Annual Report Under the wings of the lion

Transcription

1 Company profile Company structure Annual Report Under the wings of the lion

2 Company profile Company structure Contents Company profile 1 Company structure 2 Speech of the Chairman 3 Supervisory board 4 Board of directors 5 Products 7 Our customers 9 The Company staff 10 Management report 11 Separate fi nancial statements 18

3 Company profile Company structure 1 Company profi le Business name: Domicile: Company identification number: Date of registration in the Business Register: Legal form: Business activities: Share capital: Amount paid up: Number of shares: Face value of 1 share: Sole shareholder: Generali Poisťovňa, a.s. Mlynské nivy 1, Bratislava February 1997 joint-stock company insurance activity (pursuant to 2a and following of the Act No. 95/2002 Coll. on insurance industry as amended posterior) in the area of life and non-life insurance, compulsory motor vehicles third party insurance except for credit insurance. SKK SKK dematerialized SKK 10,000 Generali Holding Vienna AG Landskrongasse 1-3, 1010 Vienna, Austria till 12. December Assicurazioni Generali S.p.A. Piazza Duca degli Abruzzi 2, Trieste, Italy since 13. December till 16. January 2008 Generali PPF Holding B.V. Diemerhof 42, 1112 XN Diemen, Netherlands since 17. January 2008 Subsidiary companies: VÚB Generali d.s.s., a.s. (50 %) Generali Consulting, s.r.o. (100 %) Economic indicators (in SKK thousands): Gross premium written Net premium written Gross technical provisions Net technical provisions Financial investment Share capital Average number of staff

4 Company profile Company structure 2 Company structure From its incorporation to Generali Poisťovňa, a.s. was a subsidiary of Generali Holding Vienna AG. With effect from the sole shareholder in Generali Poisťovňa, a.s. became Assicurazioni Generali S.p.A. registered office Piazza Duca degli Abruzzi 2, Trieste, Italy, registered in the Commercial Register under registration number In January 2008 after receiving regulatory approval, a Joint Venture Agreement between Assicurazioni Generali and PPF Group B.V. entered into effect. Generali PPF Holding B.V. registered office Diemerhof 42, 1112 XN Diemen, Netherlands, registered in the Commercial Register of the Chamber of Commerce in Amsterdam under registration number became the sole shareholder in Generali Poisťovňa, a.s. with effect from Generali Poisťovňa, a.s. provides insurance services in the area of life and non-life insurance, and since 2004 it has acted as an agent for banks. In 2004, Generali Poisťovňa, a.s. and Všeobecná úverová banka, a.s. jointly established a company, VÚB Generali dôchodková správcovská spoločnosť, a.s., to set up and manage pension funds for old-age pension saving. In 2005, Generali Poisťovňa, a.s. established a subsidiary, Generali Consulting, s.r.o., whose main activity is insurance brokerage acting as an agent for insurance companies. Amount of share in the share capital Generali Holding Vienna AG to Assicurazioni Generali S.p.A. from to Generali PPF Holding B.V. from Generali Poisťovňa, a.s. 100 % Generali Poisťovňa, a.s. VÚB Generali d.s.s., a.s. 50 % Generali Consulting, s.r.o. 100 % Further information can be found at the following internet addresses:

5 Speech of the Chairman Supervisory Board Board of directors 3 Speech of the Chairman of the Board of Directors Ladies and gentlemen, was Generali s tenth year in business in the Slovak market. This was the culmination of a successful decade in the development of our company in which we renewed our business activities in Slovakia after more than half a century. In the last year we set ourselves demanding objectives. It is my pleasure to report that we managed to achieve them. One of the most important targets that we not only managed to achieve but also to exceed was the company s economic results. We concluded our tenth year of business with an after-tax profit of SKK 142 million, which is a much better result than we planned. The main source of growth in our company s written premiums was life insurance especially unit linked insurance. As a traditional innovator in this field, Generali expanded its current fund portfolio with a unique product from the Generali Group. The unit linked insurance Generali GaranT, with a guaranteed value of share, has become a leading product whose special characteristics have enabled us to provide it to thousands of new clients. In the area of non-life insurance our activities have focussed primarily on the risks of medium-size enterprises. We succeeded in putting together a business package called Top4Biz, which provides optimal insurance coverage for small and medium enterprises through a single insurance policy. Our segmentation policy in motor vehicle insurance made a significant contribution to the overall profitability of our insurance company. In Generali Poisťovňa continued to make use of a combination of different sales and service channels for its clients. In cooperation with the VÚB bank, our most successful partner, we have succeeded in acquiring clients for life insurance, property insurance and credit repayment insurance. was an extraordinarily important year for Generali in the Central and Eastern Europe region. On 10 July Assicurazioni Generali and PPF Group N.V. signed a joint venture agreement. The two strong groups combined their activities to create one of the largest insurance groups in the region, with annual written premiums of approximately EUR 2.6 billion (2006) and 9 million clients in 12 countries. The transaction was finally completed in January I would like to conclude by thanking our clients for putting their confidence in us. I would also like to thank our employees, sales representatives and external partners, whose expert professionalism and human commitment have helped to make Generali a successful insurance company. Ing. Roman Juráš

