swiss life (luxembourg) s.a. · goal swiss life is a leading provider of pensions and long-term...

Going placesAnnual Report 2003

Swiss Life (Luxembourg) S.A.

Goal Swiss Life is a leading provider of pensions and long-term savings.

Mission We are committed to helping people create a financially secure future. For Life.

Values

Expertise: We offer first-class solutions for pensions and long-term savings. This expertise is based on our proven professional competence and many years of experience.

Proximity: We foster close relationships with our customersand partners and andeavour to understand their needs.This proximity enables us to provide optimum solutions tailored to their requirements.

Openness: We nurture open and direct dialogue both withinand outside of our organisation. This approach builds trust in the work we do.

Clarity: We communicate clearly and offer products and services that are comprehensible. This clarity gives our customers and partners a sense of security.

Commitment: We work with commitment and enthusiasm tohelp our customers, staff and shareholders achieve their goals.This commitment forms the basis of long-term partnerships,and enables us to meet our social responsibilities.

Openness. Being open to the new opens up a multitude of future prospects. Changes in a person’s private and professionnallife also have an impact on their pension and long-term savings. Opportunities and risks arise that have to be identified andcarefully weighed up against each other. Swiss Life favours an open and dirct dialogue with its customers that clearly sets outthe benefits and disadvantages of different options and forms the basis for a relationship of trust.

03

Swiss Life (Luxembourg) S.A. . Annual Report . Contents

Contents

05 Editorial

07 Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company

09 Management report for the financial year 2003 to the Annual General Meeting of 5 June 2004

09 Events at the Company

10 Comments on the financial year 2003

13 Acknowledgements

15 Independent Auditor’s Report

Annual accounts

16 Balance sheet as at 31 December 2003 and 2002

18 Profit and loss accounts for the years ended 31 December 2003 and 2002

20 Notes to the accounts as at 31 December 2003

Audited Annual Financial Statementsfor the year ended 31 December 2003

05

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Editorial

During the first 6 months of 2003, we focused on

strengthening profitability rather than on growth

objectives. Accordingly, the cost cutting programme

continued, while synergies with Swiss Life in Belgium

were intensified. The objective is to optimise the use

of the resources and skills of our teams in Luxembourg

and Belgium to boost global efficiency. The collaboration

between both teams has been strongly reinforced in the

fields of IT, actuarial activities and finance.

Although each entity maintains its own status and

distinct business objectives due to the specificities of

each market, Swiss Life in Belgium and Swiss Life in

Luxembourg are now treated as a single business unit

at group level.

During the second half of the year, Swiss Life in

Luxembourg consciously focused on growth objectives.

On the local market, we continued our strategy aimed at

consolidating our leading position in group insurance.

On the international market, our determination to

be even more active in developing the distribution of

insurance solutions was formally supported by the

group, in the form of recognition as a competence

centre for this field.

This decision is significant for our company’s development

perspectives. Indeed, we have set ourselves ambitious

objectives in terms of premium income and profitability

and we now can rely on our partners in the group for

help in reaching them.

In 2003, the distribution on the Belgian market of

unit-linked products, of contracts linked to collective

internal funds and of dedicated funds already began to

show good results. For the future, besides the consolidation

of activities on the Belgian market, priority will be given

to developing solutions specific to the Italian, French

and German markets.

The definition of clear quantitative and qualitative

objectives closely attuned to our strategy, the setting up

of tools to steer these objectives, the definition of values

that are common to all personnel and the development

of a common corporate identity illustrate the systematic

implementation by our group of the strategy defined in

2002.

Our collaboration with Swiss Life in Belgium allows us

to continuously improve our operating efficiency.

Our recognition as the group’s competence centre for

international solutions opens new business perspectives

on the European markets on which we have set our

sights.

It’s quite clear. We’re on our way!

Patrick Schols

Managing Director March 2004

Editorial After a particularly difficult year in 2002, Swiss Life in Luxembourg closed

2003 with the best result since inception!

Expertise. Individuals who demonstrate exceptional skills and ability go further in life. Each pension and long-termsavings solution is only as good as its ability to accommodate an individual’s personal circumstances. The solutionmust be aligned to the person’s specific financial situation as well as to their need for change and personal development. Swiss Life accompanies people from one stage of life to the next and provides them with a sense of security, even during challenging times. For life.

07

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company

Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company

The Board of Directors

Johan Bertrands Managing Director, Société suisse d’Assurances générales

sur la vie humaine, Swiss Life (Belgium), Brussels

Chairman

Paulina Casal Director, Société suisse d’Assurances générales

sur la vie humaine, Zurich

Member of the Board

Patrick Schols Managing Director, Swiss Life (Luxembourg) S.A.

Member of the Board

The General Meeting of 28 November 2003 formally appointed Mr René Van der Smeede, member of the Corporate

Executive Board, Head of International Markets, Swiss Life Holding, Zurich, as Member of the Board.

