Condensed Consolidated Financial Statements. Contents

Transcription

1 First-Half Financial Report 2017

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3 3 Condensed Consolidated Financial Statements Contents 4 Condensed Consolidated Statement of Income (unaudited) 5 Condensed Consolidated Statement of Comprehensive Income (unaudited) 6 Condensed Consolidated Balance Sheet (unaudited) 8 Condensed Consolidated Statement of Cash Flows (unaudited) 9 Condensed Consolidated Statement of Changes in Equity (unaudited) 10 Condensed Notes to the Consolidated Financial Statements (unaudited) 10 1 General Information 10 2 Summary of Significant Accounting Policies 12 3 Segment Information 19 4 Contracts for the Account and Risk of the Swiss Life Group s Customers 20 5 Premiums, Policy Fees and Deposits Received 22 6 Details of Certain Items in the Consolidated Statement of Income 26 7 Income Taxes 26 8 Financial Assets at Fair Value through Profit or Loss 27 9 Financial Assets Available for Sale Loans and Receivables Intangible Assets including Intangible Insurance Assets Investment and Unit-Linked Contracts Borrowings Insurance Liabilities Employee Benefits Fair Value of Financial Instruments 42 Review Report

4 4 Condensed Consolidated Financial Statements Condensed Consolidated Statement of Income (unaudited) Consolidated statement of income for the 6 months ended 30 June Notes 2017 HY 2016 HY INCOME Premiums earned on insurance contracts Premiums earned on investment contracts with discretionary participation Premiums ceded to reinsurers Net earned premiums Policy fees earned on insurance contracts 9 10 Policy fees earned on investment and unit-linked contracts Net earned policy fees Commission income Investment income 4, Net gains/losses on financial assets 4, Net gains/losses on financial instruments at fair value through profit or loss 4, Net gains/losses on investment property Share of profit or loss of associates Other income TOTAL INCOME EXPENSES Benefits and claims under insurance contracts Benefits and claims under investment contracts with discretionary participation Benefits and claims recovered from reinsurers Net insurance benefits and claims Policyholder participation Interest expense Commission expense Employee benefits expense Depreciation and amortisation expense Impairment of property and equipment and intangible assets 0 Other expenses TOTAL EXPENSES PROFIT FROM OPERATIONS Borrowing costs PROFIT BEFORE INCOME TAX Income tax expense NET PROFIT Net profit attributable to equity holders of Swiss Life Holding non-controlling interests 3 1 NET PROFIT Earnings per share attributable to equity holders of Swiss Life Holding Basic earnings per share (in CHF) Diluted earnings per share (in CHF)

5 5 Condensed Consolidated Financial Statements Condensed Consolidated Statement of Comprehensive Income (unaudited) Consolidated statement of comprehensive income for the 6 months ended 30 June 2017 HY 2016 HY NET PROFIT OTHER COMPREHENSIVE INCOME ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT Exchange differences on translating foreign operations Net investment hedges Financial assets available for sale Cash flow hedges Financial assets reclassified to loans Share of other comprehensive income of associates 0 0 Adjustments relating to items that may be reclassified: Policyholder participation Shadow accounting Income tax TOTAL ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT Revaluation surplus on investment property 2 0 Remeasurements on defined benefit pension liability Adjustments relating to items that will not be reclassified: Policyholder participation Shadow accounting 0 0 Income tax 6 35 TOTAL NET OTHER COMPREHENSIVE INCOME TOTAL NET COMPREHENSIVE INCOME Total net comprehensive income attributable to equity holders of Swiss Life Holding non-controlling interests 4 1 TOTAL NET COMPREHENSIVE INCOME

6 6 Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheet (unaudited) Consolidated balance sheet Notes ASSETS Cash and cash equivalents Derivatives Assets held for sale Financial assets at fair value through profit or loss Financial assets available for sale Loans and receivables Financial assets pledged as collateral Investment property Investments in associates Reinsurance assets Property and equipment Intangible assets including intangible insurance assets Current income tax assets Deferred income tax assets Other assets TOTAL ASSETS

7 7 Condensed Consolidated Financial Statements Consolidated balance sheet Notes LIABILITIES AND EQUITY LIABILITIES Derivatives Investment and unit-linked contracts Borrowings Other financial liabilities Insurance liabilities Policyholder participation liabilities Employee benefit liabilities Current income tax liabilities Deferred income tax liabilities Provisions Other liabilities TOTAL LIABILITIES EQUITY Share capital Share premium Treasury shares Accumulated other comprehensive income Retained earnings TOTAL SHAREHOLDERS EQUITY Non-controlling interests TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

