Credit risk | Creditors face the risk of counterparties not living up to their obligations. This can for instance involve failure to pay outstanding interest in the case of bonds, loans or mortgages. Credit risk arises in connection with investments and, to a lesser degree, in reinsurance business. Swiss Life strives to prevent such loss of income by setting Group-wide guidelines on the creditworthiness of borrowers and by requiring guarantees. It also strives to achieve an adequate return for the risks entered into. Outstanding positions in connection with derivative transactions with financial institutions are regularly evaluated. The counterparties provide deficiency payments, which limit the net credit risk per counterparty.
Bonds make up over half of Swiss Life’s investments. Of these, almost 60% are bonds with an AAA rating. The remaining part of the bond portfolio is broadly diversified, with strict limits for lower-rated bonds (BBB or lower).