6 Speech of the Chairman Supervisory Board Board of directors 4 The Supervisory Board Report During the financial year the Supervisory board fulfilled the tasks specified by legal regulations and Articles of Association. At sessions and meetings with the Board of Directors it was regularly informed on the course of business and the Company state, and supervised the Board of Directors activities. The PricewaterhouseCoopers Slovensko, s.r.o., Bratislava, audited the annual financial statements for the financial year,compiled by the Board of Directors and submitted the Letter of representation. The audit result was accepted and taken into account by the Supervisory Board. The Supervisory Board verified the financial statements compiled by the Board of Directors, Report on state of business and proposal of how to use net income for the current period, and it raised no objections after the final result of its verification. It approves the annual financial statements compiled in accordance with the Commercial Code. The supervisory Board approves the Board of Directors proposal of how to use net income and proposes that the General Assembly takes a resolution in this effect. Prague, February 2008 On behalf of the Supervisory Board Dkfm. Werner Moertel e.h. Chairman Supervisory Board Chairman of the Supervisory Board Dkfm. Werner Moertel Members of the Supervisory Board Dipl. Bw. Walter Steidl Dr. Francesco Bosatra Luisa Coloni PhDr. Věnceslava Srnáková Mgr. Oľga Brnková

7 Speech of the Chairman Supervisory Board Board of directors 5 Board of directors Roman Juráš Chairman of the Board of Directors born in 1970 in Prostějov (Czech Republic) graduate of Vysoká škola ekonomická (University of Economics) in Bratislava, Services Economics and Tourism Faculty in Banská Bytsrica 1992 KPMG in Vienna audit of insurance companies and international projects 1996 Generali Poisťovňa, a.s., since 1997 the company authorized agent 2001 Member of the Generali Poisťovňa, a.s. Board of Directors Chairman of the Board of Directors and Director General of the Generali Poisťovňa, a.s. Positions in other companies: VÚB Generali dôchodková správcovská spoločnosť, a.s. Chairman of the Board of Directors, Generali consulting, s.r.o. the company agent Milan Fleischhacker Member of the Board of Directors born in 1963 in Bratislava, graduate of the Mathematics and Physics Faculty at the Comenius University in Bratislava, field of study: Probability and mathematical statistics, Doctor of Sciences degree 1986 Slovak Academy of Sciences Philosophy and Sociology Institute 1991 Sociology Department of the Philosophy Faculty at the Comenius University in Bratislava 1991 Kooperatíva, družstevná poisťovňa, a.s Director of Zürich Poisťovňa, poisťovacie služby, s.r.o Director General and Chairman of the Board of Directors of Zürich Poisťovňa, a.s Member of the Generali Poisťovňa, a.s. Board of Directors

8 Speech of the Chairman Supervisory Board Board of directors 6 Kurt Pap Member of the Board of Directors born in 1947 in Vienna, graduate of a secondary grammar school, 6 terms at the Faculty of Law 1969 Generali, Austria 1984 Area Director of the insurance company Ankerversicherung, Austria 1990 Generali, Austria 1999 Generali Poisťovňa, a.s., since 1999 the company authorized agent 2004 Member of the Generali Poisťovňa, a.s. Board of Directors

9 Products Customers The Company staff 7 Products Generali Poisťovňa, a.s. is a universal insurance company offering a wide spectrum of products and services created according to clients requirements and the insurance market needs. The insurance products portfolio is being constantly supplemented by products designed for needs of own sales and individual external partners and brokers. After starting the cooperation with VÚB, a.s. Generali Poisťovňa, a.s. has enriched its offer also by banking and insurance products. Personal insurance Life assurance Endowment life insurance - classical endowment insurance - endowment insurance with partial instalments - wedding or study insurance - Junior / Senior insurance Term insurance - term insurance - term insurance with declining sum insured Unit linked insurance Accident insurance of individuals - accident insurance of individuals - accident insurance of children - accident insurance of family Accident insurance of groups - group accident insurance of companies in working and leisure time - group accident insurance of children and teachers at schools - short-term group accident insurance - accident insurance of graduates - accident insurance of unemployed Health insurance - daily allowance insurance in case of hospitalization - daily allowance insurance in case of sick leave Travel insurance abroad - for tourist trips (short-term and annual) - for business and study trips (short-term and annual) - to international bank credit cards (annual) Insurance of capability to repay a credit product Motor vehicle insurance Compulsory motor third party liability insurance - assistance services in case of a traffic accident - legal counselling (Euro Extra product) - accident insurance of driver (Euro Extra product)

