CIG PANNÓNIA LIFE INSURANCE PLC.

Transcription

1 CIG PANNÓNIA LIFE INSURANCE PLC. QUARTERLY REPORT ON THE BASIS OF THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED ACCORDING TO THE INTERNATIONAL FINANCIAL REPORTING STANDARDS ADOPTED BY THE EU Q August 2017 CIG Pannónia Life Insurance Plc., Q information 1

2 1. Summary CIG Pannónia Life Insurance Plc. (hereinafter: Issuer) publishes its report for the first half of 2017 on this day. The Issuer publishes in this quarterly report for the first half of 2017, as required by the legislation, its consolidated, unaudited data in accordance with the International Financial Reporting Standards (IFRS) adopted by the EU. The quarterly report has been prepared in accordance with the provisions of IAS 34. Data compiled in accordance with the Hungarian Accounting Act, unaudited and unconsolidated, as well as data are published by the Issuer simultaneously with the present quarterly report, in a quarterly information paper concerning the Issuer and its subsidiaries, CIG Pannónia First Hungarian General Insurance Company Ltd. (hereinafter referred to as EMABIT), Pannónia Life Insurance cplc. (hereinafter referred to as Pannónia Life Insurance), and Pannónia General Insurance cplc. (hereinafter referred to as Pannónia General Insurance). Main results and events of Q2 2017: - The CIG Pannónia Group 1 (hereinafter: Group) gross written premium was HUF million in the first half of 2017 which means a 50% increase compared to the previous year, mainly due to the new subsidiaries. The non-life shows a 74% growth in gross written premium according to IFRS, while the gross written premium according to IFRS of the life increased 38% compared to the first half of The Issuer shareholders equity was HUF million in 2016 which increased to HUF million, that is 61% growth in On 13 April 2017 the general meetings of CIG Pannónia First Hungarian General Insurance Ltd and Pannónia General Insurance cplc. decided on the merger by acquisition of Pannónia General Insurance cplc. into CIG Pannónia First Hungarian General Insurance cplc., which plan was approved by the supervisory authority at 23 June. MKB Bank cplc as the minority shareholder of Pannónia General Insurance cplc. submitted a statement to the Board of Directors of CIG Pannónia First Hungarian General Insurance cplc. on the decision that it wishes not to be a shareholder of the successor (merged) company and it requests the payment for its share according to the draft terms of transformation. - On 24 April 2017 the General Meeting of CIG Pannónia Life Insurance Plc. approved the transformation plan of the Company and Pannónia Life Insurance cplc., the draft terms of the merger by acquisition with its annexes, in particular the draft statements of assets and liabilities and the draft inventory of assets, the report of the auditor and the merger agreement. The General Meeting determined 30 June 2017 as the date of the transformation. The type of the transformation is merger by acquisition, which means that Pannónia Life Insurance cplc. merges into CIG Pannónia Life Insurance Plc. by acquisition. The merge was authorized by the supervisory authority on 23 June The Company Registry Court of Budapest Capital Regional Court registered the merger by acquisition of Pannónia Life Insurance cplc. into the Company and the merger by acquisition of Pannónia General Insurance cplc. into CIG Pannónia First Hungarian General Insurance Company Ltd on 30 June The date of the transformation is 30 June With the merger by acquisition Pannónia Life Insurance cplc. ceased to exist and all of its assets and liabilities were transferred to CIG Pannónia Life Insurance Plc. by way of universal succession. The business form of CIG Pannónia Life Insurance Plc. remained unchanged, it continues its operation as a public limited company, the executive officers and the registered capital of the company remained unchanged. Pannónia General Insurance cplc. also ceased to exist and all of its assets and liabilities were transferred to CIG Pannónia First Hungarian General Insurance Company Ltd. by way of universal succession. The business form of CIG Pannónia First Hungarian General Insurance Company Ltd. remained unchanged, it continues its operation as a public limited company, the executive officers and the registered capital of the company remain unchanged. 1 Group, or CIG Group is referred as the Issuer and its consolidated companies. CIG Pannónia Life Insurance Plc., Q information 2

