CIG Közép-európai Biztosító Zrt. Supplement to the 2008 Annual Report

Transcription

1 CIG Közép-európai Biztosító Zrt. Supplement to the 2008 Annual Report 24 April

2 1. GENERAL INFORMATION CIG Közép-európai Biztosító Zrt. (hereinafter referred to as: Insurer) was established as a private company limited by shares on 26 October English name: CIG Central-European Insurance Private Company Limited by Shares The Hungarian Financial Supervisory Authority approved the foundation of the company on 19 December The pre-company period lasted until 17 January 2008, and the company was registered on 18 January The Hungarian Financial Supervisory Authority issued a business licence to the Insurer on 8 May 2008, after which it began developing its own sales network and finalising the conditions for entering the market. The sales activity of the Insurer was launched on 26 May 2008, and therefore the first fiscal year comprises 7 months. Registered office: 1033 Budapest, Flórián tér 1. It has no other place of business. The Insurer does not provide cross-border services. Central telephone number: , central fax number: Local-rate number: Website: Owners The company has 42 owners, but none of them possess a more than a 10% stake. type of shares: ordinary, registered shares number of shares: 20,672,000 total nominal value of shares: HUF 2,067,200, Supervisory Board Chairman: Zsigmond Járai (mother's maiden name: Róza Molnár) 2626 Nagymaros Pállya Celesztin utca, lot no.: 10783/8. Members: Dr. József Bajer (mother's maiden name: Mária Szohr) 1028 Budapest, Noémi utca 15/b Charles Kovács (mother's maiden name: Eva Neumann) 1 Rue des Pas Redon, Meymac, Correze, France 2

3 Dr. Gábor Móricz (mother s name: Katalin Bazsó) 1055 Budapest Honvéd tér 10/a.III.1. Béla Preisinger (mother's maiden name: Ilona Szvoboda) 2000 Szentendre, Bánáti Sverák József utca 2/a Board of Directors Chairman: Béla Horváth (mother's maiden name: Valéria Kozár) 2093 Budajenő Csalogány u. 17. Members: Dr. Gyula Lajos Mikó (mother's maiden name: Róza Czirják) 1182 Budapest Zalatna u. 12. Zsolt Kelemen (mother's maiden name: Jolán Fissi) 2089 Telki Legelődombi u Management Chief Executive Officer: Chief Actuary: Chief Legal Advisor: Senior doctor: Accounting Manager: Alternative sales: Product development: IT: Béla Horváth Dr. Gyula Lajos Mikó Dr. Andrea Muhits Dr. Katalin Halász Zsolt Kelemen Anna Kemény Csaba Gaál Sándor Vígh 1.5. Signatories to Annual Report Béla Horváth, chief executive officer 2093 Budajenő Csalogány u

4 Dr. Gyula Lajos Mikó, chief actuary 1182 Budapest Zalatna u.12. Person compiling financial statements: Zsolt Kelemen, Head of Accounting Registration number: chamber reg. no Telki Legelődombi u. 12. Mother's maiden name: Jolán Fissi 1.6. Auditor In accordance with Act LX of 2003 the company must be audited. Information on auditor: KPMG Hungária Kft Budapest, Váci út 99 Chamber ID number: László Fébó, registered auditor Chamber registration number: The Insurer paid a fee of HUF 9.5 million + VAT to the auditor for the audit of the annual report and the supplementary auditor's report. The annual report is based on the Accounting Policies and its appendices, Act C of 2000 on Accounting and Government Decree 192/2000 on the annual reporting and bookkeeping obligations of insurance companies. 4

