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Annual Report 2006Swiss Life (Luxembourg) S.A.

Preview on 11 May

Bruno Pfister, CEO International and Chairman of the Board of Directors of Swiss Life in Luxembourg, Patrick Schols, CEO of Swiss Life in Luxembourg and Rolf Dörig, Group CEO

Patrick Schols

Exhibition

Presentation of the exhibition by its curator, Christian Mosar

About Life - The ages of Life

To celebrate over 20 year in Luxembourg, Swiss Life chose to invite four of Luxembourg’s young photographers to express their craft on the theme of life. This corporate sponsorship gave rise to an exhibition entitled “About Life - The ages of life”.

On Thursday 11 May 2006, Rolf Dörig, Swiss Life’s Group Chief Executive Officer, Bruno Pfister, Swiss Life Group’s Chief Executive Officer International, Victor Rod, Director of the Commissariat aux Assurances and Patrick Schols, Chief Executive Officer of Swiss Life in Luxembourg met with the CEOs and Swiss Life partners in the prestigious venue of the Musée d’Histoire de la Ville de Luxembourg.

The setting for this mysterious invitation was the exhibition “About Life - The ages of life”, conceived so as to appear between the 20th anniversary of Swiss Life in Luxembourg and the 150th anniversary of the Swiss Life Group. Coordinated by Christian Mosar, independent art critic, this initiative required almost a year of collaboration with four of Luxembourg’s young photographers: Jeanine Unsen, Natacha Wagner, Véronique Kolber and Patrick Galbats. “They have developed very different arguments to our own about what could be called the ‘common denominator’ of this collaboration. Our day-to-day professional activity and the setting up of such an

exhibition also have in common the choice of daring gesture and initiative” Patrick Schols explained, in front of an audience of partners and large account-holding clients at the preview.

In total, four evening events were organised surrounding this exhibition. The day after the prestigious 11 May, with its dinner cocktail which was accompanied, on the terrace, by a group of gipsy jazz musicians, Swiss Life in Luxembourg took part in the museum’s official opening. Upon this occasion Patrick Schols offered the City of Luxembourg four works from the exhibition. They will join the museum’s permanent collection, which Mr Paul Helminger, Mayor of the City of Luxembourg, officially welcomed. On 16, then 18 May, a second series of group customers and partners, and the employees of the Luxembourg entity gathered respectively in the venue, so as to enjoy a private exhibition visit in the presence of the artists.

3 000 clients and affiliates of local group plans were invited by post to come and savour the work of the four artists. They mixed with museum visitors, and were presented with a souvenir, a specially published exhibition brochure. The partners and group customers who weren’t able to come were not left on the sidelines of the festivities. They received, by post, a gift illustrating the venture: an art book of 64 pages, grouping the complete artistic contributions, which was also given to the guests of the various evening events. “The choice of this project allowed us to include in one way or another all of our customers and partners, no matter their profile or location”, explains Patrick Schols.

The exhibition was open to the public during almost eight weeks; it’s exceptional press coverage undeniably ensured its success. “To collaborate with young artists and a cultural institution, to publish an art book, was a challenge in direct relation with the very history of our company, nevertheless a great source of pleasure. We are delighted, once more, to have strayed from the beaten track.”

T h E A G E S O f L I f EMusée d’histoire de la Ville de Luxembourg 12 May - 25 June 2006

Swiss Life (Luxembourg) S.A. . Annual Report 2006 . About Life - The ages of Life

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Contents

5 Editorial

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

9 Management report for the financial year 2006

to the Annual General Meeting of 7 June 2007

9 Events at the Company

11 Comments on the financial year 2006

14 Acknowledgements

16 Independent Auditor’s Report

18 Annual accounts

18 Balance sheets as at 31 December 2006 and 2005

20 Profit and loss accounts for the years ended 31 December 2006 and 2005

22 Notes to the accounts as at 31 December 2006

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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Contents

4

Exhibition

Editorial

In 2004 and in 2005, Swiss Life in Luxembourg doubled its turnover. At the end of the year 2006 we showed a growth of 75% which is a great source of satisfaction. We owe this increase essentially to the take-off of products linked to dedicated funds in international individual insurance. Our strategy to diversify products, as well as distribution channels and markets, has shown to be beneficial. On 1 January 2006, Belgian legislation unfavourable to life insurance came into force, but this has not been able to tarnish our record.We are also satisfied in group insurance, where we have maintained our leadership on the local market, while our activity in international group insurance has been enhanced by the strengthening of collaboration within the Swiss Life Network.

More than ever, our ambition remains to be the partner of choice in pensions and long-term savings. It means that the quality of our service is always at the forefront of our thoughts and actions. This is necessary to guarantee complete customer satisfaction.

