Cleared horizons. Annual Report Swiss Life (Luxembourg) S.A.

Transcription

1 Cleared horizons Annual Report 2004 Swiss Life (Luxembourg) S.A.

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3 Swiss Life (Luxembourg) S.A.. Annual Report Contents Contents Editorial 07 Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company 09 Management report for the financial year 2004 to the Annual General Meeting of 2 June Events at the Company 11 Comments on the financial year Acknowledgements 17 Independent Auditor s Report Annual accounts 18 Balance sheets as at 31 December 2004 and Profit and loss accounts for the years ended 31 December 2004 and Notes to the accounts as at 31 December 2004

4 Audited Annual Financial Statements for the year ended 31 December 2004

5 Swiss Life (Luxembourg) S.A.. Annual Report Editorial Editorial 05 Attaining these goals puts our energy, creativity and flexibility to the test each and every day. We have, in fact, even more reasons to congratulate ourselves on our success. We also owe it to our passion for our business and the motivation of the entire team, without whom these results could not have been achieved. I would like to take this opportunity to thank every single member of staff for their commitment. Our goal is now to profit from this momentum to keep up the pace was a year characterised by growth. Significant growth in fact as we nearly doubled our turnover with a 50% higher than forecast figure for premium income collected. Moreover, continued efforts to contain costs and optimise operational efficiency are bearing fruit and we have achieved results similar to those of A few years ago, we had a steep path ahead of us. Today, our success tells us that we went in the right direction. We were right to focus our strategy on maintaining our position as leader in group insurance on the local market, developing specific solutions for expatriates and Third Country Nationals as well as diversifying our business into assurfinance. Swiss Life intends to achieve a position of pensions leadership. Through the professionalism of our team, the aptness of our solutions and the excellence of our service, we intend to set market standards for private as well as occupational provisions. We aim to become the first point of reference for our clients, partners and staff. Between 2002 and 2004, the Swiss Life Group focused on its core businesses of life insurance and long-term savings, on cost reduction, operational efficiency, slimming down the management structure, financial health (by, in particular, strengthening the capital base) and instilling a performance culture. Henceforth, this strategy will be extended and we will be concentrating on the following strategic directions: growth, efficiency and leadership. The horizon is now clear and we are ready for the new challenges that lie ahead. Patrick Schols Managing Director May 2005

6 Ambition Pensions leadership. Mission We are committed to helping people create a financially secure future. For life. Values Expertise We offer first-class solutions for pensions and long-term savings. This expertise is based on our proven professional competence and many years of experience. Proximity We foster close relationships with our customers and partners and endeavour to understand their needs. This proximity enables us to provide optimum solutions tailored to their requirements. Openness We nurture open and direct dialogue both within and outside of our organisation. This approach builds trust in the work we do. Clarity We communicate clearly and offer products and services that are comprehensible. This clarity gives our customers and partners a sense of security. Commitment We work with commitment and enthusiasm to help our customers, staff and shareholders achieve their goals. This commitment forms the basis of long-term partnerships, and enables us to meet our social responsibilities.

7 Swiss Life (Luxembourg) S.A.. Annual Report Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company 07 The Board of Directors Johan Bertrands Chief Executive Officer, Swiss Life (Belgium), Brussels Chairman Paulina Casal Senior Vice President, Swiss Life Insurance and Pension Company, Zurich Member of the Board Patrick Schols Managing Director, Swiss Life (Luxembourg) S.A. Member of the Board René van der Smeede Member of the Corporate Executive Board, Head of International Markets, Swiss Life Insurance and Pension Company, Zurich Member of the Board Mr René van der Smeede going into retirement as of 31 December 2004, he will be replaced from 1 January 2005 by Margrit Schmid, Senior Vice President, Swiss Life Insurance and Pension Company, Zurich. Management Patrick Schols Managing Director Didier Bossicart Sales & Marketing Director (until 31 May 2004) Pierre Dubru Director Operations (until 30 April 2004) Director Local Market (from 1 May 2004) Raphaël Warland Actuarial Director (until 30 April 2004) Technical & Financial Director (from 1 May 2004) The Management will be reinforced by Hocine Berrane Hocine Berrane Raphaël Warland Patrick Schols Pierre Dubru as Director IT & Organisation from 1 January Auditors PricewaterhouseCoopers S.à r.l., Luxembourg

8 t 15:24 PM 2217 m Growth The Swiss Life Group wants to profit from the growing pensions market and position itself internationally as the preferred provider of pension solutions for individuals and companies. The continuous improvement of customer satisfaction is one important driver for this. Distribution in the individual markets will be more strongly diversified in order to create additional possibilities for customers to make contact. Swiss Life intends to grow by at least 1% above the market average in the countries in which it operates. For Swiss Life in Luxembourg, this means carrying on with our commercial strategy, i.e. the maintenance of our position as local market leader in group insurance and the acquisition of new market share, the development of our specific insurance products for expatriates and the diversification of our assurfinance business, in respect of markets and products as well as distribution partners.