8 8 Condensed Consolidated Financial Statements Condensed Consolidated Statement of Cash Flows (unaudited) Consolidated statement of cash flows for the 6 months ended 30 June Notes 2017 HY 2016 HY TOTAL NET CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Capital contributions to investments in associates 11 Sales of investments in associates 1 Dividends received from associates 2 0 Purchases of property and equipment Sales of property and equipment 5 3 Purchases of computer software and other intangible assets 5 6 Disposals of subsidiaries, net of cash and cash equivalents 51 TOTAL NET CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Issuance of debt instruments Redemption of debt instruments Distribution out of capital contribution reserve Sales of treasury shares 0 0 Borrowing costs paid Dividends paid to non-controlling interests 1 1 TOTAL NET CASH FLOWS FROM FINANCING ACTIVITIES TOTAL CHANGE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents as at 1 January Foreign currency differences Total change in cash and cash equivalents CASH AND CASH EQUIVALENTS AS AT END OF PERIOD

9 9 Condensed Consolidated Financial Statements Condensed Consolidated Statement of Changes in Equity (unaudited) Consolidated statement of changes in equity for the 6 months ended 30 June 2017 Accumulated other Total Non- Share Share Treasury comprehen- Retained shareholders controlling Notes capital premium shares sive income earnings equity interests Total equity Balance as at 1 January Total net comprehensive income Distribution out of capital contribution reserve Conversion of convertible debt Equity-settled share-based payments Sales of treasury shares Allocation of treasury shares under equity compensation plans In-kind contributions from non-controlling interests Dividends 1 1 BALANCE AS AT END OF PERIOD Consolidated statement of changes in equity for the 6 months ended 30 June 2016 Accumulated other Total Non- Share Share Treasury comprehen- Retained shareholders controlling capital premium shares sive income earnings equity interests Total equity Balance as at 1 January Total net comprehensive income Distribution out of capital contribution reserve Conversion of convertible debt Equity-settled share-based payments Sales of treasury shares Allocation of treasury shares under equity compensation plans Dividends 1 1 BALANCE AS AT END OF PERIOD

10 10 Condensed Consolidated Financial Statements Condensed Notes to the Consolidated Financial Statements (unaudited) 1 General Information The Swiss Life Group is one of Europe s leading comprehensive life and pensions and financial solutions providers. In its core markets of Switzerland, France and Germany, Swiss Life offers individuals and corporations comprehensive and individual advice plus a broad range of own and partner products through its sales force and distribution partners such as brokers and banks. Swiss Life Select, tecis, Horbach, Proventus and Chase de Vere advisors choose suitable products for customers from the market according to the Best Select approach. Swiss Life Asset Managers offers institutional and private investors access to investment and asset management solutions. Swiss Life provides multinational corporations with employee benefits solutions and high net worth individuals with structured life and pensions products. Distribution out of capital contribution reserve For the 2016 financial year, a distribution was made to the shareholders of Swiss Life Holding Ltd (hereinafter referred to as Swiss Life Holding ) from the capital contribution reserve instead of a dividend payment from profit. This amounted to CHF 356 million (CHF per registered share) and was paid in the first half of Summary of Significant Accounting Policies The half-year financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. The accounting policies used in the preparation of the interim financial statements are consistent with those used in the financial statements for the year ended 31 December 2016, except for the changes in accounting policies as described below. These interim financial statements should be read in conjunction with the 2016 annual financial statements. Figures may not add up exactly due to rounding.

11 11 Condensed Consolidated Financial Statements Changes in accounting policies The Swiss Life Group adopted the amendments to IAS 7 Statement of Cash Flows as at 1 January The amendments improve the information provided to users of financial statements about an entity s financing activities. A reconciliation between the opening and closing balances of liabilities arising from financing activities is provided in Note 13 Borrowings. Other new or amended standards and interpretations did not have an impact on the consolidated financial statements. Reclassifications in the consolidated statement of income Costs of CHF 47 million relating to inventory property was reclassified from other income to other expenses in order to achieve gross presentation. The consolidated statement of income for the 6 months ended 30 June 2016 was adjusted accordingly. Related party transactions Transactions with subsidiaries were eliminated on consolidation. No major transactions with other related parties were entered into in the period under review. Functional and presentation currency Items included in the financial statements of the Group are mea sured using the currency of the primary economic environment in which the Group s entities operate (the functional currency ). The consolidated financial statements are presented in millions of Swiss francs (CHF), which is the Group s presentation currency. Foreign currency exchange rates Average 2017 HY Average 2016 HY 1 British pound (GBP) Czech koruna (CZK) Euro (EUR) Singapore dollar (SGD) US dollar (USD)

