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Ladies and gentlemen, welcome to the Swiss Life Presentation on the Q1 Results 2021 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. 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 selected top line figures for the first quarter of 2021. 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 14% to CHF 527 million. All segments contributed positively. Asset managers grew by 7%, owned IFAs by 23% and owned and third-party products and services by 13%. Gross written premiums, fees and deposits received decreased by 14% to CHF 6.8 billion, mainly due to Switzerland. Insurance reserves, excluding policyholder participation liabilities grew by 1% to CHF 175 billion.Swiss Life Asset Managers recorded net new assets of CHF 2.9 billion in the third party as balancing business TPAM. Total assets under management in our TPAM business increased to CHF 96.7 billion. Direct investment income totaled CHF 0.95 billion. The non-annualized direct yield was 0.6%, essentially in line with the prior year period. The non-annualized net investment yield stood at 0.7% compared to 0.4% in Q1 2020. Our SST ratio on the January 1, 2021 has published and filed with FINMA with 197%. Today, the SST ratio is at around 200% and thus, also slightly above our ambition range. We are well on track with our Swiss Life 2021 program, and I can confirm all the Swiss Life 2021 financial targets.I will now move on to our segment reporting, starting with Switzerland. Premiums decreased by 24% to CHF 4.3 billion due to the group life business. The overall market was down by 14%. Premiums in individual life were up by 2%, while the market increased by 3%. Periodic premiums grew by 3%, while single premiums were down by 1%. Premiums in group life declined by 25% to CHF 4 billion, while the market decreased by 17%. Periodic premiums were down by 6%, but single premiums decreased by 45%. About 80% of this decline in single group life premiums can be attributed to new accounts, by the remaining 20% relates to our entries of employees in existing schemes. We continued to focus on disciplined underwriting to protect and improve the quality of our full insurance book. Overall, our full insurance technical reserves have grown by around 1% since year-end 2020 based on the mentioned premium development. On the other hand, assets under management in our semi-autonomous business, the foundations increased to CHF 5.2 billion compared to CHF 4.8 billion at year-end 2020 or CHF 4.2 billion at the end of Q1 2020. Growth in semi-autonomous solutions results in lower reported premiums. Only risk and cost premiums are recorded by the savings components are reported off-balance as asset inflows in the respect this foundation. This development is in line with our full range provider strategy and our established focus on quality before growth. Fee and commission income increased by 12% to CHF 82 million due to a high contribution from Swiss Life Select and our businesses with unit-linked solutions and real estate brokerage as well as with investment solutions for private clients.Turning to France. Premiums increased by 17% to CHF 1.8 billion. The market grew by 10%. In our life business premiums increased by 22%, following strong growth in the prior year and continued demand for our new pension products. The market was up by 18%, which compares to a heavily depressed first quarter in 2020. The unit-linked shares in our life premiums was 57%. This is at the full year 2020 levels and substantially above the market average of 36%. Life net inflows were CHF 0.5 billion versus overall market net inflows of CHF 4.4 billion. Premiums in health and protection grew by 5%, while the market was up by 4%. P&C premiums grew by 13%, driven by motor products based on new partnerships. Market growth was 3%.Fee and commission income rose by 17% to CHF 93 million. Unit-linked fees increased based on high unit-linked reserves, primarily due to net inflows and a more favorable financial market in management. We also generated higher revenues from structured products.I will continue with Germany. Premiums increased by 5% to CHF 390 million due to higher premiums with modern, modern traditional and disability products. The market decreased by 6%, driven by single premiums. Fee and commission income rose by 27% to CHF 164 million due to strong contribution from our owned IFAs based on an increased number of financial advisers and productivity gains.This top line development also includes an extraordinary benefit of around CHF 50 million from a successful campaign based on the discontinued solidarity surcharge. The number of financial advisers increased by 13% year-on-year to 4,846.Moving on to our International unit. Premiums decreased by 6% to CHF 278 million. The business with private clients in Asia increased despite ongoing lockdown measures, thanks to the domestic Singapore business and the successfully launched digital document exchange for some of the business abroad. Premiums with private clients in Europe decreased year-on-year as the prior year period was less affected by lockdowns.Corporate claims show a positive development. Fee and commission income was up by 5% to CHF 79 million, largely driven by high contribution from our owned IFAs, particularly in the U.K. and in CEE. Asset under control for private clients, 1 driver of fee income increased by 1% to CHF 20.9 billion compared to year-end 2020, mainly as a result of positive financial market movements.Let's continue with Asset Managers. Asset Managers, commission income rose by 7% to CHF 205 million. The increase is fully driven by higher recurring commission income. 