9 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June 2005 Events at the Company 09 In Luxembourg, 2004 was characterised for Swiss Life by a virtual doubling of premium income, which totalled million euros against million euros in 2003, and by a profit of million euros, which practically equalled that of 2003 (2.969 million euros). While each of our activities contributed to the growth of our turnover, individual unit-linked products were distinguished by spectacular growth, particularly on the Belgian market, where the productivity generated through collaboration with new partners initiated in 2003 was confirmed. In order to maintain this growth we have strengthened our existing partnerships by creating new products, in particular, contracts linked to structured funds. On the Italian market, continued collaboration with Banca del Gottardo brought good results. In order to speed up the diversification of our assurfinance business, we boosted the efforts begun in 2003 to increase sales on the French market. The collaboration established with private banks and wealth managers is beginning to bear fruit in We have adapted our organisation so as to respond to the demands of marketing insurance products in accordance with the freedom to provide services by establishing a multi-disciplinary team dedicated to the international markets (for both individual and group insurance). We are endeavouring to build up a solid base of know-how and to work to the highest quality standards. For this reason besides increasing sales, we have given particular attention to improving the reliability of our working procedures and our standard of service in order, on the one hand, to consolidate our existing partnerships and, on the other, to create a strong basis for our future developments. On the international market our services for expatriates and third country nationals have continued to meet with success. We have worked to overcome the obstacles to the realisation of some of our risk insurance quotations. The widening of our geographic cover and the revision of our rates should open up new prospects for We are the leader on the Luxembourg market in group insurance. This business has also contributed to the growth in turnover. Besides new SME clients, we have won some new local large accounts for both risk and retirement pension insurance. Until last year we were very busy bringing the supplementary pension schemes of our clients into compliance with the law of 8 June The experience we gained from this and the good relations we formed with the local supervisory authorities have given us a real competitive advantage. Indeed, we can now pride ourselves on having a solid knowledge of the way this law is applied and thus are in a position to give especially effective advice to new prospective clients. Premium volumes on our traditional individual insurance products are up, with an exceptional increase especially in single premiums on annuities. As for our individual capitalisation product, Prinsave, the premiums have more than doubled - proof that interest in products carrying guaranteed interest is not waning despite the recovery of the financial markets. We began the year 2004 with the unveiling of Swiss Life's new logo, developed for our group in connection with the implementation of its strategy. We introduced this new logo progressively on all our stationery and publicity material and adapted all our documents with an emphasis on our assurfinance business and our Flexi-Group product. As at 31 December 2004 all the required adaptations were completed with the exception of our website. We are in fact taking advantage of the change in presentation to undertake a complete revision of its content and to launch an entirely new user-friendly site during 2005.

10 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June As for our team itself, we have begun gradually to strengthen our marketing support services to cope with our increased work load. We are expecting to take on more new staff in Moreover, we have taken part in an employee satisfaction survey organised at group level. From the results of this survey we can determine the measures needed for introducing the performance culture into our daily work in a practical and positive way and to noticeably improve the general climate. With the return of growth to our turnover and our excellent result, we are completely up to speed with the strategy of our group. While we have good reason for being particularly satisfied with the achievements of 2004, we will continue striving to stay on course and to consolidate our gains for the future. Audit The Annual General Meeting of 3 June 2004 appointed Pricewaterhousecoopers S.a.r.l., Luxembourg as auditors for one year. t 15:40 PM 2004 m

