Morningstar | Swiss Life Continues to Impress With Fees
Swiss Life is a pure-play life insurer and doesn’t have the benefits of diversification that come to a multiline during periods of low economic growth and interest rates. Unlike France, Switzerland is predominantly a pension-driven life insurance market. This is largely driven by occupational pension schemes that have been growing over the last 10 years as Swiss insurers moved away from private pensions in the hope of achieving better economies of scale. However, variable costs have remained high.Swiss Life secured its place as the number-one provider in Switzerland in 2015 after AXA Leben reduced its full insurance within group and increasingly favoured contracts without a savings component and conversion into retirement, moving more toward risk. This left a gap for Swiss Life that utilised capacity in full insurance group life. The top six life insurers in Switzerland now account for around 90% of premium, so it is a relatively consolidated market.Pillar II is the mainstay for profits and is a highly important social insurance system for small- to medium-size enterprises in Switzerland that need full insurance models. Group life represents about 70% of premium volume in Switzerland. Its importance is followed by classic individual life for maturity and death that takes nearly 15%. However, life insurance in Switzerland has experienced difficulties over recent years.The pressure on group life investment spreads has been driven by low and negative yields. However, this compression has been disguised by reserve strengthening that has allowed Swiss Life to lower its average guaranteed rate. Also, in Switzerland the mandatory workplace pension schemes carry a state-determined conversion rate. This conversion rate sets the length of time a retirement pot lasts, as it represents the amount of the pot that should be paid out on an annual basis. Detrimental to Swiss Life, this conversion rate has remained too high.Swiss Life is a holding company, engaged in providing life insurance and pension solutions and services. Co.'s segments include: Switzerland, France, Germany, International, Asset Managers, and Other. Co.'s Switzerland, France, Germany and International segments primarily consist of life insurance operations and distribution units. The life insurance operations provides a range of life, pension, health, annuity and investment-type policies to both groups and individuals, including disability coverage. Co. focuses primarily on life and pensions in Switzerland, France and Germany and on cross-border business from Liechtenstein, Luxembourg and Singapore.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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