new business margin from 2.6%- 1 .9% is primarily due to the high new business production of full insurance solutions and the unfavorable interest rate developments. Nevertheless, our new business margin is above our ambition level of 1.5% in all of our segments. Let me now move on to operational efficiency. As already mentioned, operational efficiency continues to be an important thrust in our Swiss Life 2021 program. We are addressing operational efficiency with three key performance indicators. In life insurance, the efficiency ratio improved by one basis point to 41 basis points, primarily driven by the increase in life insurance reserves. At our owned IFAs, the distribution operating expense ratio improved by two percentage points to 26%, as higher commission income outweighed higher expenses.
In our TPAM business, the cost income ratio decreased to 84% from 91%, in line with the growing net commission income and improved efficiency. Turning to capital, cash, and payout on slide 28. As of 1st of January 2020, our Swiss Solvency Test ratio is estimated to be slightly above 200%. As of today, the SST ratio is somewhat lower given recent financial market developments. We will communicate the results of the full calculation in our financial condition report by the end of April 2020. Our Solvency II ratio was above 200%, based on a standard model excluding any transitional measures. Slide 29 shows our cash remittance and dividend. In 2019, we remitted CHF 752 million of cash to the holding company. This is an increase of 8% year-over-year and corresponds to 70% of the 2018 net profit.
For the 2019 financial year, the board of directors will propose to the AGM an increase of the dividend to CHF 20, up from CHF 16.5 in the previous year. This corresponds to a payout ratio of 53%. Part of the total dividend payment, namely CHF 5 per share, will be paid in cash as a par value reduction. The par value of the Swiss Life share will thus be reduced from CHF 5.1- CHF 0.10. Coming to our newly announced share buyback program. On December 5, 2019, we have completed our CHF 1 billion share buyback program. Today, we announced an additional share buyback program running from March 2020 to May 2021. We will repurchase shares for CHF 400 million. As in the last share buyback, the program will be executed by a partner bank through a second trading line.
The repurchased shares will be proposed for cancellation to the AGM. The share buyback will be financed with cash at the holdings, including the annual cash build-ups. At year-end 2019, we had slightly more than CHF 0.9 billion of cash at the holding company and were thus slightly above the middle of our comfort range. Let me sum up. Today, we report a strong 2019 financial year. Our Swiss Life 2021 program is well underway. We are on track to strengthen our earnings quality, particularly by increasing our fee result. We are ahead with the value of new business, though this has become more challenging given the sharp decline in interest rates. We will maintain our cost discipline to improve operational efficiency. When it comes to capital, cash, and payout, I can report a strong solvency and a growing cash remittance based on disciplined capital management.
This led to an increase of the payout ratio. We successfully completed our CHF 1 billion share buyback program in December 2019, and will buy back additional shares for CHF 400 million. Finally, our return on equity increased to 10.8%, which is above our target range. Thank you for listening. Back to you, Patrick.
Thank you, Matthias. Now, dear analysts and investors, it's your turn. Who'd like to ask the first question?
We will now begin the question and answer session. Anyone who wishes to ask a question now press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Webcast viewers may submit their questions in writing by the nativity field. The first question comes from the line of Peter Eliot, Kepler Cheuvreux . Please go ahead.
Thank you very much. I have three questions, please. The first one was on the sort of levels of cash that you need. I'm going to sound very greedy here because I was very pleased indeed with the announcements today, and thank you. You mentioned, Matthias, that you were just above the CHF 0.9 billion midpoint at the end of the year. My understanding is that you're now thinking that sort of CHF 0.8 billion is okay rather than the sort of CHF 0.8 billion-CHF 1.0 billion band. I was just wondering if you could sort of confirm that and give your thoughts around what drove that, and maybe also sort of confirm your view on sort of other pockets of cash available, whether you'd still sort of rule out upstreaming any other pockets of fungible cash. The second one was on the new French solvency rules.