11 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June 2005 Comments on the financial year General considerations Total premium income Evolution in EUR million 11 Swiss Life (Luxembourg) S.A. closed the year under review with a profit of million euros, which practically equals that of 2003 (2.969 million euros). The accounting profit for the financial year just ended arises essentially from: - excellent results on death and disability risk; - lower financial results compared to 2003 which benefited from exceptional elements that were not repeated in 2004; - containment of operating costs, which remained stable despite the growth in turnover On the local group insurance market, written premiums showed a rise of more than 20% and the company was thus able to consolidate its position as leader after having brought its insurance contracts into compliance with the law of 8 June 1999 relating to supplementary pension schemes. For individual insurance, sales on the Belgian and Italian markets of dedicated funds and structured products linked to investment funds were highly successful and form the basis of the surge in turnover Distribution of premiums by country in 2004 Distribution in EUR million Insurance operations Gross premium income practically doubled: from million euros in 2003, they rose to million euros. The charts illustrate the growth in premiums over the last five financial years together with the distribution of n Luxembourg n Belgium n Italy n Other EEA countries n Countries outside the EEA premiums by country.

12 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June The growth in premiums from according to the type of product is illustrated in the chart and invites the following comments: Movements in individual/group premium income Evolution in EUR million In individual insurance, all segments show a clear progression: - increase of 76% in traditional insurance arising essentially from annuities and death insurance; increase of 107% for pure individual capitalisation operations; increase of 450% for products whose investment risk is 21 borne by the policyholder. Individual Group In group insurance, we observe growth across all segments: - very slight rise of 1% in traditional insurance; - rise of 46% in collective capitalisation insurance; - rise of 13% in group products whose investment risk is borne by the policyholder. Movements in premiums - Type of product Evolution in EUR million Total n 2003 n 2004 Traditional Capitalisation Investment risk borne by policyholder Total n 2003 n 2004

13 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June 2005 Technical provisions at 31 December 2004 for contracts with a guaranteed rate amounted to million euros, an increase of 11% compared with the previous year. As for contracts whose investment risk is borne by the policyholder, technical provisions rose by 58% to million euros. Overall, the technical provisions of the company have thus for the first time crossed the 500-million euro threshold. Total technical provisions Evolution in EUR million 3. Financial income Net investment income came to million euros against million euros in 2003; recall that the financial year 2003 benefited from capital gains realised on property sales and variable yield securities and from an exceptional clawback of investment charges. 4. Profit for the year For the year under review, the company realised a profit after tax of EUR Taking into account the balance brought forward from 2003 (EUR ), the balance available to the Annual General Meeting is EUR We propose to allocate this balance as follows: Allocation to legal reserve: Allocation to free reserve: Allocation to unavailable reserve 99 for tax purposes: (*) Unavailable reserve brought forward for tax purposes: (**) ( ) Balance carried forward: (*) in accordance with article 174a of the Income Tax Law allowing wealth tax to be charged to its own base n Products with guaranteed technical rate n Investment risk borne by policyholder 2004 (**) clawback of due past allocation to unavailable reserve for tax purposes, i.e., the allocation to unavailable reserve for the year 1998 (unavailable reserve retained for 5 tax years following the year in which the request to set up the reserve was made) and transfer to the free reserve. Finally, benefits paid in 2004 amounted to million euros, against million euros in 2003, ie, a rise of 62%, observed for all products.

14 t 16:02 PM 1786 m Efficiency The Swiss Life Group wants to continue improving the profitability of its insurance business and to reduce its dependence on the financial result. This will be achieved through the simplification and optimisation of operational processes, reduction of complexities across the entire value chain and strict cost management. With the introduction of organisational responsibility at the level of Swiss Life senior management in Luxembourg, we have given ourselves the means to undertake an in-depth analysis of our processes so that we can optimise the transparency of our procedures. By putting in place service level standards, we will be making a commitment to delivery deadlines and quality both internally and with regard to our partners and end clients.

15 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June 2005 Acknowledgements 15 We would like to thank both our individual and corporate clients for their trust and loyalty. We would also like to thank our partners (consultants, brokers, distribution partners, bank partners) for their stimulating and productive collaboration. Finally, our thanks go to the whole team who have shown themselves to be equal to the ambitious targets we set ourselves. The Board of Directors, Luxembourg, 7 April 2005

16 t 17:30 PM 1270 m Leadership The Swiss Life Group wants to promote a performance-oriented culture and an entrepreneurial approach. The basis for this includes our corporate values, clear objectives and performance yardsticks, short decision-making processes, a performance-oriented remuneration system, and the systematic recording and development of our employees' skills and abilities. In Luxembourg, a detailed job description is written for each post. Each year, clear objectives are set for each member of staff, with regular monitoring through interim and final appraisals. The results of staff satisfaction surveys carried out at group level mean we can take concrete steps to continuously improve the working environment of our personnel.