5 1.7 Regulatory capital Regulatory capital (in THUF) Equity 1,268,256 1,445,619 Carrying amount of intangible assets - 182, ,164 Own shares repurchased 0 0 Regulatory capital 1,086,174 1,101,455 Minimum regulatory capital requirement (THUF) 40,400 Minimum solvency capital of insurer (THUF) 803, Main features of accounting policies The Insurer prepares an annual report using double-entry bookkeeping. When preparing the annual report and during bookkeeping, the basic principles set forth in the Act on Accounting (Act C of 2000, hereinafter: Accounting Act) must be enforced with due consideration of the contents of Government Decree 192/2000 (XI.24) on the annual reporting and bookkeeping obligations of insurance companies (hereinafter Government. Decree). When compiling its annual report and during the bookkeeping the Insurer followed the accounting principles referred to above. When measuring assets and liabilities in the balance sheet the company assumed the going concern principle, and therefore assets were valued as follows: Measurement of assets - Intangible and tangible assets were measured at cost. These assets are recognised in the balance sheet at net value (cost depreciation), and in the accounting records at gross value. - The straight-line method was used to record depreciation. The applied depreciation rates were determined on the basis of useful lives, and these are the same as the rates specified in Schedule 1 to the Corporate Tax Act. - The Insurer records daily amortisation on capitalised intangible assets in use every month, based on straight-line rates and calculated on the opening values. The expected period of wear and tear, market obsolescence, is used as the basis for the amortisation: - rights and concessions, formation: 5 years - software: 3 years, - other intellectual property (planning documentation, etc.): 5 years, - buildings: 50 years, - buildings, temporary buildings (lightweight structures): 10 years, - machinery, equipment, fittings: 7 years, - vehicles: 5 years, residual value: 20% - IT and office assets (data transmission, telecommunications) and equipment, networks: 3 years. The Insurer writes off assets in full and in one lump sum as depreciation if their individual purchase price is below HUF 100,000. 5

6 In accordance with Section 4 (8) of the Government Decree, investments made on behalf of life insurance policyholders who carry the investment risk must be measured at fair value. The fair value measurement is performed by the custodian in accordance with agreements. Impairment of assets: Act C of 2000 on Accounting prescribes the recording of impairment for certain assets if their fair value (perception, utility) is lower than their carrying amount upon the balance sheet preparation date. The Insurer records impairment on the following assets: securities issued for longer than one year; other receivables. Impairment of securities with maturities longer than one year In respect of debt securities with a maturity of longer than one year, whether listed under current assets or financial investments, impairment shall be accounted if the difference between the carrying amount and the market value without any (accumulated) interest of the debt security is negative, appears permanent and is of a substantial amount. The following must be taken into account when establishing the fair value of the securities: The stock exchange and free market price of the security less any (accumulated) interest, its market value and the long-term trend thereof, The market perception of the issuer of the security and the trend of such perception, whether the issuer will pay the nominal value (and the accumulated interest) upon maturity or when redeemed, and if so in what percentage. If the market value of the securities is substantially and permanently higher than its carrying value when preparing the balance sheet, the impairment previously recorded must be reversed by the difference. With the reversal of impairment, the carrying value of the securities may not exceed the purchase price, or if the purchase price is greater than the nominal value (securities purchased at a price higher than the nominal value), the carrying value of the securities may not exceed the nominal value of the given security with the reversal of impairment. Significant is considered to be an amount exceeding 2% of the given asset. Impairment on other receivables: Based on the debtor rating, impairment must be recorded on receivables prevailing as of the balance sheet date of the business year (including receivables from credit institutions, financial enterprises and insurance brokers, loans or advances, and receivables under accrued income) which are not settled by the balance sheet preparation date. The amount of the impairment is the difference (loss) between the carrying value of the receivable and the amount expected to be recovered therefrom, based on information available as of the balance sheet preparation date, provided that this difference is permanent and significant. For small receivables per customer or debtor, the amount of the impairment may also be determined as a percentage of the amount of such receivables registered in the books, based on a combined rating of the 6