With this in mind, in 2006, we initiated various initiatives which will be completed over the course of 2007. Thus, we have prepared for the move of our teams and the geographical reorganisation of the departments, made possible by the refurbishment of the last unoccupied level

of the building. We are hoping that this new working environment will enable not only a better quality of welcome for our partners and customers, but that it will also aid in increasing work productivity and improving the well-being of our staff. We are aware that the success of our company is directly linked to the commitment and professionalism of our teams. We have therefore continued to highlight the development of the competences of our personnel and have begun its reinforcement. We will continue to do so in 2007 with a more intensive phase of recruitment.Amongst other projects aimed at ensuring the quality of our services, and for which we have laid the foundations in 2006, we can also cite the renewal of our computer stock, the setting up of a security policy, and the development of a business continuity plan.In terms of efficiency, they add to the continued automation work of our processes. All these efforts have borne fruit and we can congratulate ourselves on the significant lowering of the costs/premiums ratio.

As for the coming months, they will see a sophistication and personalisation of our individual insurance products aimed at affluent customers, as well as the strengthening of our collaboration initiated in 2006 with Swiss Life in Liechtenstein. Finally, we are awaiting important developments in group insurance in the near future.

With the same strategic axes of growth, efficiency and leadership defined by the Group, we are therefore beginning the year 2007 with confidence and optimism.

Patrick Schols

Chief Executive Officer March 2007

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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Editorial

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Speech of Bruno Pfister, CEO International and Chairman of the Board of Swiss Life in Luxembourg, during the preview on 11 May

Ambition

Pensions leadership.

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

customers and partners and endeavour to understand

their needs. This proximity enables us to provide

optimum solutions tailored to their requirements.

Openness We nurture open and direct dialogue both

within and 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 to help 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.

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

The Board of Directors

Bruno Pfister (since 29 March 2006) Member of the Corporate Executive Board of Swiss Life Holding, Chief Executive Officer International

Chairman

Johan Bertrands (until 29 March 2006) Chief Executive Officer, Swiss Life (Belgium), Brussels Chairman

Margrit Schmid Senior Vice President, Swiss Life Insurance and Pension Company, Zurich

Member of the Board

Patrick Schols Chief Executive Officer, Swiss Life (Luxembourg) S.A. Member of the Board

Paulina Casal (until 29 March 2006) Senior Vice President, Swiss Life Insurance and Pension Company, Zurich Member of the Board

Management

Patrick ScholsChief Executive Officer

Hocine BerraneDirector IT & Organisation

Pierre DubruDirector Local Market

Peter Jeurissen Business Development Director

Raphaël WarlandTechnical & Financial Director

Auditors

The Annual General Meeting of 1 June 2006 appointed PricewaterhouseCoopers S.à r.l., Luxembourg as auditors for

one year.

Hocine Berrane Pierre Dubru Patrick Schols Raphaël Warland Peter Jeurissen

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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Executive bodies of Swiss Life (Luxembourg) S.A., a Luxembourg Insurance Company

Anne Brasseur, Échevin de la Ville de Luxembourg, during the opening on 12 May

Exhibition

The Dub El Swing band during the preview on 11 May

Boris fuge, Musée d’Histoire de la Ville de Luxembourg, during the opening on 12 May

Events at the Company

In 2006, the exceptional progression of Swiss Life in

Luxembourg cannot be denied. Turnover amounted to

534.869 million euros, which is a rise of 75% compared

with 2005. This growth is all the more remarkable because

it follows a doubling in premium income over each of the

two previous years. As for profits, they amounted to

1.907 million euros. The downturn in relation to the

preceding financial year can be explained notably by the

smaller realised gains, a rise in claims and an increase in

costs, due to investments to support future growth.

On the Luxembourg market, premium volume continued

to progress in 2006, with a rise of 32.6% compared with the

previous year. Swiss Life’s position as leader in the sector

of group insurance has thus been reconfirmed and the

company benefits from the recognition of professionals in

human resources. This recognition, moreover, took shape

once again through winning the HR One Best Pension

Solution Award for the fourth consecutive year.

But it’s on the international market that Swiss Life in

Luxembourg has recorded the greatest advancement.

Group insurance is indeed a contributing factor, but it

is principally its individual insurance products aimed at

affluent customers which realised a significant growth.

It is little surprise that turnover decreased, however, on the

Belgian market following the entry into force, on 1 January

2006, of the new tax on life insurance contract premiums.

At the end of 2005, this measure generated a brief craze for

life insurance contracts which was followed by a reticence

to invest in this type of product over 2006. Nevertheless,

the pursuit of diversification as much in distribution

channels as in products on offer, as well as the important

development of other markets such as the French and

Italian markets, have shown to be profitable and have

enabled the company to counter the consequences of the

new Belgian taxation on turnover by compensating the

regression in products linked to internal collective funds

and external funds. The excellent progress in international

individual insurance can be explained by the substantial

growth of dedicated funds, for which premiums

have practically tripled. This take-off resulted from a

willingness to develop partnerships capable of attracting a

clientele of high net worth individuals. This is the case, for

example, in France, where many collaboration agreements

have been set up with various private banks.