17 Swiss Life (Luxembourg) S.A.. Annual Report Management report for the financial year 2004 to the Annual General Meeting of 2 June 2005 Independent Auditor s Report 17 To the Shareholders Following our appointment by the Annual General Meeting of 3 June 2004, we have audited the attached annual accounts of Swiss Life (Luxembourg) S.A. for the year ended 31 December 2004 and have read the related management report. The annual accounts and the management report are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these annual accounts based on our audit and to check the consistency of the management report with them. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual accounts. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall annual accounts presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the attached annual accounts give, in conformity with the Luxembourg legal and regulatory requirements, a true and fair view of the financial position of Swiss Life (Luxembourg) S.A. as of 31 December 2004 and of the results of its operations for the year then ended. The management report is in accordance with the annual accounts. PricewaterhouseCoopers S.à r.l Réviseur d'entreprises Represented by Mervyn R. Martins Luxembourg, 12 May 2005

18 Swiss Life (Luxembourg) S.A.. Annual Report Balance sheets as at 31 December 2004/ Balance sheets as at 31 December 2004/2003 (expressed in euros) Assets Notes Subscribed capital unpaid Intangible assets 3(b), Investments Investments in affiliated undertakings and participating interests 3(d), Other financial investments 3(e), 6 Shares and other variable yield transferable securities and units in unit trusts 3(f) Debt securities and other fixed income transferable securities 3(g) Other loans Deposits with credit institutions Investments for the benefit of life insurance policyholders who bear the investment risk 3(h) Reinsurers'share of technical provisions Life insurance provision Debtors Debtors arising out of direct insurance operations 3(i), 8 - Policyholders Intermediaries Debtors arising out of reinsurance operations - due on claims other debtors Other debtors Other assets Tangible assets and stocks 3(c) Cash at bank and in hand Prepayments and accrued income Accrued interest and rent Deferred acquisition costs 3(j), Other prepayments and accrued income Total assets The accompanying notes form an integral part of these financial statements.

19 Swiss Life (Luxembourg) S.A.. Annual Report Balance sheets as at 31 December 2004/2003 Balance sheets as at 31 December 2004/2003 (expressed in euros) 19 Liabilities Notes Capital and reserves 10 Subscribed capital Reserves Legal reserve Other reserves Profit brought forward Profit for the financial year Subordinated liabilities Subordinated loan Technical provisions 3(k), 12 Provision for unearned premiums Life insurance provision Claims outstanding Provision for bonuses and rebates Technical provisions for life insurance contracts where the investment risk is borne by the policyholders 3(k) Provisions for other risks and charges Provisions for taxation (l) Deposits received from reinsurers Creditors 3(m), 8, 13 Creditors arising out of direct insurance operations Creditors arising out of reinsurance operations - Payable reassigned premiums Other creditors, including tax and social security Accruals and deferred income 3(n) Total liabilities The accompanying notes form an integral part of these financial statements.

20 Swiss Life (Luxembourg) S.A.. Annual Report Profit and loss accounts for the years ended 31 December 2004/ Profit and loss accounts for the years ended 31 December 2004/2003 (expressed in euros) Technical account - Life insurance business 14 Earned premium, net of reinsurance Notes Gross premiums written Outward reinsurance premiums Change in the provision for unearned premiums, net of reinsurance Investment income Income from participating interests Income from land and buildings Income from other investments Gains on the realisation of investments Unrealised gains on investments 3(h) Other technical income, net of reinsurance Claims incurred, net of reinsurance Claims paid Gross amount Reinsurers' share Changes in provisions for claims Gross amount Changes in other technical provisions, net of reinsurance Life insurance provision Gross amount Reinsurers' share Bonuses and rebates, net of resinsurance Net operating expenses Acquisition costs Changes in deferred acquisition costs Administrative expenses 3(o), 17, Reinsurance commissions and profit participation Investment charges Investment management charges, including interest Value adjustments on investments Losses on the realisation of investments Unrealised losses on investments 3(h) Other technical charges, net of reinsurance Allocated investment return transferred to the non-technical account Balance on the technical account - life insurance business The accompanying notes form an integral part of these financial statements.

