Ladies and gentlemen, welcome to the Swiss live presentation of the Q3 Results 2019 Conference Call and Live Webcast. I'm Iruna, the Chorus Call operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Matthias Ehlich, 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 1st 9 months of 2019. Please note that all figures quoted are in Swiss francs 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 17% to $1,300,000,000 Swiss Life Asset Managers grew by 25%, our owned IFAs by 24% and our own and third party products and services by 6%. Gross written premiums, fees and deposits received increased by 25% to 18,000,000,000 dollars This growth comes mainly from our Swiss Group Life business. Insurance reserves, excluding policyholder classification liabilities, grew by 6% to $165,000,000,000 All units contributed to this.
Swiss Life asset managers achieved net new assets of $6,500,000,000 in our 3rd party asset management. Total assets under management in our TPAM business now amount to $80,000,000,000 dollars Direct investment income was at 3,300,000,000 The net investment yield stood at 1.9% on a non annualized basis. Our SSD ratio was slightly above 200%. I will now move on to our segment reporting starting with Switzerland. Premiums substantially increased by 48% to $11,600,000,000 driven by the Group Life business.
The overall market was up by 4%. In individual life, premiums grew by 9%. The overall individual market in Switzerland was up by 2%. Periodic premiums increased by 1%, while single premiums, mainly with modern and modern traditional products, grew by 30%. Premiums in group life increased by 54%.
The market increased by 4%. Periodic premiums grew by 12%, while single premiums increased by 90%. This increase in premiums is driven by additional demand as our largest competitor was pulling out of the full insurance business. This was achieved while maintaining our strict underwriting discipline to support capital efficiency. As said in the Q1 half year calls, this growth in 2019 is exceptional.
Single premiums will revert to a more normal level in 2020. Overall premiums in group life also excluding for this exceptional move were above the prior year level. New business production with semi autonomous solutions was up 4%. Assets under management in our investment foundation grew by 21% to $10,300,000,000 compared to $8,500,000,000 at year end 2018. Fee and commission income in Switzerland was up by 9% to $198,000,000 due to Swiss Life Select, our mortgage business, pension consulting and investment solutions for private clients.
Turning now to France. Premiums increased by 1% to $4,200,000,000 The slight decrease in our Life business was offset by the positive development in our Health and Protection and P and C businesses. Overall, the market was up by 4%. In our Life business, premiums were down by 1%, while the market increased by 5%. This is due to our continued focus on maintaining an attractive unit linked share in our business.
The unit linked share in our life premiums was 46%, essentially double the market average of 24%. In health and protection, premiums increased by 4%. The market was up also by 4%. Premiums in our group business were up by 6%. Premiums in individual protection increased by 7% and premiums in individual health grew by 2%.
P and C premiums were up by 7%, driven by motor products supported by new partnerships. The market was up by 3%. Fee and commission income rose by 3% to 238,000,000 dollars Unit linked fees increased due to high unit linked reserves and positive net inflows. This was partly offset by lower banking fees due to a reduced turnover with structured products. I continue with Germany.
Premiums grew by 4% to $982,000,000 We achieved higher periodic premiums with disability and modern traditional products, both in group and individual life. The market increased by 11%, driven by single premiums. Fee and commission income was up by 12% to $359,000,000 driven by the strong contribution from our owned IFAs due to an increased number of financial advisers. Moving on to our international unit. Premiums decreased by 16% to $1,300,000,000 mainly due to lower single premiums with private and corporate clients.
Assets under control for private clients grew by 9% to $20,600,000,000 compared to year end 2018. Fee and commission income was up by 35% to 240,000,000 dollars All business lines contributed to this. Main drivers were FinCentrum acquired in October 2018 and organic growth at Chase Devere as well as with private and corporate clients. Let's continue with asset managers. Asset managers figures include payoffs acquired last year at the end of August and Livit Facility Management reported on a gross basis starting 2019.
Livid Facility Management contributed $30,000,000 to the total commission income. Asset managers' commission income rose to $574,000,000 due to higher management fees on a growing asset base and higher transaction fees. This is an increase of 25% or excluding Leavitt facility management of 18%. CPAM contributed $305,000,000 and PAM 2 69,000,000 to total commission income. The share of total nonrecurring income for PAM, meaning transaction fees and other net income, was stable year on year at 24% of total income.