3 - On 31 Marc 2017 the General Meeting of Pannónia General Insurer cplc. (as the majority ownership of CIG Pannónia First Hungarian General Insurance Ltd) decided to transfer the portfolio of compulsory motor vehicle liability and condominium and home to Aegon Hungary General Insurance cplc. The supervisory authority approved the transfer on 23 June 2017, with the effect of 1 July One step of the integration process is the portfolio adjustment: according to its business strategy, CIG Pannonia First Hungarian General Insurance Ltd. focuses on those niche markets where it can operate competitively. - CIG Pannónia Life Insurance Plc., on 11 April 2017 concluded a strategic cooperation agreement with MKB Bank cplc. According to this, the two companies cooperate in long term, the branches of MKB started to sell the pension and products of CIG Pannónia, while the agents of CIG Pannónia offer the products of the MKB Bank for their clients. With this strategic agreement, the mutually beneficial cooperation between the companies will continue to strengthen. - Parallel with the legal merger, the change of IT systems and the migration of policies into the registration systems of CIG Pannónia has been started. The first step is that the claim settlement of nonlife s have been done in the systems of CIG Pannónia since 1st May On 1st July 2017, the policies of the non-life have been migrated into the IT system of the CIG Pannónia First Hungarian General Insurance Ltd. In line with the IT migration the harmonisation of the operation and the merger of the operating areas are also in progress. - The after-tax result of the Group is a HUF 2,484 million profit in the first half of 2017, the total comprehensive income of the Group is a HUF 2,425 million profit. The earnings per share of the owners is HUF 40,2 for the half year. The acquistions badwill and the revaluation of the contingent consideration had a HUF million one-off revenue, though the assets held for sale resulted a HUF 399 million loss in the first half year. The loss of acquired companies portfolio may decreaseare expected to result a loss from the results of CIG Pannónia Life Insurance Plc. and CIG Pannónia Firsr Hungarian General Insurance Ltd. in In the life- the sales activity of the tied agent network has reached 111% of H in the first half of The performance of the independent broker network was 148% higher than in the same period of the previous year, while the bank channel performed twentyone times better thanks to the new subsidiaries. So the total amount of new acquisitions was HUF million in the first half year in the life, that is 173% of the amount of the same period in the previous year. The new acquisition in nonlife increased by 203% compared to H The available solvency capital of the Issuer is 227 percent at the end of first quarter in , which significanty exceeds the 150 percent Solvency Capital Requirement of the Supervisory Authority (which contains a 50 percentage volatility puffer). - The owners of Pannónia Insurance Companies approved the companies audited annual report and business report for the financial year 2016, prepared according to the Hungarian Accounting Act, and the General Meeting of CIG Pannonia held on 24 April 2017 approved the Company's audited, consolidated financial statements and consolidated business report for the financial year 2016, prepared according to the international financial reporting and accounting standards accepted by the European Union. 2 At the time of preparing this quarterly report, the consolidated solvency capital calculations as at are in progress; the deadline for the completion of this calculation is the end of the third quarter. CIG Pannónia Life Insurance Plc., Q information 3

4 - The General Meeting appointed Ernst & Young Audit LLC (chamber registration number: ) until the closure of the financial year 2017 and personally responsible auditor Gabriella Virágh (chamber registration number: ) as the statutory auditor of the Company. - The General Meeting appointed Mrs Imre Fekete as a member of the Supervisory Board and Audit Committe of the Issuer for a three years period with the effect from 2. June 2017 by the authorization of the National Bank of Hungary. - CIG Pannónia First Hungarian General Insurance Ltd. made a strategic decision on starting it s activity in retail casco. The decision is justified by the fact that after the merger by acquisition EMABIT retained the retail casco portfolio of Pannónia General Insurance cplc. - Pannónia General Insurer cplc., to cover it s risk and decrease the expected losses, restructured it s re structure in the first part of The Insurer concluded an adverse development cover contract to cover it s claims from previous years. - The revision of the product structure at Pannónia Life Insurer Ltd. is in progress. The sale of the profitable products and products in the target s of the Group, will be continued. While the Group will maintain the portfolio of the other life products and serve its existing clients. - On 1st June 2017 the Budapest-Capital Regional Court (striking down the decision of the court of first instance) has partly suspended until the final decision in the base litigation the execution of the decision of the National Bank of Hungary of 8th November 2016 regarding Dimenzió Kölcsönös Biztosító és Önsegélyező Egyesület in its order of 24th May Namely, the Court temporarily suspended the implementation of those parts of the decision in which the National Bank of Hungary had withdrawn the activity license of Dimenzió association and appointed the supervisory commissioner of the Pénzügyi Stabilitási és Felszámoló Nkft. (PSFN) to accomplish the transfer of the portfolio of the association. Events after the balance sheet date: - The MKB Bank cplc., in accordance with the merger agreement related to Pannónia Life Insurer Ltd., is entitled by a share exchange to receive pieces of ordinary shares of CIG Pannónia Life Insurance Plc. The shares were provided from the own shares of the Company. The shares were transferred to the securities account of the owner on 6 July. Meanwhile the CIG Pannónia First Hungarian General Insurance Ltd transfered the value of the shares of the Pannónia General Insurer cplc. determined in the merger agreement to the MKB Bank cplc. - On 31 July 2017, on the general meeting of Pannonia CIG Fund Manager Ltd. (which is founded by the CIG Pannónia Life Insurance Plc. with it s strategic partner, the Pannonia Pension Fund) decided to decrease the share of CIG Pannónia Life Insurance Plc. from 50% to 16% in the Fund Manager. The reason of the change (with the intention of the economies of scale and efficiency) is to increase it s owner scale with MKB Bank cplc., MKB Pension Fund, MKB-Pannónia Health and Self-help Fund and the Gránit Bank Ltd. With the increase of the ownerscale, the registered capital of the Pannonia CIG Fund Manager Ltd. increased significantly from the previous HUF 150 million to HUF 306,12 million. The profit of the Pannonia CIG Fund Manager Ltd. will be subdivided between the owners by the profitability of the owners portfolio and not by the share from the Pannonia CIG Fund Manager Ltd.. Accroding to the preference shares the CIG Pannónia Life Insurance Plc. delegates 1-1 member to the 7 members Executive Board and 5 members Audit Board. Budapest, 22 August CIG Pannónia Life Insurance Plc. CIG Pannónia Life Insurance Plc., Q information 4