Management

Patrick Schols Managing Director

Didier Bossicart Sales & Marketing Director

Raphaël Warland Actuarial Director

Pierre Dubru Director Operations

Auditors

PricewaterhouseCoopers S.à r.l., Luxembourg

Proximity. Knowing how to relate to people is a key to success. The provision of pensions and long-term savings not only requires expertise and experience but also intuition: a feeling for what makes people tick, an ability to listen to theirquestions and concerns, an understanding of their personnal wishes and objectives. Swiss Life believes it is essential togain an in-depth knowledge and understanding of its customers and their personal circumstances. To find a suitable solution in each and every case.

09

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Management report for the financial year 2003 to the Annual General Meeting of 5 June 2004

In Luxembourg, 2003 was characterised for Swiss Life by an

extraordinary profit of 2.969 million euros (compared to a

loss of 4.370 million euros in 2002). During the same

period, premium income fell by 25% from 104.523 million

euros in 2002 to 78.419 million euros in 2003.

Various factors explain the level of our result. The measures

taken in 2002 to neutralise the volatility of our results by

reducing dramatically our exposure to equities and unit

trusts have borne fruits. Indeed, we observe almost no

unrealised losses, have realised no loss on investment and

have obtained excellent interest results. Moreover, the cost

reduction programme was continued in 2003. We achieved

our target despite an extraordinary write off due to the

abandonment of an IT project, following our decision on

27 March 2003.

2003 was satisfactory regarding the group insurance

business, for which Swiss Life is the leading company on

the Luxembourg market. The deadline for bringing the

supplementary pension scheme of companies established

in Luxembourg into conformity with the law of 8 June 1999

was set for 31 December 2003. The organisation set up

several months ago to meet the specific needs of those of

our customers who were concerned by this process allowed

us to provide a high quality service. Our group insurance

solution, specific to small and medium-sized companies,

Flexi-Group, continued to generate good results.

Regarding the international market, in particular solutions

for expatriates and third country nationals, the number of

quotations and subscribed contracts has increased as a

result of our efforts, begun in 2002, to intensify relations

with our partners. Renewed interest for vehicles with a

guaranteed rate compared with unit linked products can be

noted for 2003.

Regarding individual traditional insurance, 2003 was

characterised by an excellent technical result, due in

particular to very favourable claim results.

Regarding our sales strategy, we favour the distribution of

our products on the local market to the members of our

supplementary pension schemes.

Accordingly, we can provide a global solution taking into

account the benefits of the Luxembourg social security

system, the benefits provided by supplementary pension

schemes and the family circumstances of the concerned

persons, while optimising their tax situation.

As regards individual insurance in general, we have started,

with good results, to actively distribute unit-linked

products, contracts linked to collective internal funds and

dedicated funds on the Belgian market in collaboration

with distribution networks (Master Brokers). We have

continued our search for synergies with new financial

partners and new distribution channels. Furthermore, a

new system for the administration of unit-linked contracts

was introduced in 2003, with the objective of optimising

some internal operations but also to improve our service

to our customers.

In 2003, the Luxembourg entity was chosen by the Swiss Life

group as the European insurer in the framework of

the Credit Life project, regarding the insurance of credits

relating to the acquisition of a vehicle. We expect a

significant increase in premium volume in 2004.

Finally, we started 2003 with a move to one of the group’s

two newly constructed buildings on the route d’Arlon.

Our IT equipment was renewed. Our staff thus benefit

from more powerful computers.

2003 was marked by the group’s project to create a new

corporate identity as part of implementing its strategy.

This new corporate identity and our new logo were

presented to all Luxembourg and Belgian collaborators

on 5 January 2004 during a joint event. The new corporate

identity will be introduced gradually and should be

operational in all the core markets by the end of 2005.

Auditors

The Annual General Meeting of 5 June 2003 appointed

PricewaterhouseCoopers S.à r.l., Luxembourg as auditors

for one year.

Events at the Company

2. Insurance operations

Gross premium income in 2003 fell by 25%, from

104.523 million euros in 2002 to 8.419 million euros.

However, it should be noted that extraordinary premiums

were written during 2002 for an amount of 17,323 million

euros; if these extraordinary premiums are not taken into

account, the fall in premium income in 2003 is reduced to

10%. Moreover, the company was favouring business

profitability to the detriment of growth.

Traditional individual insurance was down by 20% due

mainly to the non-renewal of significant annuity contract

subscriptions in 2002.

Individual pure capitalisation operations fell by 57%,

whereas individual products, where the investment risk is

borne by the policyholder, grew significantly by 32%, owing

to the intensification of their distribution on the Belgian

market, in particular concerning contracts linked to

collective internal funds.

10


1. General considerations

In Luxembourg Swiss Life closed the year under review with

a positive result of 2.969 million euros. It thus returned to

profit, after having closed 2002 with a loss of 4.370 million

euros. For the record, this loss was due to the

implementation of strategic decisions made during 2002

regarding the reallocation of investment assets. The profit

for the year just ended is mainly the result of

- a return to a healthy financial result, due notably to the

above-mentioned strategic decisions which have borne

fruit;

- excellent death and disability results;

- the control of operating expenses.