The company also confirms its interest in the segment of

affluent customers.

The ambitious growth objectives continue to be supported

by an efficiency improvement strategy. In 2006,

Swiss Life in Luxembourg thus pursued the simplification

and the optimisation of its operational processes. Based

on the proven methodology of Lean Six Sigma, measures

have been studied to facilitate the follow-up and closure

processes in assurfinance activities and the company

has continued its automation of the administration of

group insurance contracts. Reflecting more deeply on the

constant improvement of quality, Swiss Life has planned

the creation of an Internal Control & Quality Management

position and the reinforcement of its Organisation section.

The first stones were laid at the end of 2006, and resources

dedicated to these activities will be fully operational

during the first semester of 2007.

The presence of Swiss Life in Luxembourg has yet again

been strengthened thanks to the employment of new

collaborators to support the existing teams. Growth

in terms of human resources will continue in 2007 but

the company also hopes to consolidate its management

policy of the competences of the personnel already in

place. The strategy has also been implemented in human

capital management tools through the definition of

clear objectives, the evaluation of competences and the

identification of supporting development measures.

Swiss Life reaffirms the importance of these tools so that

personnel are loyal to the aims of the company.

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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Management report for the financial year 2006 to the Annual General Meeting of 7 June 2007

Swiss Life is fully aware of the direct link between the quality of the service offered and the commitment of its collaborators, and has once again evaluated the aforementioned during its Commitment Survey, organised annually within the Group. In Luxembourg, the commitment of collaborators has been maintained at a high level, encouraging the pursuit of our efforts to guarantee an optimal working environment. Results of the survey identified new routes for improvement and concrete measures to be taken which should enable, we hope, the continued improvement of satisfaction and motivation of everybody.

Let’s add that Swiss Life in Luxembourg has continued to highlight visibility on the local market. The company was involved in the “Gala HR One” by offering a healthy break to participants through relaxation sessions. Its presence at the “Dynamic Day” show enabled it, in other respects, to make new contacts in the context of group insurance. Finally, the company had hoped “to mark the occasion” in 2006, a transitional year considering the 20 years of the presence of Swiss Life on Grand Ducal territory and the 150 years of the Group. For this event, it challenged four young Luxembourg photographers on the theme of life. At the end of spring, the works of the four artists were exhibited in the Musée d’Histoire de la Ville de Luxembourg under the title “About Life - The ages of life”. We propose you to dip into this theme and exhibition over these pages.

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78 153 305 535

2003 2004 2005 2006

600

500

400

300

200

100

0

6

33

66 102

168160

Luxembourg

Belgium

France

Italy

Other EEA countries

Countries outside the EEA

Comments on the financial year 2006

1. General considerations

Swiss Life (Luxembourg) S.A. closed the year 2006 with a

profit of 1.907 million euros. The downturn of almost 40%

compared with the previous year (3.176 million euros) is

essentially due to:

- a rise in death and disability claims leading to a lowering

in results on risk;

- a diminution in the financial results compared to 2005,

which benefited from important realised gains;

- a drop in the cost result, resulting from contained rises

in operating costs and for which the technical margins

on new production, again chiefly generated at the

year-end, will emerge fully from 2007.

The rise in premium income for group insurance was

exceptional. This resulted from the contribution of

substantial single premiums and enabled the company to

further strengthen its leadership within the sector.

The explosion in turnover (whose progress attained

85%) continued in individual insurance, thanks to the

rapid development of unit-linked products, and more

particularly of dedicated funds distributed on the French

and Italian markets.

2. Insurance operations

Turnover rose to 534.869 million euros, which is an

increase of 75% compared with 2005. This growth is even

more remarkable as it follows a doubling in turnover over

the last two years in a row.

The following charts illustrate the growth in premiums

over the last four financial years together with the

breakdown of premiums by country.

Total premium income

Evolution in EUR million

Distribution of premiums by country in 2006

Distribution in EUR million

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Individual Group Total

2005 2006

232 429 73 106 305 535

600

500

400

300

200

100

0

Products with a guaranteed rate

Investment risk borne by policyholder

116

298

20042003 2005 2006

184

331

401

356

836

371

0

125

250

375

500

625

750

875

1 000

1 125

1 250

1 375

Products with a guaranteed rate

Investmentrisk borne by policyholder

Total

2005 2006

64 65 241 470 305 535

600

500

400

300

200

100

0

The growth in premiums from 2005 to 2006 according to

the type of product is illustrated in the following charts,

and discussed below.

