2 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 2008, except for the changes in accounting policies as described below.

These interim financial statements should be read in conjunction with the 2008 annual financial statements.

Changes in accounting policies | In March 2007, the International Accounting Standards Board issued a revised IAS 23 Borrowing Costs which removes the option of immediately recognising as an expense borrowing costs relating to assets which take a substantial period of time to get ready for use or sale. The revised Standard applies to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 1 January 2009. The revised Standard does not impact the Swiss Life Group, as it was already the Group’s accounting policy to capitalise borrowing costs directly attributable to the construction or acquisition of a qualifying asset as part of the cost of that asset.

In September 2007, the International Accounting Standards Board issued a revised version of IAS 1 Presentation of Financial Statements. The revised Standard gives preparers of financial statements the option of presenting income and expense items and components of other comprehensive income, either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensive income). This enables readers to analyse changes in equity resulting from transactions with owners in their capacity as owners (such as dividends) separately from “non-owner” changes (such as transactions with third parties). The revised Standard came into effect for the annual periods beginning on 1 January 2009. The Swiss Life Group has elected to present two separate statements: a separate income statement and a statement of comprehensive income.

As part of the annual improvement project, the International Accounting Standards Board issued an amendment to IAS 40 Investment Property and a consequential amendment to IAS 16 Property, Plant and Equipment in May 2008. Property under construction or development for future use as investment property falls within the scope of IAS 40. As the Swiss Life Group applies the fair value model for investment property, such property is measured at fair value. Where fair value of investment property under construction is not reliably measurable, the property is measured at cost until the date construction is completed or the date at which fair value becomes reliably measurable, whichever is earliest. The amendments apply for annual periods beginning on 1 January 2009. The adoption of this amendment led to a reclassification of property and equipment to investment property of CHF 92 million as at 1 January 2009.

In March 2009, the International Accounting Standards Board clarified the accounting treatment for embedded derivatives when reclassifying financial instruments. The amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and Measurement require the assessment of all embedded derivatives on reclassification of a financial asset out of the “at fair value through profit or loss” category. If necessary, the embedded derivatives are accounted for separately. The amendments apply retrospectively for annual periods ending on or after 30 June 2009. As the Swiss Life Group has not reclassified any financial assets out of the “at fair value through profit or loss” category, the amendments are not currently relevant.

In March 2009, the International Accounting Standards Board issued amendments to IFRS 7 Financial Instruments: Disclosures. The amendments relate to enhanced disclosures about fair value measurements and liquidity risk. One of the main changes it involves is that existing IFRS 7 fair value disclosures should be made separately for each class of financial instruments. A three-level hierarchy for fair values is established: level 1 – quoted prices; level 2 – observable inputs to fair value measurements; and level 3 – unobservable inputs to fair value measurements. A maturity analysis should be made for derivative financial liabilities. The amendments are effective for annual periods beginning on or after 1 January 2009. However, an entity will not be required to provide comparative information in the first year of application. The Swiss Life Group will apply the new disclosure requirements for the first time in the financial statements covering the annual period 2009.

The following amendments to Standards and new Interpretations are mandatory for the first time for the financial year beginning on 1 January 2009, but are not currently relevant for the Swiss Life Group:

IFRIC 13 Customer Loyalty Programmes

IFRS 2 Share-based Payment – Amendment relating to vesting conditions and cancellations

IAS 1 Presentation of Financial Statements and IAS 32 Financial Instruments: Presentation – Amendments relating to disclosure of puttable instruments and obligations arising on liquidation

IFRIC 15 Agreements for the construction of real estate

IFRIC 16 Hedges of a net investment in a foreign operation

Annual improvements to IFRS as published in May 2008, except for the amendment to IAS 40 Investment Property and IAS 16 Property, Plan and Equipment, described above.

Related Party Transactions | Transactions with subsidiaries have been eliminated on consolidation. No major transactions with other related parties have been entered into in the period under review.

Functional and presentation currency | Items included in the Group’s financial statements are measured 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

  30.06.200931.12.20082009 HY2008 HY
1 British pound (GBP)  1.79271.54131.68412.0745
1 Croatian kuna (HRK)  0.20990.20360.20430.2212
1 Czech koruna (CZK)  0.05880.05620.05570.0639
1 Euro (EUR)  1.52551.49151.50611.6060
100 Hungarian forint (HUF)  0.55980.56250.52200.6350
100 Polish zloty (PLN)  33.960035.940033.817046.0960
1 Romanian new leu (RON)  0.36290.37320.35740.4395
1 Singapore dollar (SGD)  0.74680.73450.75700.7569
1 Slovak koruna (SKK)  n. a.0.0495n. a.0.0500
1 US dollar (USD)  1.07991.06081.12931.0506