10 Products Customers The Company staff 8 Motor hull insurance - insurance in case of a motor vehicle traffic accident or theft - assistance services in case of a traffic accident - additional insurance of an alternate vehicle - technical assistance, insurance of windshields Accident insurance of persons being conveyed by a motor vehicle - insurance of an accident resulting in death or permanent disability Insurance of legal protection of motor vehicle owner and driver Auto 6 everything for your car compulsory motor third party liability insurance, motor hull insurance, accident insurance of persons being conveyed, insurance of legal protection, insurance of windshields, insurance of mobility technical assistance services Property insurance Natural persons - citizens - insurance of an apartment unit and a house - household insurance - windshield insurance - liability insurance for damage - assistance services Legal entity entrepreneurs - insurance of movable and immovable property - insurance in case of theft - windshield insurance - machinery insurance - electronics insurance Operation interruption insurance Building insurance Machinery installation insurance Transport insurance - insurance of goods transported - liability insurance of a road carrier Liability insurance - operational liability insurance - liability insurance when performing profession Insurance of agricultural risks - agricultural enterprises insurance - agricultural products insurance - agricultural cattle insurance Municipalities - insurance of movable and immovable property of municipalities - liability insurance

11 Products Customers The Company staff 9 Our customers and their insurance company Generali Poisťovňa, a.s. lives up to its name in its business activities, because it really is a universal insurance company. Its customers include individuals, families, the self-employed, small and medium entrepreneurs, large industrial firms, professional organisations, interest groups, towns and villages. The strategic challenge facing the insurance company is to offer services for every customer in search of a solution for their insurance needs or an expected increase in the value of their assets. Above all it must do so with the highest possible level of quality and for an acceptable price. The management and employees of the Generali insurance company are aware that in a highly competitive environment like that which dominates Slovakia at the moment, it is necessary to provide first class service for clients and partners. They do not see it as imposition from outside, however, or the effect of difficult and hectic times. In Generali, the approach to customers is based primarily on the traditions and values of the company. We are a friendly insurance company, ready and willing to carry out our mission in a professional manner. For us, professionalism means having a portfolio of modern products that reflects the dynamically developing needs of our customers, using the latest knowledge and technology to increase the speed and quality of our processes, communicating effectively, comprehensibly and politely, taking care of the personal and professional growth of our employees, doing business in a fair and transparent manner. We do all this for and because of our customers, to show them that choosing Generali is a good and right choice. Generali in Slovakia seeks to do everything necessary to ensure that a client-centred approach is not just a trendy slogan, but also a part of the company s philosophy. Its commercial policy and its company culture as a service provider are directed towards this objective. All this is in accordance with the group s CARE concept, or in other words being as close to the customer as possible.

12 Products Customers The Company staff 10 The Company staff Generali Poisťovňa, a.s. had a total of 301 employees* as at Their average age reached 34.6 years. Once again, women made up the majority of employees - 71 %. Half of employees have a university education and the average length of employment in Generali was nearly 4 years. Employees are amongst a company s most important assets and therefore the company seeks to create favourable conditions for their education and development. Based on the annual plan for education, developed in cooperation with the heads of the organisational units, a timetable of internal training was drawn up for the whole year. The development of management skills and the education of managers continued in with an extension module focussing on management skills in the new millennium, the management of change and the area of coaching in relation to the team. New managers who had not attended the previous modules were offered a basic management course summarising the previous modules focussing on management communication, the assessment of performance, team leadership and motivation, chairing meetings and time management. In addition to their continuing education, managers could choose from two open courses on social protocol and ethics and enemy tactics and manipulation. Employees could take part in made-to-measure training programmes such as persuasion and negotiation, communication and image, stress relief, presentation skills, evaluation interviews and provision of feedback, time management and value management. Internal training was provided in cooperation with our team of experienced internal trainers. In addition to internal training, employees took part in over 100 external training seminars and professional conferences that enabled them to renew their knowledge in their area of specialisation, acquire new knowledge and familiarise themselves with the latest trends in their field or new legislation and changes in the law that could affect their work and the life of the insurance company. Many employees also took advantage of opportunities to take part in training to develop their computer skills. The company continued to provide broad support for employees language education, with a particular emphasis on improving the level of English, which is considered to be the official language for communication within the Generali Group. Employees had the opportunity to attend English lessons organised on the company premises as individuals or in groups and also to choose from a range of external language schools. The company s education team focussed on training for employees in the area of own sales and the sales representatives in partner brokerage companies. Employee motivation was one of the priority areas of the company s social policy last year. We added opportunities to take part in sports to the social programme. There was also investment in the area of prevention, rehabilitation and regeneration. The company s desire to motivate its employees could also be seen in the significant changes in the system of gifts for milestones in employee s personal and working lives. To support the development of positive relations between colleagues, the company corporate events for its employees, which included Children s Day, Generali Weekend and also a Christmas party. * the number of employees includes colleagues on maternity leave