12 12 Condensed Consolidated Financial Statements 3 Segment Information Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by management (Corporate Executive Board) in deciding how to allocate resources and in assessing performance. The accounting policies for the segments are the same as those described in the Summary of Significant Accounting Policies section. Intersegmental services and transfers of assets and liabilities are treated as if the transactions were with third parties, i.e. at market prices applicable at the time of the transaction. Corporate costs were not allocated to the individual segments as they consist of general administrative expenses and head office expenses that relate to the Swiss Life Group as a whole. The reportable segments have been identified based on information about the components of the entity that management uses to make decisions about operating matters. The business is managed based on IFRS results. The information provided to management focuses on product lines and services. The organisational and management structure within the insurance business is geographical. The reportable segments have therefore been identified as follows: Switzerland France Germany International Asset Managers Other Switzerland, France, Germany and International primarily consist of life insurance operations and distribution units. The life insurance operations offer a broad range of life, pension, health, annuity and investment-type policies to both groups and individuals, including disability coverage. The Group s strategy focuses primarily on life and pensions in Switzerland, France and Germany and on cross-border business from Liechtenstein, Luxembourg and Singapore. These segments also include a number of companies which hold investments mainly pertaining to life insurance.

13 13 Condensed Consolidated Financial Statements International comprises the cross-border insurance operations in Liechtenstein, Luxembourg and Singapore, the Swiss Life Select units operating in Austria and the Czech Republic as well as Chase de Vere operating in the United Kingdom. Non-life operations involve operations in France and mainly include property and casualty, liability and motor insurance, accident and health insurance and payment protection insurance. Asset Managers refers to the management of assets for institutional clients and the Group s insurance business, as well as the provision of expert advice for such clients. Other refers principally to various finance and service companies, as well as payment protection insurance. The statement of income and the balance sheet for the segments are provided in the following pages.

14 14 Condensed Consolidated Financial Statements Statement of income for the 6 months ended 30 June 2017 Total before Switzer- Inter- Asset elimi- Elimiland France Germany national Managers Other nations nations Total INCOME Premiums earned on insurance contracts Premiums earned on investment contracts with discretionary participation Premiums ceded to reinsurers Net earned premiums Policy fees earned on insurance contracts Policy fees earned on investment and unit-linked contracts Net earned policy fees Commission income Investment income Net gains/losses on financial assets Net gains/losses on financial instruments at fair value through profit or loss Net gains/losses on investment property Share of profit or loss of associates Other income TOTAL INCOME of which intersegment EXPENSES Benefits and claims under insurance contracts Benefits and claims under investment contracts with discretionary participation Benefits and claims recovered from reinsurers Net insurance benefits and claims Policyholder participation Interest expense Commission expense Employee benefits expense Depreciation and amortisation expense Impairment of property and equipment and intangible assets Other expenses TOTAL EXPENSES of which intersegment SEGMENT RESULT Unallocated corporate costs 33 PROFIT FROM OPERATIONS 760 Borrowing costs 84 Income tax expense 152 NET PROFIT 524

15 15 Condensed Consolidated Financial Statements Statement of income for the 6 months ended 30 June 2016 Total before Switzer- Inter- Asset elimi- Elimiland France Germany national Managers Other nations nations Total INCOME Premiums earned on insurance contracts Premiums earned on investment contracts with discretionary participation Premiums ceded to reinsurers Net earned premiums Policy fees earned on insurance contracts Policy fees earned on investment and unit-linked contracts Net earned policy fees Commission income Investment income Net gains/losses on financial assets Net gains/losses on financial instruments at fair value through profit or loss Net gains/losses on investment property Share of profit or loss of associates Other income TOTAL INCOME of which intersegment EXPENSES Benefits and claims under insurance contracts Benefits and claims under investment contracts with discretionary participation Benefits and claims recovered from reinsurers Net insurance benefits and claims Policyholder participation Interest expense Commission expense Employee benefits expense Depreciation and amortisation expense Impairment of property and equipment and intangible assets Other expenses TOTAL EXPENSES of which intersegment SEGMENT RESULT Unallocated corporate costs 30 PROFIT FROM OPERATIONS 729 Borrowing costs 85 Income tax expense 143 NET PROFIT 500