The local group insurance market continued to be marked

by the need to bring local contracts into conformity with

the law of 8 June 1999 concerning supplementary pension

schemes. This process came to an end with success on

31 December 2003.

Regarding individual insurance, the distribution on the

Belgian market of unit-linked products, of contracts linked

to collective internal funds and of dedicated funds was

intensified, in particular through partnerships with

distribution networks.

Comments on the financial year 2003

63 67

82 8817

27

1999

Total premium incomeEvolution in millions €

2000 2001 2002 200378


In group insurance, premium income fell across all

segments:

- very slight decrease (- 1%) in traditional insurance,

due to the non-renewal of single premium annuities

in 2002; premiums for risk insurance grew by 18%;

- 43% fall in collective capitalisation insurance; excluding

the extraordinary premiums mentioned above, premium

income grew by 4%;

- decline of 25% regarding group products where

the investment risk is borne by the policyholder.

Technical provisions for contracts with a guaranteed rate

stood at 297.649 million euros at 31 December 2003, up

8% on the preceding year.

For contracts where the investment risk is borne by the

policyholder, technical provisions grew by 17% to

115.854 million euros.

Benefits paid in 2003 totalled 34.531 million euros,

compared to 134.166 million euros in 2002, representing

a spectacular decrease of 74%. For the record, 2002 was

characterised on the one hand by collective transfers of

important clients to pension funds and, on the other hand,

by some significant individual benefits.

3. Financial income

Net investment income stood at 17.7 million euros

compared to only 5.1 million euros in 2002 when it was

strongly affected by the unfavourable evolution of the

financial markets and by the reallocation of our investment

portfolios.

2003 benefited from the following elements:

- positive effects of the strategic decisions regarding the

reallocation of investment assets;

- gains on property sales and on variable yield securities;

- lower investment charges.

4. Profit for the year

Profit for the financial year under review : € 2 969 051

Balance carried forward to new accounts,

including a loss of (€ 3 722 673) carried

forward from the 2002 financial year: (€ 753 622)

255

282 29

7

275

1999

Technical provisionsEvolution in millions €

2000 2001 2002 2003

298

85

126

126

99

1999

Deposit Administration & Unit-LinkedEvolution in millions €

2000 2001 2002 2003

116

11

Clarity. People with clear ideas see further. With the increasingly complicated range of insurance and financial productson offer today, pensions and long-term savings products are a mystery to many people. This makes it all the moreimportant to present complex scenarios in easily comprehensible terms. Swiss Life strives to create transparency whendealing with customers and partners. Clear information and simplystructured products are therefore indispensable.


13

We would like to thank our policyholders and those

insured with us for their confidence and loyalty.

We would also like to thank our partners (consultants,

brokers and bank partners) for their support.

We must also express our thanks to all our staff. Their

professionalism and dynamism contribute constantly

to the success of our company.

The Board of Directors,

Luxembourg, 29 March 2004

Acknowledgements

Commitment. You can achieve more if you enjoy what you do. Trying something new can totally transform your life. It can also have implications for your pension and long-term savings. Swiss Life provide you with easily comprehensibleanswers to complex questions. Advice that gives you a clear picture. Products and services that inspire confidence becauseyou understand them. Transparency creates trust.


15

To the Shareholders

Following our appointment by the Annual General Meeting of 5 June 2003, we have audited the attached annual accounts

of Swiss Life (Luxembourg) S.A. for the year ended 31 December 2003 and have read the related management report.

The annual accounts and the management report are the responsibility of the Board of Directors. Our responsibility is to

express an opinion on these annual accounts based on our audit and to check the consistency of the management report

with them.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the annual accounts are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

annual accounts. An audit also includes assessing the accounting principles used and significant estimates made by

the Management, as well as evaluating the overall annual accounts presentation. We believe that our audit provides a

reasonable basis for our opinion.

In our opinion, the attached annual accounts give, in conformity with the Luxembourg legal and regulatory requirements,

a true and fair view of the financial position of Swiss Life (Luxembourg) S.A. as of 31 December 2003 and of the results

of its operations for the year then ended.

The management report is in accordance with the annual accounts.

PricewaterhouseCoopers S.à r.l

Réviseur d’entreprises

Represented by

Mervyn R. Martins

Luxembourg, 29 March 2004

Independent Auditor’s Report

AssetsNotes 2003 2002

Subscribed capital unpaid 11 7 436 806 7 436 806

Intangible assets 3(b), 4 71 202 1 337 941

Investments

Land and buildings 3(c), 5 0 1 396 166

Investments in affiliated undertakings and participating interests 3(d), 6 272 999 284 175

Other financial investments 3(e), 7

Shares and other variable yield

transferable securities and units in unit trusts 3(f) 1 799 990 5 112 653

Debt securities and other fixed income transferable securities 3(g) 282 148 512 258 799 540

Other loans 8 174 937 88 747

Deposits with credit institutions 1 083 343 1 329 703

285 479 781 267 010 984

Investments for the benefit of life insurance policyholders

who bear the investment risk 3(h) 115 854 384 98 555 169

Reinsurers'share of technical provisions

Life insurance provision 372 453 274 196

Debtors

Debtors arising out of direct insurance operations 3(i), 9

- Policyholders 1 039 884 309 245

- Intermediaries 156 208 84 963

Debtors arising out of reinsurance operations

- due on claims 303 440 123 467

- other debtors 891 344 759 678

Other debtors 1 354 986 1 059 031

3 745 862 2 336 384

Other assets

Tangible assets and stocks 3(c) 198 460 115 080

Cash at bank and in hand 18 227 599 12 307 642

18 426 059 12 422 722

Prepayments and accrued income

Accrued interest and rent 8 564 934 8 257 042

Deferred acquisition costs 3(j), 10 2 109 882 1 888 341

Other prepayments and accrued income 373 648 322 459

11 048 464 10 467 842

Total assets 442 435 011 399 842 044

The accompanying notes form an integral part of these financial statements.