13 11 Management report Economic development and trends in the insurance market The Slovak economy continued to develop dynamically, in particular achieving strong economic growth combined while at the same time satisfying the conditions for euro adoption. At 9%, GDP growth was even greater than in the previous year. As regards the political situation, in Slovakia became a member of the Schengen Area, which meant that the country s borders with other member countries became open. Economic growth continues thanks to positive trends in internal consumption and exports. Industrial production was also reinforced by the start of production in new factories, especially in the automobile industry. Economic growth has been maintained through an influx of foreign direct investment, thought this investment has been strongly focussed on the automobile industry, increasing the economy s dependency on this sector. The deficit in public finances remains low in line with the state budget, giving the government some room to implement a degree of social redistribution. Inflation is also currently under control thanks to a fall in energy prices and the strong Slovak crown. At the end of, inflation was 3.4%, with core inflation at 4.2%. These inflation levels should be sufficient to allow the NBS to satisfy the Maastricht criteria. The base rate was 4.25% at the end of, 0.5% lower than in the previous year. The Slovak crown strengthened against the euro by 2.8% and it its exchange rate against the euro should be fixed in the first half of The second year of left wing government was marked by major changes in a number of areas, which shook confidence in legal security and the stable business environment. The efforts of the government coalition to revise the results of many measures of the previous government dominated the process for the creation and application of law in. Examples include the opening of the second pillar of the pension system to allow clients to leave, the rules for the mandatory return of the profits from health insurance to health care, changes in the taxation of banks and insurance companies of a partially retroactive character. Other aspects of public life that disturbed the majority of people in Slovakia in the past year included: symptoms of populism in government policy; expressions of national intolerance and violence; and increased tension in Slovak-Hungarian relations. The changes in the pension and health insurance system also created significant fears. Further reforms are also expected. The coming years will be important, especially as regards the introduction of the euro in 2009 and the financing of areas in which reform has been implemented (e.g. healthcare) when privatisation, an important source of financing during the transition period, has been suspended since Another important issue is investment in further sustainable growth, which will not be easy to combine with the implementation of social programmes and potential growth in general consumption. Regarding the insurance market, there is still a continuation of the trends observed in the previous year though there were exceptions in some areas of the sector. The life insurance segment remains the overall motor of growth in the sector. Premiums written increased by 13% compared to the previous year. Most of the growth came in the area of investment life insurance, which has become very popular in recent years. A number of products were relaunched in the market, e.g. guaranteed funds for investment life insurance with single and regular premiums or the distribution of new life insurance products. With regard to distribution channels, multilevel marketing dealers continue to have a very strong

14 12 position. The market share of bancassurance products (banking and insurance products sold through one channel) is on the rise. The non-life insurance segment has reported stagnation for three years in a row. This stagnation is due primarily to motor vehicle insurance where there continues to be strong competition in MTPL (mandatory third party liability) insurance, including pressure on prices. The reduction in premiums as a result of direct insurance from abroad had a negative effect on the property insurance segment. The profitability of the MTPL market depends to a large extent on the obligation to create provisions to cover deficits arising from old MTPL claims, the best current estimate of which is SKK 4.3 billion. The regulatory body and insurance law require companies to contribute to this provision based on their market share in MTPL for motor vehicles. Individual insurance companies create provision differently, however, based on different interpretations of accounting rules. The financial performance of insurance companies, in particular the ability to satisfy future obligations, is highly dependent on this issue. The market in pensions savings was the subject of various government statements in. A positive development for savers was a reduction in the fees that pension management companies can charge them. The number of savers continues to increase and by the end of they numbered 1.6 million will be significant for savers because they will have the option to revise their original decision to enter the two-pillar pension system from to June Business performance The development of business activities in continued in the successful direction begun in previous years. After making a profit of SKK 51 million last year, Generali Poisťovňa, a.s. continued to develop its activities with a pre-tax profit of SKK million, which greatly exceeded all expectations. In addition to its main activity insurance the company was also active in the area of other financial services. The pension management company VÚB Generali, d.s.s., a.s. provides pension saving services for clients of the second pillar of the Slovak pension system and is currently in third place in the market for such services. For the first time its income exceeded expenditure, resulting in a profit of SKK 12,5 million. The brokerage company Generali Consulting, s.r.o. provides financial advice on pension saving and life insurance. In the area of insurance the company is continuing to improve its well placed products and develop cooperation on distribution, in which it is concentrating on more closely integrating insurance with banking products and investment funds.

