1. FINANCIAL REPORT
50 Comments to the financial statements
52 Consolidated income statement
54 Consolidated balance sheet
55 Consolidated statement of source
and application of funds
56 Consolidated off-balance sheet business
58 Notes to the consolidated financial statements
101 Report of the Group’s auditors
102 Income statement (parent company)
103 Balance sheet before allocation of retained
earnings (parent company)
104 Notes to the financial statements (parent company)
108 Proposed allocation of retained earnings
109 Report of the statutory auditors
49

2. COMMENTS TO THE FINANCIAL STATEMENTS
Credit Suisse Group’s Annual Report contains two sets of financial statements: the conso-
lidated annual financial statements of Credit Suisse Group at 31 December 1998 and the
annual financial statements of Credit Suisse Group, parent company, for the financial year
ended 31 March 1999. Both sets of statements have been examined by independent auditors.
Their reports are presented on pages 101 and 109.
The consolidated financial statements include Credit Suisse First Boston, Credit Suisse, Neue
Aargauer Bank, the Private Banks, the financial subsidiaries of Credit Suisse Group in
Guernsey, and Winterthur Insurance.
For the banking and financial businesses, the consolidated financial statements were
prepared pursuant to the accounting rules for banks; for the insurance business, the
accounting rules for insurance companies were applied. “Winterthur” Swiss Insurance
Company (Winterthur) is included in the consolidated financial statements using the pooling
of interests method. Significant information about insurance operations is shown separately
in the balance sheet and income statement; figures for previous periods have been adjusted
as prescribed by the pooling of interests method.
The 1998 financial year As of 1 January 1998, the business activities of Bank Leu Ltd
were focused on private banking. Individual and corporate customer relationships were
transferred to the responsibility of Credit Suisse. On 1 June 1998 (legally into force with
retroactive effect on 1 January 1998) Affida Bank, Zurich, was integrated into Bank Leu
Ltd, Zurich, and Bank Heusser, Basle, into Clariden Bank, Zurich. Affida Bank was fully
amalgamated with Bank Leu’s organisation, whilst the former Bank Heusser retained its
structures and operates under the name “Clariden Heusser, Basel”. On 31 July 1998, the
acquisition of the Garantia Group (São Paulo and Nassau) announced in June 1998 was
completed at a price of USD 675 m. In addition, Credit Suisse First Boston acquired two
leading brokerage firms in Australia and New Zealand, First Pacific Group, Sydney, and
First NZ Capital, Wellington. All these acquisitions are included in the consolidated financial
statements of Credit Suisse First Boston as of the acquisition date. Winterthur sold the
majority of its participation in HIH (Australia) in the first half of 1998; CHF 101 m profit was
recorded in extraordinary income. In the second half of 1998 the sale of Winterthur’s active
reinsurance business to PartnerRe was closed; extraordinary income of CHF 442 m was
recorded from this transaction.
In connection with the class action settlement for World War II, in August 1998
Credit Suisse Group and UBS AG reached a comprehensive settlement with the plaintiffs,
and the settlement contracts were signed in February 1999. Credit Suisse Group expects
its portion of the settlement payment to amount to CHF 381 m after tax. This amount is
included under extraordinary expenses in the Credit Suisse Group’s financial statements
and, as announced when the 1998 half-year results were released, it has been offset by
booking the appropriate sum from reserves for general banking risks to extraordinary income.
In addition, in order to create provisions for credit risks, another CHF 552 m of reserves for
general banking risks have been released through extraordinary income.
50

3. Total provisions of CHF 1,349 m were set aside in 1996 and 1997 for Credit Suisse
Group’s expected restructuring costs. Costs of CHF 298 m in 1996, CHF 450 m in 1997
and CHF 456 m in 1998 have been charged to these provisions. At the end of 1998, the
balance of the restructuring provision thus stood at CHF 145 m. In 1997, Credit Suisse
First Boston created provisions of CHF 332 m (CHF 237 m after tax) against extraordinary
expenses to cover expected restructuring costs associated with the acquisition of the Euro-
pean investment banking business of BZW. The integration of the business areas acquired
was completed during 1998, with CHF 204 m of the provision used for the purpose. At
Bank Leu, a provision of CHF 115 m (CHF 82 m after tax) was created against extraordin-
ary expenses in 1997 in order to implement the bank’s new organisational structure, which
became effective on 1 January 1998. CHF 12 m of this provision was used for this pur-
pose in 1997, CHF 75 m in 1998. A provision of CHF 375 m (CHF 300 m after tax) was
made for integration and restructuring costs incurred by the insurance business; a balance
of CHF 165 m remained as at 31 December 1998. Overall, the charges to these restructur-
ing provisions in 1998 amounted to CHF 965 m, leaving a total balance of CHF 446 m in
restructuring provisions. An extraordinary provision of CHF 523 m (CHF 453 m for banking
areas, CHF 70 m for insurance) was created in 1997 to cover technology costs, primarily
those associated with the IT changes required to prepare for the year 2000 and the launch
of the euro. Over the course of 1998, CHF 276 m (CHF 241 m for banking and CHF 35 m
for insurance) of this provision was spent accordingly. At the end of 1998, the total balance
of this provision came to CHF 247 m.
Pursuant to Swiss Stock Exchange legislation, the minority interests in Credit Suisse
First Boston, Credit Suisse and Winterthur were acquired in 1998; Credit Suisse Group
now holds 100% of the voting and ownership rights in the two banks and the insurance
company.
As at 31 March 1998, CS Life was transferred from Credit Suisse Group to Winterthur
and subsequently retroactively merged with the latter’s existing life insurance company,
Winterthur Life, as at 1 January 1998.
On 1 January 1999, the method of tax assessment in the Canton of Zurich was
changed to the current-year method. The figure for Swiss taxes in the 1998 income state-
ment thus includes a one-off relief from tax due to the Canton of Zurich amounting to
CHF 118 m.
Subsequent events On 15 February 1999, Credit Suisse Group announced the acquisition
of Warburg Pincus Asset Management Inc., and a stake of 19.9% in Warburg, Pincus & Co.’s
private equity business. Subject to regulatory approval, this transaction is scheduled to close
in June 1999.
Following organisational changes at Credit Suisse First Boston which combine the
Fixed Income division and Credit Suisse Financial Products into a new division, in April
1999 Credit Suisse Group repurchased Swiss Re’s 20% minority position in Credit Suisse
Financial Products.
51