Balance sheets as at 31 December 2003/2002(expressed in euros)

16

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Balance sheets as at 31 December 2003/2002


LiabilitiesNotes 2003 2002

Capital and reserves 11

Subscribed capital 15 000 000 15 000 000

Reserves

Legal reserve 12 218 752 218 752

Other reserves 3 037 381 3 037 381

Profit brought forward -3 722 673 647 416

Profit for the financial year 2 969 051 -4 370 089

17 502 511 14 533 460

Technical provisions 3(k), 13

Provision for unearned premiums 763 559 558 624

Life insurance provision 287 658 664 267 931 263

Claims outstanding 2 206 918 2 557 326

Provision for bonuses and rebates 7 020 020 3 707 296

297 649 161 274 754 509

Technical provisions for life insurance policies

where the investment risk is borne by the policyholders 3(k) 115 854 384 98 555 169

Provisions for other risks and charges 3(l)

Provisions for taxation 1 233 871 1 115 935

1 233 871 1 115 935

Deposits received from reinsurers 372 453 274 196

Creditors 3(m), 9, 14

Creditors arising out of direct insurance operations 1 629 890 882 703

Creditors arising out of reinsurance operations

- Payable reassigned premiums 4 777 596 3 742 995

Other creditors, including tax and social security 1 545 266 2 067 533

7 952 752 6 693 231

Accruals and deferred income 3(n) 1 869 879 3 915 544

Total liabilities 442 435 011 399 842 044

Balance sheets as at 31 December 2003/2002(expressed in euros)

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Balance sheets as at 31 December 2003/2002

17

18

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Profit and loss accounts for the years ended 31 December 2003/2002

Notes 2003 2002

Technical account - Life insurance business 15

Earned premium, net of reinsurance

Gross premiums written 16 78 419 290 104 523 246

Outward reinsurance premiums -4 667 478 -2 942 502

Change in the provision for unearned premiums, net of reinsurance -206 913 -264 724

73 544 899 101 316 020

Investment income

Income from participating interests 0 13 380

Income from other investments

Income from land and buildings 34 829 208 976

Income from other investments 17 517 613 17 503 223

Gains on the realisation of investments 1 915 176 1 308 832

19 467 618 19 034 411

Unrealised gains on investments 3(h) 5 378 861 908 197

Other technical income, net of reinsurance 1 249 311 1 223 572

Claims incurred, net of reinsurance

Claims paid

Gross amount -34 531 403 -134 166 137

Reinsurers' share 303 440 123 467

Changes in provisions for claims

Gross amount 267 181 1 395 830

-33 960 782 -132 646 840

Changes in other technical provisions, net of reinsurance

Life insurance provision

Gross amount -46 791 634 43 290 591

Reinsurers' share 98 257 -179 827

-46 693 377 43 110 764

Bonuses and rebates, net of resinsurance -7 362 729 -4 616 379

Net operating expenses

Acquisition costs 17 -1 759 619 -1 374 592

Changes in deferred acquisition costs 227 499 -108 418

Administrative expenses 3(o) -5 213 890 -4 637 328

Reinsurance commissions and profit participation 891 344 759 679

-5 854 666 -5 360 659

Investment charges

Investment management charges, including interest -1 287 783 -4 250 865

Value adjustments on investments -79 364 -129 614

Losses on the realisation of investments -449 033 -9 571 068

-1 816 180 -13 951 547

Unrealised losses on investments 3(h) -415 431 -12 505 789

Other technical charges, net of reinsurance -462 650 -761 579

Allocated investment return transferred to the non-technical account -520 514 365 766

Balance on the technical account - life insurance business 2 554 360 -3 884 063

Profit and loss accounts for the years ended 31 December 2003/2002(expressed in euros)


Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Profit and loss accounts for the years ended 31 December 2003/2002

19

Notes 2003 2002

Non-technical account

Balance on the technical account - life insurance business 2 554 360 -3 884 063

Allocated investment return transferred from the life insurance technical account 520 514 -365 766

Tax on profit or loss on ordinary activities 0 0

Profit on ordinary activities after tax 3 074 874 -4 249 829

Other taxes, not shown under the preceding items -105 823 -120 260

Profit for the financial year 2 969 051 -4 370 089

Profit and loss accounts for the years ended 31 December 2003/2002(expressed in euros)


20

Swiss Life (Luxembourg) S.A. . Annual Report 2003 . Notes to the accounts as at 31 December 2003

Notes to the accounts as at 31 December 2003

1. GeneralSwiss Life (Luxembourg) S.A. ("the company") is an

insurance company incorporated in the Grand Duchy of

Luxembourg on 27 March 1985, as a limited liability

company (société anonyme). The objects of the company are

to engage in any insurance and reinsurance business in the

"life" branch, both in the Grand Duchy of Luxembourg and

abroad, on its own behalf and on behalf of third parties, as

follows:

A. Insurance operations

- in case of death

- in case of life, with or without reinsurance

- combined

- regarding complementary covers providing non-

indemnity benefits in the event of sickness or accident,

in particular in the event of disability.

