34 Guarantees and Commitments

In CHF million  
  31.12.2011 31.12.2010
Financial guarantees
  130 354
Loan commitments
  119 107
Private equity commitments
  266 331
Other capital commitments
  611 475
Operating lease commitments
  18 13
Contractual obligations to purchase or construct investment property
  329 247
Other contingent liabilities and commitments
  320 74
Total
  1 793 1 601


Future minimum lease payments under non-cancellable operating leases – lessee
In CHF million  
  31.12.2011 31.12.2010
Not later than 1 year
  1 3
Later than 1 year and not later than 5 years
  17 10
Total
  18 13


Guarantees

The Group has issued financial guarantees and transaction-related guarantees and similar instruments. Financial guarantees provide for specified payments to be made to reimburse the holder for a loss incurred in the event that a client fails to make payment when due.

Loan commitments

The Group has also entered into irrevocable commitments to extend credit in the form of loans and other instruments. They represent undrawn credit lines which are available to clients to secure their liquidity needs. With respect to credit risk, these commitments are contingent upon clients maintaining certain credit standards, and the Group monitors its exposure on a regular basis.

The total amount of credit commitments includes commitments to lend at fixed rates, which expose the Group to interest rate risk. These commitments are entered into for restricted periods of time. As at 31 December 2011, committed principal amounts stood at EUR 13 million and CHF 68 million (2010: EUR 4 million and CHF 52 million). The range of committed interest rates is 2.6% to 5.9% for commitments in euro and 1.0% to 3.2% for commitments in Swiss francs.

Private equity commitments

Private equity commitments represent unfunded commitments to make investments in direct private equity or private equity funds. Such commitments do not involve credit or market risk, as the Group purchases investments at market value at the time the commitments are invoked.

Operating lease commitments

The Group has entered into various operating leases as a lessee. Rental expenses recognised in income for these items totalled CHF 42 million for the year ended 31 December 2011 (2010: CHF 43 million). Minimum lease payments totalled CHF 42 million in 2011 (2010: CHF 43 million).

Other contingent Liabilities and commitments

Contractual obligations for repairs and maintenance of investment property amounted to CHF 69 million as at 31 December 2011, which are included in this line item (2010: CHF 60 million).

Legal proceedings

The Group is involved in various legal proceedings, claims and litigation generally relating to its insurance operations. The outcome of such current legal proceedings, claims and litigation could have a material effect on operating results or cash flows when resolved in a future period. However, in the opinion of the management these matters are adequately provided for as at the balance sheet date.

 

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