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 90 million. This was due to higher recurring management fees on a growing average asset sales.In our TPAM business, commission income grew by 10% to CHF 115 million, recurring fees were up by 14% based on higher average assets under management. Nonrecurring commission income, such as transaction and performance fees decreased slightly by CHF 3 million year-on-year. The share of total nonrecurring income for TPAM, meaning commission income as well as other net income, such as from project development, with 14% of total TPAM income compared to 12% in the prior year period.Net new assets in our TPAM business amounted to CHF 2.9 billion compared to CHF 13 million in the first quarter of 2020. We achieved strong inflows in real assets of CHF 1.1 billion, including CHF 1 billion from real estate and CHF 0.1 billion from infrastructure. This is above the 2020 level when we achieved inflows in real assets of CHF 0.8 billion. Inflows in other asset classes amounted to CHF 0.9 billion in money market funds, CHF 0.7 billion in bonds and balance mandates and CHF 0.2 billion in equity.Excluding money market funds, net new assets amounted to CHF 2.0 billion compared to CHF 1.1 billion in the prior year period. Overall, as for the management in our TPAM business were up to CHF 96.7 billion compared to CHF 91.6 billion at year-end 2020. Drivers were strong net new assets, supported by market performance and favorable FX effects.Turning to our investment result. Our direct investment income increased by around CHF 60 million to CHF 0.95 billion. Income on equities was lower due to reduced exposure and due to lower dividend payments in the COVID-19 environment. Income on bonds was also down due to past bond realizations and lower reinvestment yields. This was partly offset by higher rental income compared to the prior year period. The non-annualized direct yield was at 0.6%.Our non-annualized net investment yield was 0.7% compared to 0.4% in the prior year period. The increase is due to higher net capital gains in bonds, loans and alternative investments as well as substantially improved FX hedging effect including a decrease in hedging costs. Those positive effects were partly offset by negative P&L contribution of the hedged equity portfolio, including losses on equity hedging derivatives in the context of a positive market environment. Unrealized gains within the equity portfolio are recognized as other comprehensive income.At the end of March 2021, unrealized net gains on equities amounted to CHF 2.4 billion compared to CHF 1.6 billion at year-end 2020. Unrealized net gains and bonds amounted to CHF 13.3 billion compared to CHF 18.2 billion at year-end 2020. The asset mix remained in line with year-end 2020. Our net equity exposure amounted to 4.4% and the real estate exposure amounted to 22.2%.Let me give some additional color on the real estate portfolio. We had non-annualized real estate revaluation gains of 0.5%, in line with the prior-year period. Our vacancy rate increased to 4.7% compared to 3.9% at year-end 2020. About 2/3 of this increase relates to Switzerland, primarily due to recent real estate acquisitions with planned reletting towards the end of the year. The remainder pertains to France and Germany. As already mentioned in our full year 2020 speech, we expect slightly higher vacancy rates for the year-end 2021 compared to the level of 3.9% in Q4 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.Moving to solvency, cash and payout. Our SST ratio was 197% on the January 1, 2021. As of today, the SST ratio is at around 200% and therefore, slightly above our ambition range of 140% to 190%. Cash at holding amounts to somewhat below CHF 1 billion today, compared to a figure of slightly more than CHF 1 billion at year-end. Both our solvency and cash position remains strong. Our CHF 400 million share buyback, which was resumed on the January 4, 2021, is on track and will be completed by the end of May, the latest.Let me sum up. I'm very pleased with the strong performance of Swiss Life in 2020 so far, especially with the development of the fee business. We have, thus, further improved the quality of our earnings and demonstrated the resilience and strength of our business model in an environment that remains challenging. We are very well on track with our Swiss Life 2021 program, and they can, therefore, confirm all the Swiss Life 2021 financial targets.Thank you for listening. I'm now ready to take your questions.