16 16 Condensed Consolidated Financial Statements Balance sheet as at 30 June 2017 Total before Switzer- Inter- Asset elimi- Elimiland France Germany national Managers Other nations nations Total ASSETS Cash and cash equivalents Derivatives Assets held for sale Financial assets at fair value through profit or loss Financial assets available for sale Loans and receivables Financial assets pledged as collateral Investment property Investments in associates Reinsurance assets Property and equipment Intangible assets including intangible insurance assets Other assets SEGMENT ASSETS Income tax assets 82 TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES Derivatives Investment and unit-linked contracts Other financial liabilities Insurance liabilities Policyholder participation liabilities Employee benefit liabilities Provisions Other liabilities SEGMENT LIABILITIES Borrowings Income tax liabilities EQUITY TOTAL LIABILITIES AND EQUITY

17 17 Condensed Consolidated Financial Statements Balance sheet as at 31 December 2016 Total before Switzer- Inter- Asset elimi- Elimiland France Germany national Managers Other nations nations Total ASSETS Cash and cash equivalents Derivatives Assets held for sale Financial assets at fair value through profit or loss Financial assets available for sale Loans and receivables Financial assets pledged as collateral Investment property Investments in associates Reinsurance assets Property and equipment Intangible assets including intangible insurance assets Other assets SEGMENT ASSETS Income tax assets 80 TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES Derivatives Investment and unit-linked contracts Other financial liabilities Insurance liabilities Policyholder participation liabilities Employee benefit liabilities Provisions Other liabilities SEGMENT LIABILITIES Borrowings Income tax liabilities EQUITY TOTAL LIABILITIES AND EQUITY

18 18 Condensed Consolidated Financial Statements Premiums and policy fees from external customers Net earned premiums Net earned policy fees 2017 HY 2016 HY 2017 HY 2016 HY LIFE Individual life Group life TOTAL LIFE NON-LIFE Accident and health 5 6 Property, casualty and other TOTAL NON-LIFE TOTAL

19 19 Condensed Consolidated Financial Statements 4 Contracts for the Account and Risk of the Swiss Life Group s Customers Assets relating to certain life insurance and investment contracts are managed for the account and risk of the Swiss Life Group s customers (separate account/unit-linked contracts, private placement life insurance). They are segregated and managed to meet specific investment objectives of the policyholders. The assets back the insurance liabilities and the financial liabilities arising from these contracts. The fair values of the liabilities reflect the fair values of the assets. Certain contracts with unit-linking features contain financial and insurance guarantees. The liabilities relating to these guarantees are included in financial liabilities and insurance liabilities, respectively. Assets for the account and risk of the Swiss Life Group s customers Cash and cash equivalents Derivatives 0 0 Financial assets at fair value through profit or loss Debt securities Equity securities Investment funds Other 2 2 TOTAL ASSETS FOR THE ACCOUNT AND RISK OF THE SWISS LIFE GROUP S CUSTOMERS Liabilities linked to assets for the account and risk of the Swiss Life Group s customers Notes Unit-linked contracts Investment contracts Insurance liabilities TOTAL LIABILITIES LINKED TO ASSETS FOR THE ACCOUNT AND RISK OF THE SWISS LIFE GROUP S CUSTOMERS Financial result for the 6 months ended 30 June Assets and liabilities Assets and liabilities for the account and risk of the for the account and risk of the Swiss Life Group Swiss Life Group s customers Total Notes 2017 HY 2016 HY 2017 HY 2016 HY 2017 HY 2016 HY Investment income Net gains/losses on financial assets Net gains/losses on financial instruments at fair value through profit or loss Net gains/losses on investment property Share of profit or loss of associates FINANCIAL RESULT

20 20 Condensed Consolidated Financial Statements 5 Premiums, Policy Fees and Deposits Received Written premiums 2017 HY 2016 HY Direct Assumed GROSS WRITTEN PREMIUMS Ceded NET WRITTEN PREMIUMS Earned premiums 2017 HY 2016 HY Direct Assumed GROSS EARNED PREMIUMS Ceded NET EARNED PREMIUMS Written policy fees 2017 HY 2016 HY Direct GROSS WRITTEN POLICY FEES Ceded NET WRITTEN POLICY FEES