5 2. Financial Statements Consolidated Statement of Comprehensive Income- cumulated data Data in million HUF 2017Q1-Q2 (A) 2016Q1-Q4 (B) 2016Q1-Q2 (C) Change (A)-(C) Gross written premium Changes in unearned premiums reserve Earned premiums, gross Ceded re premiums Earned premiums, net Premium and commission income from investment contracts Investment income Share of the profit of associates and joint ventures accounted for using the equity method Other operating income Other income Total income Claim payments and benefits, and claim settlement costs Net change in the value of life technical reserves and unit-linked life reserves Investment expenditure Change in the fair value of liabilities relating to investment contracts Change in the fair value of assets and liabilities relating to embedded derivatives Investment expenses, changes in reserves and benefits, net Fees, commissions and other acquisition costs Other operating costs Operating costs Results from the available for sale assets Profit/loss before taxation Tax income / (expenses) Deferred tax income / (expenses) Profit/loss after taxation Comprehensive income, wouldn t be reclassified to profit or loss in the future Comprehensive income, would be reclassified to profit or loss in the future Other comprehensive income Total comprehensive income CIG Pannónia Life Insurance Plc., Q information 5

6 Consolidated Statement of Comprehensive Income cumulated data data in million HUF 2017Q1-Q2 (A) 2016Q1-Q4 (B) 2016Q1-Q2 (C) Change (A)-(C) Profit/loss after taxation attributable to the Company s shareholders Profit/loss after taxation attributable to NCI Profit/loss after taxation Total comprehensive income attributable to the Company s shareholders Total comprehensive income attributable to NCI Total comprehensive income Earnings per share Basic earnings per share (HUF) 40,2 11,7 5,1 35,1 Diluted earnings per share (HUF) 37,8 11,7 5,1 32,7 Earnings per share of NCI's Basic earnings per share (HUF) -0,2 0,0 5,1-5,3 Diluted earnings per share (HUF) -0,2 0,0 5,1 0,0 CIG Pannónia Life Insurance Plc., Q information 6

7 Consolidated Statement of Comprehensive Income -quarterly data data in million HUF 2017Q2 (A) 2017Q1 (B) 2016Q2 (C) Change (A)-(C) Gross written premium Changes in unearned premiums reserve Earned premiums, gross Ceded re premiums Earned premiums, net Premium and commission income from investment contracts Investment income Share of the profit of associates and joint ventures accounted for using the equity method Other operating income Other income Total income Claim payments and benefits, and claim settlement costs Net change in the value of life technical reserves and unit-linked life reserves Investment expenditure Change in the fair value of liabilities relating to investment contracts Change in the fair value of assets and liabilities relating to embedded derivatives Investment expenses, changes in reserves and benefits, net Fees, commissions and other acquisition costs Other operating costs Operating costs Results from the available for sale assets Profit/loss before taxation ######## Tax income / (expenses) Deferred tax income / (expenses) Profit/loss after taxation Comprehensive income, wouldn t be reclassified to profit or loss in the future Comprehensive income, would be reclassified to profit or loss in the future Other comprehensive income ######## Total comprehensive income CIG Pannónia Life Insurance Plc., Q information 7

8 Consolidated Statement of Comprehensive Income -quarterly data (continuation) data in million HUF 2017Q2 (A) 2017Q1 (B) 2016Q2 (C) Change (A)- Profit/loss after taxation attributable to the Company s shareholders Profit/loss after taxation attributable to NCI Profit/loss after taxation Total comprehensive income attributable to the Company s shareholders Total comprehensive income attributable to NCI Total comprehensive income CIG Pannónia Life Insurance Plc., Q information 8