[Operator Instructions] The first question comes from Peter Eliot from Kepler Cheuvreux.
Congratulations on the great results, as always. I have 3 questions, please. First one on the fee income result. I mean, I know you don't disclose the fee results for Q1. But I was just wondering if you could give us any pointers on whether we should expect this to move in line with the strong fee income you've disclosed or whether any of it is lower margin. And I guess, in particular, you've previously said that recent asset management inflows have been at higher margin. And I'm just wondering if that's still the case in Q1. Second question would be on cash, quite positively surprised actually the cash at holding just below CHF 1 billion because, given that you've, I think, just about finished if you haven't already finished the share buyback. Yes, it's higher than I would expected them. I'm just wondering if there's any sort of, in particular, that you're able to comment on there in terms of the drivers?And then the third question is on the Swiss premiums. Just wondering if you can sort of help us on how you see the outlook for that business? I mean, should we -- the trends that we saw in Q1, are they something that you expect to continue or might we see a sort of partial recovery for insurance solutions in future quarters? Any insight you can give there would be very helpful.
Okay. Thanks, Peter, for the question. Let me start with the first one on the fee income. By and large, clearly, we see this going through into the fee results as well. There is certainly some differentiation to be made across, let's say, the various businesses. Germany, we had an exceptionally strong Q1 for the reasons mentioned. But there, we really expect to see some operational leverage. In Asset Managers, if we look at the total asset composition, we have seen a good share of, let's say, real assets in the inflows. If we look at the overall book, we have around 40%, 42% real estate in the assets under management in TPAM, which is essentially at a primary level. It's also important to see that we have had substantial stronger growth in TPAM compared to the PAM business. And in the PAM business, cost income ratio is clearly below or is better than the one in TPAM. So that's a couple of things to keep in mind when thinking about fee development, but let me also here confirm, obviously, that the targets for the fee result for 2021. On the level of the cash, yes, the share buyback is ongoing, we have not fully completed it. We are maybe at CHF 375 million as of today. What is important to keep in mind in terms of the cash level at holdings that we have paid out the dividends to the shareholders, but we have paid it out net of the withholding tax of around CHF 230 million and this withholding tax will be paid from the holding in May versus the end of May.So this is an outflow that is not yet reflected in the numbers mentioned. In terms of the group life business, there are a couple of things. First of all, to keep in mind for the year 2021, there is a strong seasonality. In the group life business, we have typically most of the single premiums coming in at the beginning of the year. So if we look now at the premium development within the year, we expect this decline of minus 24% on a relative basis to -- becomes more. But overall, also for the full year, we expect a premium reduction in the Swiss group life business now. A bit more longer term, what I can say there, we have this full range provider strategy. And this is nothing new. I mean, we have mentioned, for example, also at Investor Day that we strive for a good mix between full insurance. And semi-autonomous solutions, clearly, there is now compared, for example, to the year 2019, when we had a high share of full insurance in the new business normally focused more on the semi-autonomous business. Interest rates have come down substantially. And therefore, we have an actual, let's say, preference in the low, in this very low rate environment in semi-autonomous solutions. But as rates move up, this can also lead to some obvious mixes between full insurance and semi-autonomous business.