21 Swiss Life (Luxembourg) S.A.. Annual Report Profit and loss accounts for the years ended 31 December 2004/2003 Profit and loss accounts for the years ended 31 December 2004/2003 (expressed in euros) 21 Notes Non-technical account Balance on the technical account - life insurance business Allocated investment return transferred from the life insurance technical account Tax on profit or loss on ordinary activities Profit on ordinary activities after tax Other taxes, not shown under the preceding items Profit for the financial year The accompanying notes form an integral part of these financial statements.

22 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December Notes to the accounts as at 31 December General Swiss Life (Luxembourg) S.A. ("the company") is an insurance company incorporated in the Grand Duchy of Luxembourg on 27 March 1985, as a limited liability company (société anonyme). The objects of the company are to engage in any insurance and reinsurance business in the "life" branch, both in the Grand Duchy of Luxembourg and abroad, on its own behalf and on behalf of third parties, as follows: A. Insurance operations - in case of death - in case of life, with or without reinsurance - combined - regarding complementary covers providing nonindemnity benefits in the event of sickness or accident, in particular in the event of disability. B. Capitalisation operations C. Management of collective pension funds, and more generally, any financial, asset and real estate transactions directly connected with the objects above. The company may also acquire any interests and shareholdings in any other companies or insurance companies which are liable to further the company s business, and more particularly by establishing special purpose companies, investments, mergers, subscribing for and purchasing shares, bonds and other securities, purchasing interests in companies and by any partnership or other agreements of any kind whatsoever. 2. Presentation of the financial statements These financial statements have been prepared in conformity with the law of 8 December 1994 on financial statements with respect to insurance and reinsurance undertakings, and with the significant accounting policies generally accepted within the insurance industry in the Grand Duchy of Luxembourg. The accounting policies and the valuation rules apart from those defined by the law or the Commissariat aux Assurances are determined and applied by the Board of Directors. The company is, in accordance with Luxembourg law, exempt from the requirement to prepare consolidated financial statements and a consolidated directors report for the year ended 31 December Therefore, in conformity with legal provisions, these accounts were presented on a non consolidated basis for approval by the shareholders at the Annual General Meeting. 3. Summary of significant accounting policies The significant accounting policies applied by the company are as follows: A. Translation of items expressed in foreign currencies The assets and liabilities expressed in foreign currencies are translated into euros ( ) at the exchange rates prevailing at the balance sheet date. Transactions during the accounting period, expressed in foreign currencies are translated into euros ( ) at the exchange rates prevailing at the balance sheet date. B. Intangible assets The intangible assets are valued at historical acquisition cost. Intangible assets are amortised on a straight line basis at 33.33% p.a. on setup costs, 16.67% to 50% p.a. on software and 10% on goodwill. C. Land and buildings - Tangible fixed assets Land and buildings and tangible assets, are valued at historical acquisition cost. The acquisition cost includes expenses incidental to the purchase. Buildings and tangible assets with limited useful economic lives are amortised on a straight line basis at the following rates: Real estate 2.5% Plant 10% - 25% Electrical equipment 20% % Machinery 20% % Office furniture 10% %

23 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December 2004 D. Shares in affiliated undertakings and participating interest Affiliated undertakings are considered to be the undertakings between which the company or the parent company exercises a dominant influence either directly or indirectly. Participating interests refer to rights contained in the capital of other undertakings which, when creating a durable link with those undertakings, are intended to contribute to the company s activities. Shares in affiliated undertakings and participating interests are valued at historical acquisition cost which includes expenses incidental to the purchase. If the impairment in value is of a permanent nature, the shares in affiliated undertakings and participating interests are valued at the lower of cost or market at the balance sheet date. These value adjustments should no longer continue when the reasons for which they were made cease to apply. E. Other financial investments Other financial investments are valued at historical acquisition cost which includes incidental purchase expenses. If the directors expect the impairment in value to be permanent in nature, the other financial investments are valued at the lower value at the balance sheet date. These value adjustments may not be carried when the reasons for which they were made cease to apply. F. Shares and other variable yield transferable securities and units in unit trusts Debt securities and other fixed income securities are valued at historical acquisition cost, or redemption value, taking into account the following elements: A positive difference between the acquisition cost and redemption value is written off in instalments over the duration of the holding of the security; A negative difference between the acquisition cost and redemption value is released to income in instalments over the period remaining to repayment. G. Debt securities and other fixed income transferable securities Debt securities and other fixed income securities are valued at historical acquisition cost, or redemption value, taking into account the following elements: A positive difference between the acquisition cost and redemption value is written off in instalments over the duration of the holding of the security; A negative difference between the acquisition cost and redemption value is released to income in instalments over the period remaining to repayment. H. Investments for the benefit of life insurance policyholders who bear the investment risk Investments for the benefit of life insurance policyholders who bear the investment risk are valued at the market value at the balance sheet date and any difference between this value and the acquisition cost is disclosed in the technical account for life insurance in the unrealised gains or losses on investments line items. The market value shall refer to that value quoted on an exchange or the value at which the investment could be sold, valued prudently and in good faith. I. Debtors Debtors are valued at the lower of their nominal and their probable realisable value. Value adjustments shall be made when recoverability is questionable, either in part or entirely. These value adjustments shall no longer be carried when the reasons for which they were made cease to apply. J. Deferred acquisition costs Deferred acquisition costs directly related to life insurance contracts, disclosed as an asset, are based on the calculation of the life insurance provision. K. Technical provisions Sufficient technical provisions are set up in order that the company can meet, as far as can be reasonably foreseen, any liabilities arising from insurance contracts. Provision for unearned premiums Written premiums include all the amounts received or receivable with respect to insurance contracts concluded prior to the end of the accounting period. That part of written premiums which is to be allocated to one or more subsequent financial years is deferred by way of the provision for unearned premiums, computed separately for each contract on a prorata basis. 23