I was wondering if you could just sort of talk about the implications of those for you and whether that has fed into the generous buyback. Whether you see more sustainable cash remittance up from France in the future on that. The third one, on your investment portfolio. Obviously, you've gone more into real estate, again, this year. I'm just wondering whether there's an upper limit to that or what you see going forward. Whether we should expect any slowdown in that growth in real estate share of your investment portfolio. Thank you very much.
Thank you, Peter. I'll take the last questions and hand over the other two to Matthias. First on real estate. Of course, at some point there is an upper limit, that's not, let's say, relevant for this year. Given the relative values of real estate versus long-dated bonds, I still expect us to be very active in the market. On the other two, over to Matthias.
Thank you, Peter. In terms of the level of cash, I think the guidance that we gave in the past still applies. That means the CHF 800 to CHF 1 million to CHF 1 billion, that's the comfort range. Just kind of every level there within that range is equally comfortable. There's no change there. As you mentioned, we will finance the share buyback with what we have currently at the holding and the annual cash buildups that will come through. In terms of additional pockets, we had a discussion on a previous call in terms of the free reserves in the IAG, which we then said they are called free reserves, but they are not free, because we do not want to run the OpCo with less statutory equity. To cut that answer short, there are no additional pockets.
Now, moving to the French solvency rule. As a group, we are regulated by SST, and the relevant criteria that we consider when thinking about capital management actions over and on top of the dividend or the group SST ratio and the cash available at the holding company. It is a positive for our French company. There, the Solvency II ratio will increase due to that regulation. From a group perspective, this is not a game changer.
Okay. Thank you very much.
Next question comes from the line of Andy Sinclair, Bank of America. Please go ahead.
Morning, thanks everyone. Three from me, if that's okay. Firstly, just on sales. January's passed, and just wondering if you could give us any update on kind of what the sales volumes looked like for Switzerland. Is there any further residual pickup from AXA's departure, or is it really just back to normalized levels after kind of the one-off boost last year? Secondly, was just on debt levels. You're currently towards the upper end of your 25%-30% range for debt in the capital structure. That'll probably be exacerbated a little bit by the buyback. I just wondered if there's any desire for deleveraging or just happy to grow into that over time. Thirdly, just having deployed the cash for the buybacks, does that really preclude you from looking at any M&A over your current plan period? Thanks.
On the insurance side, there's nothing special to say about any sales in Switzerland, so there's no further lap over from the whole competitor withdrawal from the BVG market. That was quite some time ago. On the debt side, we confirm our reference levels there. There's no de-leveraging ambition here. We feel happy about where we are. As you know, we're not on a M&A spree anyway. Any transactions we've done in the past were well below the amounts that would be possible to finance with the additional small debt capacity that we still have. There's no change in policy here.
Very good. Thanks.
Next question comes from the line of Michael Huttner from Berenberg. Please go ahead.
Fantastic. Thank you so much. The results were so amazing. Not that I'm covering you yet, but the real question is, given where you are today and where you were a year and a half ago when you set your new three-year plan, which target in particular do you feel most comfortable about? I would identify obviously the fee result, but I just wondered if maybe in the cashflow or new business or something, there's something in here for us to think about. The other is a standard question. Can you talk about the coronavirus thing? Maybe, give us a feel for how you see it. The final thing, and here I haven't looked at all the numbers, so excuse me if I'm wrong and, well, I probably am wrong, but anyway.
The one bit of your presentation which struck me as not being quite so confident was the health in France. I just wondered, given that's a business where I've always had high expectations and they haven't always I always feel, well, have not been quite so wonderful. Is that a business where you'd think, well, strategically, it's not as core as we think? Thank you.
On the French health, we do think that it is core. As you know, there have been quite a lot of reforms on the French market around the health business over the last couple of years. We have a well-established franchise, and we've managed that transition, so that stays core. On the corona side, first of all, we've issued similar travel restrictions or let's say hygiene policies as many of our competitors. I think that's important to mention first. On our business, we have not felt anything yet in our core markets here in Europe. Whether or not that'll change, of course, will depend on how the coming weeks and months will develop. The first area where you could hypothetically expect some impact is in our advisory business. We have 14,000 salespeople out there.