That's great. Can I just follow-up very quickly on the last point because I guess, I mean, I was trying to look through the seasonality a little bit. So I was sort of thinking more about longer term. So what you're commenting on towards the end. But I mean, I guess, when we come to do our forecast for Q1 2022 for example, if the environment is the same as today in terms of interest rate level, et cetera, should we be using the Q1 '21 as a sort of baseline starting point? Or do you think it was sort of still low -- still lower than one might use for a base? I don't know that's a bit clearer.
Yes, we have had -- if you look back into the past, we have seen different levels, let's say, of production of premium in the first half of the year. Certainly, the Q1 '21 is probably at the lower end. But that said, there are various things that enter the picture, there are lag effects from prior-year periods. We have tariffs that we're establishing. Then it takes a while before this is seen in the premium. So I wouldn't, let's say, put now too much emphasis on this Q1 result because we also have seen, as we guys mentioned, seeing substantially lower amounts of new entries into existing schemes. This may or may not have to be seen in the context of the COVID environment with less people and changing job rate, I think. This -- the Q1 has been a very particular Q1 and I think we now have to see how this develops further.
Next question comes from Andrew Sinclair from Bank of America. We will take the next question, comes from Colm Kelly from UBS.
Question on the fee income, obviously, strong growth coming via the adviser, the IFA channel. You talked a little bit around that being driven by some adviser growth, but also productivity increases. Can you just put some numbers around both of those drivers so we can get more clarity on exactly what is driving that 23% year-on-year growth.And related to that, is there anything you would comment for this first quarter that is exceptional within any of those numbers.And then lastly, just in terms of residual COVID impacts, you mentioned it in your last answer to an extent, but to what extent do you feel COVID has, maybe in the first quarter, held back any of these growth numbers that you have delivered, particularly when we look at kind of international or some of the non-domestic business, to what extent is that still being impacted by COVID, if you're able to put either qualitative or quantitative answer to that, please?
Thank you. Let me start first with the question on advisers and the productivity gains. And let me focus here on Germany, where we have this 27% growth in fee income, even though also in other areas, let's say, in U.K. and CEE, we have seen a good development of the numbers. So in Germany, we have seen year-on-year, an increase of 13% in terms of adviser numbers and maybe 5% since the end of 2020. Now on the other hand, we have reported for Germany this 27% growth in fee income. And as mentioned, there was a particular benefit in it. The German government has abolished this tax surcharge, solidarity tax surcharge for many people which attribute to non-client segments. And this has generated additional opportunities for our financial advisors, and we have said this is maybe around CHF 50 million. So if you strip that top line, this particular top line effect out of this German growth, you end up with a, let's say, adjusted gross number, which is slightly above the 13% in terms of advisers. So there is a productivity gain of maybe 3 to 4 percentage points that we have observed in Q1, '21. Now how will this move forward? We reported about the fact that in the lockdown situations, our advisers and their clients relied more on virtual communication. And therefore, we have seen clearly that there is some productivity gains by advisers traveling less around. And we hope that at least some of those productivity gains can be continued into the future even if the lockdown situation eases in Germany. So that's to give some flavor, let's say, on the adviser business in Germany. In terms of how the COVID situation has influenced the growth numbers. You mentioned international, clearly, the situation in Asia is still. For the Singapore carrier that there is clearly a lockdown in place and restrict medical underwriting. There are, as mentioned, some ways in terms of joint document exchange. But clearly, these measures are in place in the European business of international -- the private growth business, we clearly see restrictions that have held back the premium numbers. And also in the area of Asset Managers that the lockdown situation leaves the situation where we have less client activity, less marketing, less fares, which continues to be an important, let's say, channel to acquire new clients. And as a result, it was clearly focused in all the businesses on existing client relationships.
Our next question comes from Michael Huttner from Berenberg.
