Annual Report 2012 - Swiss Life
Annual Report 2012 - Swiss Life
Annual Report 2012 - Swiss Life
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117 Consolidated Financial Statements<br />
is recognised in income as an adjustment of yield. Dividends are recorded as revenue on the ex-dividend<br />
date. Interest income is recognised on an accrual basis.<br />
A financial asset is derecognised when the contractual rights to the cash flows from the financial<br />
asset have expired or substantially all risks and rewards of ownership have been transferred or the<br />
risks and rewards have neither been transferred nor retained, but control of the asset has been transferred.<br />
Financial assets at fair value through profit or loss (FVPL)<br />
Financial assets at fair value through profit or loss comprise financial assets held for trading and<br />
financial assets designated as at fair value through profit or loss. Financial assets which the Group<br />
buys with the intention to resell in the near term are classified as held for trading. Financial assets<br />
designated as at fair value through profit or loss are irrevocably designated as such when initially<br />
recognised. Financial assets are primarily designated as at fair value through profit or loss in the following<br />
instances:<br />
– Financial assets backing insurance liabilities and liabilities arising from investment contracts for<br />
the account and risk of the <strong>Swiss</strong> <strong>Life</strong> Group’s customers (contracts with unit-linked features, separate<br />
accounts, private placement life insurance) in order to avoid measurement inconsistencies with<br />
the corresponding liabilities.<br />
– Certain equity instruments with a quoted price in an active market which are managed on a fair<br />
value basis.<br />
– Certain financial assets with embedded derivatives which otherwise would have to be separated.<br />
– Certain financial assets which share a risk with other financial instruments and give rise to opposite<br />
changes in fair value that tend to offset each other (“economic hedges”).<br />
Interest, dividend income and realised and unrealised gains and losses are included in net gains/<br />
losses on financial instruments at fair value through profit or loss.<br />
Financial assets available for sale (AFS)<br />
Financial assets classified as available for sale are carried at fair value. Financial assets are classified<br />
as available for sale if they do not qualify as held to maturity, held for trading, loans and receivables<br />
or if they are not designated as at fair value through profit or loss. Gains and losses arising from fair<br />
value changes, being the difference between fair value and cost/amortised cost, are reported in equity.<br />
On disposal of an AFS investment, the cumulative gain or loss is transferred from equity to income<br />
for the period. Gains and losses on disposal are determined using the average cost method.<br />
Loans and receivables<br />
Loans and receivables are non-derivative financial assets with fixed or determinable payments. Loans<br />
include loans originated by the Group and investments in debt instruments which are not quoted in<br />
an active market and for which no intention of sale in the near term exists. Loans are initially recognised<br />
at fair value, net of transaction costs, or direct origination costs. Subsequent measurement is at<br />
amortised cost using the effective interest method.<br />
Financial assets reclassified from financial assets available for sale to loans due to the disappearance<br />
of an active market are not reclassified back to financial assets available for sale if the market becomes<br />
active again.<br />
<strong>Swiss</strong> <strong>Life</strong> – <strong>Annual</strong> <strong>Report</strong> <strong>2012</strong>
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