4. CONSOLIDATED INCOME STATEMENT
Notes 1998 1997 Change Change
(p. 68 ff) in CHF m in CHF m in CHF m in %
RESULT FROM INTEREST BUSINESS
Interest and discount income 19,280 18,761 519 3
Interest and dividend income from trading portfolios 5,562 5,734 –172 –3
Interest and dividend income from financial
investments from banking activities 425 436 –11 –3
Interest expenses from banking activities 20,115 20,352 – 237 –1
NET INTEREST INCOME 1, 2, 6 5,152 4,579 573 13
RESULT FROM COMMISSION AND SERVICE FEE BUSINESS
Commission income from lending activities 392 387 5 1
Commissions from securities and investment transactions 8,030 6,389 1,641 26
Commissions from other services 330 307 23 7
Commission expenses 425 491 – 66 –13
NET COMMISSION AND SERVICE FEE INCOME 1, 2 8,327 6,592 1,735 26
NET TRADING INCOME 1, 2, 7 2,378 5,282 – 2,904 – 55
NET INCOME FROM INSURANCE BUSINESS
Premiums earned, net 26,477 25,258 1,219 5
Claims incurred and actuarial provisions 27,395 25,557 1,838 7
Commission expenses, net 2,075 2,277 – 202 –9
Investment income from insurance business 8,350 7,351 999 14
NET INCOME FROM INSURANCE BUSINESS 1, 2, 9, 10 5,357 4,775 582 12
OTHER ORDINARY INCOME
Income from the sale of financial investments 1,224 112 1,112 –
Income from investment activities 129 81 48 59
– of which from participations valued according to the equity method 105 30 75 250
– of which from other non-consolidated participations 24 51 – 27 – 53
Real estate income 28 45 –17 – 38
Sundry ordinary income 336 407 – 71 –17
Sundry ordinary expenses 1,231 863 368 43
OTHER ORDINARY INCOME 1, 2 486 – 218 704 –
NET OPERATING INCOME 21,700 21,010 690 3
52

5. Notes 1998 1997 Change Change
(p. 68 ff) in CHF m in CHF m in CHF m in %
NET OPERATING INCOME CONTINUED 21,700 21,010 690 3
Personnel expenses 10,586 9,931 655 7
Other operating expenses 4,473 3,979 494 12
TOTAL OPERATING EXPENSES 1, 2 15,059 13,910 1,149 8
GROSS OPERATING PROFIT 6,641 7,100 – 459 –6
Depreciation and write-offs on non-current assets 1 657 590 67 11
Valuation adjustments, provisions and losses
from banking business 1, 8 3,175 2,624 551 21
DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES 3,832 3,214 618 19
GROUP PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 2,809 3,886 –1,077 – 28
Extraordinary income 1, 3 1,554 1,323 231 17
Extraordinary expenses 1, 4 573 3,534 – 2,961 – 84
Taxes 1, 2 575 1,074 – 499 – 46
GROUP PROFIT 3,215 601 2,614 435
Minority interests 1 147 204 –57 –28
NET PROFIT (AFTER MINORITY INTERESTS) 3,068 397 2,671 –
53

6. CONSOLIDATED BALANCE SHEET
Notes 31 Dec. 1998 31 Dec. 1997 Change Change
(p. 68 ff) in CHF m in CHF m in CHF m in %
ASSETS
Cash and other liquid assets 33 2,313 3,404 –1,091 – 32
Money market claims 12, 33 26,594 24,013 2,581 11
Due from banks 33 140,152 145,778 – 5,626 –4
Claims from the insurance business 33 7,482 6,424 1,058 16
Due from customers 13, 14, 33 103,183 144,491 – 41,308 – 29
Mortgages 14, 33 80,558 78,904 1,654 2
Securities and precious metals trading portfolios 15, 16, 33 102,515 103,826 –1,311 –1
Financial investments from the banking business 17, 19, 33 17,467 16,017 1,450 9
Investments from the insurance business 18, 19 102,316 93,387 8,929 10
Non-consolidated participations 20, 21 1,331 1,192 139 12
Tangible fixed assets 21 6,362 6,271 91 1
Intangible assets 21 802 181 621 343
Accrued income and prepaid expenses 9,628 9,419 209 2
Other assets 23 51,734 56,261 – 4,527 –8
TOTAL ASSETS 24, 35, 36 652,437 689,568 – 37,131 –5
Total subordinated claims 3,048 2,566 482 19
Total due from non-consolidated participations 227 43 184 428
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities in respect of money market paper 33 14,735 12,520 2,215 18
Due to banks 33 154,048 180,236 – 26,188 –15
Commitments from the insurance business 33 8,412 6,045 2,367 39
Due to customers in savings and investment accounts 33 46,618 48,533 –1,915 –4
Due to customers, other 33 178,561 195,571 –17,010 –9
Medium-term notes (cash bonds) 33 5,844 7,216 –1,372 –19
Bonds and mortgage-backed bonds 27, 33 44,953 45,594 – 641 –1
Accrued expenses and deferred income 11,778 11,677 101 1
Other liabilities 28 57,004 58,168 –1,164 –2
Valuation adjustments and provisions 29 5,670 7,129 –1,459 – 20
Technical provisions for the insurance business 30 96,652 91,228 5,424 6
Reserves for general banking risks 29, 31 2,048 2,890 – 842 – 29
Share capital 31 5,382 5,322 60 1
Capital reserve 31 10,993 9,366 1,627 17
Revaluation reserves from the insurance business 31 5,942 5,337 605 11
Retained earnings 31 –1,596 334 –1,930 –
Minority interests in shareholders’ equity 31 2,178 1,801 377 21
Group profit 31 3,215 601 2,614 435
– of which minority interests 31 147 204 – 57 – 28
Total shareholders’ equity 31 28,162 25,651 2,511 10
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 35, 36 652,437 689,568 – 37,131 –5
Total subordinated liabilities 16,524 16,636 –112 –1
Total liabilities due to non-consolidated participations 718 567 151 27
54