Thanks for the these amazing results. And I just wondered whether you can explain the solidarity tax a little bit more. It turns intriguing, I suppose, with the message to clients, which you're no longer paying on tax should you pay it from the insurance. Just wanted to understand what it is? And then the -- on the group life premiums, you did give a really full answer. I -- what I'm wondering is, why now? So -- or maybe I was -- maybe a little bit of -- but it seems quite a big change. And it seems I know in line with especially -- but in the past, has always been growth in this area adjusting for the actions. And now it seems to be kind of almost if this is slammed on the brakes.And I just wondered what is the reason now? You mentioned tariffs. And I just wondered if it's linked to the decision you announced earlier this year that the pensions you pay would be accounting -- think they were below the [ 82 ], minimum, but I can quite understand then?And then my third question is on the real estate whether you can give us a little bit of comfort that the rise in vacancy rate that you have signaled before, but is anything to order that?
Okay. Thanks, Michael. On the solidarity tax, let me give some background on that. The German government has introduced that in '99s or something like that to finance the integration of the former DDR that the Democratic Republic of Germany in the context of the reunification. This was the surcharge of, at the end, 5.5% on the tax. And this has been in place for essentially now 30 years. And effective 2021, a large part of the population gets rate of this surcharge in the tax bill. So maybe up to a taxable income of EUR 60,000. They will have -- there will be a relief from paying this tax. So meaning they have more disposable income at hand. And this was taken up or recognized by our financial advisory business as an opportunity, and they started to advise their clients to invest that additional taxable or that additional disposable income into the old-age pension. And this was clearly seen last year as an opportunity, last year people have had time to think about that. And because this tax relief enters into force this year, we have now seen these contracts start and we now have also recognized this benefit, this additional income in fee income this year. So that's a bit of the background to that solidarity surcharge tax. The business is now written, if you wish. And this is kind of a one-off that we have seen as an additional top line. Now in terms of the group life business, maybe I'm not sure whether I have understood all the questions, but let me go back a bit. As you said, in 2019, we have raised a substantial block of business, as a competitor pulled out, this money came in at the beginning of 2019. We have increased back then, both the single premiums and also the periodic premiums. And we have had the now really on the books. We remixed that money at the beginning of 2019 when interest rates were substantially higher than they are today. Now as also mentioned, we have this full range strategy, which sees a mix shift of full insurance business and semi-autonomous business, and we now have focused in the past year. And that's the business that now has entered in Q1 on the balance sheet more on the semi-autonomous business. Rates have come down substantially, and we put clearly profitability before growth. And that's the reason why we have maintained and even also tightened our underwriting in the full insurance space because at the end of the day, we want to protect the quality of the full insurance back book. Now what also happens is, we move into the semi-autonomous space, we just have, due to the accounting, a lower recognition of premium, what does it mean? We record only the cost and the risk premium in our P&L and both -- and all the savings component, be it that the regular savings contribution semi-autonomous business or the initial payment when somebody ends semi-autonomous business is not recorded in the premium, but that flows directly into this semi-autonomous foundation without being recorded as premium. And there, we have, as mentioned, grown the AUMs to now CHF 5.2 billion comparing to CHF 4.2 billion, 1 year ago. So that's a bit on the group life premium dynamics. Now on the vacancy rate, we have had recent acquisitions, which we have acquired at some vacancies premiums, that was essentially the driver for this uptick from the 3.9% at year-end 2020 to the 4.7%, that we now report for Q1. The reletting activities are underway. And also based on that, we can confirm what we already stated at the full year disclosure call, that for the end of 2021, we see vacancy rates slightly above the 2020 level.
That's really helpful. Just one very quick follow-up on the solidarity. The CHF 15 million, 1-5 million extra in Q1, will there be similar amounts in the next few quarters or is it all done now?
No, that's now all done. These contracts now have entered into force. We have received through our product partners, the commission business to that and an extraordinary item that we have recorded. Now there is something else in Germany that you may have heard of. The finance ministry in Germany plans to reduce the maximum technical interest rate for insurance products, for life insurance products from currently 0.9% to 0.25%, starting in 2022. And experience has shown and it has been the last time in 2017, that some reduction has taken place, but also in prior years before such a lowering of the rates, typically, people buy life insurance at the somewhat higher technical rates. And this typically also leads to a pickup of financial adviser activity in such a year-end. We see this come for 2021, let's say, a market-wide effect.