Movements in individual/group premium income


Movements in premiums - Type of product


In 2006, premium income on products with technical rates

guaranteed by the insurer remained stable (+1%) compared

with 2005.

Thanks to the still positive context of financial markets,

on the other hand, an overall growth of 95% for products

whose investment risk is borne by the policyholder can be

observed. All sectors are concerned and it breaks down as

follows:

- increase of 105% in collective insurance;

- increase of 94% in individual insurance: the decline

of 46% for products linked to collective internal funds

and external funds, following the introduction of the

unfavourable taxation in Belgium, weighs less heavily due

to the explosion of dedicated funds for which premium

income, which grew by 184%, attained 372.044 million

euros.

Total technical provisions


On 31 December 2006, technical provisions for contracts

with a guaranteed rate were up to 371.526 million euros,

which was an increase of 4% compared with the previous

financial year.

As for contracts whose investment risk is borne by the

policyholder, technical provisions rose by 108% to

835.929 million euros.

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Thus, the technical provisions of the company now reach

an overall sum of 1.207 billion euros.

Finally, benefits paid settled down a little, from

82.574 million euros in 2005 to 81.749 million euros

in 2006.

The rise in claims mentioned above is notably illustrated

as benefits paid in the case of death; thus, total death lump

sums and pensions rose to 4.914 million euros, against

1.865 million euros in 2005.

3. Financial income

Net investment income came to 17.062 million euros

against 19.988 million euros in 2005; the financial year

2005 benefited from capital gains realised on the sale of

bonds for an amount of 1.989 million euros.

4. Profit for the year and proposed allocation

For the year under review, the company realised a profit

after tax of EUR 1 907 254.

Taking into account the balance brought forward from

2005 of EUR 615 353, the balance available to the Annual

General Meeting is EUR 2 522 607.

We propose to allocate this balance as follows:

Allocation to legal reserve: e 95 363

Allocation to free reserve: e 1 521 631

Allocation to unavailable reserve

for tax purposes (*): e 872 493

Unavailable reserve brought forward

for tax purposes (**): (e 921 631)

Dividend to be paid to shareholders: e 800 000

Balance carried forward: e 154 751

(*) in accordance with article 174 bis of the Income Tax Law allowing wealth tax to be charged to its own base.

(**) clawback of due past allocation to unavailable reserve for tax purposes, i.e., the allocation to unavailable reserve for the year 2000 (unavailable reserve retained for 5 tax years following the year in which the request to set up the reserve was made) and transfer to the free reserve.

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Acknowledgements

We would like to thank our clients for their unwavering

trust.

Our thanks also go to our partners, loyal ambassadors

of our company, as well as our colleagues at Swiss Life in

France, Swiss Life in Belgium, Swiss Life in Liechtenstein

and Banca del Gottardo, for their invaluable collaboration.

Finally, we would like to thank our staff. Through their

enthusiasm and commitment, they strengthen the success

of our company on a daily basis.

The Board of Directors

Luxembourg, 22 March 2007

Speech of Victor Rod, Director of the Commissariat aux Assurances, during the preview on 11 May

Exhibition

Speech of Anne Brasseur, Échevin de la Ville de Luxembourg, during the opening on 12 May

Independent Auditor’s Report

To the Shareholders of Swiss Life (Luxembourg) S.A.

Report on the annual accounts

Following our appointment by the General Meeting of the Shareholders dated 1 June 2006, we have audited the

accompanying annual accounts of Swiss Life (Luxembourg) S.A., which comprise the balance sheet as at 31 December 2006,

and the profit and loss account for the year then ended, and a summary of significant accounting policies and other

explanatory notes.

Board of Directors’ responsibility for the annual accounts

The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in accordance

with Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts. This responsibility

includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation

of annual accounts that are free from material misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit in

accordance with International Standards on Auditing as adopted by the “Institut des Réviseurs d’Entreprises”. Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether

the annual accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual

accounts. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material

misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the Auditor

considers internal control relevant to the entity’s preparation and fair presentation of the annual accounts in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by the Board of Directors, as well as evaluating the overall presentation of the annual accounts. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, these annual accounts give a true and fair view of the financial position of Swiss Life (Luxembourg) S.A. as

of 31 December 2006, and of the results of its operations for the year then ended in accordance with Luxembourg legal and

regulatory requirements relating to the preparation of the annual accounts.

Report on other legal and regulatory requirements

The management report, which is the responsibility of the Board of Directors, is in accordance with the annual accounts.