9 Consolidated Statement of Financial Position data in million HUF ASSETS Change (A) (B) (C) (A)-(C) Intangible assets Property, plant and equipment Deferred tax assets Deferred acquisition costs Reinsurer's share of technical reserves Investments in jointly controlled companies Available-for-sale financial assets Investments for policyholders of unit-linked life policies Financial assets - investment contracts Financial assets - embedded derivatives Receivables from policies and other receivables Other assets and prepayments Cash and cash equivalents Assets held for sale Total assets LIABILITIES Technical reserves Technical reserves for policyholders of unit-linked Investment contracts Liabilities from the issue of interest-bearing shares Loans and financial re Liabilities from Other liabilities and provosions Liabilities related to the available for sale assets Total liabilities NET ASSETS SHAREHOLDERS' EQUITY Registered capital Capital reserve Other reserves Profit reserve Equity attributable to the Company's shareholders Non-controlling interests Total shareholders' equity CIG Pannónia Life Insurance Plc., Q information 9

10 Consolidated Changes in Equity Q1-Q data in million HUF Share capital Capital reserve Equity of the Total Other Retained shareholders of the NCI shareholders reserves earnings Company equity Balance on 31 December Total comprehensive income Other comprehensive income Profit in reporting year NCIs (aquisition) Derecognition of NCIs Balance on 30 June Consolidated Changes in Equity Q1-Q data in million HUF Share capital Capital reserve Equity of the Total Other Retained shareholders of the NCI shareholders reserves earnings Company equity Balance on 31 December Total comprehensive income Other comprehensive income Profit in reporting year Restructuring in the Shareholders' equity Balance on 30 June CIG Pannónia Life Insurance Plc., Q information 10

11 Consolidated Statement of Cash Flows data in million HUF 2017 Q1 - Q Q1 - Q2 Profit/loss after taxation Modifying items Depreciation and amortization Extraordinary depreciation 0 9 Booked impairment Result of investment sales Exchange rate changes Profit or loss of joint ventures Changes of assets and liabilities relating to embedded derivatives, net Corporate tax Interest received Badwill on acquisition Results of minority interests Results of available for sale assets Interest cost Change of active capital items: Increase / decrease of deferred acquisition costs (-/+) Increase / decrease of investments for policyholders of unit-linked life policies (-/+) Increase / decrease of financial assets investment contracts (-/+) Increase / decrease of receivables from contracts and other receivables (-/+) Increase / decrease of reinsurer s share from technical reserves (-/+) Increase /decrease of other assets and active accrued and deferred items (-/+) Increase / decrease of technical reserves (+/-) Increase / decrease of liabilities from (-/+) Increase / decrease of investment contracts (+/-) Increase / decrease of technical reserves due to unit-linked life (+/-) Increase / decrease of other liabilities (+/-) Corporation tax payed Net cash flow from operating activities CIG Pannónia Life Insurance Plc., Q information 11

12 Consolidated Statement of Cash Flows Cash flow from investing activities 2017 Q1 - Q2 data in million HUF 2016 Q1 - Q2 Purchase of debt instruments(-) Sales of debt intruments(+) Purchase of tangible and intangible assets (-) Sales of tangible and intangible asset (+) 3 0 MKB acquisition (net of cash) Interest received Dividend received Cash flow from investing activities Cash flow from financing activities Securing loans Repayment of loans Interest payed on interest bearing shares Cash flow from financing activities Impacts of exchange rate changes 2-5 Net increase / decrease of cash and cash equivalents (+/-) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period CIG Pannónia Life Insurance Plc., Q information 12

13 3. Changes in accounting policies For financial year beginning on 1 January 2017, the Group does not have new mandatory used standard which has significant influence on the structure of the Group s Financial Statements. CIG Pannónia Life Insurance Plc., Q information 13

14 4. Presentation of the Issuer s financial position consolidated and unaudited data for Q2 2017, on the basis of the financial reporting standards (IAS 34) adopted by the EU The Issuer and its consolidated companies, representing together the CIG Group, deal with the sale of unit-linked life, term life, endowment, health, pension, rider and general, within that mainly casco, compulsory vehicle liability, home, business property- and liability, freight liability and suretyship and also deal with portfolio management and fund management. The company with a decisive impact on the Group s operations remains CIG Pannónia Life Insurance Plc., as a parent company; however, the performance of EMABIT and Pannónia CIG Fund Manager Ltd. is becoming more substantial. Pannónia Insurance Companies as the new members of the Group (from 1 st January 2017) had a significant influence on the results of the Group. In the first half of 2017, the Group s gross written premium was HUF 12,602 million, which is 150 percent of the revenues generated in the same period of the previous year. Of this HUF 6,408 million are the gross written premium of unit-linked life (of this HUF 1,637 million of pension policies), HUF 1,271 million are traditional life products (of this HUF 420 million from pension policies), HUF 123 million are health policies, and HUF 4,800 million are non-life. The non-life generated a gross written premium of HUF 4,800 million in the first half of 2017 according to IFRS increased by 75% compared to the previous year (HUF 2,745 million). In the life the gross written premium from the first annual premiums of policies sold was HUF 977 million, which is a HUF 30% increase compared to the same period of the previous year (HUF 749 million). The gross written premium income from renewals was HUF 5,039 million in the first half of 2017 in contrast to HUF 4,384 million in the same period of the previous year, so the renewal premiums increased by 15%. Top-up and single premiums (HUF 1,785 million) were more than twice as the premiums in the same period of the previous year, mainly relating to unit-linked life policies. Within the total life premium income- according to IFRS - of HUF 7,801 million, the rate of top-up and single premiums is 23 percent. The increase in the premiums is due to the acquisition of MKB companies. CIG Pannónia Life Insurance Plc., Q information 14