7 customers and trade debtors. If the difference (loss) on these receivables exceeds HUF 100,000 the Insurer considers it significant. If the amount estimated to be recovered from a receivable is substantially higher than the carrying amount of such receivable based on the credit rating of the debtor, the impairment previously accounted must be reversed by the difference. After the impairment is reversed in this manner the carrying value of the receivable may not exceed the original registered amount (or for foreign currency receivables, the amount calculated using the exchange rate specified in the accounting policies). Liquid assets: - Foreign currency assets are measured using the official exchange rate of the National Bank of Hungary as of the reporting date. - Forint deposits are measured at their value in the closing bank statement. Receivables and liabilities are recognised in the balance sheet at values substantiated with an inventory. From the perspective of the annual report, all information is material whose omission or erroneous inclusion, within reasonable limits, may influence the data of the report or the decisions of the users (materiality principle). Errors which result in a more than 10% change in the value of equity in the year under review are considered to be material by the Insurer. The balance sheet preparation date is 31 January following the reporting year. The Insurer calculates income and expenses in accordance with the provisions of the Government Decree: - For traditional products, premium income is accounted on a continuous basis when it falls due under the valid policies, and at the amount stated in the policies. When policies are cancelled, income accounted in the month of cancellation is reduced relative to the date of the cancellation. - For UL (unit-linked) premium products the premium income is accounted when it is financially realised. The premium is taken into account when identified. At year-end the Insurer adjusts the premium income with premium receivables, and accounts the contractual premiums in accordance with the provisions of the relevant Government Decree. Errors identified during reviews and self-revisions which affect previous years and exceed 2% of total assets are considered by the Insurer to be significant errors. 1.9 Valuation of financial situation The following indicators illustrate profitability, liquidity and reserves at the Insurer: (The 2007 indicators are not applicable and therefore a comparison of the two years cannot be made.) Profitability Retained profit / Earned premiums -28% Technical result / Earned premiums -30% Retained profit / Shareholders' equity -74% Capital adequacy Shareholder's equity / Subscribed capital 70% 7

8 Reserve coverage Investments / Reserves 81 Liquidity indicators Liquid assets / Current liabilities 2 Simple claim ratio UL claims paid / UL first year premium 1.3% Sales cost ratio Acquisition costs / Gross premium 65% Administration cost ratio Administration costs / Gross premiums 29% 8

9 2. DETAILS ON BALANCE SHEET AND INCOME STATEMENT ROWS 2.1. Intangible assets Value of intangible assets: Intangible assets Net Change Capitalised value of formation 182, , , ,037 Foundation depr. -25,099 Intellectual property 0 164, , ,645 Intellectual property depreciation -15,626 Intangible asset investment 0 11,400 11, ,400 Total 182, , , ,082 The Insurer records used software under intellectual property. Intangible asset investments are contained in the TRIAS investment registration software, which were not capitalised in Investments Land and buildings The Insurer does not own any property. In 2008 the Insurer moved into new premises but did not carry out any investments on the new building Investments in related companies The Insurer has investments in the following related companies: CIG Első Magyar Általános Biztosító Zrt Budapest, Flórián tér 1. Ownership share: 100% HUF 670,000,000 This non-life insurance company did not commence its operations in 2008 since the HFSA licensing procedure was still underway. Subscribed capital THUF 670,000 Equity THUF 672,418 9

10 Pannonia Biztosításközvetítő Kft 1033 Budapest, Flórián tér 1. Ownership share: 100% HUF 5,000,000 It did not commence business operations in Subscribed capital THUF 5,000 TISIA S.R.L Bucharest, Romania Ownership share: 100% HUF 1,205,460 (EUR 4,500) Conducted advisory activities in Romania in relation to establishing the new subsidiary. The Insurer does not prepare a consolidated annual report on companies that are founded but yet to launch their operations because the financial statements provide a true and fair view of the financial and earnings position of the parent company and its subsidiaries even without their inclusion Other investments The company's securities portfolio amounts to THUF 1,055,885 and is shown in the following table: Other investments (THUF) (THUF) cost (THUF) fair value Shares 0 12,274 9,839 Deposits at credit 0 1,004,000 1,004,000 institutions Other loans 0 1,130 1,130 Other investments 0 56,858 40,916 (investment units) Total: 0 1,074,262 1,055,885 The Insurer recorded impairment on securities totalling THUF 18,377, of which THUF 2,435 related to shares and THUF 15,942 to investment units. In respect of the Insurer s operations, the criterion of permanence did not apply, but substantial differences (20-40%) did, and market trends developed towards the end of the year on the international markets which justified this difference for the Insurer. Money market analysts do not forecast any fundamental change in the near future either, and therefore the Insurer decided to record impairment Unit-linked investments The fair value of the Insurer's investments executed for unit-linked life insurance policyholders totalled THUF 1,955,107, with a cost value of THUF 1,529,939, as presented in Appendices