24 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December Notes to the accounts as at 31 December 2004 Life insurance provision The life insurance provision, which consists of the actuarial value of the company s liabilities net future premiums, is calculated separately for each contract. The technical basis used in estimating the life insurance provision in the balance sheet are: Individual insurance: Technical rate: depending on the currency and date of issue Tables: depending on the type of insurance and date of issue For contracts issued since 01 October 2000: - Dutch GBM/GBV tables for decreasing term insurance (loan cover) - Dutch GBM*/GBV* tables for other term insurance in event of death, whole life insurance, fixed term and combined insurance (death type) - Belgian MR/FR tables for combined insurance (life type) and life annuities - German DAV94T M/F tables for insurance "Credit Life" Group insurance: Technical rate: depending on the currency and date on which the premium is paid Tables: depending on the type of insurance and date on which the premium is paid Premiums paid after 01 January 2000: - Belgian MK/FK tables for death insurance and associated deferred lump sum insurance - Belgian MR/FR tables for life annuities and non-associated deferred lump sum insurance The applied technical rates are equal to or less than the maximum rates authorised by the Commissariat aux Assurances. They depend on the currency in which contracts are issued. From 01 March 2002, the maximum technical rate is 2.50% for EUR, USD and GBP. For CHF, the company has been guaranteeing a technical rate of 1.00% since 01 February For individual traditional insurance with level premiums and old capitalisation contracts, the technical rate at the time the contract is issued is guaranteed on all past and future premiums, while for group contracts (successive single premiums) and new capitalisation contracts, the guarantee applies to premiums paid in the past, any premium paid after the change in technical rate benefiting from the new rate. The methods and formulas applied to individual and group contracts are as follows: a. Traditional individual and group contracts, the mathematical reserve is calculated using the prospective method. Inventory reserves as shown in the balance sheet are derived from the difference between future commitments on the part of the insurer as at the balance sheet date and those of the insured. The future commitments of the insured are obtained by updating future premiums due from the next anniversary date as at the balance sheet date and adding the proportion of inventory premiums not due as at the balance sheet date. With successive (single) premium contracts and current annuities, the future commitments on the part of the insured are zero. b. For complementary insurance not involving the establishment of mathematical reserve, the provisions shown in the balance sheet are equal to the commercial premiums paid but not used (provision for unearned premiums). c. For individual and group capitalisation contracts, the mathematical reserve is calculated using the "recurrence" method. Provision for claims outstanding The provision for claims outstanding corresponds to the total estimated cost (including claims settlement costs) for settling all claims arising from events which have occurred up to the end of the financial year. The provision for claims outstanding is computed separately for each claim. Provision for bonuses and rebates This provision consists of amounts intended for policyholders or contract beneficiaries to the extent that such amounts represent an allocation of surplus or profit arising on business, or a partial refund of premium made based on the performance of the contracts.