15 13 Portfolio development The company maintained growth in premiums written. Regular premiums grew by 12.5% due to an increase in the insurance portfolio. The fall in single premiums posted the previous year did not continue in and in fact single premiums increased by 44.2%. The overall year-on-year growth rate was 5.6%. The company s market share was the same as the previous year, at 3.8%. Market share in life insurance was 3.9% and 3.7% in non-life insurance. The structure of the insurance portfolio remains balanced between life and non-life insurance with the proportion of life insurance being 51.4%. The structure of the portfolio is generally stable and allows good risk diversification in non-life insurance between motor vehicle and property insurance. Table: Premium structure by type of insurance In SKK million Volume Share Volume Share of premiums in % of premiums in % Life insurance 1 117,3 51,4% 973,8 47,3% Motor 516,9 23,8% 561,6 27,3% Property 409,6 18,8% 400,7 19,4% Accidental injury, death, disability 129,9 6,0% 123,2 6,0% Total Premiums written 2 173,7 100,0% 2 059,3 100,0% 2006 The driving force in the growth of life insurance premiums is investment life insurance, while traditional life insurance has ceased to grow. The reason is the strong market focus on investment life insurance in recent years and declining income from traditional life insurance in line with capital markets. The majority of new life insurance products come from our traditional partners VÚB and the financial brokers OVB and MBI. Bancassurance cooperation with VÚB has been reinforced by the merging of insurance and banking products in order to provide clients with integrated solutions for financing and insurance cover. The portfolio of personal insurance was updated with the introduction of new insurance products and new types of rider, such as accident insurance for the family FAMILY. In addition, new investment funds have been added for investment life insurance products, the most successful of which was the Generali GaranT investment fund, which allows greater flexibility in investment strategy and links investment, insurance and guarantees.

16 14 The company has more than life insurance policies in its portfolio of which are for life protection and are for life risks. Non-life Premiums written did not maintain the momentum of the previous year and fell by 2.7%. The fall relates mainly to the area of motor vehicle insurance, where the strategic priority was prudence in underwriting risks rather than increase in market share. This approach was shown to be appropriate by the not very favourable market conditions and the growing competition in this sector. At present the motor vehicle insurance portfolio comprises nearly policies, of which the majority are MTPL policies. This portfolio comes mainly from the company s own sales network (network of agents) and partly from VÚB a.s. and OVB. Acquisition in the MTPL and CASCO portfolios followed a prudent approach to the selection of risks in line with the segmentation policy based on age, location and engine capacity. It is also worth noting personal insurance, where there is growth mainly in accident insurance and sickness insurance. High productivity was achieved through own sales and sales by external brokers. There was also strong growth in payment protection insurance in cooperation with VÚB, a.s., as payment protection insurance for bank loans to retail clients. There was a marked increase in property insurance for local businesses and firms. Insurance for agricultural risks also grew. Insurance claims and benefit In general terms, developments in insurance claims and the loss ratio were very positive in. In the last three years there has been a pronounced improvement in the ratio of premiums to paid out insurance benefit (incurred loss) while premiums have grown gradually. The company is however aware of potential risks that may lead to an increase in the loss ratio in coming years. Such risks include the increasing saturation of the market and growth in competition, especially as it effects insurance rates and prices. Another important fact is that types of insurance with a high level of own retention have improved greatly e.g. accident insurance and insurance for retail property. The favourable loss ratio in motor vehicle insurance comes from the strong MTPL portfolio, where the trend in the loss ratio has so far been very positive. In this type of insurance, we have increased provisions for insurance benefit for claims that arose but have not been reported, in order to create adequate resources to cover late-reported insurance claims. The CASCO portfolio also posted a stable loss ratio, as the portfolio itself did not change very much in the course of the year and remains nearly unchanged. Nevertheless, the long-term trend in the loss ratio for this portfolio is downwards. Personal insurance posted a low loss ratio, including travel insurance. The provision for the deficit in MTPL insurance was adjusted to cover the full extent of our obligations and currently amounts to SKK million. This provision is created in accordance with applicable legislation and the current estimate of the market deficit.

17 15 Financial investments (placements) and their returns Financial investments related to insurance business increased by 16.4% and at the end of they were worth SKK 4.3 billion. The investment portfolio comprises long-term fixed income bonds (82%), variable coupon bonds (9%) and term deposits (9%). The investment strategy remains unchanged from the previous year. This strategy is currently governed by criteria of stability, income and liquidity in order to ensure the company s ability to satisfy all its future liabilities from insurance activities. Graph: Financial investments (placements) portfolio volume and rating structure (ratings) Bonds 4,3 3,6 19,5% 16,4% A 80 % 2,6 2,1 19,5% AA 10 % AAA NR BBB 4 % 2 % 4 % Financial Investments Unit- linked funds Returns on other financial instruments increased by 30% to reach SKK 148 million, additionally supported by positive technical cash flows. The company is a leader in the field of investment life insurance in terms of insurance coverage and flexibility and its portfolio of investment funds. At present there are 29 investment funds in four asset management groups: Generali Investments VUB Asset Management Capital Invest / Pioneer WIOF Funds