PricewaterhouseCoopers S.à r.l. Luxembourg, 24 April 2007

Réviseur d’entreprises

Represented by

Mervyn R. Martins

Balance sheets as at 31 December 2006 and 2005(expressed in euros)

Assets Notes 2006 2005

Subscribed capital unpaid 10 7 436 806 7 436 806

Intangible assets 3(b), 4 59 381 42 661

Investments

Investments in affiliated undertakings and participating interests 3(d), 5 99 526 99 526

Other financial investments 3(e), 6

- Shares and other variable yield transferable securities and units in unit trusts 3(f) 6 596 214 3 539 580

- Debt securities and other fixed income transferable securities 3(g) 369 375 509 360 148 733

- Other loans 7 155 392 205 241

- Deposits with credit institutions 0 1 109 086

376 226 641 365 102 166

Investments for the benefit of life insurance policyholders who bear the investment risk 3(h) 835 929 404 401 166 224

Reinsurer’ share of technical provisions

Life insurance provision 509 881 443 001

Debtors 3(i), 8

Debtors arising out of direct insurance operations

- Policyholders 5 086 487 5 613 843

- Intermediaries 430 261 2 019

Debtors arising out of reinsurance operations

- due on claims 2 380 771 778 739

- other debtors 43 890 692 716

Other debtors 1 535 891 1 459 125

9 477 300 8 546 442

Other assets

Tangible assets and stocks 3(c) 166 456 191 788

Cash at bank and in hand 19 777 643 17 833 083

19 944 099 18 024 871

Prepayments and accrued income

Accrued interest and rent 8 589 938 8 473 650

Deferred acquisition costs 3(j), 9 4 335 975 3 803 403

Other prepayments and accrued income 491 844 81 873

13 417 757 12 358 926Total assets 1 263 001 269 813 121 097

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

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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Balance sheets as at 31 December 2006 and 2005

Balance sheets as at 31 December 2006 and 2005(expressed in euros)

Liabilities Notes 2006 2005

Capital and reserves 10

Subscribed capital 15 000 000 15 000 000

Reserves

- Legal reserve 11 522 865 364 066

- Other reserves 6 446 548 4 636 236

Loss brought forward 615 353 408 485

Profit for the financial year 1 907 254 3 175 979

24 492 020 23 584 766

Subordinated liabilities

Subordinated loan 8 6 500 000 6 500 000

Technical provisions 3(k), 12

Provision for unearned premiums 667 282 683 378

Life insurance provision 357 931 131 342 600 666

Claims outstanding 8 925 307 3 932 610

Provision for bonuses and rebates 4 002 394 8 660 055

371 526 114 355 876 709

Technical provisions for life insurance policies where the investment risk is borne by the policyholders 3(k), 12 835 929 404 401 166 224

Provisions for other risks and charges 3(l)

Provisions for taxation 3 443 380 2 571 799

3 443 380 2 571 799

Deposits received from reinsurers 509 881 443 001

Creditors 3(m), 8, 13

Creditors arising out of direct insurance operations 8 955 129 11 088 388

Creditors arising out of reinsurance operations

- Payable reassigned premiums 7 712 051 6 669 961

Other creditors, including tax and social security 2 878 430 2 169 032

19 545 610 19 927 381

Accruals and deferred income 3(n) 1 054 860 3 051 217

Total liabilities 1 263 001 269 813 121 097


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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Balance sheets as at 31 December 2006 and 2005

Profit and loss accounts for the years ended 31 December 2006 and 2005(expressed in euros)

Notes 2006 2005

Technical account - Life insurance business 14

Earned premium, net of reinsurance

Gross premiums written 15 534 868 553 305 331 972

Outward reinsurance premiums -7 842 722 -6 324 243

Change in the provision for unearned premiums,net of reinsurance 18 801 64 479

527 044 632 299 072 208

Investment income

Income from other investments

- Income from other investments 19 104 314 18 862 300

Gains on the realisation of investments 2 584 218 4 365 020

21 688 532 23 227 320

Unrealised gains on investments 3(h) 20 280 917 18 934 647

Other technical income, net of reinsurance 1 436 906 973 925

Claims incurred, net of reinsurance

Claims paid

- Gross amount -82 175 740 -82 932 773

- Reinsurers’ share 2 380 771 778 739

Changes in provisions for claims

- Gross amount -5 010 796 -66 729

-84 805 765 -82 220 763

Changes in other technical provisions, net of reinsurance

Life insurance provision

- Gross amount -455 685 971 -234 436 811

- Reinsurers’ share 66 880 81 562

-455 619 091 -234 355 249

Bonuses and rebates, net of resinsurance 2 188 388 -5 878 064

Net operating expenses

Acquisition costs 16 -5 909 006 -6 160 219

Changes in deferred acquisition costs 533 913 1 766 024

Administrative expenses 3(o), 17, 18, 19 -5 542 018 -4 658 154

Reinsurance commissions and profit participation 24 492 692 716

-10 892 619 -8 359 633

Investment charges

Investment management charges, including interest -2 710 133 -2 500 353

Value adjustments on investments -47 752 -11 732

Losses on the realisation of investments -1 612 503 -512 135

-4 370 388 -3 024 220

Unrealised losses on investments 3(h) -9 232 150 -3 399 160

Other technical charges, net of reinsurance -137 472 -31 393

Allocated investment return transferred to the non-technical account -430 518 -583 321