25 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December 2004 Technical provisions for life insurance contracts where the investment risk is borne by the policyholders. This item shall comprise technical provisions set up to cover liabilities relating to investments in the context of life insurance contracts whose value or return is determined by reference to an index or to investments for which the policyholder bears the risk. L. Provisions for other risks and charges Provisions for other risks and charges are intended to cover losses or debts whose nature is clearly defined but are, at the balance sheet date, either likely or certain to be incurred but amounts are indeterminable. The liabilities for the employees pension fund are included under the technical provisions item. M. Creditors Creditors are included in liabilities at settlement value. If the amount payable is greater than the amount received, the difference is charged at the date when the debt is recognised. If the amount payable is lower than the amount received, the difference is released to income in instalments over the remaining period of the contract. N. Accruals and deferred income This item consists of both income receivable before the balance sheet date but relating to a subsequent financial year and charges that relate to the current financial year but payable in a subsequent financial year. O. Administrative expenses Administrative expenses specifically consist of costs arising from premium collection, portfolio administration, handling of bonuses and rebates and inward and outward reinsurance. In particular they include staff costs and depreciation provisions in respect of office furniture and equipment in so far as these need not be shown under acquisition costs, claims incurred or investment charges. P. Value adjustments Value adjustments are deducted directly from the related individual asset. 4. Intangible assets The movements in intangible assets incurred during the financial year may be summarised as follows: Capital Formation increase expenses costs Software Goodwill Total Gross book value 01/01/ Additions during the year Disposals during the year 0 0 ( ) 0 ( ) Gross book value 31/12/ Accumulated depreciation 01/01/2004 (13 898) ( ) ( ) ( ) ( ) Depreciation during the year (12 891) Accumulated depreciation 31/12/2004 (13 898) ( ) ( ) ( ) ( ) Net book value 31/12/ Net book value 31/12/ Shares in affiliated undertakings and participating interests The movements during the financial year in respect of shares in affiliated undertakings and participating interests are as follows: Participating interest Gross book value 01/01/ Additions during the year 0 Disposals during the year ( ) Gross book value 31/12/ Accumulated depreciation 01/01/ Depreciation 0 Depreciation adjustments relating to prior years ( ) Accumulated depreciation 01/01/ Net book value 31/12/ Net book value 31/12/ Actual value 31/12/

26 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December The actual value of shares in affiliated undertakings and participating interests has been determined by the following methods: - Transferable securities which are admitted to official listing on a stock exchange or dealt in on another regulated market are valued on the basis of the last available price. - Transferable securities not admitted to official listing on a stock exchange or not dealt in on another regulated market and transferable securities admitted to official listing on a stock exchange or dealt in on another regulated market for which the last available price is not representative are valued on the basis of their reasonably foreseeable sales price determined with prudence and good faith by the Board of Directors. The undertakings in which the company holds twenty per cent or more of the capital are the following: - Esofac International S.A., Résidence Val Fleuri II - 37, rue Michel Engels, Luxembourg, in which the company has a holding of 30%. - SLGB MANAGEMENT S.A. 23, avenue de la Porte Neuve, Luxembourg, in which the company has a holding of 24%. The company Active Pension Solutions S.A., in abbreviated form APENSO, 23, avenue de la Porte Neuve, Luxembourg was dissolved following a decision by the Extraordinary General Meeting of 19 November Relating to this liquidation, we have received the amount of euros, thus generating a realised loss of euros. 6. Other financial investments The current value of the items "Shares and other variable yield transferable" and "Debt securities and other fixed income transferable securities" as at 31 December 2004, was euros and euros respectively. The actual value of the investment portfolio has been determined by the following methods: - Transferable securities which are admitted to official listing on a stock exchange or dealt in on another regulated market are valued on the basis of the last available price. - Transferable securities not admitted to official listing on a stock exchange or not dealt in on another regulated market and transferable securities admitted to official listing on a stock exchange or dealt in on another regulated market for which the last available price is not representative are valued on the basis of their reasonably foreseeable sales price determined with prudence and good faith by the Board of Directors. The depreciation of the positive and negative differences between the acquisition cost and the redemption value (agio/disagio) in the financial year 2004 stands at euros and euros respectively. The net balance for depreciation as at 31 December 2004, stands at euros. 7. Other loans Other loans are secured on contracts taken out by the borrowers.