The next question comes from Liang Fulin from Morgan Stanley.
I have 3 questions, please. So the first one is, so you just mentioned that in Germany, apparently, the increase in fee income is mainly driven by the higher number of advisers. Just wonder, is that actually because all partially benefiting from the fact that the more people are looking for jobs during COVID-19. And then with the economy actually recovers, then your potential again to lose people to the other industries. Or is it because there, you have like a school or something, which is just pumping out the qualified advisers quicker than before? So that's the first one. And then secondly is a very quick one, is just want to make sure that the cash number, if I -- slightly below CHF 1 billion. If I remember correctly, you used to -- the remittance from your subsidiaries, it usually happens actually later in the year. So this number has not included the cash you're going to receive from your subsidiaries, right? My last question is also a very quick one. Just want to confirm the solidarity tax point, you just said that it sounds like, you mean that's a one-off effect in first quarter, is that right, because if I understand correctly, the disposable income of those low-income like populations will increase actually going forward as well. So why do you think it's just one-off impact to 1Q results?
Okay. Let me start with the first question. Conceptually, you are right. The main driver of the growth of fee income is the growth of the number of advisers. But the 13% we mentioned, there is a bit of additional productivity gains. Indeed, the fact that in the lockdown situation, people see the job of financial base as an opportunity to personally grow to have something to do, may have supported the growth, especially in one of the channels we have in the Swiss brand. On the other hand, one of our key attraction points to financial advisers is our platform in Germany, which help, which offers them a very efficient way that makes them successful in advising people, in meeting people and also in making money for themselves. I mean, this platform, let's say, the features of this, that the way we manage, to say, that the advisory force is really an attraction point, which is here to say a new aspect of, let's say, this COVID-19 situation. In terms of the the cash number, the main relating from Swiss Life AG has been included in the numbers, in the cash numbers reported. And as said, there is this outflow of the withholding tax on the dividend of around CHF 230 million that will take place. On the other hand, we will have some remittances from small units to come in at -- during the second quarter, and we will report for the half year numbers despite of COVID. On the solidarity tax surcharge, indeed, this surcharge has been abolished effective now for the future. And as a result, our clients have to pay lower amounts of taxes, and they will have, in the future, a higher income. And this higher income, for example, is now invested into a periodic premium contract. So they have essentially committed, as you wish, all their increase in the future, disposable income into a contract. And this contract has now been essentially advised to them. And this is commissioned for us upfront. And this commission has now come in, in the first quarter of 2021 as we have done quite some of the advisory in 2020, and contracts have now started in the beginning 2021.
The next question comes from Ashik Musaddi from JPMorgan.
I just have a couple of questions and most of the questions have already been answered. So first of all, like if I look at your third-party asset management move in terms of total assets, around CHF 2.9 billion is because of net inflows and around CHF 3 billion, CHF 3.5 billion is because of mark-to-market. So can you just give us some clarity on what this mark-to-market is because I mean interest rates have gone up. So you should have a big negative mark-to-market on the bond side, how you are doing on the real estate side? Any additional clarity on this would be very helpful. And secondly, if I look at the fee premium growth -- or if we see fee revenue growth, it was 8%, whereas if I look at the total AUM growth in third-party, it's been roughly, say, 20% over the past 1 year versus fee income growth of only 8%. Now I remember like in your opening remarks, you mentioned that it's because of the mix of PAM and TPAM, and it's because of commission income, which is not recurring in nature. So can you just give additional thoughts on that? Like how do you think about the growth in third-party AUM versus the growth in fee revenue at the group level -- sorry, in the asset management business?