7. CONSOLIDATED STATEMENT OF SOURCE AND APPLICATION OF FUNDS
1998
Net 1997
Source Application in/outflow Source Application Net in/outflow
in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m
FROM OPERATIONS,
EQUITY TRANSACTIONS AND INVESTMENTS 1,186 – 24
OPERATING ACTIVITIES 5,917 8,317
Net profit for the year 3,215 601
Provisions for credit and other risks 2,584 2,617
Losses 101 133
Provisions for taxes 575 1,250
Depreciation and write-offs 681 617
Creation of extraordinary valuation adjustments
and provisions 462 3,330
Extraordinary income 1,488 1,213
Valuation of companies valued according
to the equity method 105 30
Accrued income and prepaid expenses 209 1,916
Accrued expenses and deferred income 101 2,928
EQUITY TRANSACTIONS 226 1,746
Share capital 60 1,436
Capital surplus and retained earnings 1,922
Dividends paid 1,457 1,358 1,114
Foreign exchange differences 363 38
Minority interests 64 104
INVESTMENTS IN LONG-TERM ASSETS – 874 93
Investments in companies 514 813
Real estate 42 280
Other tangible and intangible fixed assets 1,430 1,000
FINANCIAL INVESTMENTS, PROVISIONS, – 4,083 –10,180
OTHER ASSETS AND LIABILITIES
Investments from the banking business 1,450 4,436
Investments from the insurance business 8,929 12,274
Valuation adjustments and provisions 3,108 1,198
Technical provisions 1 5,424 7,378
Other assets 5,144 14,642
Other liabilities 1,164 14,992
FROM OTHER BALANCE SHEET ITEMS – 3,588 18,942
ASSETS 38,956 –15,833
Money market claims 2,581 3,936
Due from banks 5,626 23,133
Claims from the insurance business 1,058 407
Due from customers 40,234 13,870
Mortgages 3,265 2,227
LIABILITIES – 42,544 34,775
Liabilities in respect of money market paper 2,215 1,284
Due to banks 26,188 14,336
Commitments from the insurance business 2,367 1,033
Due to customers in savings and investment accounts 1,915 1,237
Due to customers, other 17,010 29,008
Bonds and medium-term notes 2,013 16,549
CHANGE IN LIQUID ASSETS – 2,402 18,918
Securities and precious metals trading portfolios 1,311 18,446
Cash and accounts with central banks 1,091 472
1 In line with insurance practice, the change in the technical provisions is shown as a total amount under changes in provisions affecting the cash flow.
55

8. CONSOLIDATED OFF-BALANCE SHEET BUSINESS
31 Dec. 1998 31 Dec. 1997 Change Change
in CHF m in CHF m in CHF m in %
CONTINGENT LIABILITIES
Credit guarantees in form of avals, guarantees
and indemnity liabilities 8,870 9,852 – 982 –10
Bid bonds, delivery and performance bonds,
letters of indemnity, other performance-related guarantees 4,471 4,965 – 494 –10
Irrevocable commitments in respect of documentary credits 2,225 3,112 – 887 – 29
Other contingent liabilities 3,710 3,943 – 233 –6
TOTAL CONTINGENT LIABILITIES 19,276 21,872 – 2,596 –12
IRREVOCABLE COMMITMENTS 84,775 64,490 20,285 31
LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY 59 63 –4 –6
CONFIRMED CREDITS 262 473 –211 – 45
Mortgage Other Without
collateral collateral collateral Total
ANALYSIS OF COLLATERAL AS AT 31 DECEMBER 1998 in CHF m in CHF m in CHF m in CHF m
CONTINGENT LIABILITIES
Credit guarantees in form of avals, guarantees
and indemnity liabilities 58 6,814 1,998 8,870
Bid bonds, delivery and performance bonds,
letters of indemnity, other performance-related guarantees 171 2,148 2,152 4,471
Irrevocable commitments in respect of documentary credits 1 150 2,074 2,225
Other contingent liabilities 109 647 2,954 3,710
TOTAL CONTINGENT LIABILITIES 339 9,759 9,178 19,276
At 31 December 1997 306 6,811 14,755 21,872
IRREVOCABLE COMMITMENTS 2,889 40,946 40,940 84,775
At 31 December 1997 383 25,151 38,956 64,490
LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY 0 0 59 59
At 31 December 1997 0 0 63 63
CONFIRMED CREDITS 0 0 262 262
At 31 December 1997 0 10 463 473
31 Dec. 1998 31 Dec. 1997 Change Change
in CHF m in CHF m in CHF m in %
FIDUCIARY TRANSACTIONS 35,216 32,581 2,635 8
56

9. 31 Dec. 1998 31 Dec. 1998 31 Dec. 1997 31 Dec. 1997
31 Dec. 1998 Positive gross Negative gross 31 Dec. 1997 Positive gross Negative gross
Notional replacement replacement Notional replacement replacement
amount value 4 value 4 amount value value
in CHF bn in CHF bn in CHF bn in CHF bn in CHF bn in CHF bn
DERIVATIVE INSTRUMENTS
INTEREST RATE PRODUCTS
Forward rate agreements 152.7 0.1 0.1 193.7 0.3 0.1
Swaps 2,383.1 65.3 60.3 1,551.2 39.6 38.2
Options bought and sold (OTC) 914.1 8.5 8.8 598.3 5.1 5.0
Forwards 54.0 0.2 0.3 0.1 0.0 0.0
Futures 539.2 – – 420.8 – –
Options bought and sold (traded) 633.8 – – 219.0 – –
TOTAL INTEREST RATE PRODUCTS 4,676.9 74.1 69.5 2,983.1 45.0 43.3
FOREIGN EXCHANGE PRODUCTS
Forwards 1 782.2 14.7 16.9 667.6 19.2 17.7
Swaps 2 247.4 9.3 11.6 216.8 9.2 10.3
Options bought and sold (OTC) 342.3 5.5 6.1 534.2 5.3 5.7
Futures 1.5 – – 0.4 – –
Options bought and sold (traded) 0.3 – – 0.1 – –
TOTAL FOREIGN EXCHANGE PRODUCTS 1,373.7 29.5 34.6 1,419.1 33.7 33.7
PRECIOUS METALS PRODUCTS
Forwards 1 18.8 0.9 1.1 26.3 1.6 2.0
Options bought and sold (OTC) 15.4 0.5 0.9 8.6 0.5 0.7
Futures 0.2 – – 1.8 – –
Options bought and sold (traded) 0.4 – – 0.0 – –
TOTAL PRECIOUS METALS PRODUCTS 34.8 1.4 2.0 36.7 2.1 2.7
EQUITY/INDEX-RELATED PRODUCTS
Forwards 8.2 0.7 0.6 2.0 0.1 0.0
Options bought and sold (OTC) 191.4 13.8 14.7 204.4 10.4 10.4
Futures 38.6 – – 21.0 – –
Options bought and sold (traded) 63.2 – – 63.4 – –
TOTAL EQUITY/INDEX-RELATED PRODUCTS 301.4 14.5 15.3 290.8 10.5 10.4
OTHER PRODUCTS
Forwards 0.1 0.0 0.0 0.0 0.0 0.0
Options bought and sold (OTC) 4.0 0.3 0.1 3.1 0.1 0.0
Futures 8.5 – – 9.5 – –
Options bought and sold (traded) 0.1 – – 0.6 – –
TOTAL OTHER PRODUCTS 12.7 0.3 0.1 13.2 0.1 0.0
TOTAL, GROSS 6,399.5 119.8 121.5 4,742.9 91.4 90.1
TOTAL REPLACEMENT VALUES
ACCORDING TO THE BALANCE SHEET 43.1 3, 5 49.2 5 50.2 3, 5 50.9 5
1 including outstanding spot transactions
2 cross-currency interest rate swaps
3 positive replacement value after deduction of CHF 4.4 bn (1997: CHF 3.1 bn) of assets pledged as security
4 No replacement values are shown for traded derivatives (futures and traded options) subject to daily margining requirements.
Total positive and negative replacement values on traded derivatives amount to CHF 1.4 bn and CHF 2.1 bn respectively.
5 of which from the insurance business: positive replacement values CHF 1.3 bn (1997 CHF 0.4 bn), negative replacement values CHF 0.6 bn (1997 CHF 0.2 bn)
57

10. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL PRINCIPLES
The Group financial statements have been drawn up based on the accounting rules of
the Implementing Ordinance to the Swiss Federal Law on Banks and Savings Banks of
1 February 1995 and the Federal Banking Commission guidelines of 14 December
1994 (with the amendments of 14 November 1996 and 22 October 1997), supple-
mented by the pooling of interests method and the provisions of the Swiss accounting
and reporting recommendations with respect to insurance companies (FER 14). As
required by the pooling of interests method, the consolidated financial statements of
Credit Suisse Group show the combined results of Credit Suisse Group and Winterthur
as if the merger had been effective for all previous periods shown. In addition, the
consolidation and valuation policies reflect the accounting principles set out in the
Swiss stock exchange listing regulations; they also largely conform to the provisions of
the 4th and 7th EU directives and the EU directive governing the financial statements
of banks. The financial year for the Group ends on 31 December. Group companies
with a different closing date prepare interim financial statements as at 31 December for
consolidation purposes. For subsidiaries acquired after 1 January 1997, goodwill
(the amount paid in excess of the equity acquired when purchasing an interest in a
company) is stated in the balance sheet under “Intangible assets” and amortised over
its estimated useful life (not exceeding 20 years).
SCOPE AND METHOD OF CONSOLIDATION
The assets and liabilities, off-balance sheet transactions and income and expenses
of all the banking, insurance and financial institutions in which Credit Suisse Group
has a direct or an indirect interest of more than 50% as of the balance sheet date are
fully consolidated in the financial statements. For the “Winterthur” Swiss Insurance
Company subgroup, the capital is consolidated according to the pooling of interests
method. For the other Group companies the capital is consolidated according to the
purchase method as of 1 January 1990 (or later, if acquired thereafter). Intercompany
transactions and unrealised gains therefrom are eliminated. Minority interests in share-
holders’ equity and net profit are indicated separately, but are viewed as forming an
integral part of the corporate base. Other companies in which the Group has a stake of
20% or more are accounted for using the equity method. Long-term holdings which are
designated for resale are booked as “Financial investments”. Subsidiaries and long-term
holdings outside the core business, and less significant holdings are not consolidated.
58

11. CHANGES TO THE SCOPE OF CONSOLIDATION
The scope of consolidation has undergone the following material changes:
Group division Winterthur Insurance
HIH Winterthur, Sydney
The majority participation in HIH Winterthur of 51.2% was sold mid-1998. The approximately
7% stake still held by the Winterthur Group is included in investments from the insurance
business. HIH Winterthur was deconsolidated retroactively as at 1 January 1998.
Winterthur Reinsurance Corporation of America, New York
Winterthur Life U.S. Holdings, Inc., Wilmington
Winterthur Life Re Insurance Company, Dallas
The investments in the three above mentioned companies were sold as at 1 October
1998. Thus, the income statements of these companies are only included up to
30 September 1998.
Group division Credit Suisse First Boston
Banco di Investimentos Garantia S.A., São Paulo
Garantia Banking Limited, Nassau
For a price of USD 675 m, Credit Suisse First Boston took over 100% of the share
capital of both companies as at 31 July 1998. The companies operate under the name
of Banco de Investimentos Credit Suisse First Boston Garantia S.A. and Credit Suisse
First Boston Garantia Banking Limited respectively.
BZW business areas in the Asian region
In early 1998 selected BZW business areas in Asian investment banking were
acquired. The names of the individual companies are listed in note 37.
FOREIGN CURRENCY TRANSLATIONS
In the annual accounts of the individual Group companies, income and expense items
denominated in foreign currencies are translated into the relevant local reporting curren-
cies on the basis of the exchange rate as of the transaction date. Assets, liabilities and
off-balance sheet items are translated as of the year-end rate. Hedged assets and
liabilities are carried at their forward hedging rates. For the purposes of consolidation,
the balance sheets of foreign Group companies are translated into Swiss francs at the
year-end exchange rate, and their income statements are translated using the average
exchange rate for the financial year. Translation differences are credited or debited to
shareholders’ equity and are shown separately in the statement of shareholders’ equity.
The key foreign exchange rates are listed in the notes to the consolidated financial
statements on page 100.
59

12. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DEVIATIONS FROM THE RELEVANT EU DIRECTIVES
The Swiss accounting rules for banks conform in essence to EU directives and guidelines.
The areas in which Group accounting policies deviate from the accounting principles set
out in the directives of the European Union (4th and 7th EU directives and the EU direc-
tive governing the financial statements of banks) can be summarised as follows:
– The classification criteria used in the balance sheet and the income statement differ
from those set out in the EU directive governing the financial statements of banks.
– The proportions of overall income and expenditure for operations outside Switzerland
are not detailed by geographical location but are provided as combined totals.
– No specific information is given concerning compensation or liabilities towards Members
of the Board of Directors or Members of the Executive Board of Credit Suisse Group.
– Securities and precious metals treated as trading positions are carried at their fair value.
Historical differences between cost and fair value are not disclosed in the notes to the
financial statements.
– Subsidiaries and long-term holdings which are not in the banking, finance or insurance
sectors are not consolidated.
– There is no formal management report on the business year.
The following are significant deviations from the EU directives governing the financial
statements of insurance companies:
– The classification and presentation used in the financial statements have been adjusted
from those set out in the EU directives governing the financial statements of insurance
companies. Winterthur Group publishes an annual report which focuses on the presentation
of the result of the insurance business.
– Unrealised gains on life business investments are taken to revaluation reserves as part
of shareholders’ equity and not to funds for future distribution to shareholders and
policyholders.
GENERAL ACCOUNTING AND VALUATION PRINCIPLES
Recording of business All completed business is recorded in the financial statements
as follows: foreign exchange, money market and precious metal transactions are recorded
on value (settlement) date. Prior to the value date, foreign exchange and precious metal
transactions are recorded as off-balance sheet business. Securities transactions are
recorded on a trade date basis.
Reclassification of prior year figures Certain amounts in the consolidated financial
statements for 1997 have been reclassified to conform to the 1998 presentation. Material
reclassification: In the insurance business, stamp duty is no longer included in “Tax expenses”
but in “Operating expenses” (1997: CHF 132 m) and in “Investment income”
(1997: CHF 44 m).
60