21 21 Condensed Consolidated Financial Statements Earned policy fees 2017 HY 2016 HY Direct GROSS EARNED POLICY FEES Ceded NET EARNED POLICY FEES Under the accounting principles adopted, deposits received under insurance and investment contracts for which deposit accounting is used are not recognised as income: 2017 HY 2016 HY Gross written premiums and policy fees Deposits received under insurance and investment contracts GROSS WRITTEN PREMIUMS, POLICY FEES AND DEPOSITS RECEIVED

22 22 Condensed Consolidated Financial Statements 6 Details of Certain Items in the Consolidated Statement of Income Commission income 2017 HY 2016 HY Brokerage commissions Asset management commissions Other commissions and fees TOTAL COMMISSION INCOME Investment income 2017 HY 2016 HY Interest income on financial assets available for sale Interest income on loans and receivables Other interest income 20 0 Dividend income on financial assets available for sale Net income on investment property TOTAL INVESTMENT INCOME Net gains/losses on financial assets 2017 HY 2016 HY Sale of financial assets available for sale loans Net gains/losses from sales Impairment losses on debt instruments available for sale 0 3 equity instruments available for sale 6 34 loans and receivables 0 4 Impairment losses on financial assets 6 41 Foreign currency gains/losses TOTAL NET GAINS/LOSSES ON FINANCIAL ASSETS

23 23 Condensed Consolidated Financial Statements Net gains/losses on financial instruments at fair value through profit or loss 2017 HY 2016 HY Currency derivatives Interest rate derivatives Equity derivatives Other derivatives 30 9 Financial assets designated as at fair value through profit or loss Associates at fair value through profit or loss 1 Investment contracts without discretionary participation Non-controlling interests in investment funds Other financial liabilities 0 Assets for the account and risk of the Swiss Life Group s customers Liabilities linked to assets for the account and risk of the Swiss Life Group s customers TOTAL NET GAINS/LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Other income 2017 HY 2016 HY Realised gains/losses on sales of subsidiaries and other assets 30 1 Revenue from sale of inventory property Other foreign currency gains/losses Other 13 7 TOTAL OTHER INCOME Net insurance benefits and claims 2017 HY 2016 HY Benefits and claims under insurance contracts Life benefits and claims paid, gross Change in liability for future life policyholder benefits, gross Non-life claims paid, gross Change in reserve for non-life claims, gross Benefits and claims recovered from reinsurers Net benefits and claims under insurance contracts Benefits and claims under investment contracts with discretionary participation Life benefits and claims paid, gross Change in liability for future life policyholder benefits, gross Net benefits and claims under investment contracts with discretionary participation TOTAL NET INSURANCE BENEFITS AND CLAIMS

24 24 Condensed Consolidated Financial Statements Interest expense 2017 HY 2016 HY Interest expense on deposits 3 4 Interest expense on investment contracts Interest expense on deposits under insurance contracts Other interest expense 6 14 TOTAL INTEREST EXPENSE Commission expense 2017 HY 2016 HY Insurance agent and broker commissions Asset management and banking commissions Other commissions and fees TOTAL COMMISSION EXPENSE Employee benefits expense 2017 HY 2016 HY Wages and salaries Social security Defined benefit plans Defined contribution plans 1 1 Other employee benefits TOTAL EMPLOYEE BENEFITS EXPENSE

25 25 Condensed Consolidated Financial Statements Depreciation and amortisation expense Notes 2017 HY 2016 HY Depreciation of property and equipment Amortisation of present value of future profits (PVP) Amortisation of deferred acquisition costs (DAC) Amortisation of deferred origination costs (DOC) Amortisation of other intangible assets TOTAL DEPRECIATION AND AMORTISATION EXPENSE Other expenses 2017 HY 2016 HY Marketing and advertising Information technology and systems Rental, maintenance and repair Professional services Cost of inventory property sold Premium taxes and other non-income taxes Other TOTAL OTHER EXPENSES

