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 2010, except for the changes in accounting policies as described below.

These interim financial statements should be read in conjunction with the 2010 annual financial statements.

Changes in accounting policies — In May 2010, the International Accounting Standards Board issued annual improvements to IFRS. The improvements have been effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate. An amendment to IFRS 7 Financial Instruments: Disclosures clarifies certain disclosures with regard to credit risk and quantitative disclosures. The amended disclosures will be reflected in the 2011 annual consolidated financial statements. An amendment to IAS 34 Interim Financial Reporting clarifies the disclosure of significant events and transactions. These changes, if any, are reflected in the present first-half financial report 2011.

In November 2009, an amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement was issued. The amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. The Interpretation has been effective for annual periods beginning on or after 1 January 2011. The Swiss Life Group is currently not affected by the amendment.

In November 2009, IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments was issued. The Interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. The Interpretation has been effective for annual periods beginning on or after 1 July 2010. The Swiss Life Group does not currently have such extinguishments.

In November 2009, amendments to IAS 24 Related Party Disclosures were issued by the International Accounting Standards Board. The amendments apply to annual periods beginning on or after 1 January 2011 and clarify and simplify the definition of a related party. The requirements for government-related entities to disclose details of all transactions with the government and other government-related entities are removed. The Swiss Life Group is currently not affected by these changes.

In October 2009, an amendment to IAS 32 Financial Instruments: Presentation was issued. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. Previously such rights issues were accounted for as derivative liabilities. Provided certain conditions are met, such rights issues are classified as equity under the amendment regardless of the currency in which the exercise price is denominated. The amendment has been effective for annual periods beginning on or after 1 February 2010. The Swiss Life Group does not currently have such rights issues.

The following amended Standards and Interpretations are not relevant to the Swiss Life Group:

IFRS 1 First-time Adoption of International Financial Reporting Standards – Limited exemption from comparative IFRS 7 disclosures for first-time adopters
Annual improvements as issued in May 2010, except for the amendments to IFRS 7 Financial Instruments: Disclosures and IAS 34 Interim Financial Reporting as discussed 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
  30.06.2011 31.12.2010 Average 2011 HY Average 2010 HY
1 British pound (GBP)
  1.3528 1.4560 1.4634 1.6524
1 Croatian kuna (HRK)
  n/a 0.1691 n/a 0.1972
1 Czech koruna (CZK)
  0.0502 0.0498 0.0522 0.0558
1 Euro (EUR)
  1.2217 1.2483 1.2713 1.4383
100 Hungarian forint (HUF)
  0.4594 0.4490 0.4714 0.5275
100 Polish zloty (PLN)
  30.6973 31.5608 32.1409 35.8379
1 Romanian new leu (RON)
  n/a 0.2916 n/a 0.3454
1 Singapore dollar (SGD)
  0.6854 0.7276 0.7195 0.7752
1 US dollar (USD)
  0.8420 0.9339 0.9051 1.0829