If we now see a very dire development here, of course, we'd notice that in our IFA business, but we don't feel anything yet at all. The main thing we feel is really on the financial markets. You know our SST sensitivities. Here, of course, that's where we feel it most. On the liability side, we have a well-balanced portfolio between mortality and longevity risk. The target question will be, I'll hand over to Matthias.
In terms of the program, we can clearly confirm the Swiss Life 2021 targets that we have laid out. That is in page 31. Our current assessment is that we are really on track in terms of fee result and risk result. As mentioned, in terms of the new business, with the closing of the year 2019, we see ourselves ahead. Having said that, rates have come down significantly since year-end, and there we see some headwind. As we close the year, value of new business really looked ahead of the goals. Operational efficiency, I think there we are also comfortable. In terms of SST, we are ahead. This is also true if we talk about today's situation. In terms of cash, you see we have also a good track record there as well as for the dividend.
I think we are really comfortable with the targets, even though there is hard work ahead of us.
Thank you.
Next question comes from the line of Kevin Ryan, Bloomberg Intelligence. Please go ahead.
Thank you. I've just got two questions on a similar theme, really. The first one is on the new Swiss group life business you've taken on last year. Have there been any surprises there with the portfolios that you have taken on? That's the first question. The second question is, this business is inherently lower margin than some of the other businesses you're in. I'm just wondering how you're looking at rebalancing the portfolio going forward and what the outlook for more fee income is and how you see that balancing the group life business that you've taken on. Thank you.
We have several sources for our fee income and fee result. First, we have asset management, where we were on a strong growth track, supported by our real estate franchise, which is of course very well supported now by these low rates. That should continue to do well. We also have a strongly growing IFA business, as Matthias just pointed out, where we can also expect further growth, further demand by clients. We also have the unit-linked business, which is also important mainly from France and from international. Here, of course, with the market environment we see, we might see, depending how financial markets continue, we might see some slowdowns from the strong fourth quarter developments. Overall, we confirm our very ambitious targets. Look where we came from, the fee results. Just five years ago, we were at CHF 260 million.
Today, we're at CHF 550, and we confirm the CHF 600, CHF 650. Now to the BVG. Yes, you're right. It is indeed a lower margin business than the rest of our business. We've always said that and confirmed that. With the business we've taken on from AXA, we've actually improved the quality of our business. For example, the average age in our portfolio, and the mix between mandatory and non-mandatory business, and so on. If a surprise, then it was on the positive side.
Thank you.
Next question comes from the line of Jonny Irwin, UBS. Please go ahead.
Hello, good morning. Thanks for taking my questions. Two for me, please. On the buyback, I'm just trying to understand the rationale behind this, the amount and the timing a bit more. I guess one of the things that you guys as a management team have become very well-known for is consistent, reliable, conservative execution. It just feels to me like this buyback, having committed to do two years forward of returning cash remittances to shareholder, is a bit of a stretch, and it does tie your hands a little bit on the cash flow front and at quite an uncertain time for markets. I'm just wondering, basically, why you've done it and what you're trying to signal here. That's the first question. Secondly, has there been any change on vacancy rates, or indeed trends on the real estate markets in Switzerland?
Thank you.
First on the share buyback. As we've always said, it depends on two conditions. If two conditions are fulfilled, we assess the situation. The first condition is that we're above the 190 in SST, and this we've been for quite some time now. The second condition is that we have cash available with the ambition levels that we mentioned. Of course, there is no automatic share buyback if these conditions are fulfilled. We assess the situation and given the outlook of the cash generation, given the outlook we have with the strong organic growth that is coming through, we felt comfortable with this share buyback and the timing. You're right, we have two annual net cash generations within the program. That's exactly the reason why we've gone for 15 months.