26 26 Condensed Consolidated Financial Statements 7 Income Taxes Income tax expense 2017 HY 2016 HY Current income tax expense Deferred income tax expense TOTAL INCOME TAX EXPENSE Financial Assets at Fair Value through Profit or Loss Notes Debt securities Equity securities 9 9 Investment funds debt Investment funds equity Investment funds balanced Real estate funds Infrastructure investments Private equity and hedge funds 5 6 Financial assets for the account and risk of the Swiss Life Group s customers TOTAL FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS

27 27 Condensed Consolidated Financial Statements 9 Financial Assets Available for Sale Cost/amortised cost Net unrealised gains/losses Fair value (carrying amount) Debt securities Senior secured loans Equity securities Investment funds debt Investment funds equity Investment funds balanced Real estate funds Private equity Hedge funds TOTAL FINANCIAL ASSETS AVAILABLE FOR SALE Loans and Receivables Cost/amortised cost Gross amount Allowance for impairment losses (carrying amount) Notes LOANS Mortgages Corporate and other loans Note loans Debt securities previously classified as available for sale Other debt securities classified as loans TOTAL LOANS RECEIVABLES Insurance receivables Reinsurance receivables Accrued income Settlement accounts Other receivables TOTAL RECEIVABLES TOTAL LOANS AND RECEIVABLES

28 28 Condensed Consolidated Financial Statements 11 Intangible Assets including Intangible Insurance Assets Intangible insurance assets Other intangible assets TOTAL INTANGIBLE ASSETS Intangible insurance assets Present value of future profits from acquired insurance Deferred acquisition costs Deferred origination costs portfolios (PVP) (DAC) (DOC) Total 2017 HY 2016 YE 2017 HY 2016 YE 2017 HY 2016 YE 2017 HY 2016 YE Balance as at 1 January Additions Amortisation Effect of shadow accounting Disposals 0 0 Foreign currency translation differences BALANCE AS AT END OF PERIOD Present value of future profits (PVP) The present value of future profits relates to portfolios of insurance contracts and investment contracts with discretionary participation acquired in a business combination or transfer of portfolios. It relates to contracts acquired in Germany and is amortised in proportion to gross profits or margins over the effective life of the acquired insurance and investment contracts. Deferred acquisition costs (DAC) Certain acquisition costs relating to new and renewed insurance contracts and investment contracts with discretionary participation are deferred. Deferred origination costs (DOC) These costs are recoverable and are directly attributable to securing the right to investment management services within investment contract policies. They relate to contracts in Switzerland, Luxembourg and Singapore.

29 29 Condensed Consolidated Financial Statements Other intangible assets for the 6 months ended June 2017 Customer Computer Brands and Goodwill relationships software other Total COST Balance as at 1 January Additions Disposals Foreign currency translation differences BALANCE AS AT END OF PERIOD ACCUMULATED AMORTISATION AND IMPAIRMENT Balance as at 1 January Amortisation Disposals Foreign currency translation differences BALANCE AS AT END OF PERIOD TOTAL OTHER INTANGIBLE ASSETS AS AT END OF PERIOD Includes elimination of fully amortised/impaired assets. Other intangible assets for the year 2016 Customer Computer Brands and Goodwill relationships software other Total COST Balance as at 1 January Additions Additions from business combinations Additions from internal software development 0 0 Disposals Foreign currency translation differences BALANCE AS AT END OF PERIOD ACCUMULATED AMORTISATION AND IMPAIRMENT Balance as at 1 January Amortisation Impairment losses 4 4 Disposals Foreign currency translation differences BALANCE AS AT END OF PERIOD TOTAL OTHER INTANGIBLE ASSETS AS AT END OF PERIOD Includes elimination of fully amortised/impaired assets.

30 30 Condensed Consolidated Financial Statements Goodwill Goodwill represents the excess of the fair value of the consideration transferred and the amount of any non-controlling interest recognised, if applicable, over the fair value of the assets and liabilities recognised at the date of acquisition. Goodwill includes amounts relating to both the Swiss Life Group s interest and the non-controlling interest in the business acquired in the case where non-controlling interest is measured at fair value. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on associates is included in the carrying amount of the investment. The acquisition of MAYFAIR CAPITAL INVESTMENT MANAGEMENT LIMITED, London, in November 2016 led to the recognition of goodwill of CHF 17 million. The goodwill has been allocated to the Asset Managers segment. Goodwill relating to Lloyd Continental has been allocated to the France segment. Goodwill relating to CapitalLeben has been allocated to the International segment. Goodwill relating to Corpus Sireo has been allocated to the Asset Managers segment. Of the goodwill relating to other acquisitions, CHF 19 million ( : CHF 18 million) have been allocated to the France segment and CHF 25 million ( : CHF 25 million) to the Asset Managers segment as at 30 June Lloyd Continental CapitalLeben Corpus Sireo Other Net carrying amount of goodwill Goodwill relating to Swiss Life Select (acquisitions of AWD Holding AG and Deutsche Proventus AG) has been allocated to the Switzerland, Germany and International segments.