13. Repo business Repurchase and reverse repurchase transactions are shown in the
balance sheet as advances secured by securities or as deposits against which the
bank’s securities are pledged. Depending on the type of counterparty, they are shown
as claims on (“Due from”) or liabilities to (“Due to”) banks or customers. They are carried
in the balance sheet at the amounts at which the securities were initially acquired or
sold as specified by the respective agreements, plus interest accrued to the balance
sheet date.
Transactions involving non-monetary assets Claims and liabilities from lending
and borrowing transactions of non-monetary assets such as money market paper,
precious metals or commodities and those arising from securities lending and borrowing
are marked to market and, depending on the counterparty, are shown as claims on
or liabilities towards banks or customers. Securities positions arising as a result of
securities lending and borrowing are included in the securities and precious metals
trading portfolios.
Cash, bank balances, money market paper and loans Receivables and liabilities
are generally accounted for at nominal value. Money market instruments held for
trading are carried at their fair value. The necessary provisions for recognisable risks
and potential losses are normally deducted from the appropriate asset items in the
balance sheet. Endangered interest and commission income due from customers and
banks are not booked as “Income from interest business”. Instead, they are only included
in the income statement following payment. Provisions for exposures subject to country
risk, default risks and other bank risks are booked to “Valuation adjustments and
provisions”. This position contains no undisclosed reserves.
Leasing All leased items (capital goods, vehicles and real estate) are valued using
the annuity method and are stated as a separate item under lendings. The depreciation
charges contained in the rental income are set off directly against the book values of
the corresponding leased assets, so that only the interest portion of the rental income is
shown in the income statement.
Real estate Real estate is valued at the cost (including capital improvements) less
depreciation over its useful life (40–67 years). No depreciation is charged on land
except where valuation adjustments have been made to allow for a reduction in the
market value.
61

14. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other tangible fixed assets Other tangible fixed assets such as computers,
machinery, furnishings, vehicles and other equipment, as well as alterations and impro-
vements to rented premises, are depreciated using the straight line method over their
estimated useful life (in general 3–5 years).
Intangible assets The goodwill included in this balance sheet position arises from
the majority holdings acquired from 1 January 1997 in connection with the capital
consolidation. This goodwill is amortised over its estimated useful life (maximum 20 years).
Pension fund As a rule, employees are affiliated to legally autonomous staff pension
funds which are independent of the Group. The requisite contributions are made to the
pension funds and posted under “Personnel expenses”.
Taxes Tax expense is calculated on the basis of the annual results reported in the
individual financial statements of the Group companies. Deferred tax assets and liabili-
ties are established for the expected future tax implications of temporary differences
between the carrying amounts and the tax bases of assets and liabilities. Deferred tax
assets and liabilities calculated at the expected tax rate on the basis of adjustments in
the valuation of assets and liabilities for Group purposes are charged to tax expense
and recorded as other assets or provisions. No provision is made for non-recoverable
withholding taxes on undistributed profits of Group companies nor is a deferred tax
asset recognised arising from tax losses brought forward.
Claims and liabilities of related companies Claims and liabilities in respect of
related companies towards Group companies which are accounted for using the equity
method are reported in the notes to the consolidated financial statements.
62

15. VALUATION AND ACCOUNTING POLICIES IN RELATION
TO BANK-SPECIFIC POSITIONS
Securities trading portfolio The trading portfolio consists of balances held in
connection with the trading of readily realisable securities, securities acquired as a
result of underwriting activities and holdings of precious metals. Securitised and non-
securitised options are shown under “Other assets”.
Trading balances in bonds, shares and similar securities and precious metal
accounts and holdings are carried at fair value (amount for which an asset could be
exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s-
length transaction) as of the balance sheet date. Profits and losses from the valuation
of the trading portfolio and realised gains and losses on these positions are shown
under “Income from trading”. Interest and dividend income from the trading portfolio is
credited to “Result from interest business”.
Financial investments from the banking business This balance sheet item
comprises securities and precious metal positions purchased as a long-term invest-
ment. It also includes real estate and holdings assumed from the lending business
and designated for resale.
Fixed-interest debt securities which are being held until final maturity are valued
according to the accrual method. In this case, premiums and discounts are accrued or
deferred over the term of the instrument until final maturity in the relevant balance sheet
position. Realised profits or losses which are interest related and which arise from the
early disposal or redemption of the instrument are accrued or deferred over the remain-
ing term of the instrument, i.e. to the original final maturity, and credited to or debited
from “Result from interest business” as appropriate.
Investment holdings of equities and debt securities which are designated for
resale and which do not constitute trading balances are valued according to lower of
cost or market. The notes to the consolidated financial statements include details of
both the cost price and the market value of these holdings.
Capital gains resulting from the sale of financial investments at above the
purchase price are shown under “Income from the sale of financial investments”.
Unrealised losses on equity positions as a result of a decrease in their market value, and
unrealised profits up to the original result of changes in creditworthiness, are accounted
for in the same way as credit business.
Real estate assumed from the lending business and designated for resale is
valued according to lower of cost or market.
63

16. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reserves for general banking risks Reserves for general banking risks are precau-
tionary reserves charged to “Extraordinary expenses” to hedge against latent risks in the
bank’s operating activities. Releases are credited to extraordinary income.
Derivatives Forward rate agreements, futures, swaps, options, forward contracts and
other over-the-counter off-balance sheet instruments held for trading purposes are
carried at their fair value and the resulting profits and losses are included in “Net trading
income” in the income statement. The resulting replacement values are included in
“Other assets” or “Other liabilities” as appropriate and are presented net by counterparty
for transactions in those products where the bank has a legal right of set off; otherwise
the replacement values are presented gross by contract.
Hedging transactions are valued using the same procedures as for the underlying
transactions they hedge.
Strategic positions are valued at lower of cost or market. Derivative financial
instruments which are deployed in the context of interest rate risk management are
valued according to the accrual method. The interest component is accrued or deferred
over the term of the instrument according to the annuity method. Realised profits or
losses which are interest related and which arise from the early disposal or redemption
of the instrument are also accrued or deferred over the remaining term of the instru-
ment, i.e. to the original final maturity.
CHANGES TO ACCOUNTING PRINCIPLES
Endangered interest Starting in 1998, the set up and release of provisions for
endangered interest is recorded under “Interest income”. Prior to 1998, provisions set
up for endangered interest overdue for less than 90 days and the reclassification of
provisions for endangered interest, which were no longer necessary from an economic
point of view, were recorded under “Valuation adjustments, provisions and losses”. The
prior year’s financial statements have not been restated. Impact on the 1998 financial
statement:
Net interest income: CHF – 99 m
Valuation adjustments, provisions and losses: CHF – 99 m
FINANCIAL INVESTMENTS
Assets held in the trading book Assets held in the trading book are carried at their
fair values as at the 1998 balance sheet date. Prior to 1998, the trading portfolio was
valued at market value. Assets that were not traded on a recognised stock exchange or
on a representative market were carried at the lower of cost or market value. The prior
year financial statements have not been restated. Impact on the 1997 consolidated
balance sheet and income statement would be:
Valuation adjustments and provisions: CHF – 69 m
Net trading income: CHF 69 m
64