18 16 Growth and change in the company Changes in the structure of the company reflect its economic growth and the aim of achieving the company s objectives while satisfying the needs of its clients and partners. The company s structure and processes underwent partial changes in order to adapt to internal changes in the planned composition of the new holding company, the needs of business partners and, not least importantly, clients. Improvements were made mainly in the areas of sales and management, with the aim of maintaining quality in the provision of services. The company s own sales network achieved very positive results in the area of property insurance. This network comprises 8 regional branches and 42 sales offices. The optimisation of processes and products begun in 2006 reinforced cooperation with VÚB and produced high growth in new production. The main source of growth were the fields of bancassurance products and investment life insurance. Single premium life insurance began to grow again after the previous year but the trend in the market is now towards the popular investment life insurance products mentioned above. Cooperation with financial brokers was reinforced by the introduction of new products and investment funds for investment life insurance. Our most important partners were the companies OVB and AFS. Business results and outlook Generali Poisťovňa, a.s. exceeded all expectation by making a profit of SKK million (compared to SKK 51 million in 2006). The main element in long-term profitability has been reduction in the expense ratio, and this remained the case in. A further contribution to profits was made by the extremely positive development in claims in. The ability to maintain a low loss ratio while maintaining growth in premiums represents a positive signal for the future and indicates the quality of the acquired portfolio. The profit was also supported by income from financial operations, which exceeded the value planned in the budget. The profit was obtained while exercising due diligence in the creation of technical provisions, including provisions for the motor vehicle MTPL deficit.

19 17 Overview of results for the year Value in SKK million Premiums written 600, , , , , ,7 increase in % 61,7% 84,3% 29,7% 30,5% 10,0% 5,6% Premiums earned 557, , , , , ,9 Profit/Loss -97,5-56,0-24,8 18,0 51,0 142,4 Profit/loss as a percentage of premiums -17,5% -5,4% -1,8% 1,0% 2,5% 6,5% In the company continued to increase its profitability. Pre-tax profits increased from SKK 51 million to SKK million. The company expects a further increase in profits in 2008 and sustainable profits for the future.

20 18 Separate fi nancial statements for the year ended 31 December prepared in accordance with International Financial Reporting Standards as adopted by European Union Report of independent auditor 20 Separate Balance sheet 22 Separate Income statement 23 Separate statement of changes in equity 24 Separate Cash flow statement 25 Notes to financial statements: 1. General information Summary of significant accounting policies Basis of preparation Investments Foreign currency translation Intangible assets Property, plant and equipment Reinsurance contracts held Financial investments Deferred acquisition costs Current and deferred income tax Offsetting financial instruments Cash and cash equivalents Share capital Liabilities from insurance contracts Receivables and payables related to insurance contracts Deposits received from reinsurers Revenue recognition Impairment of assets Insurance and investment contracts classification Leases Employees benefits Dividend distribution Critical accounting estimates and judgments Risk management Insurance risk Market risk Liquidity risk Credit risk Operational risk Capital management Property, plant and equipment Intangible assets Investments in subsidiaries, joint ventured companies 65 Ing. Roman Juráš Chairman of the Board of Directors RNDr. Milan Fleischhacker Member of the Board of Directors Ing. Juraj Jurčík, MBA Responsible for financial statements Ing. Adrián Panáček Responsible for accounting

21 19 8. Financial Instruments Reinsurance contracts Loans and Receivables Deffered income tax Cash and cash equivalents Equity Insurance liabilities Deposits from reinsurers Trade and other payables Earned premiums Net income from financial assets at fair value through profit and loss Income from other financial instruments Net insurance benefits and claims Acquisition and administrations costs Expenses by nature Income tax expense Information on employees Transactions with related parties Contingent assets, contingent liabilities and other financial commitments Events after the balance sheet date 88

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24 22 Separate Balance sheet As at 31 December Note 2006 ASSETS Property, plant and equipment Intangible asset Investments in subsidiaries and joint ventures Financial asset - Term deposits Available for sale asset At fair value through profit or loss Reinsurance contracts Loans and receivables Deferred acquisition costs Deferred tax assets Income tax receivable Other assets Cash and cash equivalents Total assets EQUITY Share capital Share premium Reserve for unrealized gains and losses on available for sale financial assets (70 988) Retained earnings 13 (7 010) ( ) Total equity LIABILITIES Insurance liabilities Deposits from reinsurers Trade and other payables Deferred tax liabilities Tax payables Total liabilities TOTAL EQUITY AND LIABILITIES (All amounts are in thousand of Slovak crowns, unless stated otherwise) The Board of Directors approved these financial statements for publishing on 20 February Ing. Roman Juráš Chairman of the Board of Directors RNDr. Milan Fleischhacker Member of the Board of Directors