31 31 Condensed Consolidated Financial Statements Goodwill relating to Swiss Life Select Switzerland Germany International Total Net carrying amount of goodwill Customer relationships The acquisition of MAYFAIR CAPITAL INVESTMENT MANAGEMENT LIMITED, London, in November 2016 led to the recognition of customer relationships of CHF 13 million. As at 30 June 2017, customer relationships comprise customer relationships relating to Swiss Life Select: CHF 4 million ( : CHF 4 million), which were allocated to the Switzerland segment. The France segment comprises customer relationships of CHF 14 million ( : CHF 15 million) and the Asset Managers segment of CHF 47 million ( : CHF 51 million). Customer relationships were included in the impairment test of the respective cash-generating unit. Brands and other Comprises the brands Corpus Sireo and Mayfair.

32 32 Condensed Consolidated Financial Statements 12 Investment and Unit-Linked Contracts Gross Ceded Net Notes Unit-linked contracts Investment contracts with discretionary participation features (DPF) Investment contracts without DPF at fair value through profit or loss Investment contracts without DPF at amortised cost TOTAL INVESTMENT AND UNIT-LINKED CONTRACTS of which for the account and risk of the Swiss Life Group s customers unit-linked contracts investment contracts

33 33 Condensed Consolidated Financial Statements 13 Borrowings Notes Hybrid debt Convertible debt Senior bonds Mortgage loans Other 1 1 TOTAL BORROWINGS Reconciliation of liabilities arising from financing activities for the 6 months ended 30 June 2017 Hybrid debt Convertible debt Senior bonds Mortgage loans Other Total Balance as at 1 January Cash flows Issues Redemptions Non-cash changes Premium/discount amortisation Conversions and other changes Foreign currency translation differences BALANCE AS AT END OF PERIOD Hybrid debt EUR 590 million in fixed to floating rate subordinated perpetual notes issued in 2007 were redeemed on the first call date on 12 April Convertible debt bonds were converted into Swiss Life Holding shares which led to an increase in share capital of CHF 2 million and share premium of CHF 90 million.

34 34 Condensed Consolidated Financial Statements 14 Insurance Liabilities Gross Ceded Net Claims under non-life insurance contracts Unearned premiums non-life Claims under life insurance contracts Future life policyholder benefits Unearned premiums life Deposits under insurance contracts TOTAL INSURANCE LIABILITIES of which for the account and risk of the Swiss Life Group s customers Unearned premiums Unearned premiums represent the portion of the premiums written relating to the unexpired terms of coverage. Claims under life insurance contracts Claims under life insurance contracts represent the liability for unpaid portions of claims incurred. It includes an estimate of the liability for claims incurred but not reported (IBNR). The measurement at reporting date is a best estimate of ultimate future claim payments. Claims under non-life insurance contracts Claims under non-life insurance contracts represent the liability needed to provide for the estimated ultimate cost of settling claims relating to insured events that have occurred on or before the financial reporting date. The estimated liability includes the amount that will be required for future payments on both claims that have been reported to the insurer and claims relating to insured events that have occurred but have not been reported to the insurer as at the date the liability is estimated. Loss development tables are generally used to make these estimates.

35 35 Condensed Consolidated Financial Statements Future life policyholder benefits and claims For participating contracts where the contribution principle applies to the allocation of the policyholder bonus, future life policy benefit liabilities are determined by using the net-level-premium method on the basis of appropriate mortality and interest rate assumptions. The valuation of other long-duration contracts is also based on the net-level-premium method with actuarial assumptions as to mortality, persistency, expenses and investment returns including provisions for adverse deviation. Deposits under insurance contracts For investment-type contracts with significant insurance risk, savings premiums collected are reported as deposits (deposit accounting).