The reason is we just don't want to sit on more cash than we need to. The vacancy rate here, that's also going well. In the Swiss market, we've seen a lower vacancy rate. As far as I remember, it's around 3.7%, and it's really across the board. We see lower vacancy rates in apartments. We see lower vacancy rates in offices. The lowest vacancy rate, by the way, we have is in the retail space, which is always, I guess, a huge surprise for anybody in the U.K. It's really going well, and it's the lowest vacancy rate we've had for as much as I can remember. Of course, we also have a lot of central locations. The office market is strong. The only bit difficult market is actually Geneva, which is, let's say, much more difficult than Zurich or Basel, or the rest of Romandie.
Also in France, we've hit new lows in the vacancy rates. The same is true for Germany. We really see a very good pickup here.
Thanks very much.
Next question comes from the line of Fulin Liang, Morgan Stanley. Please go ahead.
Hello. Thank you. This is Fulin. I've got two questions. First of all, is there any estimate of your mark-to-market solvency SST ratio, given the recent market movements? That's the first one. Secondly, I just want to make sure. Have you ever considered, because, as you previously mentioned, this buyback program is based on kind of assumption of future excess cash generation. I just wonder that given the recent market movements, do you think there is kind of, or have you ever thought about under what kind of stress scenario that this buyback could be actually canceled? That's the second one. The last one is kind of slightly relevant. Do you know the average, just wondering, what's the average guarantee rate of your annualized annuitized book? How does that move?
Thank you very much.
Okay. No, we have not thought about canceling the share buyback that we've just announced. Again, we expect a cash generation or cash to holding from our Opcos more or less in line with the profit development. Confirmed that last year again. On the annuitization number, we're trying to figure that out. Matthias, do we have something on that? Not yet, apparently.
I've not fully understood the question, in the book on page 49, you see essentially a breakdown of the reserves. Essentially in the Group Life business, a bit more than the book is non-annuitized, and there we have on average roughly 60 basis points worth of technical interest rate. We have given you for the entire Swiss market the 80 basis points average technical rate. This includes also the individual lives, this may be a guidance for you to derive what is in the annuitization phase. The 79 basis point I quoted includes the entire Swiss book.
Okay. Thank you. Thank you. That's helpful. What is the mark-to-market? Have you ever kind of have a mark-to-market?
Again, the SST is mark-to-market per se, I guess. What you're trying to get to is to give an update on where we stand now after the strong market movement.
Yes.
Of course, we're now somewhat lower than where we were at the beginning of the year. I remind you, at the beginning of the year, we were slightly above 200, including the complete share buyback that we've just announced. Given the market movements we've seen now, we're somewhat lower now.
Okay. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes on the line of Thomas Fossard, HSBC. Please go ahead.
Yes. Good morning. I've got three questions. The first one will be related to the cash remittance ratio, 69% in 2008, 70% achieved in 2019. Just wanted to make sure that if you could remind us if you provided any guidance or target in the past and if there is any leeway for you to increase a bit the remittance ratio. The second question will be related to Germany and to the savings margin. I think that several times in your presentation, you referred to the higher savings margin due to the ZZR funding.
Could you provide us with any outlook or what you potentially need to further increase, by how much you would have to increase the ZZR again in 2020, bearing in mind the evolution of interest rates and as a result, how it should play positively or negatively on your savings margin in Germany this year. The last question would be related to your duration gap. Looking at slide 51, you had a stable duration gap to 1.1. Just wanted to understand what was your current thinking about running this kind of duration mismatch in the current low interest rate environment, and if you had any actions to change that during the year. Thank you.
On the duration gap, the rationale we've mentioned now for many, many years of having this duration gap is that we do not include a duration component for our real estate portfolio. The real estate portfolio we have, which is heavily geared towards Switzerland, has a rate sensitivity, especially in Switzerland. Look at the typical flight to quality moves we saw in 2008. We even had a slight appreciation of the real estate prices in 2008 in Switzerland. As we don't attribute any rate sensitivity to the real estate portfolio at all, when we calculate the duration gap, I think we are on the side of caution that we have a open duration gap here exactly to take that interest rate sensitivity of our 20% real estate portfolio into account. Again, we've been saying that for several years.