17. YEAR 2000
The challenge faced by financial institutions worldwide as the year 2000 approaches is
substantial. It extends to almost every aspect of daily operations and interaction with the
markets. Credit Suisse Group began work on the year 2000 issue in 1996, utilising a
priority-driven methodology, encompassing inventory and assessment, remediation or
replacement, testing, third-party risk analysis and contingency planning.
Business-critical systems in the banking area are being addressed first, and, having
identified over 1,500 systems that require remediation, 84% were completed and put
back into production by 31 December 1998. Remediation of non-compliant date formats
has been achieved either by expanding the date format to incorporate four-digit years, or
by “windowing” for century determination. To mitigate third-party risks, during 1998 over
7,000 customers and business partners were contacted in relation to their own year 2000
projects. In addition, the Group’s banks have participated in 30 industry tests during
1998 and are committed to taking part in 59 industry tests planned during 1999. However,
with systems of such size and complexity, with multiple interfaces to and high reliance
upon external systems, no guarantee can be given that there will be no adverse effects
from the year 2000 issue. As a consequence, the banks have started a contingency
planning process which includes the formation of management teams to quickly respond
to unexpected events.
The Board of Directors and the Executive Board of Credit Suisse Group are provided
with regular status reports and have given the highest priority to the year 2000 project.
EVENTS SINCE THE BALANCE SHEET DATE
On 15 February 1999 Credit Suisse Group announced that Credit Suisse Asset Management
will acquire Warburg Pincus Asset Management, Inc., a leading US asset manager with
260 employees and USD 22 bn in assets under management, as well as a 19.9% pas-
sive minority equity stake in Warburg, Pincus & Co.’s private equity business. The price
of the asset management transaction was fixed at USD 650 m, including an initial
USD 450 m and an additional USD 200 m earn-out over three years. Subject to
regulatory approval, the agreement is expected to close by mid-1999.
Following the organisational changes at Credit Suisse First Boston which combine the
Fixed Income division and Credit Suisse Financial Products in a new division, in April 1999
Credit Suisse Group repurchased Swiss Re’s 20% minority position in Credit Suisse
Financial Products.
65

18. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
VALUATION AND ACCOUNTING POLICIES IN RELATION
TO INSURANCE-SPECIFIC POSITIONS
INVESTMENTS IN RESPECT OF INSURANCE BUSINESS
Real estate Real estate is valued at the market price. The market value of a property
is calculated at its capitalised rental income at the interest rate applied in the country
or market in question. Undeveloped plots of land and buildings under construction are
carried at cost.
Bonds and loans Bonds and loans are valued according to the amortised cost method.
The difference between the purchase price and the redemption value is distributed over
the remaining life so that a constant yield is achieved. The corresponding valuation
adjustment is shown under the position “Net investment income from insurance busi-
ness”. Default risk is accounted for through the use of write-offs. Intercompany trans-
actions and unrealised gains have been eliminated, with the exception of assets booked
as investments from insurance business.
Shares Listed shares are marked to market at year-end. Unlisted shares are valued
at cost. If the yield or intrinsic value is endangered, a valuation adjustment is made.
Derivatives Derivatives and other financial instruments are generally used to hedge
the exposure to changes in the fair value of recognised assets, liabilities and firm
commitments. Any gains and losses are therefore recognised in the income statement
together with the offsetting loss or gain on the hedged item.
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 carried at their market value.
Statement of higher and lower values arising from the uniform valuation of
investments in the Group accounts and revaluation reserves Higher or lower
values arising from the uniform valuation of investments in the Group accounts in com-
parison with the figures contained in the statutory accounts are recorded as follows:
Valuation differences resulting from the revaluation of fixed-interest securities and
mortgages, unlisted shares and non-consolidated long-term holdings are included in the
income statement (under “Net investment income from insurance business”).
In the case of listed shares and real estate, compensated write-offs in respect of the
difference between the balance sheet value in the statutory accounts and the cost value
are stated in the income statement (“Net investment income from insurance business”).
Valuation differences between cost and market values are allocated to shareholders’ equity
(“Revaluation reserves from the insurance business”) directly, without affecting the income
statement, after deferred tax calculated on the basis of a full provision on unrealised gains
for which there is no contractual obligation to pay to policyholders upon realisation.
66

19. Technical provisions The amount of the technical provisions is based on the ex-
pected liabilities due to the insured and the claimants. As a rule, calculations are made
individually, i.e. depending on the insurance contract or claim. Statistical or mathematical
calculation methods are applied if these lead to approximately the same results and if
they conform to the methods approved by the supervisory authorities of the respective
countries. The equalisation reserves legally prescribed and locally created in some
countries are not included in the Group accounts. As a rule, provisions for claims out-
standing are not discounted. Technical provisions for life business are calculated with
regard to local regulations. The surplus due to policyholders is accounted for on the
basis of the resolutions passed by the individual companies as to the distribution of profit.
CHANGES TO ACCOUNTING PRINCIPLES
Equalisation reserves and discount The amounts taken over from the local
accounts in the previous years in order to create equalisation reserves as well as the
discounts made in accordance with local regulations are no longer considered. The
one-time change-over effect has a positive influence on the income statement
amounting to CHF 71.8 m.
67

20. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Banking business Insurance business Total
1 SPLIT OF INCOME STATEMENT INTO BANKING 1998 1997 1998 1997 1998 1997
AND INSURANCE BUSINESS in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m
Net interest income 5,152 4,579 0 0 5,152 4,579
Net commission and service fee income 8,327 6,592 0 0 8,327 6,592
Net trading income 2,378 5,282 0 0 2,378 5,282
Net income from insurance business 0 0 5,357 1,2 4,775 1,2 5,357 4,775
Other ordinary income 1,386 376 –900 – 594 486 – 218
NET OPERATING INCOME 17,243 16,829 4,457 4,181 21,700 21,010
Salaries and other compensation 7,587 6,967 1,332 1,401 8,919 8,368
Employee benefits 680 632 325 310 1,005 942
Other personnel expenses 438 412 224 209 662 621
Personnel expenses 8,705 8,011 1,881 1 1,920 1 10,586 9,931
Premises and real estate expenses 672 531 213 242 885 773
Expenses for IT, machinery, furnishing,
vehicles and other equipment 784 689 137 166 921 855
Sundry operating expenses 1,841 1,600 826 751 2,667 2,351
Other operating expenses 3,297 2,820 1,176 2 1,159 2 4,473 3,979
Total operating expenses 12,002 10,831 3,057 3,079 15,059 13,910
GROSS OPERATING PROFIT 5,241 5,998 1,400 1,102 6,641 7,100
Depreciation and write-offs on non-current assets 567 573 90 17 657 590
Valuation adjustments, provisions and losses 3,175 2,624 0 0 3,175 2,624
Total depreciation, valuation adjustments,
losses 3,742 3,197 90 17 3,832 3,214
GROUP PROFIT BEFORE EXTRAORDINARY
ITEMS AND TAXES 1,499 2,801 1,310 1,085 2,809 3,886
Extraordinary income 1,011 1,323 543 0 1,554 1,323
Extraordinary expenses 573 3,089 0 445 573 3,534
Taxes 204 842 371 232 575 1,074
GROUP PROFIT 1,733 193 1,482 408 3,215 601
Minority interests 36 114 111 90 147 204
NET PROFIT
(AFTER MINORITY INTERESTS) 1,697 79 1,371 318 3,068 397
Expenses due to the handling of both claims and investments are allocated to the income from insurance business.
1 personnel expenses CHF 510 m (previous year CHF 573 m)
2 other operating expenses CHF 321 m (previous year CHF 312 m)
68

21. 1998 1997 Change
2 INCOME AND EXPENSES FROM Switzerland Abroad Switzerland Abroad Switzerland Abroad
ORDINARY ACTIVITIES BY ORIGIN in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m
Net interest income 2,808 2,344 2,539 2,040 269 304
Net commission and service fee income 3,688 4,639 3,539 3,053 149 1,586
Net trading income 1,193 1,185 853 4,429 340 – 3,244
Income from insurance business 2,933 2,424 1,724 3,051 1,209 – 627
Other ordinary income 410 76 – 64 –154 474 230
NET OPERATING INCOME 11,032 10,668 8,591 12,419 2,441 –1,751
Personnel expenses 3,563 7,023 3,519 6,412 44 611
Other operating expenses 1,755 2,718 1,631 2,348 124 370
TOTAL OPERATING EXPENSES 5,318 9,741 5,150 8,760 168 981
GROSS OPERATING PROFIT BEFORE TAXES 5,714 927 3,441 3,659 2,273 – 2,732
% of total 86% 14% 48% 52%
Taxes 274 301 139 935 135 – 634
% of total 48% 52% 13% 87%
GROSS OPERATING PROFIT AFTER TAXES 5,440 626 3,302 2,724 2,138 – 2,098
% of total 90% 10% 55% 45%
1998 1997 Change Change
3 ANALYSIS OF EXTRAORDINARY INCOME in CHF m in CHF m in CHF m in %
Gains from the disposal of participations 553 27 526 –
Other extraordinary income 1,001 1,296 – 295 – 23
– of which release of reserves for general banking risks 933 1,186 – 253 – 21
TOTAL EXTRAORDINARY INCOME 1,554 1,323 231 17
1998 1997 Change Change
4 ANALYSIS OF EXTRAORDINARY EXPENSES in CHF m in CHF m in CHF m in %
Creation of reserves for general banking risks 3 1,629 –1,626 –100
World War II settlement 459 0 459 –
Other extraordinary expenses 111 204 93 – 46
Realised losses from the disposal of participations 0 42 – 42 –100
Restructuring cost Credit Suisse Group 0 839 – 839 –100
Restructuring cost BZW 0 332 – 332 –100
Information technology, year 2000, euro 0 488 – 488 –100
TOTAL EXTRAORDINARY EXPENSES 573 3,534 – 2,961 – 84
69

22. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1998 1997 Changes Change
5 INCOME STATEMENT OF BANKING BUSINESS Notes in CHF m in CHF m in CHF m in %
NET INTEREST INCOME 6 5,152 4,579 573 13
RESULT FROM COMMISSION AND SERVICE FEE ACTIVITIES
Commission income from lending activities 392 387 5 1
Commissions from securities and investment transactions 8,030 6,389 1,641 26
Commissions from other services 330 307 23 7
Commission expenses 425 491 – 66 –13
NET COMMISSION AND SERVICE FEE INCOME 8,327 6,592 1,735 26
NET TRADING INCOME 7 2,378 5,282 – 2,904 – 55
OTHER ORDINARY INCOME
Income from the sale of financial investments 1,224 112 1,112 –
Income from investment activities 94 57 37 65
– of which from participations valued according to the equity method 83 30 53 177
– of which from other non-consolidated participations 11 27 –16 – 59
Real estate income 28 45 –17 – 38
Sundry ordinary income 322 282 40 14
Sundry ordinary expenses 282 120 162 135
OTHER ORDINARY INCOME 1,386 376 1,010 269
NET OPERATING INCOME 17,243 16,829 414 2
Personnel expenses 8,705 8,011 694 9
Other operating expenses 3,297 2,820 477 17
TOTAL OPERATING EXPENSES 12,002 10,831 1,171 11
GROSS OPERATING PROFIT 5,241 5,998 – 757 –13
Depreciation and write-offs on non-current assets 567 573 –6 –1
– of which on real estate 82 120 – 38 – 32
– of which on other tangible and intangible fixed assets 480 453 27 6
– of which on non-consolidated participations 5 0 5 –
Valuation adjustments, provisions and losses 8 3,175 2,624 551 21
DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES 3,742 3,197 545 17
ANNUAL PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 1,499 2,801 –1,302 – 46
Extraordinary income 1,011 1,323 – 312 – 24
Extraordinary expenses 573 3,089 – 2,516 – 81
Taxes 204 842 – 638 – 76
ANNUAL PROFIT 1,733 193 1,540 –
Minority interests 36 114 – 78 – 68
NET PROFIT (AFTER MINORITY INTERESTS) 1,697 79 1,618 –
70