25 23 Separate Income statement Year ended 31 December Note 2006 Gross earned premiums Earned premiums ceded to reinsurers ( ) ( ) Net insurance premium revenue Net loss from financial instruments at fair value through profit or loss 18 (3 881) (5 832) Financial investment income Investment management Reinsurers commission Rent income and sale of property Net Income Insurance benefits Insurance benefits recovered from reinsurers ( ) ( ) Insurance claims and loss adjustment expenses Insurance claims and loss adjustment expenses ceded to reinsurers ( ) ( ) Net insurance benefits and claims Commissions and other acquisition costs Investment management expenses Administration costs Expenses PROFIT BEFORE TAX Income tax charge 23 (23 756) - PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS

26 24 Separate statement of changes in equity Attributable to equity holders of the Company Share Share Revaluation Retained capital premium reserve earnings Total Equity at beginning of year ( ) Net change in available for sale financial asset net of tax - - (89 998) - (89 998) Net change in insurance liabilities from unrealized available for sale net gains net of tax Net expense recognized in equity - - (76 709) - (76 709) Profit for year Total recognized income for - - (76 709) Employee share option Equity at the end of (70 988) (7 010) Attributable to equity holders Share Share Revaluation Retained capital premium reserve earnings Total Equity at beginning of year ( ) Net change in available for sale financial asset net of tax - - (13 064) - (13 064) Net change in insurance liabilities from unrealized available for sale net gains net of tax Net expense recognized in equity - - (4 910) - (4 910) Profit for year Total recognized income for (4 910) Increase of share capital Equity at the end of ( )

27 25 Separate Cash flow statement Year ended 31 December Note 2006 Premium income Claims and benefits paid ( ) ( ) Net cash flow from purchase and redemption of bonds ( ) ( ) Acquisition of equities - (16 019) Transfers to term deposits ( ) Acquisition of investment funds ( ) ( ) Interest income Personnel expenditures ( ) ( ) Commissions expenditure ( ) ( ) Other technical expenditure ( ) ( ) Reinsurance cash flow ( ) (55 217) Other non technical cash flow Cash generated from operations ( ) Income tax refund Net cash from operating activities ( ) Cash flows from investing activities Acquisition of property, plant and equipment and intangible asset 5,6 (34 744) (24 963) Repayment of loans Loans to subsidiaries (5 000) (11 900) Net cash used in investing activities (38 538) (34 411) Cash flow from financing activities Proceeds from issuance of ordinary shares Net cash used in financing activities Net increase/decrease in cash and cash equivalents (16 867) Cash and bank accounts at beginning of year Exchange gains/losses on cash and cash equivalents - (473) Cash and cash equivalents at the end of year

28 26 Notes to the consolidated fi nancial statements 1. General information Generali Poisťovňa, a.s. ( the Company ) is a composite insurance company with head office situated in Slovak republic. The Company operates both life and non-life insurance risk, such as those associated with death, disability, health, property and liability. The Company operates on the territory of Slovak republic and employs over 280 people (2006: over 250). The Company was established on 18 October 1996 and incorporated in the Commercial Register on 12 February The Company is a joint-stock company incorporated and domiciled in Slovak republic. The address of registered office is: Mlynske nivy 1, Bratislava, Slovakia. The Company is not listed on stock exchange. The Company s corporate ID (ICO) is and tax identification number is The statutory bodies of the Company according the commercial register: Management Board: Ing. Roman Juráš chairman RNDr. Milan Fleischhacker Kurt Pap Supervisory Board: Dkfm. Werner Moertel chairman Dr. Francesco Bosatra Dipl. Bw. Walter Steidl Ing. Luisa Coloni Mgr. Oľga Brnková PhDr. Věnceslava Srnánková The Company s sole shareholder and ultimate parent company is Assicuracioni Generali S.p.A., Trieste from 13 December when shareholding was transferred from Generali Holding Vienna AG, Landskronngasse 1-3, A-1011 Vienna. Assicurazioni Generali S.p.A., Trieste, Italy is listed on the Italy Stock Exchange, Milan, Italy. The Company and its subsidiaries and joint-ventures are included in consolidated financial statement of Assicurazioni Generali S.p.A., Trieste. The General Meeting approved the Company s financial statements for the previous accounting period on 19 September.

