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 2009, except for the changes in accounting policies as described below.

These interim financial statements should be read in conjunction with the 2009 annual financial statements.

Changes in accounting policies — In January 2008, the International Accounting Standards Board issued a revised version of IFRS 3 Business Combinations and related revisions to IAS 27 Consolidated and Separate Financial Statements. One of the main changes is an option which has been added to IFRS 3 Business Combinations to permit the acquirer in business combinations in which control is achieved without buying all of the equity of the acquiree to recognise 100% of the goodwill, not just the acquirer’s portion of the goodwill (“full goodwill method”). The revised Standard requires that acquisition-related costs are expensed. Another change relates to partial disposals of an investment in a subsidiary while control is retained and to the acquisition of additional shares in a subsidiary after control was obtained. Such transactions are accounted for within equity. The amendments are effective for annual periods beginning on or after 1 July 2009. IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Revised) have been applied prospectively with effect from 1 January 2010 and therefore there is no impact on comparative periods in the 2010 consolidated financial statements.

In July 2008, the International Accounting Standards Board published Eligible Hedged Items (an amendment to IAS 39 Financial Instruments: Recognition and Measurement). The amendment provides clarification on how hedge accounting should be performed with regard to identifying inflation as a hedged risk and hedging with options. The amendment is effective for annual periods beginning on or after 1 July 2009. No impact on the consolidated financial statements arose from the adoption of this amendment.

The following amendments to Standards and new Interpretations are mandatory for the first time for the financial year beginning on 1 January 2010, but are not currently relevant for the Swiss Life Group:

IFRS 2 Share-based Payment – Group Cash-settled Share-based Payment Transactions

IFRIC 17 Distributions of Non-cash Assets to Owners

IFRIC 18 Transfers of Assets from Customers

Annual improvements to IFRS as published in April 2009

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
  30.06.2010 31.12.2009 Average 2010 HY Average 2009 HY
1 British pound (GBP)
  1.6126 1.6639 1.6524 1.6841
1 Croatian kuna (HRK)
  0.1836 0.2043 0.1972 0.2043
1 Czech koruna (CZK)
  0.0514 0.0564 0.0558 0.0557
1 Euro (EUR)
  1.3210 1.4837 1.4383 1.5061
100 Hungarian forint (HUF)
  0.4640 0.5480 0.5275 0.5220
100 Polish zloty (PLN)
  31.9608 36.0500 35.8379 33.8170
1 Romanian new leu (RON)
  0.3026 0.3523 0.3454 0.3574
1 Singapore dollar (SGD)
  0.7713 0.7348 0.7752 0.7570
1 US dollar (USD)
  1.0778 1.0300 1.0829 1.1293