The other thing we've been saying for quite some time is the guidance, or let's say, indication on the cash generation. We've been slightly below 70% for several years now. It's usually been between 65% and 70%. The 70% of cash remittance, sorry I said cash generations, cash remittance, that is really on, let's say, a bit on the high side. We do confirm that going forward, we expect cash remittance to grow more or less in line with our earnings. On the question in Germany, I hand over to Matthias Aellig.
On the ZZR, we had this year quite an amount to finance, EUR 185 million additional buildup of the ZZR, which meant some gains realization to finance that, including also gains on interest rate derivatives. This actually was the reason why we said the savings result was unusually high. We do not expect that to occur to the same extent in 2020. Rates have come down, but we cannot predict the rates and the additional ZZR that they build up in Germany depends on where the rates are at the end of each quarter. We just say we expect a lower savings result, but I think the number would be speculation as we do not know where the rates will stay at the quarter ends.
Next question comes from the line of René Locher. MainFirst, please go ahead.
Yes. Good morning all. I am on slide 39. That's the details of the net investment income. Perhaps you can comment firstly on the revaluation gains on real estate. Now year-by-year, you are above the guidance of 1%-2%. I would say it's more or less in line with what we hear from listed Swiss real estate companies. Nevertheless, perhaps you can give a little bit of an outlook here. As a follow-up question, I'm also struggling now, for many years, you have increased reserves by CHF 900 million and the net capital gains are CHF 659. As I understood, as normally you take the realized capital gains and they remain on the balance sheet to beef up. I will decide off the balance sheet. Perhaps you can always explain again. The next question is on Circle.
Let me just understand the revaluation or expected revaluation gains on The Circle project. How are these booked? On slide 41, on Switzerland, the saving result is slightly down from six to eight to CHF 586. Matthias, if I'm right now with the reserve strengthening, is it fair to expect a slightly higher saving result in 2020? I understood in Germany, the CHF 73 are not sustainable. Looking at France is up from CHF 179,210. I was wondering, is the strong saving result in France sustainable? Thank you.
Okay. First, on the savings results, where we've never given any guidance on the savings results. As you know, we give guidance and targets on the risk and the fee results. The strengthening of the reserves. Well, you're right. These have historically been close to each other, but they've never been exactly the same. I think Matthias can explain that in more detail right after me. You mentioned that we've increased reserves by around EUR 600. No, we strengthened reserves by EUR 600 million. Of course, the increase in reserves has been much more. The real estate gains, they've only been up by EUR 60 million year-on-year. Of course, they've been stronger than what we've guided for, let's say, several years ago when we said it should usually be around 1% and 2%.
Please keep in mind that also interest rates have not exactly gone where we expected them, and because of the rate sensitivity that I just mentioned before, that's in my view, the main reason why we've just seen much stronger revaluation reserve gains than we had alluded to several years ago. They were now at around 3% and not at the 1%-2% that I mentioned before. On The Circle, as you've probably seen, the take-up here is also going strong now. We're at around almost 75% by now. As we hold a minority share in the project of 49%, I believe that will be at cost. It's too early to say if there will be any gains or not coming from the project. It's going well, and I'm very happy with the development.
Now I hand over to Matthias for the reserve strengthening questions and details.
As you said, we have similar figures as in 2018, so roughly CHF 600 million worth of realized gains, CHF 660 concretely in 2019. Also around CHF 900 million of reserve strengthening. The policy approach we take is as in the past. The reason for that is essentially the actuarial guidance that we have to follow and that we follow, which means that, once you realize gains, that means it is essentially bringing forward some income, and that then necessitates a strengthening of the reserve, and that's the pattern that we have been seeing for quite some years. There's no change to that.
Okay, thanks.
That was the last question.
That brings us to the end of our conference. Once again, thank you for calling in today, and I wish you a good day. Goodbye, everyone.
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