15 The change in unearned premium reserve in the first half of 2017 was HUF 436 million, while the amount of ceded re premiums was HUF 2,553 million. The significant increase of these items is mainly due to the continuous growth of the non-life portfolio and the higher re s proportion in non-life. In order to decrease the uncertainities in the portfolio of the Pannónia General Insurance Company, the Company increased the reinsurer s share in the outstanding claim reserves of 31 December 2016 from 40% to 80% and transferred the surplus as re premium to its reinsurer partner in the first half year of Unit-linked life policies sold by the Group that do not qualify as policies under IFRS are classified by the Group as investment contracts. In connection with the investment contracts, the Issuer generated a premium and commission income of HUF 74 million in total during the reporting period. The other operating income (HUF 548 million) mainly includes the Issuer s income from fund management (HUF 434 million), which increased significantly compared to Q Also recognized and accounted for as part of this item the reversal of losses on receivables (HUF 37 million) and the income from pending charges (HUF 23 million) and the reversal of the provision (HUF 20 million). The most important item among expenses are claim payments and benefits and claim settlement costs (together HUF 5,926 million), including HUF 4,378 million related to partial or full surrender of unit-linked life policies, HUF 1,301 million of maturity of unit-linked policies and HUF 318 million claim settlement expenditure paid on general s. The amount of net change in reserves (HUF 481 million), which is made up of mainly the following changes in reserves. The unit-linked life reserve amount increased by HUF 307 million. The actuarial reserves increased by HUF 478 million, while the result-depending reserves increased by 5 million.the technical reserves for the bonus payment of the clients increased by 71 million and there was HUF 100 million increase in the other technical reserves. Mainly due to the operation in the non-life branch and the change in the re structure, the outstanding net claim reserves decreased by HUF 216 million, while the cancellation reserves decreased by HUF 260 million concurrently with the decrease of the premium receivables. There was also a decrease in the reserve for premium refunds independent of profit (HUF 4 million). The total operating cost of the Issuer was HUF 4,648 million in the first half of 2017, of which HUF 2,761 million is related to the fees, commissions and other acquisition costs, and HUF 1,887 million is related to other operating costs. Acquisition costs show increasing tendency, although at a lower rate than the increase in the gross premiums earned. The primary reason for this is that in the amount of new sales of the new members the sales of the non-life s that have lower commission rate represent a higher proportion. The other operating costs increased by HUF 1,069 million compared to the same period of the previous year (HUF 818 million in the first half year of 2016). This increase is almost entirely related to the other operating costs incurred at the Pannónia Insurance CIG Pannónia Life Insurance Plc., Q information 15

16 Companies. On evaluating the net asset value of the acquired companies, the difference between the fair value and the value according to IFRS4 of the technical reserves is HUF 256 million in case of the life company, and HUF 937 million in case of the non-life company, This difference is recognised among immaterial assets and will be amortised parallel with the on later evaluations. The amount of the amortisation in the first half year explains HUF 350 million from the increase of the other operationg costs. The Group expects a significant decrease in the operating costs after the merger by acquisition, and the operational and IT migration. The investment result is HUF 3,888 million profit, which is due to the aggregated effect of the following issues. The one-off item on the acquisition of MKB Insurance Companies was HUF 3,003 million on 1st January 2017, of which is described in paragraph 5 th of the Executive Summary. The amount of the contingent consideration was revalued through profit or loss at the end of the half year, which resulted in a HUF 194 million profit. The unit-linked yield was HUF 576 million in the first half year of During the second quarter of 2017 the rise of stock markets continued, and overperformed the bond market instruments, while the raw material market investments had produced negative yield as in the previous quarter. The developing stock markets overachieved significantly the developed stock markets, where the Japanese market produced the weakest performance. After the correction at the end of the quarter the Europeans shares were slightly underperformares compared to the American stocks. Among the stock markets of emerging countries, the Chineese and Indian market lead the increase, while the Russian stock market suffered again devaluation. The BUX index closed this period with around 11% growth. Accordingly during this quarter the most popular funds were those that invest in the Eeastern- Euaropean and Chineese stock markets and the actively managed portfolios.moreover as a result of the Navigator service there was a significant capital inflow into the liquidity funds. The investment results were negatively influenced by the interest costs of financial re, which amounted to HUF 26 million. The Issuer had HUF 283 million yield profit on its own investments in The interest expenditure for interest-bearing shares were HUF 142 million in the first half of 2017 which is shown in investment expenditure, and there was HUF 142 million loss in change in fair value of assets and liabilites related to embedded derivatives, which is totally HUF 284 million loss. Changes in the Liabilities from the issue of interest bearing shares under the duration of the shares has a significant negative effect on the Issuer s results and on the capital according to IFRS, but this negative effect except from the nominal interest payable does not mean real expenditure for the Issuer, it represents incremental value for the owners of the interest bearing shares. At the end of the duration (after 11 September 2017), when the interest bearing shares will be converted into ordinary shares, the amount of the liability (the Liabilities from the issue of interest bearing shares and the Financial assets embedded derivatives from interest bearing shares) will be shown as capital increase, that compensates the capital decrease effect of the expenditure of interest bearing shares recognized prevoiusly. CIG Pannónia Life Insurance Plc., Q information 16