27 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December Amounts owed by or to affiliated undertakings or undertakings with which the company is linked by virtue of a participating interest The items may be broken down as follows: Affiliated undertakings Undertakings linked by virtue of participating interest Debtors Debtors arising out of reinsurance operations Creditors Creditors arising out of reinsurance operations Debenture loans of which subordinated loans Other creditors Deferred acquisition costs The movements in deferred acquisition costs during the financial year can be summarised as follows: Net acquisition costs, opening balance Conversion differences (net) (1 256) Net difference in additions/depreciation during the year (72 354) Net acquisition costs, closing balance Capital and reserves The movements during the financial year in respect of capital and reserves may be broken down as follows: Subscribed Legal Other Profit brought Profit for capital reserve reserves forward the year As at 31/12/ ( ) Allocation of result ( ) Movements during financial year As at 31/12/ ( ) As at 31 December 2004, the subscribed capital amounting to euros, is represented by shares with no nominal value; the paid up capital is euros. 11. Legal reserve The company must allocate 5% of its net profit for each financial year in order to comply with Luxembourg company law requirements. This allocation ceases to be compulsory once the legal reserve balance reaches 10% of the issued share capital. The legal reserve is not available for distribution to shareholders, except upon the dissolution of the company.

28 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December Technical provisions Provision Life Provision for unearned insurance for claims Provision Technical premiums provision outstanding for bonuses provisions* Total Closing balance 31/12/ Conversion difference 76 ( ) (12 648) (1 983) ( ) ( ) Opening balance 01/01/ Movements during year 2004 (23 702) (37 354) Closing balance 31/12/ * relating to life insurance where investment risks are borne by the policyholder. 13. Classification of loans according to duration All loans have a duration of less than one year. 14. Results from the life insurance business The principal results of the life insurance business may be broken down as follows: 2004 Life insurance Individual premiums Premiums under group contracts Periodic premiums Single premiums Premiums for non-bonus contracts Premiums for bonus contracts Premiums from contracts where the investment risks are borne by the policyholders Reinsurance balance Geographical breakdown of premiums written Gross direct insurance premiums amounting to euros, may be broken down into geographic zones according to where the contracts have been concluded: 2004 Life insurance Contracts concluded in the Grand Duchy of Luxembourg Contracts concluded in other countries of the EEA Contracts concluded in other countries outside the EEA

29 Swiss Life (Luxembourg) S.A.. Annual Report Notes to the accounts as at 31 December Commissions Commissions paid to insurance intermediaries relating to direct insurance amount to euros (2003: euros), and is included in the acquisition costs item. 17. Personnel employed during the year The average number of persons employed during the financial year 2004 amount to 51, and may be broken down in the following categories: Category Number of persons Management 4 Executives 27 Salaried employees 19 Waged employees 1 The personnel costs with respect to the financial year may be broken down as follows: Wages and salaries Social security costs of which pensions Remuneration granted to members of the Board of Directors and to Management Directors fees or other remuneration to members of the Board of Directors amount to euros including employer charges. Remuneration granted to the company s Management amount to euros including employer charges. 19. Off balance sheet commitments At 31 December 2004, the company has entered into commitments as follows: Leasing of hardware Leasing of vehicles Leasing of telephone equipment Lease agreement Suretyship on behalf of third parties Collective pension funds Assets Investments Other financial investments - Shares and other variable yield transferable securities and units in unit trusts Debt securities and other fixed income transferable securities Debtors - Debtors arising out of direct insurance operations Other assets - Cash at bank and in hand Prepayments and accrued income - Accrued interest and rent Other prepayments and accrued income Liabilities Technical provisions - Technical provisions for life insurance contracts where the investment risk is borne by the policyholders Information concerning tax Swiss Life (Luxembourg) S.A. is subject to the income tax (impôt sur le revenu) and net wealth tax (impôt sur la fortune) in force in the Grand Duchy of Luxembourg. 22. Information concerning consolidated companies Swiss Life (Luxembourg) S.A. is included in the consolidated financial statements prepared by Swiss Life Holding, a société anonyme under Swiss law, whose registered offices are at CH-8022 Zurich, General-Guisan-Quai 40 (Switzerland), being the largest group of companies to which the company belongs as a subsidiary. The consolidated accounts are available from the head offices of Swiss Life (Luxembourg) S.A.. 29

30 Swiss Life (Luxembourg) S.A. - A limited company under Luxembourg law authorised by ministerial order on 2 May Trade Register Luxembourg section B #22663 Swiss Life 25, route d Arlon L-8009 Strassen B.P L-1020 Luxembourg T F L2S communication