Net new assets in our GPAM business amounted to $6,500,000,000 compared to $5,200,000,000 in the prior year period. Net new assets split by asset class are 32% real estate, 23% balanced mandates, 20% bonds, 11% money market funds, 9% equities and 5% infrastructure. Excluding money market flows, net new assets were at the prior year level of $5,800,000,000 As mentioned at half year, we had extraordinary strong inflows in the 1st 6 months, and we did not expect a linear development in the second half of twenty nineteen. Assets under management for TPAM increased to $80,000,000,000 compared to $71,000,000,000 at year end 2018. The split by asset class is 41% real estate, 20% each are bonds and balance mandates, 8% equities, 6% money market funds and 3% infrastructure.
Turning now to our investment result. Our direct investment income slightly decreased by $35,000,000 to 3 point $254,000,000,000 Higher rental income on our real estate portfolio was offset by lower coupons on bonds and slightly lower dividend income. On an FX adjusted basis, direct investment income was slightly above the prior year level. The non annualized direct yield was 2.0%, down from 2.2% in the prior year period, also due to the basis effect from higher asset valuations. Our non annualized net investment yield decreased to 1.9% from 2.2% due to higher asset valuations and lower net capital gains on bonds, alternative investments and loans as well as a higher drag due to FX hedging.
This was partly offset by higher real estate revaluation gains and net realized gains on equities. The asset mix remained in line with half year twenty nineteen. Moving on to solvency. Our ROCE ratio was slightly above 200% by the end of September 2019. This increase compared to full year is due to tighter credit spreads, more favorable equity markets and the real estate appreciation.
As of today, the SST is essentially on the same level. Moreover, our duration gap is around 1. This brings me to the end of my speech. Overall, we had a good start into the 1st 9 months of 2019 and to our Swiss Life 2021 program. With regards to our first strategic trust quality of earnings and earnings growth, we are on track with the development of our fee business.
I am particularly pleased that all units contributed to a growing fee and commission income so far in 2019. We're also on track with our second trust operational efficiency. We will maintain our cost discipline in all lines of business. When it comes to our 3rd thrust, capital cash and payout, I can report a healthy solvency. Also, we are close to completion of our $1,000,000,000 share buyback program.
Thank you for listening. I am now ready to take your questions.
The first question from the phone comes from Andrew Sinclair with Bank of America. Please go ahead.
Thanks and good morning everyone. I have three questions if that's okay for me. Firstly, just wondered if you could give us a quick update on the outlook for non recurring fees in Asset Management. Secondly, just sticking with Asset Management, as you mentioned, you gave guidance at H1 that inflows might be a bit slower in H2. I just wondered if you could give us any update on the outlook in Q4 given we're a month and a bit in already
as you're
kind of seeing the trends of Q3 or seeing a bit of a pickup again? And third and finally, year on year fee growth, fee income growth in international was particularly strong. I just wondered how much of that was acquisitions versus what was the organic growth within international for fee income? Thanks.
Thanks for the question. Let me start with the 3rd question to fee growth in international, as you mentioned, there has been a quite strong contribution from the acquisition of FinTechrom as the fall. I would say that contributed, let's say, 80% to 85% of the growth. But the rest of the business, as we mentioned also in the speech, were also contributing to the growth. The second question, when it comes to asset management, indeed, we already gave, let's say, some guidance for the entire program.
For asset managers, what we said already at Investor Day in 2018 was that in 2019, we would see, let's say, the historic project development pipeline from Corpus IREO as way out and that we would have a somewhat back end loaded plan for asset managers. Now this before let me continue on that. Before in 2020, we would see again a start of a higher contribution from the project development coming from the pipeline that was developed under the Swiss Life brand 1 after we have taken over Corpus Cereo back in 2014. Now this will particularly become clear in the Q4 of 2019, this project development effect. However, as mentioned in the half year call, we have the clear guidance that we see a catch up in terms of segment result for the Q4.
So 2019, we see a clear catch up for the full year compared to half year in terms of the TPAM segment result. Now in terms of the nonrecurring fees we had, the nonrecurring fees in PPAM, we had 33% in 2018. As you mentioned, we have now 24% in the 4th in the Q3. And we see somewhere in between the current level in Q3 and what we had in last year. So that's a bit when it comes to the nonrecurring fees.
In terms of NNA, we had a particularly strong half year and we clearly flagged that we would not expect that to be repeated in the second half of the year. If we look at the flows, excluding money market compared to last year, we are still on prior year level, So nothing to be particularly worried about.
Very good.
Now I hope I covered all the three questions.
I think so, yes. Thanks.
The next question from the phone comes from Peter Eliot with Kepler Cheuvreux. Please go ahead, sir.