17 The Issuer realized HUF 107 million profits from the result of the Pannónia CIG Fund Manager Ltd. in the first half year of This is shown in the Share of the profit of associates and joint ventures accounted for using the equity method. According to EU IFRS the portfolio that Pannónia General Insurance cplc. sold to Aegon Hungary General Insurance cplc. have to be considered as assets held for sale as they met the criteria determined by the IFRS 5. The realised loss on this group of assets was HUF 399 million, which consists of the loss of the assets held for sale (HUF -115 million) in H1, the expected result of the sale (HUF 300 million) and the impairment loss of the intangible asset (HUF -584 million) derived from the technical reserves revaluation on the held for sale portfolio. The asset group that currently produce losses, will represent no further loss after the sale. As a result of all of the above, the profit before tax amounted to HUF 2,576 million profit (in the same period of 2016 the profit before taxation was HUF 341 million), that was reduced by the HUF 92 million tax liability. The profit after tax is HUF 2,484 million, that is HUF 2,168 million higher than the profit after tax of the same period of The other comprehensive income contains the decrease in the fair value of available-for-sale financial assets amounting to HUF 59 million and, thus, the total comprehensive income represents a profit of HUF 2,425 million in the firs thalf year of The Issuer s balance sheet total was HUF 102,198 million; its financial position is stable; the company has met its liabilities in full. On 30 June 2017 the shareholders equity was HUF 6,396 million. CIG Pannónia Life Insurance Plc., Q information 17

18 5. Executive summary In the first half year of 2017 the annualized premium of the new sales of regular premium policies sold by the Group is HUF 4,051 million that is 140 percent higher than in the same period of the previous year. Of this HUF 1,096 million is from unit-linked life, HUF 329 million is from traditional and group life policies and HUF 2,626 million is from general. In the previous year the annualized premium of the new sales was HUF 1,689 million, of which HUF 750 million related to unit-linked life, HUF 73 million was derived from traditional and group life policies and HUF 866 million related to general. From the whole amount of the annualized premium of new sales of H1 2017, HUF 1,649 million is related to the recently consolidated Pannónia Insurance Companies, of which HUF 401 million is related to Pannónia Life Insurance Company and HUF 1,248 million is related to Pannónia General Insurance Company. New sales Annualized premium of new sales Change Change % (A - C) / (million HUF) (A) (B) (C) (A - C) C Unit-linked life s % Traditional and group life s % General s % Total annualized premium of new sales % As for life policies sold in the first half year of 2017, the share of the tied agent network is 38 percent, while the brokerage network was 33 percent and the bank channel was 29 percent. The whole amount of the general s are related to independent broker and bank channels. The new sales data of general s contains only the regular premium policies. 3 In case of single-premium unit-linked policies the premium of new sales is 10% of the single premium. CIG Pannónia Life Insurance Plc., Q information 18

19 Market share indicators 4 On the basis of the gross written premium of life policies On the basis of the adjusted gross written premium of life policies On the basis of the gross written premium of non-life policies million HUF Market share million HUF Market share million HUF Market share ,94% ,32% ,19% ,04% ,35% ,52% ,28% ,85% ,63% After examining the adjusted gross written premium, the Insurer, with a market share of 4.04 percent, it is the company with the 9. largest adjusted gross written premium on the basis of the fourth quarter of 2016 data. The EMABIT gained a 1.28 percent share in non-life market in Q on examining the gross written premium. The acquisition of Pannónia Insurance Companies resulted a 4.73% share on life market, which means the 7 th place in the gross written premium rank. The non-life share of the group increased to 2.72 percent,that will decrease nearly to 2% due to the transfer of the portfolio sold. 4 The quarterly data publication by MABISZ ceased, data on Q2017 were not available, thus the table shows the data for CIG Pannónia Life Insurance Plc., Q information 19

