Zurich Insurance Group Annual Report 2012 Holding company 329
Notes to the financial statements
1. Basis of Presentation
Zurich Insurance Group Ltd (the Company) presents its financial statements in accordance with Swiss law.
Unless otherwise stated all amounts in these financial statements including the notes are shown in Swiss franc
thousands, rounded to the nearest thousand.
2. Summary of significant accounting policies
a) Exchange rates
Unless otherwise stated, assets and liabilities expressed in currencies other than Swiss francs are translated at year
end exchange rates. Revenues and expenses are translated using the exchange rate at the date of the transaction.
Unrealized exchange losses are recorded in the income statements and unrealized exchange gains are deferred
until realized.
b) Investments in subsidiaries
Investments in subsidiaries are equity interests, held on a long-term basis for the purpose of the holding company’s
business activities. They are carried at cost less adjustments for impairment.
c) Accrued income
Income is accrued for interest which is earned but not yet due for payment at the end of the reporting period.
d) Derivatives
Derivatives are carried at market value with changes in the market value recorded in the income statements.
3. Interest income
Interest income is earned mainly on the Company’s subordinated loan of CHF 4,832 million with its subsidiary
Zurich Insurance Company Ltd. The decrease of CHF 140 million compared to 2011 is the result of lower interest earned
for 2012 on this loan.
4. Other financial income
Other financial income includes primarily foreign exchange gains and net gains on derivatives with subsidiaries.
5. Other income
Other income for 2012 represents the partial release of CHF 18.7 million of the irrevocable commitment made by
the Company on behalf of the Zurich Insurance Group to the Z Zurich Foundation in 2011, as an other Group company
made the 2012 payment.
6. Administrative expense
Administrative expense includes directors’ fees of CHF 4.1 million for both years ended December 31, 2012 and 2011
and overhead expenses of CHF 10.0 million for for both years ended December 31, 2012 and 2011. In addition,
administrative expense for 2011 includes CHF 75.3 million in respect of an irrevocable commitment made by the
Company on behalf of the Zurich Insurance Group to the Z Zurich Foundation to fund its charitable activities.
Financial information
7. Other financial expense
Other financial expense includes impairments on investments in subsidiaries of CHF 75 million in 2012 and
CHF 256 million in 2011. Additionally, 2011 expense includes a loss of CHF 435 million related to the redemption
of the three remaining series of Trust Capital Securities issued through the Zurich RegCaPS Funding Trusts.
After the redemption, the trusts that issued these securities and the related limited partnerships and limited liability
companies were liquidated.
8. Tax expense
The tax expense consists of income, capital and other taxes.