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Error in the half-year accounts 2002 - No impact on equity

21.10.2002

In connection with the planned capital increase, Swiss Life/Rentenanstalt submitted its 2002 half-year report to the statutory auditors for additional review. An error was thereby discovered in the IAS half-year accounts. The half-year results after taxes are accordingly lower by CHF 192 million, amounting to CHF 578 million. At the same time, the unrealised gains/losses are correspondingly improved, and equity and the Group's financial situation remain higher and total equity remains unchanged. The planned capital increase is not affected. Immediate measures should improve financial reporting and ensure consistent quality.

The review of the 2002 half-year report performed by the auditors PricewaterhouseCoopers found that the electronic securities administration system that had been implemented during the early part of this year was not functioning perfectly. In this IT system, an error was made in calculating the amortized values of certain maturing bonds. Correcting this error has led to a reduction of CHF 254 million in the net realised gains/losses in the IAS half-year results, which raises the half-year loss after taxes by CHF 192 million to CHF 578 million. On the other hand, the unrealised gains/losses in the balance sheet increased correspondingly. The parent company's accounts are not affected by this error, and the embedded value remains unchanged. In their report, the auditors confirm the accuracy of the corrected 2002 half-year financial accounts. The cause of this error has been remedied.

"This new reporting error is very regrettable," said CEO Roland Chlapowski. "It reveals weaknesses in the project management in implementing the new securities administration system. We will follow up accordingly and qualitatively and quantitatively strengthen the accounting team, under the management of Bruno Pfister, our new CFO since the middle of August".

The Board of Directors has ordered immediate measures to be taken. Commenting on this, Dr. Andres F. Leuenberger, Chairman of the Board, states: "To ensure the quality of our accounting, we will strengthen our internal controls and increase the involvement of the external auditors in our financial reporting. From now on, Swiss Life/Rentenanstalt will have the auditors review the half-year financial statements".
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