20 Pannónia (former MKB) Insurance Companies were involved into the consolidation with the date of the acquisition (1 st January 2017). The following tables contain the consolidated financial statements of Pannónia Insurance Companies, including the effects of the acquisition prepared on the basis of the EU IFRS accounting policy, adopted by the Group. The income statements prepared according to the Hungarian Accounting Law for H of the Pannóni Insurance Companies are contained in the quarterly report of CIG Pannónia. Pannónia General Insurance cplc. separate financial statement (data in million HUF) Intangible assets 970 Reinsurer's share of technical reserves Property, plant and equipment 77 Deferred acquisition costs 148 Available-for-sale financial assets Receivables from associated companies 26 Receivables from policies and other receivables Other assets and prepayments 18 Cash and cash equivalents 199 Total assets Technical reserves Liabilities from Other liabilities and provosions Total liabilities Total fair value of net assets (Shareholder s equity) CIG Pannónia Life Insurance Plc., Q information 20

21 Pannónia Life Insurance cplc. separate financial statement (data in million HUF) Intangible assets 265 Deferred acquisition costs 109 Available-for-sale financial assets Investments for policyholders of unit-linked life policies Financial assets - investment contracts Receivables from policies and other receivables 75 Other assets and prepayments 5 Cash and cash equivalents 163 Total assets Technical reserves Technical reserves for policyholders of unit-linked Investment contracts Liabilities from - 95 Other liabilities and provosions Liabilities to associated companies - 26 Total liabilities Total fair value of net assets (Shareholder s equity) The Group evaluated the acquired companies according to IFRS 3 standard at the date of the acquisition. It assessed the fair value of assets, liabilities and contingent liabilities and the cost of the acquisition (the estimated value of the acqusition) as at 1st January The negative difference between the contingent consideration and cost of the acquisition and the share of the acquirer in the fair value of assets, liabilities and contingent liabilities is the badwill (negative goodwill), which is realised as profit as at the date of the acquisition. CIG Pannónia Life Insurance Plc., Q information 21

22 The following table contains the settlement of the acquisition cost and badwill: Calculation of negative goodwill at the date of acquisition (data in million HUF) MKB General Insurance cplc. MKB Life Insurance cplc. Total Consideration transfered Expected value of the adjusment according to the contract Contingent consideration Total consideration transfered NCI (propotional part of the fair value of net assets) Total fair value of net assets Badwill The acquisition results in a badwill of HUF 1,691 million in case of MKB General Insurance cplc. and HUF 1,312 million in case of MKB Life Insurance cplc. The cumulative one-off effect on the results of the Group in 2017 business year is a HUF 3,003 million profit. Moreover in case of MKB General Insurance cplc. the share purchase agreement contains a contingent consideration depending on the future profit/loss of the company, the accurate amount shall be determined the latest by the time the 2017 financial statements of Pannónia General Insurance cplc. are approved for issuance. The Group has preapared an estimation in accordance with EU IFRSs to determine the expected value of the adjusment of the consideration transfered and the expected value of the contingent consideration as at the acqusition date. According to the agreement between the parties, the initial consideration transfered will be modified later by a correction mechanism. The amount of the contingent consideration is recognised as a liability in the financial statements and it will be revalued through profit or loss at every reporting date. The amount of the revaluation of the contingent consideration is HUF 194 million profit as at 30 June CIG Pannónia Life Insurance Plc., Q information 22

23 6. Operating s The life is represented by CIG Pannónia Life Insurance Plc. and Pannónia Life Insurance cplc., the non-life is represented by CIG Pannónia First Hungarian General Insurance Company Ltd. and Pannónia General Insurance cplc., and the other s are represented by the rest of the subsidiaries of the Group. Segment Information Q1-Q (data in million HUF) Q1-Q ASSETS Life Non-life Pannónia Life Pannónia Nonlife Other Adjusting entries for calculations in the financial statements (IFRS - HAL) Adjusting entries for calculations in the financial statements (consolidation) Total Intangible assets Property, plant and equipment Deferred tax assets Deferred acquisition costs Reinsurer's share of technical reserves Subsidiaries Investments in jointly controlled companies Available-for-sale financial assets Investments for policyholders of unit-linked life policies Financial assets - investment contracts Financial assets - embedded derivatives Receivables from policies and other receivables Other assets and prepayments Cash and cash equivalents Intercompany receivables Assets held for sale Total assets *HAL Hungarian Accounting Law CIG Pannónia Life Insurance Plc., Q information 23