B. Capitalisation operations

C. Management of collective pension funds, and more

generally, any financial, asset and real estate transactions

directly connected with the objects above.

The company may also acquire any interests and shareholdings

in any other companies or insurance companies which are

liable to further the company's business, and more

particularly by establishing special purpose companies,

investments, mergers, subscribing for and purchasing

shares, bonds and other securities, purchasing interests in

companies and by any partnership or other agreements of

any kind whatsoever.

2. Presentation of the financial statementsThese financial statements have been prepared in conformity

with the law of 8 December 1994 on financial statements

with respect to insurance and reinsurance undertakings,

and with the significant accounting policies generally accepted

within the insurance industry in the Grand Duchy of

Luxembourg.

The accounting policies and the valuation rules apart from

those defined by the law or the Commissariat aux Assurances

are determined and applied by the Board of Directors.

The company is, in accordance with Luxembourg law,

exempt from the requirement to prepare consolidated

financial statements and a consolidated directors’ report

for the year ended 31 December 2003. Therefore, in

conformity with legal provisions, these accounts were

presented on a non consolidated basis for approval by

the shareholders at the annual general meeting.

The company is only included in the consolidated financial

statements prepared by Société Suisse d'Assurances

Générales sur la Vie Humaine, a société anonyme under

Swiss law, whose registered offices are at CH-8022 Zurich,

40 quai du Général Guisan (Switzerland).

3. Summary of significant accounting policiesThe significant accounting policies applied by the company

are as follows:

A. Translation of items expressed in foreign currencies

The assets and liabilities expressed in foreign currencies are

translated into euros (€) at the exchange rates prevailing at

the balance sheet date.

Transactions during the accounting period, expressed

in foreign currencies are translated into euros (€) at

the exchange rates prevailing at the balance sheet date.

B. Intangible assets

The intangible assets are valued at historical acquisition cost.

Intangible assets are amortised on a straight line basis at

33.33% p.a. on setup costs, 16.67% to 50% p.a. on software

and 10% on goodwill.

C. Land and buildings - Tangible fixed assets

Land and buildings and tangible assets, are valued at

historical acquisition cost. The acquisition cost includes

expenses incidental to the purchase.

Buildings and tangible assets with limited useful economic

lives are amortised on a straight line basis at the following

rates:

Real estate 2.5%

Plant 10% - 25%

Electrical equipment 20% - 33.3%

Machinery 20% - 33.3%

Office furniture 10% - 33.3%


21D. Shares in affiliated undertakings and participating interest

Affiliated undertakings are considered to be the undertakings

between which the company or the parent company

exercises a dominant influence either directly or indirectly.

Participating interests refer to rights contained in the

capital of other undertakings which, when creating a

durable link with those undertakings, are intended to

contribute to the company’s activities.

Shares in affiliated undertakings and participating interests

are valued at historical acquisition cost which includes

expenses incidental to the purchase.

If the impairment in value is of a permanent nature, the

shares in affiliated undertakings and participating interests

are valued at the lower of cost or market at the balance

sheet date.

These value adjustments should no longer continue when

the reasons for which they were made cease to apply.

E. Other financial investments

Other financial investments are valued at historical

acquisition cost which includes incidental purchase

expenses.

If the directors expect the impairment in value to be

permanent in nature, the other financial investments are

valued at the lower value at the balance sheet date.

These value adjustments may not be carried when the

reasons for which they were made cease to apply.

F. Shares and other variable yield transferable securities

and units in unit trusts

Shares and other variable yield transferable securities and

units in unit trusts are valued at the lower of historical

acquisition cost and realisable value. The acquisition cost

includes expenses incidental to the purchase. The value

adjustments which correspond to the difference between

the realisable value and the acquisition cost are maintained

even if the reasons for which they were made cease to apply.

G. Debt securities and other fixed income transferable

securities

Debt securities and other fixed income securities are valued

at historical acquisition cost, or redemption value, taking

into account the following elements:

A positive difference between the acquisition cost and

redemption value is written off in instalments over the

duration of the holding of the security;

A negative difference between the acquisition cost and

redemption value is released to income in instalments over

the period remaining to repayment.

H. Investments for the benefit of life insurance

policyholders who bear the investment risk

Investments for the benefit of life insurance policyholders

who bear the investment risk are valued at the market value

at the balance sheet date and any difference between this

value and the acquisition cost is disclosed in the technical

account for life insurance in the unrealised gains or losses

on investments line items.