Balance on the technical account - life insurance business 2 774 596 4 356 297

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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Profit and loss accounts for the years ended 31 December 2006 and 2005

Profit and loss accounts for the years ended 31 December 2006 and 2005(expressed in euros)

Notes 2006 2005

Non-technical account

Balance on the technical account - life insurance business 2 774 596 4 356 297

Allocated investment return transferred from the life insurance technical account 430 518 583 321

Tax on profit or loss on ordinary activities -1 260 223 -1 757 281

Profit on ordinary activities after tax 1 944 891 3 182 337

Other taxes, not shown under the preceding items -37 637 -6 358

Profit for the financial year 1 907 254 3 175 979


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Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Profit and loss accounts for the years ended 31 December 2006 and 2005

Notes to the accounts as at 31 December 2006

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 2006. 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.

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.

22

Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Notes to the accounts as at 31 December 2006

(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:

Plant 10% - 25.0%Electrical equipment 20% - 33.3%Machinery 20% - 33.3%Office furniture 10% - 33.3%

(d) 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.

23


(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 contracts, 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 contracts.

Provision for unearned premiums

Written premiums include all the amounts received or

receivable with respect to insurance contracts 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.

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 and methods applied for computing

the balance sheets’ life insurance provision are specified

in the annual actuarial report communicated to the

supervisory authority.

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 contracts where the

investment risk is borne by the policyholders

This item shall comprise technical provisions set up to

cover liabilities relating to investments in the context

of life insurance contracts 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 income

This item consists of both income receivable before the

balance sheet date but relating to a subsequent financial

year and charges that relate to the current financial year

but payable in a subsequent financial year.

24


3. Summary of significant accounting policies (continued)

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 01/01/2006 13 898 143 244 252 486 128 905 538 533

Additions during the year 0 0 58 278 0 58 278

Disposals during the year 0 0 (14 458) 0 (14 458)

Gross book value 31/12/2006 13 898 143 244 296 306 128 905 582 353

Accumulated depreciation 01/01/2006 (13 898) (143 244) (209 825) (128 905) (495 872)

Depreciation during the year 0 0 (27 100) 0 (27 100)

Accumulated depreciation 31/12/2006 (13 898) (143 244) (236 925) (128 905) (522 972)

Net book value 31/12/2006 0 0 59 381 0 59 381

Net book value 31/12/2005 0 0 42 661 0 42 661

5. Shares in affiliated undertakings and participating interestsThe movements during the financial year in respect of shares in affiliated undertakings and participating interests are as

follows:

Participating interest

€

Gross book value 01/01/2006 99 526

Additions during the year 0

Disposals during the year 0

Gross book value 31/12/2006 99 526

Gross book value 01/01/2006 0

Depreciation 0

Depreciation adjustments relating to prior years 0

Accumulated depreciation 31/12/2006 0

Net book value 31/12/2006 99 526

Net book value 31/12/2005 99 526

Actual value 31/12/2006 229 525

(o) Administrative expenses

Administrative expenses specifically consist of costs arising

from premium collection, portfolio administration,

handling of bonuses and rebates and inward and outward

reinsurance. In particular they include staff costs and

depreciation provisions in respect of office furniture and

equipment in so far as these need not be shown under

acquisition costs, claims incurred or investment charges.

(p) Value adjustments

Value adjustments are deducted directly from the related

individual asset.

25


5. Shares in affiliated undertakings and participating interests (continued)

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


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 undertakings 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%.

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

Luxembourg, in which the company has a holding

of 24%.

6. Other financial investmentsThe current value of the items “Shares and other variable

yield transferable securities” and “Debt securities and

other fixed income transferable securities” as at

31 December 2006, was 8 412 001 euros and

371 534 295 euros respectively.

The actual value of the investment portfolio has been

determined by the following methods:

- Transferable securities which are admitted to official


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


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 2006 stands at

1 685 721 euros and 900 721 euros respectively.

The net balance for depreciation as at 31 December 2006,

stands at 13 345 745 euros.

7. Other loansOther loans are secured on contracts taken out by the

borrowers.