Thank you very much. Apologies, Matthias, for asking on Capital Management because I know you said it's the wrong time to said you the you said you would return capital above 190% SST. But since then, it's obviously become clear that it's really the holding cash that's the binding constraint, not the SST ratio. So I was wondering if you could just give us a little bit more detail on how you think of that. Would you will you do you sort of plan to review the position once a year in February?
And you said 0.8 to 1.0. I'm wondering if you holding cash level, I'm just wondering, is it really sort of 0 point 8 or the 1.0, which is in your thinking? And I'm wondering whether you take into account the fact that you're about to receive large dividends internally. And related to that, I'm just wondering whether you can could you give us an update on what your current holding cash position is? And what you expect it to be at year end, whether it's same outlook that you had at H1?
Thank you very much.
Thank you, Peter, for the question. I think you already answered most of the question yourself. Indeed, we now want to really focus on the complete things, the running share by EBIT Bank before we start talking about the future. But let me confirm the framework that we have established in 20 18 at Investor Day, and that's really the cornerstone of how we think about that. And this framework foresees 2 dimensions that we take into account when to consider potential capital management actions.
And the first one, as you said, is the SST ratio of 190% or it has to be in excess of 190% that we consider potential capital management actions. And the second dimension is to have enough cash at the holding. As you mentioned, we have this internal deferred comfort level, which is €800,000,000 to €1,000,000,000 dollars That's still the framework that we apply in thinking about potential capital management actions. Now in terms of holding cash, we were at Q3 at around 1,000,000,000 dollars Back then, the share buyback was probably around completed by somewhere between 80% 80 5%. As of today, we expect to be in terms of comfort range in the middle of it by year end after having completed the share buyback.
So that's essentially the update on in terms of capital management.
Okay. Thank you very much.
The next question from the phone comes from Jonny Urwin with UBS. Please go ahead.
Hi there, morning. Thanks for taking my questions. So just one main question really. So I think you were seeing some drag from the project development fees in Q3, but it sounds like there's more to come in Q4. But what's been clear is there are other parts of the business which are kind of performing a bit better in terms of the fee income growth.
So could you just run us through those? I think you mentioned some transaction fees in the Q3. It looks like the Proprietary Asset Management business is doing very well and the owned IFA channel as well. So just a bit more detail around those areas because I think that they are an important offset for the project fees this year. Thank you.
Yes, indeed, we have 3 sources of fee income that now had, I would say, different growth dynamics year to date. We have in terms of the asset management, which I would like to talk at the end about, a strong growth of 25%. There were a couple of effects in there, but let me first move on to the owned IFA channels. We had in Germany, which is, let's say, the biggest substantial organic growth of 12%. This is well supported by a higher adviser base and there we also keep investing.
So that business is really going well. We had also seen a quite a strong growth in fee income in the Swiss business, part of which is also the owned IFA channel, which also works well and also contributed to the IFA channels and particularly also to the strong growth was the international IFAs, most of which, as I mentioned before, 80% to 85% of the growth there came from this acquisition last year, but also our IFA in the UK, Chase Devere, developed positively. So that gives you a bit of a flavor of how the IFA channels develop. Now in terms of own and third party products and services, we have seen there this 6% growth and this includes the unit linked business in international where we have a growing asset base and also includes the unit linked business in France. The unit linked business in France also had similar to the international business also a slightly higher asset base and also a growing fee income there.
But yes, we still feel a bit there the capital market decline from last year. In 2018, in Q4, we have seen a contraction of the asset base there and following a decrease of some appetite for Unit Linked Solutions in France, which now also led to the fact that we have a slightly lower life premium there. So that's a bit what we can say there in terms the unit linked business. In France, for the Life business, which also then over time feeds into the fee result of our 3rd party products and services. We expect a catch up in terms of life premium for year end.
And so that's a bit dynamics there. What they also have to mention is that we have other businesses. We have the banking business in France, which now is below prior year due to lower structured product turnover, but we have also many other smaller businesses that contributed positively pension consulting in Switzerland, mortgage business in Switzerland and the like. So this should give you a bit of a flavor for this 3rd bucket. And now I come back to, let's say, the asset managers business, where we have this 25% growth of the top line.
As mentioned, there is this consolidation effect of Levitas and Services. They were already included last year on an equity consolidated basis. So the profit was recognized. Now we do it in a gross basis and this contributed about 7 percentage points to those 25% growth rates. Then we have there the acquisition of Bales, which also contributed and if we account for that, there is still, let's say, around 10 percentage points growth in asset managers on what we would call on an organic basis.