23. 1998 1997 Change Change
6 ANALYSIS OF THE RESULT FROM INTEREST BUSINESS in CHF m in CHF m in CHF m in %
Interest and discount income
Interest income on claims due from customers 11,365 9,634 1,731 18
Interest income on claims due from banks 6,479 7,943 –1,464 –18
Interest income from money market claims 979 775 204 26
Credit commissions treated as interest earnings 380 330 50 15
Interest income from leasing operations 77 79 –2 –3
Total interest and discount income 19,280 18,761 519 3
Interest and dividend income from trading portfolios
Interest income 5,093 5,544 – 451 –8
Dividend income 469 190 279 147
Total interest and dividend income from trading portfolios 5,562 5,734 –172 –3
Interest and dividend income from financial investments
Interest income 348 376 – 28 –7
Dividend income 77 60 17 28
Total interest and dividend income from financial investments 425 436 –11 –3
Interest expense
Interest expenses for liabilities due to customers 14,314 11,900 2,414 20
Interest expenses for liabilities due to banks 5,801 8,452 – 2,651 – 31
Total interest expense 20,115 20,352 – 237 –1
– of which interest expenses for subordinated liabilities 650 757 –107 –14
TOTAL INTEREST INCOME 5,152 4,579 573 13
1998 1997 Change Change
7 ANALYSIS OF TRADING INCOME in CHF m in CHF m in CHF m in %
Income from securities and commodities trading 1,289 3,085 –1,796 – 58
Income from foreign exchange and banknote trading 140 1,014 – 874 – 86
Income from precious metals trading 163 210 – 47 – 22
Income from trading in interest rate instruments 786 973 –187 –19
TOTAL TRADING INCOME 2,378 5,282 – 2,904 – 55
8 ANALYSIS OF VALUATION ADJUSTMENTS, 1998 1997 Change Change
PROVISIONS AND LOSSES in CHF m in CHF m in CHF m in %
For default risks (credit and country risks) 2,586 2,193 393 18
For other business risks 488 298 190 64
Losses 101 133 – 32 – 24
– of which losses from lending activities 52 64 –12 –19
VALUATION ADJUSTMENTS, PROVISIONS AND LOSSES 3,175 2,624 551 21
71

24. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1998 1997 Change Change
9 INCOME STATEMENT OF INSURANCE BUSINESS Notes in CHF m in CHF m in CHF m in %
NON-LIFE BUSINESS
Premiums written 10 12,257 13,694 –1,437 –10
Change in provisions for unearned premiums
and in actuarial provisions (health) – 454 – 397 – 57 14
PREMIUMS EARNED 11,803 13,297 –1,494 –11
Claims and annuities paid – 8,157 – 8,940 783 –9
Change in provision for claims and annuities outstanding – 763 –1,214 451 – 37
CLAIMS INCURRED – 8,920 –10,154 1,234 –12
Dividends paid – 229 –189 – 40 21
Change in provision for dividend –106 –106 0 0
DIVIDENDS TO POLICYHOLDERS INCURRED – 335 – 295 – 40 14
OPERATING EXPENSES – 3,771 – 4,077 306 –8
UNDERWRITING RESULT NON-LIFE –1,223 –1,229 6 0
Net investment income 11 2,261 2,123 138 7
Interest on deposits and bank accounts (incl. exchange rate differences) 140 128 12 9
Other interest paid – 98 – 71 – 27 38
Other income and expenses –180 –190 10 –5
PROFIT BEFORE TAX AND MINORITY INTERESTS 900 761 139 18
LIFE BUSINESS
Premiums written 10 14,674 12,072 2,602 22
Change in provisions for unearned premiums 0 –111 111 –100
PREMIUMS EARNED 14,674 11,961 2,713 23
Claims paid – 6,987 – 6,038 – 949 16
Change in provisions for claims outstanding 28 –113 141 –
CLAIMS INCURRED – 6,959 – 6,151 – 808 13
CHANGE IN ACTUARIAL PROVISIONS – 9,263 – 7,305 –1,958 27
Bonus allocation –1,541 –1,420 –121 9
Change in participation fund – 377 –208 –169 81
ALLOCATION TO PARTICIPATION –1,918 –1,628 – 290 18
OPERATING EXPENSES –1,359 –1,261 – 98 8
Net investment income 11 5,758 5,006 752 15
Interest on deposits and bank accounts 207 118 89 75
Interest on bonuses credited to policyholders –117 –124 7 –6
Other interest paid – 302 –189 –113 60
Other income and expenses (incl. exchange rate differences) – 291 – 61 – 230 377
PROFIT BEFORE TAX AND MINORITY INTERESTS 430 366 64 17
72

25. 1998 1997 Change Change
INCOME STATEMENT OF INSURANCE BUSINESS (continued) in CHF m in CHF m in CHF m in %
SUMMARY
Profit before tax and minority interests (non-life business) 900 761 139 18
Profit before tax and minority interests (life business) 430 366 64 17
PROFIT BEFORE TAX, MINORITY INTERESTS,
EXTRAORDINARY EXPENSES AND INTEREST ON BONDS 1,330 1 127 203 18
Interest on convertible bonds and warrant issues – 20 – 42 22 – 52
Extraordinary expenses 0 – 445 445 –
Income from disposal of investments/business areas 543 0 543 –
Tax – 371 – 232 –139 60
ANNUAL PROFIT BEFORE MINORITY INTERESTS 1,482 408 1,074 263
Minority interests –111 –90 – 21 23
ANNUAL PROFIT AFTER MINORITY INTERESTS 1,371 318 1,053 331
10 ANALYSIS OF DIRECT BUSINESS, 1998 1997 Change Change
GEOGRAPHICAL DISTRIBUTION in CHF m in CHF m in CHF m in %
Europe
Non-life 10,449 10,064 385 4
Life 14,484 11,587 2,897 25
EUROPE, TOTAL 24,933 21,651 3,282 15
North America
Non-life 2,350 2,498 –148 –6
Life 5 17 –12 – 71
NORTH AMERICA, TOTAL 2,355 2,515 –160 –6
Asia-Pacific
Non-life 225 1,559 –1,334 – 86
Life 85 54 31 57
ASIA-PACIFIC, TOTAL 310 1,613 –1,303 – 81
Other regions
Non-life 46 48 –2 –4
Life 0 0 0 0
OTHER REGIONS, TOTAL 46 48 –2 –4
DIRECT BUSINESS, GROSS, TOTAL 27,644 25,827 1,817 7
Reinsurance assumed, gross
Non-life 723 1,309 – 586 – 45
Life 254 472 – 218 – 46
REINSURANCE ASSUMED, GROSS, TOTAL 977 1,781 – 804 – 45
TOTAL BUSINESS, GROSS 28,621 27,608 1,013 4
Reinsurance ceded
Non-life –1,536 –1,784 248 –14
Life –154 – 58 – 96 166
REINSURANCE CEDED, TOTAL –1,690 –1,842 152 –8
Business, net
Non-life 12,257 13,694 –1,437 –10
Life 14,674 12,072 2,602 22
TOTAL BUSINESS, NET 26,931 25,766 1,165 5
Home market Switzerland
Non-life 2,912 2,820 92 3
Life 8,954 6,489 2,465 38
HOME MARKET SWITZERLAND, TOTAL 11,866 9,309 2,557 27
73