26


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

The items may be broken down as follows:

Undertakings Affiliated linked by virtue undertakings of participating interest

€ €

Debtors

Debtors arising out of reinsurance operations 2 405 263 0

Creditors

Creditors arising out of reinsurance operations 7 429 169 0

Debenture loans

- of which subordinated loans 6 500 000

Other creditors 885 500 0

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

€

Net acquisition costs, opening balance 3 803 403

Conversion differences (net) (1 341)

Net difference in additions/depreciation during the year 533 913

Net acquisition costs, closing balance 4 335 975

10. 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 for capital reserve reserves forward the year

€ € € € €

As at 31/12/2005 15 000 000 364 066 4 636 236 408 485 3 175 979

Allocation of result 2005 0 158 799 1 810 312 206 868 (3 175 979)

Movements during financial year 2006 0 0 0 0 1 907 254

As at 31/12/2006 15 000 000 522 865 6 446 548 615 353 1 907 254

As at 31 December 2006, 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.

27


11. 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.

12. Technical provisions

Provision for Provision Provision unearned Life insurance for claims for Technical premiums provision outstanding bonuses provisions* Total € € € € € €

Closing balance 31/12/2005 683 378 342 600 666 3 932 610 8 660 055 401 166 224 757 042 933Conversion difference 2 704 (3 338 262) (18 099) (3 795) (2 254 055) (5 611 507)Opening balance 01/01/2006 686 082 339 262 404 3 914 511 8 656 260 398 912 169 751 431 426Movements during year 2006 (18 800) 18 668 727 5 010 796 (4 653 866) 437 017 235 456 024 092Closing balance 31/12/2006 667 282 357 931 131 8 925 307 4 002 394 835 929 404 1 207 455 518

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

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

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

2006 Life insurance €

Individual premiums 429 405 817Premiums under group contracts 105 462 736Periodic premiums 108 270 922Single premiums 426 597 631Premiums for non-bonus contracts 1 389 934Premiums for bonus contracts 63 093 805Premiums from contracts where the investment risks are borne by the policyholders 470 384 814Reinsurance balance (5 370 579)

28


15. Geographical breakdown of premiums written

Gross direct insurance premiums amounting to

534 868 553 euros, may be broken down into geographic

zones according to where the contracts have been

concluded:

2006 Life insurance €

Contracts concluded in the Grand Duchy of Luxembourg 65 916 686Contracts concluded in other countries of the EEA 435 480 869Contracts concluded in other countries outside the EEA 33 470 998

16. Commissions Commissions paid to insurance intermediaries relating to

direct insurance amount to 3 521 675 euros

(2005: 4 153 630 euros), and is included in the acquisition

costs item.

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

financial year 2006 amount to 59, and may be broken

down in the following categories:

Category Number of personsManagement 5Executives 27Salaried employees 26Waged employees 1

The personnel costs with respect to the financial year may be

broken down as follows:

€

Wages and salaries 3 953 940Social security costs 363 550- of which pensions 256 616

18. 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 99 500 euros including

employer charges.

Remuneration granted to the company’s Management

amount to 852 134 euros including employer charges.

19. Fees of the independent auditorThe fees of the independent auditor in relation to the audit

of the annual accounts, the inssuance of the special report

and the reporting to the parent company amount in 2006 to

99 500 euros (2005: 54 000 euros).

20. Off balance sheet commitmentsAt 31 December 2006, the company has entered into

commitments as follows:

€

Leasing of hardware 53 094Leasing of vehicles 247 589Leasing of telephone equipment 10 330Lease agreement 2 622 891

29


21. Collective pension fundsAssets €

Investments Other financial investments - Shares and other variable yield transferable securities

and units in unit trusts 10 524 413- Debt securities and other fixed income transferable securities 17 292 474Debtors - Debtors arising out of direct insurance operations 0Other assets - Cash at bank and in hand 1 737 664Prepayments and accrued income - Accrued interest and rent 197 938- Other prepayments and accrued income 0 29 752 489

Liabilities €

Technical provisions Technical provisions for life insurance contracts where the investment risk is borne by the policyholders 29 752 489

29 752 489

22. Information concerning taxSwiss Life (Luxembourg) S.A. is subject to the income tax

(impôt sur le revenu) and net wealth tax (impôt sur la fortune) in

force in the Grand Duchy of Luxembourg.

23. Information concerning consolidated companies

Swiss Life (Luxembourg) S.A. is included in the consolidated

financial statements prepared by Swiss Life Holding, a

société anonyme under Swiss law, whose registered office is

at CH-8022 Zurich, General-Guisan-Quai 40 (Switzerland),

being the largest group of companies to which the company

belongs as a subsidiary.

The consolidated accounts are available from the head office

of Swiss Life (Luxembourg) S.A.

30


31

Véronique Kolber

Portrait memoirs

The photographed family of Véronique Kolber

Voluntarily and systematically reproducing

a feeling of intimacy in photography is certainly a difficult

exercise - because it is so revealing - but it is nevertheless

a powerful communication technique. Hence, the

photographic eye of Véronique Kolber breaks all distances

and frontiers between public and private life.

