20 Borrowings

In CHF million 
Notes  31.12.200931.12.2008
Money market instruments
  2327
Hybrid debt
  2 4872 677
Convertible debt
  3440
Bank loans
  184377
Finance lease obligations
  32
Total borrowings
32  2 7313 123


Hybrid debt

In 2009, hybrid debt was repurchased. The gain on the repurchase, calculated as the difference between the carrying amount and the amount paid to extinguish the liability, amounted to CHF 95 million and is included in other income.

Swiss Life AG renounced in 2009 the right to call on the first call date the privately placed subordinated step-up loan issued in 1999.

On 12 April 2007, ELM B.V., a Dutch repackaging vehicle, issued EUR 700 million in fixed/floating rate subordinated perpetual notes at a price of par to finance loan notes granted to Swiss Life AG, which are guaranteed by Swiss Life Holding. Swiss Life AG may repay the loan notes in full on 12 April 2017 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 12 April 2007 to 12 April 2017 at a rate of 5.849% p.a. If the notes are not redeemed on 17 April 2017, the interest will be the aggregate of 2.5% and Euribor 3-month deposits.

On 16 November 2005, J.P. Morgan Bank Luxembourg S.A. issued on a fiduciary basis EUR 350 million fixed/ floating rate subordinated perpetual notes at a price of 99.423% to fund a loan made by it to Swiss Life AG. Swiss Life AG may repay the loan in full on 16 November 2015 or on any interest payment date thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority. The notes bear interest from 16 November 2005 to 16 November 2015 at a rate of 5% p.a. If the notes are not redeemed on 16 November 2015, the interest rate will be the aggregate of 2.43% and Euribor for 3-month deposits.

In 2001, Swiss Life AG issued a subordinated step-up loan of EUR 100 million with a time to maturity of 20 years that can be repaid after 10 years. The interest rate equals Euribor plus a margin of 1.75% for the first ten years and 2.75% thereafter.

In March 1999, Swiss Life AG privately placed a subordinated perpetual step-up loan comprising three simultaneous advances of EUR 443 million (at a rate of interest of Euribor plus a margin of 1.05%, increasing by 100 basis points as from April 2009), CHF 290 million (at a rate of interest of Libor plus a margin of 1.05%, increasing by 100 basis points as from April 2009) and EUR 215 million (at a rate of interest of 5.3655%, as from October 2009 the rate of interest will be an aggregate of Euribor plus a margin of 2.05%). Swiss Life AG can next call the EUR 443 million floating rate loan and the CHF 290 million floating rate loan on 6 April 2014 and the EUR 215 million loan on 6 October 2014 or at five-year intervals thereafter, upon notice and subject to the consent of the Swiss Financial Market Supervisory Authority.

Amounts in CHF million (if not noted otherwise) 
  Nominal value
in year of issue
Nominal value
at 31.12.2009

Interest rate

Year of issue
Optional
redemption
Carrying
amount
Carrying
amount
Issuer  31.12.200931.12.2008
Swiss Life AG 1
  EUR 700EUR 5905.849%200720178711 039
Swiss Life AG 2
  EUR 350EUR 3435.000%20052015499517
  Euribor
Swiss Life AG
  EUR 100EUR 100+1.750%20012011148149
  Euribor
Swiss Life AG
  EUR 443EUR 443+2.050%19992014657660
  Libor
Swiss Life AG
  CHF 290CHF 290+2.050%19992014290290
  Euribor
Swiss Life AG
  EUR 215EUR 15+2.050%199920142222
Total
  2 4872 677
1 Hybrid loan notes granted by ELM B.V.
2 Hybrid bank loan originally granted by J.P. Morgan Bank Luxembourg S.A.


Convertible debt

On 10 June 2004, Swiss Life Holding issued CHF 317 million in 0.625% convertible bonds due in 2010. The bonds may be converted into registered shares of Swiss Life Holding at any time at the option of the holder. Bondholders exercising their conversion right are entitled to receive the number of shares equal to the principal amount of CHF 1000 divided by the original conversion price of CHF 209.625 (subject to adjustments, with effect from 29 July 2008 conversion price of CHF 200.20).

Swiss Life Holding has the option to redeem all outstanding bonds at their principal amount (together with unpaid accrued interest) at any time on or after 25 June 2007, provided that the closing price of the Swiss Life Holding share was at least 130% of the conversion price for 20 consecutive trading days. The early redemption at the option of Swiss Life Holding is subject to a period of 30 days’ notice to the bondholders.

The proceeds received from the issue of the convertible bonds have been split between a liability component and an equity component. The fair value of the liability component at issue date amounted to CHF 260 million and was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount of CHF 57 million represents the value of the option to convert the instrument into Swiss Life Holding shares (SLH shares) and is included in share premium. Transaction costs of CHF 6 million were deducted from the liability and costs of CHF 1 million were recognised in share premium.

In 2009, CHF 8 million in convertible debt was repurchased. No convertible bonds were converted in 2009 (2008: conversion into 124 115 SLH shares with a corresponding increase in share capital totalling CHF 3 million and an increase in share premium totalling CHF 20 million).

Bank loans

On 25 July 2008, Swiss Life Insurance Finance Ltd entered into a EUR 500 million loan agreement with a syndicate of banks. The syndicated loan has a three-year maturity and was originally split into a EUR 200 million fully drawn loan bearing an interest rate of Euribor plus a margin of 0.70% and a EUR 300 million undrawn credit facility against a commitment fee of 0.225%. In 2009, EUR 100 million was repaid.

Amounts in CHF million 
 
Currency

Interest rate

Maturity
Carrying
amount
Carrying
amount
Type  31.12.200931.12.2008
Mortgage loan
  CHF2.77%200945
Mortgage loan
  CHF1.09%20103839
  Euribor
Syndicated loan
  EUR+0.70%2011146293
Total
  184377


Finance lease obligations
In CHF million 
  Minimum lease paymentsPresent value of minimum lease payments
  31.12.200931.12.200831.12.200931.12.2008
Not later than 1 year
  0202
Later than 1 year and not later than 5 years
  43
Total
  4232
 
Future finance charges
  10


 
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