Swiss Life: Optimize a mixed outlook

Swiss Life reports 3Q23 data broadly in line with our expectations. No "blow-out" results, but good enough.

The company reported a fee income of CHF 1.8 bn, up 3% which is a notch below our expectations. The premiums rose 3.2%, broadly in line with our forecast. Particularly, the fee income in Switzerland was down 1%, but up in France (+15%), Germany (+15%) and International (+9%), and down 7% in Asset Management (because of subdued real estate markets). 

Swiss Life Asset Managers booked net new assets in third-party AM of CHF 8.4 billion in 9M23, 40% higher versus 9M22. The management reported no quantitative details on real estate but said it expects real estate markets to normalize over the course of next year. If one is bullish, then these numbers show that the company is on track. If one is bearish, then these numbers do not beat expectations. 

For us, the numbers are not great, but good enough to support the investment case: structural change towards more fee business will continue to increase RoE, we expect further dividend increases, solvency is strong, ongoing share buyback. A possibility to invest in a sideways outlook on Swiss Life is through a Callable Barrier Reverse Convertible which in addition to the coupon provides a conditional downside protection with a barrier at 75%. If the stock price increases, the product might be early redeemed by the issuer which enables a new investment into the participation on a positive development of Swiss Life. 

Source: Vontobel Swiss Equity Research (2023)

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