The market value shall refer to that value quoted on an

exchange or the value at which the investment could be

sold, valued prudently and in good faith.

I. Debtors

Debtors are valued at the lower of their nominal and their

probable realisable value. Value adjustments shall be made

when recoverability is questionable, either in part or

entirely. These value adjustments shall no longer be carried

when the reasons for which they were made cease to apply.

J. Deferred acquisition costs

Deferred acquisition costs directly related to life insurance

policies, disclosed as an asset, are based on the calculation

of the life insurance provision.

K. Technical provisions

Sufficient technical provisions are set up in order that the

company can meet, as far as can be reasonably foreseen,

any liabilities arising from insurance policies.

Provision for unearned premiums

Written premiums include all the amounts received or

receivable with respect to insurance policies concluded

prior to the end of the accounting period.

That part of written premiums which is to be allocated

to one or more subsequent financial years is deferred by

way of the provision for unearned premiums, computed

separately for each contract on a prorata basis.

22


Notes to the accounts as at 31 December 2003

Life insurance provision

The life insurance provision, which consists of the actuarial

value of the company’s liabilities net future premiums, is

calculated separately for each contract.

The technical basis used in estimating the life insurance

provision in the balance sheet are:

The applied technical rates are equal to or less than themaximum rates authorised by the Commissariat auxAssurances. They depend on the currency in which policiesare issued. From 01 March 2002, the maximum technicalrate is 2.50% for EUR, USD and GBP. For CHF, the companyhas been guaranteeing a technical rate of 1.00% since 01 February 2003.

For individual traditional insurance with level premiums

and old capitalisation contracts, the technical rate at the

time the policy is issued is guaranteed on all past and future

Individual insurance:Technical rate: depending on the currency and date of issueTables: depending on the type of insurance and date of issueFor policies issued since 01 October 2000:- Dutch GBM/GBV tables for decreasing term insurance

(loan cover)- Dutch GBM*/GBV* tables for other term insurance

in event of death, whole life insurance, fixed term andcombined insurance (death type)

- Belgian MR/FR tables for combined insurance (life type) and life annuities

- German DAV94T M/F tables for insurance "Credit Life"

Group insurance:Technical rate: depending on the currency and date on which the premium is paidTables: depending on the type of insurance and date on which the premium is paidPremiums paid after 01 January 2000:- Belgian MK/FK’ tables for death insurance and

associated deferred lump sum insurance- Belgian MR/FR tables for life annuities and

non-associated deferred lump sum insurance

premiums, while for group policies (successive single

premiums) and new capitalisation contracts, the guarantee

applies to premiums paid in the past, any premium paid after

the change in technical rate benefiting from the new rate.

The methods and formulas applied to individual andgroup policies are as follows:

a. Traditional individual and group policies, the mathematical

reserve is calculated using the prospective method.

Inventory reserves as shown in the balance sheet are derived

from the difference between future commitments on the

part of the insurer as at the balance sheet date and those of

the insured. The future commitments of the insured are

obtained by updating future premiums due from the next

anniversary date as at the balance sheet date and adding the

proportion of inventory premiums not due as at the

balance sheet date.

With successive (single) premium policies and current

annuities, the future commitments on the part of the

insured are zero.

b. For complementary insurance not involving the establishment

of mathematical reserve, the provisions shown in the

balance sheet are equal to the commercial premiums paid

but not used (provision for unearned premiums).

c. For individual and group capitalisation policies, the mathematical

reserve is calculated using the “recurrence” method.

Provision for claims outstanding

The provision for claims outstanding corresponds to the

total estimated cost (including claims settlement costs) for

settling all claims arising from events which have occurred

up to the end of the financial year. The provision for claims

outstanding is computed separately for each claim.

Provision for bonuses and rebates

This provision consists of amounts intended for

policyholders or contract beneficiaries to the extent that

such amounts represent an allocation of surplus or profit

arising on business, or a partial refund of premium made

based on the performance of the contracts.

Technical provisions for life insurance policies where the

investment risk is borne by the policyholders. This item

shall comprise technical provisions set up to cover liabilities


23relating to investments in the context of life insurance

policies whose value or return is determined by reference to

an index or to investments for which the policyholder bears

the risk.

L. Provisions for other risks and charges

Provisions for other risks and charges are intended to cover

losses or debts whose nature is clearly defined but are, at

the balance sheet date, either likely or certain to be incurred

but amounts are indeterminable.

The liabilities for the employees' pension fund are included

under the technical provisions item.

M. Creditors

Creditors are included in liabilities at settlement value.

If the amount payable is greater than the amount received,

the difference is charged at the date when the debt is

recognised.

If the amount payable is lower than the amount received,

the difference is released to income in instalments over the

remaining period of the contract.

N. Accruals and deferred incomeThis item consists of both income receivable before thebalance sheet date but relating to a subsequent financialyear and charges that relate to the current financial year butpayable in a subsequent financial year.

O. Administrative expensesAdministrative expenses specifically consist of costs arisingfrom premium collection, portfolio administration,handling of bonuses and rebates and inward and outwardreinsurance. In particular they include staff costs anddepreciation provisions in respect of office furniture andequipment in so far as these need not be shown underacquisition costs, claims incurred or investment charges.

