28 Guarantees and Commitments
| In CHF million | ||||
|---|---|---|---|---|
| 31.12.2024 | 31.12.2023 | |||
| Financial guarantees1 | 17 | 15 | ||
| Loan commitments | 234 | 297 | ||
| Capital commitments for alternative investments | 162 | 123 | ||
| Capital commitments for real estate investments | 344 | 378 | ||
| Other capital commitments | 159 | 123 | ||
| Contractual obligations to purchase or construct investment property | 434 | 728 | ||
| Commitments to construct inventory property | 70 | 178 | ||
| Other contingent liabilities and commitments | 290 | 75 | ||
| Total | 1 710 | 1 917 | ||
| 1Of which relating to investments in associates | 9 | 5 | ||
Financial guarantees
The Group has issued financial guarantees and similar instruments. Financial guarantees provide for specified payments to be made to reimburse the holder for a loss incurred in the event that a client fails to make payment when due.
Loan commitments
The Group has also entered into irrevocable commitments to extend credit in the form of loans and other instruments. They represent undrawn credit lines which are available to clients to secure their liquidity needs. With respect to credit risk, these commitments are contingent upon clients maintaining certain credit standards, and the Group monitors its exposure on a regular basis.
The total amount of credit commitments includes commitments to lend at fixed rates, which expose the Group to interest rate risk. These commitments are entered into for restricted periods of time. As at 31 December 2024, committed principal amounts totalled CHF 106 million for commitments in Swiss francs (2023: CHF 75 million) and CHF 66 million for commitments in euro (2023: CHF 107 million). The range of committed interest rates is 0.80% to 3.07% for commitments in Swiss francs and 1.15% to 3.62% for commitments in euro.
Capital commitments for real estate and alternative investments
They represent unfunded commitments to make investments in direct private equity, private equity funds, infrastructure and hedge funds. Such commitments do not involve credit or market risk, as the Group purchases investments at market value at the time the commitments are invoked.
Other capital commitments
They represent agreements to provide liquidity to protection funds in the insurance industry, commitments to make investments in real estate funds and other commitments.
Contractual obligations to purchase or construct investment property
They mainly relate to projects for the purchase or construction of investment property in Switzerland and Germany.
Commitments to construct inventory property
Commitments for repairs and maintenance of inventory property are included in this line item and amounted to CHF 271 million as at 31 December 2024 (2023: CHF 51 million).
Other contingent liabilities and commitments
The Group is involved in various legal proceedings, claims and litigation generally relating to its insurance operations. The outcome of such current legal proceedings, claims and litigation could have a material effect on operating results or cash flows when resolved in a future period. However, in the opinion of the management these matters are adequately provided for as at the balance sheet date.