11 If the Insurer had not measured them as of the balance sheet preparation date but on the actual date the annual report was compiled, the exchange loss on the investments would not have displayed any significant difference. Given the domestic currency crisis and the adverse international development of market yields on investments, prices are not likely to rise Receivables Receivables from direct insurance transactions Receivables from insurance transactions (THUF) Receivables from insurance policyholders (UL premium receivables) 663 Receivables from insurance brokers 20,490 - of which: commission liabilities of former business partners 2,490 commission advances to business partners 18,000 Total: 21,153 The receivables from insurance policyholders are premium receivables. The broker receivables arose due to the reversal of commissions given to insurance brokers whose contracts were cancelled, none of which exceeds 30 days Impairment booked on receivables The Insurer allocated no impairment on its receivables in 2008 since they occurred within three months of the reporting date. Negotiations are underway with the parties concerned regarding payment of the debts Receivables from reinsurance The Insurer is in negotiations with two European reinsurers on entering into financial reinsurance agreements, with the aim of spreading the risks derived from building up the Insurer's portfolio and the mortality of the life insurance portfolio. The agreements are likely to apply for regular-premium insurance policies sold in 2008 and Since the contractual conditions were not known by the balance sheet preparation date, the annual report does not contain any reinsurance-related modifications Other receivables Other receivables (THUF) Advance payments to suppliers (parking fee) 43 Trade receivables - of which to related companies (service fee to CIG Első Magyar Általános Biztosító Zrt.) 40,462 39,328 Total: 40,505 11

12 2.5. Other assets Tangible assets Changes to tangible assets: Change net IT equipment 0 32,167 25, ,500 Depreciation of IT equipment 0-6,667 Office equipment (telephone) Depreciation of office equipment 0-15 Furniture, fittings 0 16,656 14, ,442 Depreciation of furniture, fittings 0-2,214 Low-value technical equipment Depreciation of low-value technical equipment Passenger cars 4,980 56,625 48, ,010 Depreciation of passenger cars 0-7,635 Low-value other machinery 0 1,719 0 Depreciation of low-value other 0-1,719 machinery Total: 4,980 89,037 89, ,057 12

13 2.5.2 Inventories The following table illustrates inventories at the Insurer: Inventories (THUF) Advertising equipment 2,095 Printed forms 3,204 Gifts 296 Total: 5,595 The printed forms comprise insurance forms that have yet to be used Bank deposits, cash and cheques (THUF) (THUF) Change Bank deposits 1,131,988 1,409, ,066 Cash and cash equivalents Total: 1,131,988 1,409, , Prepaid expenses and accrued income Changes to prepaid expenses and accrued income: (THUF) Deferred acquisition costs 787,980 Accrued interest and rental 2,083 Other prepaid expenses and accrued income (IT service, HFSA fee, other) 11,745 Total: 801,808 By deferring acquisition costs the Insurer carries the retained loss from the first period forward to subsequent years, where it will be reversed with the profits generated in those years. During this process the Insurer bears the following principles in mind: 1.1. When deferring acquisition costs the Insurer strives to subdue the impact on profits of the difference between the structure of product costs and the cost coverage incorporated into the products, in accordance with the accruals accounting principle When recording accruals the Insurer only takes future coverage into account which it will likely be able to realise The Insurer only accrues costs which can be linked directly to acquisitions When amortising accruals the Insurer takes into account the coverage continuously received for acquisition costs. 13

