CREDIT RISKS | Creditors face the risk that counterparties might not meet their obligations. For instance, this could involve a failure to make outstanding interest payments on bonds, loans or mortgages. Credit risks arise in connection with investments and, to a lesser degree, in reinsurance. By issuing Group-wide guidelines on borrowers creditworthiness and requesting guarantees, Swiss Life endeavours to prevent defaults and to adequately offset risks taken.

Outstanding positions on derivative transactions with financial institutions are regularly evaluated by Swiss Life. The counterparties provide deficiency payments, which limit the net credit risk per counterparty. For individual bonds, the default risk is reduced by purchasing a hedge. The risks on short-term investments are spread between government bonds, central bank bills and multiple banks. The latter category is mainly protected by the deposit of securities by banks.

Swiss Life places around 60% of its investments into bonds (fair value basis), of which almost 60% represent AAA-rated paper. The remaining portion of the bond portfolio is broadly diversified, with strict limits for lower-rated bonds (BBB or below).