36 36 Condensed Consolidated Financial Statements 15 Employee Benefits Employee benefit liabilities Employee benefit liabilities consist of gross defined benefit liabilities other employee benefit liabilities TOTAL EMPLOYEE BENEFIT LIABILITIES Amounts recognised as defined benefit assets/liabilities Present value of defined benefit obligation Fair value of plan assets NET DEFINED BENEFIT LIABILITY Insurance contracts not eligible as plan assets under IFRS NET DEFINED BENEFIT SURPLUS (+)/DEFICIT ( ) (ECONOMIC VIEW) The net defined benefit liability consists of gross defined benefit liabilities gross defined benefit assets To assess the funding situation of the defined benefit plans in total, plan assets as well as insurance contracts not eligible as plan assets under IFRS must be set off against the present value of the defined benefit obligation. The total deficit taking into consideration insurance contracts not eligible as plan assets under IFRS amounted to CHF 328 million as at 30 June 2017 ( : deficit of CHF 376 million).

37 37 Condensed Consolidated Financial Statements 16 Fair Value of Financial Instruments For reporting purposes, a fair value hierarchy is established that categorises the inputs to valuation techniques used to measure fair value into level 1, 2 or 3. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). The fair value of assets or liabilities included in level 1 is based on unadjusted quoted prices in active markets for identical assets or liabilities. The fair value of assets or liabilities that are not traded in an active market is determined using valuation techniques. If all significant inputs to these valuation techniques are observable (directly and indirectly) in the market, the assets or liabilities are included in level 2. If one or more significant inputs to these valuation techniques are not observable in the market, the assets or liabilities are included in level 3. Such inputs may include information that is derived through extrapolation not substantiated by observable market data or that reflects own assumptions about what market participants would use in pricing the asset or liability. Financial instruments measured at fair value on a recurring basis As a general rule, fair values of financial instruments are based on quoted prices sourced from well-known independent price providers such as Bloomberg. Model-based level 2 and level 3 valuations of financial instruments are applied to a minority of the assets.

38 38 Condensed Consolidated Financial Statements Fair value hierarchy Valuation technique Valuation technique Quoted prices observable inputs unobservable inputs (level 1) (level 2) (level 3) Total FINANCIAL ASSETS Derivatives Currency Interest rate Equity Total derivatives Debt instruments Governments and supranationals Corporates Other Total debt instruments Equity instruments Equity securities Investment funds Alternative investments Total equity instruments Assets for the account and risk of the Swiss Life Group s customers TOTAL FINANCIAL ASSETS INVESTMENTS IN ASSOCIATES Associates at fair value through profit or loss FINANCIAL LIABILITIES Derivatives Currency Interest rate Equity Other Total derivatives Investment contracts without discretionary participation Unit-linked contracts Non-controlling interests in investment funds TOTAL FINANCIAL LIABILITIES The fair value hierarchy of assets for the account and risk of the Swiss Life Group s customers is consistent with the categorisation of assets for the account and risk of the Swiss Life Group. For a detailed description of the valuation techniques and significant inputs used in the fair value measurement of financial instruments, refer to the Consolidated Financial Statements 2016, Note 30 Fair Value Measurements. Reconciliation of fair value measurements categorised within level 3 The following tables show a reconciliation from the opening balances to the closing balances for fair value measurements categorised within level 3 of the fair value hierarchy.

39 39 Condensed Consolidated Financial Statements Assets measured at fair value based on level 3 for the 6 months ended 30 June 2017 Financial assets for the account and risk of the Swiss Life Group s Derivatives Debt instruments Equity instruments customers Total At fair At fair value value through through profit Available profit Available or loss for sale or loss 1 for sale Balance as at 1 January Total gains/losses recognised in profit or loss Total gains/losses recognised in other comprehensive income Additions Disposals Transfers into level Foreign currency translation differences BALANCE AS AT END OF PERIOD Unrealised gains/losses recognised in profit or loss for assets held at the end of the period Including associates at fair value through profit or loss. Assets measured at fair value based on level 3 for the 6 months ended 30 June 2016 Financial assets for the account and risk of the Swiss Life Group s Derivatives Debt instruments Equity instruments customers Total At fair At fair value value through through profit Available profit Available or loss for sale or loss 1 for sale Balance as at 1 January Total gains/losses recognised in profit or loss Total gains/losses recognised in other comprehensive income Additions Disposals Transfers into level Foreign currency translation differences BALANCE AS AT END OF PERIOD Unrealised gains/losses recognised in profit or loss for assets held at the end of the period Including associates at fair value through profit or loss.