14 2.7. Equity Changes in shareholders' equity during the year are shown in the following table: (THUF) Balance as at Additions - Disposal 2008 retained profit Balance as at Subscribed capital 1,033,600 1,033,600 2,067,200 Capital reserve 258, , ,800 Profit reserve -23, , ,119 Allocated reserve Retained profit / loss 184, ,119-23,744 23,744-1,075,637-1,075,637 Total 1,268,256 1,268,256 23,744-1,075,637 1,484,619 The owners of the Insurer raised capital in 2008 in accordance with preliminary plans. During the capital increase a total of 10,336,000 shares each with a nominal value of HUF 100 were issued at a unit price of HUF 125. The Insurer's owners extended a loan of HUF 915 million to the company prior to the reporting date. Based on the conditions of the loan agreement the repayment is to be made by issuing new ordinary shares. After the reporting date the owners of the Insurer decided to lower subscribed capital against the capital reserve, before using the shareholder loan to increase capital again, which resulted in the Insurer's subscribed capital totalling THUF 1,123,403 as of 24 April 2009 and its capital reserve THUF 2,259,240. Based on the provisions of the Act on Accounting the allocated reserve must include, among other things, the value of formation/transformation that is not yet written off, which for the Insurer totalled THUF 184,119 as of 31 December

15 2.8. Technical reserves Unearned premium reserve The Insurer allocated the unearned premium reserve per policy, separating the premiums due for the reporting year and subsequent year(s). This separation is done on a pro rata basis for the period between the start of the risk exposure and the reporting date, and in proportion to the period between the reporting date and the next written premium. Since the Insurer allocates a unit-linked life insurance reserve from the ad-hoc and regular payments made by the policyholder, the unearned premium reserve is only allocated to cover risks for certain periods. Cancellation reserve The Insurer's cancellation reserve covers the portions of written premium receivables that are likely to be cancelled on account of non-payment. Since the Insurer does not have series of data on its initial portfolio enabling statistical estimates to be made, a cancellation reserve is allocated for the entire amount of outstanding premium receivables, for reasons of prudence, but this practice is revised continuously. Actuarial reserve The Insurer allocates the actuarial reserve based on the actuarial principles and methods contained in the product plan to cover portfolio payments from expected cases of death. The level of the reserve is calculated separately for each insured party, and aggregated at contract and product level. The actuarial reserve was assessed assuming a zero percent rate of technical interest, and no distributable surplus yield arose. Unit-linked life insurance reserves The Insurer allocates a unit-linked life insurance reserve from the ad-hoc and regular payments made by policyholders. The reserves are valued retrospectively by the Insurer per contract after enforcing any changes that affect the reserves, which may occur due to a change in the number of investment units on the policyholder's account or to changes in unit prices. To determine the value of the asset fund the Insurer multiplies the current number of investment units on the policyholder's account with the current price of the investment units. The Insurer does not distinguish between purchase and sales prices. 15

16 Technical reserves at year-end: Reserves (THUF.) Unearned premium reserve 16,062 Actuarial reserve 4,705 Cancellation reserve 663 C. Technical reserves 21,430 D. Unit-linked technical reserve 1,955,107 Total reserves: 1,976,537 Acquisition costs considered when allocating reserves In accordance with Section 14 b) of Government Decree 192/2000 (XI. 24.) the Insurer recognises the amount of acquisition costs considered when allocating the unit-linked life insurance reserve as prepaid expenses. For other types of technical reserve the Insurer does not take acquisition costs into account. The Insurer defers acquisition costs. When deferring the costs the Insurer adheres to the contents of CEO Letter 2/2008 of the Hungarian Financial Supervisory Authority (CEO letter on the deferred acquisition costs of life insurance). When determining deferred acquisition costs, the Insurer includes in the scope of such costs the acquisition commission costs that were actually incurred (including the various shared acquisition commissions too). The amount to be accrued is determined by the Insurer per policy. When reversing the entire accrual the Insurer also records the cost coverage received continuously on a per policy basis. When determining the cost coverage the Insurer considers the regular insurance premiums received net of the first year risk premium, the administration fee and the allocation cost, but including any bonus. If a policy is cancelled, the Insurer reverses any related accrual. The accrual calculated per policy and the aggregate coverage determine the total value of the accrual, which the Insurer recognises in its accounting records. The accrual as of 31 December 2008 totalled THUF 787,980. Method applied to allocate IBNR reserve The Insurer presents its method for allocating the incurred but not reported reserve in accordance with Section 14 f) of Government Decree 192/2000 (XI. 24.). The actuarial reserve provides sufficient cover for claims incurred or caused by the reporting date but not reported, for payments due to insurance events and their expected costs, and therefore the Insurer does not allocate an IBNR reserve for the current products. Other It is not possible to use loans in connection with the unit-linked products of the Insurer. The Insurer launched its life insurance products on 26 May 2008, and therefore had no outstanding claims or related reserves in years prior to the 2008 fiscal year Provisions The Insurer did not allocate any provisions in