Let me start with the NNA figures of CHF 2.9 billion and the additional contribution of FX movements and the performance. So we report our figures in Swiss francs whereas quite a substantial part of TPAM assets are denominated in euros. And as a result of that, we have had an FX translation effect of around CHF 1.3 billion, which have to be added to the CHF 2.9 billion net new assets. And then we have had a performance of CHF 0.9 billion, and this performance clearly has various contributions, as you say, rates were having a negative impact. On the other hand, we have had some spread tightening, which open the call. But bond mandate, we have had substantial appreciation of the equities. We have also seen appreciation of the real estate, which by the way, in the TPAM assets account for 40% of the total assets under management. On the balance sheet, we have 20% of real estate and in the TPAM, it's about 40%. And there, the continued appreciation has helped. So net-net with different contributions also in terms of sales, we have had CHF 0.9 billion of performance. Now in terms of the AUM, asset management fee income, I think it -- it's important to keep in mind that the fee income does not fully develop in line with assets under management. Why is that? We have clearly, some contributions, which are nonrecurring in nature. This is essentially the real estate project development. Those are transaction fees, those are sometimes performance fees. These are fees for refurbishing real estate and the like. We have also some fees, for example, in facility management, in the property management that relate to the management of the tenant relationship. So there is quite a substantial part of the fee income, which is not developing in line with AUMs that they'll assess other components. Now in terms, and we give here the order of magnitude. We have had in Q1 nonrecurring components of the total income, meaning fee and other net income of 14% compared to 12% at the prior year Q1. For a full year -- to take the last full year 2020, we have been at 27% because within the year, this normal recurring income is back-end like this. So that's a bit about the fee dynamics and asset management.
Next question comes from Farooq Hanif from Crédit Suisse.
Just going back to the solvency test and the 200%. I mean, given what you said about FX, given the equity market, I'm just a little surprised it's not a little bit higher. I'm kind of wondering, you're giving a very, very approximate number but -- or is there a big negative that I'm not taking into account in that statement? And secondly, going back to group life, you've had a very, very strong increase, it seems, in semi-autonomous AUM. So going forward, are we going to see the potential for that AUM? I mean, I guess what I'm really trying to find out what is the net inflow or the inflow that we can -- that's going into that business? And do you expect that to grow? And then tied to that, when you talk about tariffs and wanting to get adequate compensation for writing the traditional full group life what metrics are you using? Is it return on allocated to solvency capital? Is it new business margin? Can you give us a little bit more of an idea about kind of what the hurdle rate is?
So thanks. Coming first to the SST. When you do the math with the sensitivities we provide, you may end up with a somewhat high number. Rates have improved, the spreads have improved and the equity markets have improved and real estate markets have improved. And this, roughly speaking, has contributed maybe each 1, 1.5, 2 percentage points to SST. What may be a bit a surprise is the interest rate movement. And there, you have to acknowledge that on the U.S. dollar rate increase, we have low corresponding liabilities against that, and that's the reason why rate increase in the U.S. dollar has a negative impact on the SST. However, we have had the benefit of that in 2020 as a positive contribution to SST, and now it has reversed, and this may be the reason that if you do just the back of the annual calculations in 2021 that the increase may be a big -- well within what you have expected. So there's nothing particular to note than the increase in the U.S. dollar rate. Now in terms of the group-wise business, the semi-autonomous business, we have clearly the ambition to grow that business. As said, we have had the CHF 1 billion since Q1 2020. And for us, this is something we want to follow that business. This is an attractive offer for clients. For some clients, that really is a good thing. And at the other hand, we also clearly maintain the full insurance business. There, we, as said, look in terms of the underwriting on the physical things like average age, how much extra mandatory business we have in the contract and the like and how it compares to the average book that we have. So those are more of the operational considerations we follow in terms of evaluation of the strategy, how do we think about finding the balance between full insurance and the semi-autonomous business, how do we see that. We have disclosed at the Investor Day 2018, where we have evaluated various strategies, and there we have come to the conclusion that the mixture of both for insurance and semi-autonomous is most attractive there, we look at stuff like the incremental net profit, how much value of the new business we generate and also what is the capital efficiency in terms of, do we need the capital efficiency criteria we have developed.