And this organic basis is supported, 1st of all, by the PAM business, where we have a growing asset base. We have an increased real estate share and the related transaction fees, but also in the TPAM business, we have seen such an increase and that's driven and supported by the higher asset base. And there, I come back to the previous question for the PPAM business. We confirm for TPAM this catch up. We have seen in half year a segment result that was below half year twenty eighteen and for Q4 twenty nineteen we see a clear catch up.
Thank you very much.
The next question from the phone comes from Kevin Ryan with Bloomberg. Please go ahead,
sir. Hi. It's Kevin Ryan from Bloomberg Intelligence. Thanks for taking my question. I just wanted a little bit more clarity on your Group Life and Pensions business you're putting on this year.
I mean Swiss Life is very much, to my mind, being the market leader domestically in this area forever as far as I can remember. So what I really want to know is what's so attractive about this new business you're picking up from AXA? And given the regulatory challenges, which have also been around forever in this business space, why do you want to do it? That's what I didn't quite get.
Thanks for the question. We have been, as you mentioned, within the sphere of the full insurance together with the company that has now pulled out of it one of the big players. But this full insurance market is maybe 20% of the total 2nd pillar market in Switzerland because we have there also the autonomous solutions which account essentially for 80% of the full 2nd pillar market. Now why have we taken in additional business? We have been in a position to improve our, let's say, portfolio because we could apply really disciplined underwriting.
We maintained that disciplined underwriting, and this allowed us to have, on average, younger people, younger portfolios coming onto our books. So on average, I think the business we acquired is 1 year younger than what we had on the books. We have also a lower share of the so called mandatory business and this translates into an improvement also from our business. And this was also visible at half year. I mean, the business we acquired meets our hurdle rate in terms of value of new business.
It is a below average profitability, but we are above the hurdle rate and that was visible also at the BNB development at the half year. In addition, what we also have to say, there is quite a contribution to the risk result from this business because there's some clear risk over there. We have contributions to asset management. And what we also have to say and not forget is that when looking at the competitive situation, we think and we have disclosed that also at Investor Day that we have a bit a better positioning on both the asset side and the liability side. And those consideration in aggregate led to the decision to be here with a selective underwriting in a position to acquire that business.
Thank you.
The next question comes from Jackie Coe with JPMorgan. Please go ahead. Good morning. Thank you for taking my question. Just one quick one.
Can I ask what is the Solvency II equivalent of that above 200% SST ratio, please?
Yes. We are, 1st of all, not in a position to report to have to report Solvency II as a group. For us SSD is the relevant solvency yardstick. As an additional information, we have been disclosing for several years now an indication and this indication is that we are above 200%. This was already the case a couple of years ago and has been the case since then every time.
The next question comes from Simon Forstmeyer with Bank of Stobel. Please go ahead.
Good morning. Good morning. It's Simon. Three quick ones, if I may. Firstly, the growth in Swiss individual life of 9% looks very strong, maybe more than twice the market growth.
What's driving that? And secondly, the international business, the growth there seems to be below consensus. I was just wondering if there's any particular reason for the relatively weak growth. And finally, on the return on investments, the 1.9%, that's down a little bit more than expected, not much though. I'm just wondering if that's a concern for you, if this is a quarterly flip, if you manage this at year end And then how one should model that going forward?
I think you said something like a decline of 10 basis points per annum would be a reasonable assumption if this is still valid. Thank you.
Okay. Let me maybe start with the last question. The net investment income has many components. The driver or one of the drivers will be slightly higher FX Hedging costs, this is, as we speak, not a concern for full year. We expect the numbers to be around 2.5% if nothing very unusual happens at the capital market.
Then in terms of the group, the Individual Life business in Switzerland, That growth was driven by the single premium business. We have there attractive propositions. We have there modern and modern traditional products, which really fits the needs of the clients. And that's the reason why we have been outperforming so far this year the market. Now in terms of the international premium, that's a business with very wealthy people.
Those are typically large and very large tickets that come in. It is, colloquially speaking, lumpy business. And to that end, this reduction is not a concern either for us, because there the profit driver is the assets under management in that business and this asset base has grown by 9% year over year.
All right. Thanks a lot.
Gentlemen, that was the last question.
Okay. Thank you for your interest in Swiss Life and for your questions. I look forward to talking to you again on February 28, 2020 to discuss our full year results. I wish you a nice day and goodbye.