P. Value adjustmentsValue adjustments are deducted directly from the relatedindividual asset.

4. Intangible assetsThe movements in intangible assets incurred during the financial year may be summarised as follows:

Capital Formation increase

expenses costs Software Goodwill Total

€ € € € €

Gross book value 01/01/2003 13 898 143 244 2 060 453 128 905 2 346 500

Additions during the year 0 0 5 265 0 5 265

Disposals during the year 0 0 (1 593) 0 (1 593)

Gross book value 31/12/2003 13 898 143 244 2 064 125 128 905 2 350 172

Accumulated depreciation 01/01/2003 (13 898) (143 244) (748 293) (103 124) (1 008 559)

Depreciation during the year 0 0 (1 257 521) (12 890) (1 270 411)

Accumulated depreciation 31/12/2003 (13 898) (143 244) (2 005 814) (116 014) (2 278 970)

Net book value 31/12/2003 0 0 58 311 12 891 71 202

Net book value 31/12/2002 0 0 1 312 160 25 781 1 337 941

5. Land and buildingsThe movements relating to this item during the financial year are as follows:

Land Buildings

€ €

Gross book value 01/01/2003 247 847 1 794 960

Disposals during the year (247 847) (1 794 960)

Gross book value 31/12/2003 0 0

Accumulated depreciation 01/01/2003 0 646 641

Depreciation during the year 0 (646 641)

Accumulated depreciation 31/12/2003 0 0

Net book value 31/12/2003 0 0

Net book value 31/12/2002 247 847 1 148 319

Land and buildings are used entirely for investment purposes.

Land and buildings were sold on 19 March 2003, with a capital gain of 428 432.57 euros.

24


6. Shares in affiliated undertakings andparticipating interests

The movements during the financial year in respect of shares in

affiliated undertakings and participating interests are as follows:

Participating interest

€


Additions during the year 54 905


Accumulated depreciation 31/12/2003 139 027

Net book value 31/12/2003 272 999

Net book value 31/12/2002 284 175

Actual value 31/12/2003 340 292

The actual value of shares in affiliated undertakings

and participating interests has been determined by the

following methods:

- Transferable securities which are admitted to official

listing on a stock exchange or dealt in on another

regulated market are valued on the basis of the last

available price.

- Transferable securities not admitted to official listing on

a stock exchange or not dealt in on another regulated

market and transferable securities admitted to official

listing on a stock exchange or dealt in on another

regulated market for which the last available price is not

representative are valued on the basis of their reasonably

foreseeable sales price determined with prudence and

good faith by the Board of Directors.

The companies in which the company holds twenty per

cent or more of the capital are the following:

- ESOFAC INTERNATIONAL S.A., of Résidence Val Fleuri

II - 37, rue Michel Engels, Luxembourg, in which the

company has a holding of 30%.

- Active Pension Solutions S.A., in abbreviated form

APENSO, of 23, avenue de la Porte Neuve, Luxembourg,

in which the company has a holding of 50%.

- SLGB MANAGEMENT S.A. of 23, avenue de la Porte

Neuve, Luxembourg, in which the company has a holding

of 24%.

7. Other financial investmentsThe current value of the items "Shares and other variable

yield transferable" and "Debt securities and other fixed

income transferable securities" as at 31 December 2003,

was 1 861 318 euros and 296 193 959 euros respectively.

The actual value of the investment portfolio has been

determined by the following methods:

- Transferable securities which are admitted to official

listing on a stock exchange or dealt in on another regulated

market are valued on the basis of the last available price.

- Transferable securities not admitted to official listing on a

stock exchange or not dealt in on another regulated market

and transferable securities admitted to official listing on a

stock exchange or dealt in on another regulated market

for which the last available price is not representative are

valued on the basis of their reasonably foreseeable sales

price determined with prudence and good faith by the

Board of Directors.

The depreciation of the positive and negative differences

between the acquisition cost and the redemption value

(agio/disagio) in the financial year 2003 stands at

1 016 806 euros and 442 355 euros respectively.

The net balance for depreciation as at 31 December 2003,

stands at 7 514 936 euros.

8. Other loansOther loans are secured on policies taken out by the

borrowers.


259. Amounts owed by or to affiliated undertakings or undertakings with which the company is linkedby virtue of a participating interest

The items may be broken down as follows:

UndertakingsAffiliated linked by virtue of

undertakings participating interest

€ €

Debtors

Debtors arising out of reinsurance operations 1 194 784 0

Creditors

Creditors arising out of reinsurance operations 4 777 596 0

Other creditors 306 950 0

10. Deferred acquisition costsThe movements in deferred acquisition costs during the financial year can be summarised as follows:

€

Net acquisition costs, opening balance 1 888 341

Conversion differences (net) (5 958)

Net difference in additions/depreciation during the year 227 499

Net acquisition costs, closing balance 2 109 882

11. Capital and reservesThe movements during the financial year in respect of capital and reserves may be broken down as follows:

Subscribed Legal Other Profit brought Profit forcapital reserve reserves forward the year

€ € € € €

As at 31/12/2002 15 000 000 218 752 3 037 381 647 416 (4 370 089)

Allocation of result 2002 0 0 0 (4 370 089) 4 370 089

Movements during financial year 2003 0 0 0 0 2 969 051

As at 31/12/2003 15 000 000 218 752 3 037 381 (3 722 673) 2 969 051

As at 31 December 2003, the subscribed capital amounting to 15 000 000 euros, is represented by 15 000 shares with no nominal value;

the paid up capital is 7 563 194 euros.