The artist has mainly based this relational work on

self-portraits and on the portraits of her relatives.

Her work finds its roots in family albums.

Here, photography recovers its unique ability to produce a

snapshot, which - from an ontological viewpoint -

is already just an expression of the past. Photography

becomes the fixed expression of the notion of a souvenir.

A memory extracted from the daily life, which takes on an

extraordinary dimension in the primary sense of the term,

through its qualities of tenderness and closeness; this is

what is perfectly identifiable in the photographic creation

of Véronique Kolber.

33

Swiss Life (Luxembourg) S.A. . Annual Report 2006 . Photographers

34Patrick Galbats

Documentation of a small world

The portraits of Julie by Patrick Galbats

Pink and red are the most important colours in Julie’s

small world. An apartment, a garden and proximity to

the city are the limits of her universe. In this environment

Patrick Galbats made a series of portraits of a little girl,

which document the limited and unlimited environment

of childhood. This “session behind closed doors” takes

place in only a few rooms only but strongly and directly

reveals what a child’s imaginary world is about.

In this series of shots Patrick Galbats has managed to

link - in an astonishing way - his documentary process to

recurring formal qualities, like the subtle use of colour

as a bridge between images. Each portrait is different

and unique but the different fragments of identity are all

interlinked by the colourful world of little Julie.

Without pretence and with a sometimes-disarming

honesty, Patrick Galbats shows us a world of childhood

remote from the traditionally idealised pictures normally

depicting this very peculiar age in life.

35


36Natacha Wagner

Me, me and me…

The geography of self-portrait by Natacha Wagner

Who am I?

How does this reflected image - or this image fixed upon a

medium - get closer to or further from the definition of my

own identity?

Natacha Wagner answers these questions by shooting

apparently misleading images. What seems to be a

snapshot is actually based on intuitive previsualisation.

Her photographs are therefore quite far from being

haphazardly shot; they are part of a very peculiar way of

finding oneself in the image of one’s body but also in the

image of one’s environment. The street, the flat, the objects

of daily life, all of it is part of the set-up of a self-portrait in

the making.

The notions of image-based autobiography or of a

photographic diary are fundamental for the whole

reflection on the photography of the last 10 years.

This is an approach to photography of which

Natacha Wagner is a discrete follower. She chooses

glimpses of a daily life that she manages to sublimate

through the direct and honest touch of her photographic

eye. Her pictures in a contained colour range tell us of

how the I fits into the daily environment. In muted tones

Natacha Wagner offers a deconstructed image of herself

but also an image that unites after all.

37


38Jeanine Unsen

The fiction of the portrait

Suspended images by Jeanine Unsen

The characters in the photographic staging of Jeanine

Unsen give the impression of being suspended figures,

almost lost in a context that is - apparently - alien to them.

Jeanine Unsen dissociates the notion of the portrait from

the concept of identity. In her pictures, she says nothing

about what is outside the images she has invented.

The whole story is concentrated within the picture frame.

We are not looking at images that supposedly reveal the

psychology of the character in the picture but at a riddle

that links humour, oddity and the decontextualisation of

the subject.

What makes the pictures of Jeanine Unsen so fascinating

is the fact that the location, the position of the main

characters or even the oddity of the costume in the chosen

location deconstruct a reality that is nevertheless still very

palpable through the technical mastering of the images by

the artist.

39


Bruno Pfister, CEO International and Chairman of the Board of Swiss Life in Luxembourg, during the preview on 11 May

Julie discovering the portraits of “Julie” during the opening on 12 May

Presentation of the exhibition by its curator, Christian Mosar

Design and productionMillenium

CopywritingSwiss Life

Christian Mosar

TranslationEilidh horder

MilleniumSwiss Life

Photographsfront cover: Patrick Galbats

fourth cover page: Jeanine UnsenPage 2: Natacha Wagner

Page 31: Véronique Kolber

Picture creditsInside front cover, pages 8, 15, 40: Swiss Life and Blitz

Page 4: Swiss LifePages 5, 6, 7, 33, 35, 37, 39: Blitz

Swiss Life25, route d’ArlonL-8009 StrassenB.P. 2086L-1020 LuxembourgT +352 42 39 59-1F +352 26 43 40www.swisslife.luSwiss Life (Luxembourg) S.A. - A limited company under Luxembourg law authorised by ministerial order on 2 May 1985 - Trade Register Luxembourg section B no. 22663

Documents

Annual Report 2006 Swiss Life (Luxembourg) S.A.paperjam.lu/.../rapports_annuels/2006/Swiss_Life_2006_GB.pdf · Annual Report 2006 Swiss Life (Luxembourg) S.A. ... by a group of gipsy