29 27 2. Summary of signifi cant accounting policies The principal accounting policies in the preparation of these statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The Company s financial statements at 31 December have been prepared in accordance with the International Financial Reporting standards as adopted by the European Union ( IFRS ). These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities at fair value through profit or loss. These financial statements have been prepared as separated financial statements in accordance with Article 17a), paragraph 1, of Act 431/2002 on Accounting as amended. Significant investments in subsidiaries and joint ventures are described in Note 7, the accounting method for the investment in subsidiaries is described in Note 2.2. At the time of approval of these separate financial statements the Company has not prepared consolidated financial statements in accordance with IFRS for the Company and its subsidiaries (the Group ) as required by IAS The Company applied an interpretation contained in the agenda paper issued by the European Commission Internal Market and Services for the meeting of the Accounting Regulatory Committee (document ARC/08/) about relationship between the IAS regulation and the 4th and 7th Company Law Directives. The Commission Services Department was of the opinion that, if a company chooses or is required to prepare its annual accounts in accordance with IFRS as adopted by the EU, it can prepare and file them independently from the preparation and filing of its consolidated accounts. In the consolidated financial statements, subsidiary undertakings - which are those companies in which the Group, directly or indirectly, has an interest of more than half of the voting rights or otherwise has power to exercise control over the operations - will be fully consolidated. Users of these separate financial statements should read them together with the Group s consolidated financial statements as at and for the year ended 31 December, as soon as they become available in order to obtain full information on the financial position, results of operations and changes in financial position of the Group as a whole. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the company s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimated are significant to the financial statements, are disclosed in Note 3. All amount in the notes are shown in thousands of Slovak crowns ( SKK ), rounded to the nearest thousand, unless stated otherwise.

30 28 Interpretations to published standards, amendments to standards and new standards effective in The following new interpretations to existing standards, amendments to standards and new standards have been published that are mandatory for the company s accounting periods beginning on or after 1 January : IFRS 7, Financial instruments: Disclosures, and the complementary amendment to IAS 1, Presentation of financial statements Capital disclosures (effective on or after 1 January ), introduces new disclosures relating to financial instruments and does not have any impact on the classification and valuation of the Company s financial instruments, or the disclosures relating to taxation and trade and other payables. IFRIC 8, Scope of IFRS 2 (effective for annual periods beginning on or after 1 May 2006), requires consideration of transactions involving the issuance of equity instruments, where the identifiable consideration received is less than the fair value of the equity instruments issued in order to establish whether or not they fall within the scope of IFRS 2. This standard does not have any impact on the Company s financial statements. IFRIC 10, Interim Financial Reporting and Impairment (effective for annual periods beginning on or after 1 November 2006). IFRIC 10 prohibits the impairment losses recognized in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This standard does not have any impact on the Company s financial statements. IFRS 4, Insurance contracts, amendment (effective for annual periods beginning on or after 1 January ). In August 2005 the IASB issued IFRS 7 Financial Instruments: Disclosures. IFRS 7 amended and superseded the disclosures about risk that were previously required by IAS 32 Financial Instruments: Disclosure and Presentation. Those changes necessitated consequential amendments to IFRS 4 Insurance Contracts, which previously required disclosure of the information about interest rate risk and credit risk that IAS 32 would require if the insurance contracts were within the scope of IAS 32. This amendment does not have substantial impact on the Company s financial statements. Interpretations to published standards, amendments to standards and new standards effective in but not relevant for the Company. The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January but they are not relevant to the Company s operations: IFRIC 7, Applying the restatement approach under IAS 29, Financial reporting in hyper-inflationary economies ; and IFRIC 9, Re-assessment of embedded derivatives.

31 29 Interpretations to published standards, amendments to standards and new standards that are not yet effective and have not been early adopted by the Company. The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Company s accounting periods beginning on or after 1 January 2008 or later periods, but the Company has not early adopted them: IFRS 3, Business combinations (effective from annual periods beginning on or after 1 July 2009). IFRS 3 continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured at fair value through income. Goodwill may be calculated based on the parent s share of net assets or it may include goodwill related to the minority interest. All transaction costs will be expensed. IAS 1, Presentation of financial statements, (effective for annual periods beginning on or after 1 January 2009). IAS 1 prohibits the presentation of items of income and expenses (that is, non-owner changes in equity ) in the statement of changes in equity, requiring owner changes in equity to be presented separately from non-owner changes in equity. In addition, entities making restatements or reclassifications of comparative information will be required to present a restated balance sheet as at the beginning of the comparative period. IAS 23 (Amendment), Borrowing costs (effective from 1 January 2009). It requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The group will apply IAS 23 (Amended) from 1 January 2009 but is currently not applicable to the Company as there are no qualifying assets. IAS 27, Consolidated and separate financial statements (effective from annual periods beginning on or after 1 July 2009), IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. They will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value and a gain or loss is recognised in profit or loss. IFRIC 11, IFRS 2 Group and treasury share transactions Scope of IFRS 2 (effective from annual periods beginning on or after 1 March ). IFRIC 11 provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent s shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. This interpretation does not have an impact on the Company s financial statements. IFRIC 14, IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction (effective from 1 January 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The Company will apply IFRIC 14 from 1 January 2008, but it is not expected to have any impact on the Company s accounts.