24 Segment Information Q1-Q (continuation) (data in million HUF) Q1-Q LIABILITIES Life Non-life Pannónia Life Pannónia Nonlife Other Adjusting entries for calculations in the financial statements (IFRS - HAL) Adjusting entries for calculations in the financial statements (consolidation) Total Technical reserves Technical reserves for policyholders of unit-linked Investment contracts Liabilities from the issue of interest-bearing shares Loans and financial re Liabilities from Intercompany liabilities Other liabilities and provosions Liabilities associated with assets held for sale Total liabilities NET ASSETS SHAREHOLDERS' EQUITY Registered capital Capital reserve Nominal value of own shares Other reserves Profit reserve Non-controlling interests Total shareholders' equity CIG Pannónia Life Insurance Plc., Q information 24

25 Segment Information Q1-Q (continuation) (data in million HUF) Q1-Q COMPREHENSIVE INCOME STATEMENT Life Non-life Pannónia Life Pannónia Nonlife Other Adjusting entries for calculations in the financial statements (IFRS - HAL) Adjusting entries for calculations in the financial statements (consolidation) Total Gross written premium Changes in unearned premiums reserve Earned premiums, gross Ceded re premiums Earned premiums, net Premium and commission income from investment contracts Investment income Share of the profit of associates and joint ventures accounted for using the equity method Other operating income Other income Total income Claim payments and benefits, and claim settlement costs Net change in the value of life technical reserves and unit-linked life reserves Investment expenditure Change in the fair value of liabilities relating to investment contracts Change in the fair value of assets and liabilities relating to embedded derivatives Investment expenses, changes in reserves and benefits, net Fees, commissions and other acquisition costs Other operating costs Operating costs Result of assets held for sale Profit/loss before taxation Tax income / (expenses) Deferred tax income / (expenses) Profit/loss after taxation Other comprehensive income Comprehensive income CIG Pannónia Life Insurance Plc., Q information 25

26 Comparative data to the information of Q1-Q (Q1-Q2 2016) (data in million HUF) Q1-Q ASSETS Life Non-life Pannónia Life Pannónia Nonlife Other Adjusting entries for calculations in the financial statements (IFRS - HAL) Adjusting entries for calculations in the financial statements (consolidation) Total Intangible assets Property, plant and equipment Deferred tax assets Deferred acquisition costs Reinsurer's share of technical reserves Subsidiaries Investments in jointly controlled companies Available-for-sale financial assets Investments for policyholders of unit-linked life policies Financial assets - investment contracts Financial assets - embedded derivatives Receivables from policies and other receivables Other assets and prepayments Cash and cash equivalents Intercompany receivables Assets held for sale Total assets *HAL Hungarian Accounting Law CIG Pannónia Life Insurance Plc., Q information 26

27 Comparative data to the information of Q1-Q (Q1-Q2 2016) (continuation) (data in million HUF) Q1-Q LIABILITIES Life Non-life Pannónia Life Pannónia Nonlife Other Adjusting entries for calculations in the financial statements (IFRS - HAL) Adjusting entries for calculations in the financial statements (consolidation) Total Technical reserves Technical reserves for policyholders of unit-linked Investment contracts Liabilities from the issue of interest-bearing shares Loans and financial re Liabilities from Intercompany liabilities Other liabilities and provosions Liabilities associated with assets held for sale Total liabilities NET ASSETS SHAREHOLDERS' EQUITY Registered capital Capital reserve Nominal value of own shares Other reserves Profit reserve Non-controlling interests Total shareholders' equity CIG Pannónia Life Insurance Plc., Q information 27

28 Comparative data to the information of Q1-Q (Q1-Q2 2016) (continuation) (data in million HUF) Q1-Q COMPREHENSIVE INCOME STATEMENT Life Non-life Pannónia Life Pannónia Nonlife Other Adjusting entries for calculations in the financial statements (IFRS - HAL) Adjusting entries for calculations in the financial statements (consolidation) Total Gross written premium Changes in unearned premiums reserve Earned premiums, gross Ceded re premiums Earned premiums, net Premium and commission income from investment contracts Investment income Share of the profit of associates and joint ventures accounted for using the equity method Other operating income Other income Total income Claim payments and benefits, and claim settlement costs Net change in the value of life technical reserves and unit-linked life reserves Investment expenditure Change in the fair value of liabilities relating to investment contracts Change in the fair value of assets and liabilities relating to embedded derivatives Investment expenses, changes in reserves and benefits, net Fees, commissions and other acquisition costs Other operating costs Operating costs Result of assets held for sale Profit/loss before taxation Tax income / (expenses) Deferred tax income / (expenses) Profit/loss after taxation Other comprehensive income Comprehensive income CIG Pannónia Life Insurance Plc., Q information 28