Okay. It sounds like it's very bespoke on a case-by-case basis, but I can follow-up later.
Next question comes from Thomas Fossard from HSBC.
Two questions. The first one would be related to the Swiss market. Actually, there has been a lot of swing in terms of businesses in Q1. Any indication you may share with us regarding the evolution of your new business margins? Just for us to better understand what was driven by, I would say, more cautious assumption in terms of margin and how you're shifting and moving your business around margin, that would be very helpful?And the second question will be relating to the Department of Justice. Any update on the issue? And any comments you would like to make at this stage regarding the CHF 70 million charges you've taken at the full year?
Okay. I'll start with the second question on the DOJ, there's nothing new to report on that since the full year release. Now in terms of the margin development, how we think about that we have seen in last year in 2020, a clear increase of new business margin in Switzerland from 1.6% to 2.5%. And as mentioned, this has to be seen in the context of a lower share of full insurance business that we have written in 2020. We also have had, in 2020, an improvement of the business mix, not only within the group-wise business, but also within the individualized business with an increased share of capital-light products. And with that, we could also more than offset the negative interest rate development we have had during the full year 2020. So that gives a bit of a flavor of what the dynamics were. So all in all, we can say the full insurance business has a lower than average margin, even though, as we also continue to say, it meets the hurdle rate of 1.0%, but it has been our average margin. And that's what we could already observe in 2020.
And the indication of the trends in Q1 compared to last year?
No, we disclosed the value of new business, the margin update at the half year. Thers is no update at Q1, but if you -- if you look a bit back, you know that we still have some interest rate sensitivity. And particularly for the Swiss business, there may be a positive contribution. But at the end of the day, what matters is the rate level at the half year when we disclosed the numbers and I think, it's too early to speculate what the rates will be at half year.
The last question for today's call comes from Peter Eliot from Kepler Cheuvreux.
Sorry to come back on the group life, but I'm just thinking, one thing that might really help us sort of understand the dynamics is, I don't know if you're able to give us a hint on the business that went into semi-autonomous, if that had instead gone into full insurance solutions. Are you able to sort of give us an indication of what the premium uplift might have been, maybe just so that we can sort of fully understand the quantum of that effect. And if I could just add one more. Solvency level, I mean, I think I or maybe somebody else asked this at full year. But obviously, you're above the sort of your target range at the moment. Are you able to sort of give us any thoughts on what that means for you at the moment, how you think about that? Maybe pushing my life a bit. Any comments you could give would be very helpful.
Maybe starting with the second question, first. Yes, we have situation, not the first and that we have slightly above the ambition range. I think what it means we have talked about that on all the calls, I think you -- we have discussed about the criteria that we consider. And I think there's nothing more to add to that than what we said on the previous calls. Now in terms of the question about the semi-autonomous and what might have been, I think that is kind of speculation because, I mean, it needs to fit, first of all, to the client situation. This is not that we can say, well, go there or here into the -- fit the client situation. And we cannot say that otherwise they might have gone somewhere else if those are clients that come in. What is maybe to be said, as the rule of thumb is that, when new clients enter a scheme, be it full insurance or semi-autonomous, they bring in their part of money that they have accumulated in the old scheme, that's another insurance company or in another place, and they deposit that in the full insurance, this is a single premium.And in the semi-autonomous space, it is kind of, say, deposits into the AUM. And this AUM, as mentioned, have increased by around CHF 0.4 billion since year-end 2020. That's probably the best I can say. Clearly, these numbers also include other effects, but that's probably something that we can say. And other than that, also in the semi-autonomous space, it is key to remember that all the recurring payment savings components, they do not show off in the P&L as a premium. They directly go into the foundation without touching our P&L.
Sir, so far, there are no more questions from the phone.
Thank you for your interest in Swiss Life and for your questions. I wish you a nice day. Stay safe and healthy. Goodbye.
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