12. Legal reserveThe company must allocate 5% of its net profit for each

financial year in order to comply with Luxembourg

company law requirements. This allocation ceases to be

compulsory once the legal reserve balance reaches 10%

of the issued share capital.

The legal reserve is not available for distribution to

shareholders, except upon the dissolution of the company.

26


13. Technical provisionsProvision Life Provision

for unearned insurance for claims Provision Technicalpremiums provision outstanding for bonuses provisions* Total

€ € € € € €

Closing balance 31/12/2002 558 624 267 931 263 2 557 326 3 707 296 98 555 169 373 309 678

Conversion difference (1 977) (6 204 381) (83 227) 0 (3 560 639) (9 850 221)

Opening balance 01/01/2003 556 647 261 726 883 2 474 099 3 707 296 94 994 530 363 459 457

Movements during year 2003 206 912 25 931 782 (267 181) 3 312 724 20 859 854 50 044 088

Closing balance 31/12/2003 763 559 287 658 664 2 206 918 7 020 020 115 854 384 413 503 545

* relating to life insurance where investment risks are borne by the policyholder.

14. Classification of loans according to durationAll loans have a duration of less than one year.

15. Results from the life insurance businessThe principal results of the life insurance business may be broken down as follows:

2003Life insurance

€

Individual premiums 21 060 343

Premiums under group contracts 57 358 947

Periodic premiums 60 190 310

Single premiums 18 228 979

Premiums for non-bonus contracts 1 599 988

Premiums for bonus contracts 48 767 960

Premiums from contracts where the investment risks are borne by the policyholders 28 051 342

Reinsurance balance (3 374 437)

16. Geographical breakdown of premiums writtenGross direct insurance premiums amounting to 78 419 290 euros, may be broken down into geographic zones according

to where the contracts have been concluded:

2003Life insurance

€

Contracts concluded in the Grand Duchy of Luxembourg 37 679 202

Contracts concluded in other countries of the EEA 19 244 067

Contracts concluded in other countries outside the EEA 21 496 021


2717. Commissions Commissions paid to insurance intermediaries relating

to direct insurance amount to782 018 euros

(2002: 577 429 euros), and is included in the acquisition

costs item.

18. Personnel employed during the yearThe average number of persons employed during the

financial year 2003 amount to 50, and may be broken

down in the following categories:

Category Number of persons

Management 4

Executives 21

Salaried employees 24

Waged employees 1

The personnel costs with respect to the financial year may

be broken down as follows:

€

Wages and salaries 2 854 629

Social security costs 276 066

- of which pensions 194 258

19. Remuneration granted to members of the Board of Directors and to Management

Directors’ fees or other remuneration to members

of the Board of Directors amount to 92 039 euros including

employer charges.

Remuneration granted to the company’s Management

amount to 455 778 euros including employer charges.

20. Off balance sheet commitmentsAt 31 December 2003, the company has entered into com-

mitments as follows:

€

Leasing of hardware 204 332

Leasing of vehicles 138 381

Leasing of telephone equipment 41 319

Lease agreement 1 883 359

21. Collective pension fundsAssets

€

Investments

Other financial investments

- Shares and other variable yield transferable securities

and units in unit trusts 12 179 666

- Debt securities and other fixed income transferable securities 15 991 528

Debtors

- Debtors arising out of direct insurance operations 39 222

Other assets

- Cash at bank and in hand 4 993 518

Prepayments and accrued income

- Accrued interest and rent 294 797

- Other prepayments and accrued income 256 503

33 755 234

Liabilities€

Technical provisions

- Technical provisions for life insurance policies

where the investment risk is borne by the policyholders 33 755 234

33 755 234

22. Information concerning consolidated companies

Swiss Life (Luxembourg) S.A. is only included in

the consolidated financial statements prepared by Société

Suisse d’Assurances Générales sur la Vie Humaine,

a société anonyme under Swiss law, whose registered offices

are at CH-8022 Zurich, 40 quai du Général Guisan

(Switzerland), being the largest group of companies to

which the company belongs as a subsidiary.

The consolidated accounts are available from the head

offices of Swiss Life (Luxembourg) S.A..

Swiss Life25, route d’ArlonL-8009 StrassenB.P. 2086L-1020 LuxembourgT +352 42 39 59-1F +352 26 43 40

www.swisslife.lu

L2S

com

mun

icat

ion

A limited company under Luxembourg lawauthorised by ministerial order on 2 May 1985 Trade Register Luxembourg section B #22663

swiss life (luxembourg) s.a. · goal swiss life is a leading provider of pensions and long-term...

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