17 2.10. Deposit liability to reinsurer The Insurer had no deposit liabilities to the Insurer Liabilities from reinsurance The Insurer had no liabilities from reinsurance Liabilities from direct insurance Liabilities from direct insurance (THUF) Liabilities to insurance policyholders (premiums received in December 2008 and policies issued in 2009) 822,071 Liabilities to insurance brokers (broker premiums booked in 2008 but not paid by reporting date) 523,248 Total liabilities from direct insurance: 1,345, Loan and other liabilities Loans (shareholder loans for third capital increase) 914,601 Other liabilities 708,008 - of which: Trade liability 99,434 - Wages and contributions 28,102 - Taxes and other liabilities 69,863 - Liabilities related to Fund Manager (cash in transit) 510,609 Total liabilities 2,967,928 For details on the shareholder loan see point 2.7. The liability to the Fund Manager (cash in transit) is nothing other than the premiums to be invested from unitlinked insurance contracts where the policies were issued by the reporting date, and which are financially realised vis-à-vis the fund managers after the reporting date Accrued expenses and deferred income Accrued expenses and deferred income in 2008 were as follows: (THUF) Accrued expenses and deferred income 8,516 17

18 - of which: tax advisory services audit 6,840 - Telephone and fax costs Entertainment Other Changes in profit or loss The following table presents the changes to income and expenses: Changes in profit/loss (THUF) Total gross premiums: only domestic 3,875,485 - regular 1,844,541 premiums under individual policies (unit-linked life insurance premiums) - one-off premiums under individual policies (unit-linked life insurance premiums) 2,030,944 Change in unearned premium reserve -16,062 Technical income from investments 6,616 - dividends and 3,885 profit-shares received - interest 2,731 received and similar income Non-realised gains on investments 54,667 Claims paid -25,317 - due to 30-day expiry -12,432 - due to partial redemption -12,885 Change in life insurance premium reserve -4,705 Change in cancellation reserves -663 Change in UL life insurance premium reserve -1,955,107 Costs -2,876,690 - Cost of materials -64,363 - Material-type services -28,699 - Services used -492,441 - Commissions -2,529,665 18

19 - of which: deferred acquisition costs + 787,980 - Wages and salaries -283,002 - Other staff benefits -22,614 - Wage contributions -105,035 - Depreciation -59,796 - Other costs -79,055 Technical expenses on investments -74,735 - Operational cost of investments -6,459 - Exchange loss and transaction cost of investments -68,276 Unrealised loss on investments -139,108 Technical result -1,155,619 Interest received and similar income +92,677 Exchange gain on investments +17,121 Impairment on investments -18,377 Exchange loss on investments -13,654 Other income (marketing materials, re-invoiced telephone costs) +43,737 Other expense (local business tax, vehicle tax, donation) -41,522 Non-technical profit +79,982 Retained loss -1,075,637 The gross premium was the domestic unit-linked premiums for life insurance in Hungary in The Insurer had no: - group contract premiums; - one-off premiums; - premiums on traditional life insurance contracts (with profit-shares or without). The premiums accounted from direct insurance are solely from Hungary. The Other costs comprise costs related to establishing operations in Romania (licence pending), recruiting management and staff, and ensuring operating conditions, amounting to a total of THUF 61,

20 2.15 Breakdown of costs Breakdown of costs 3,671,129 Gross acquisition costs 2,529,665 Claim settlement costs 0 Administration costs 1,135,005 Investment costs 6,459 No costs were incurred with claim settlements in the reporting year, and therefore the Insurer did not account such costs Extraordinary profit There were no extraordinary items in Taxation The Insurer had no corporate tax liability or solidarity tax liability in 2008, levied to help redress the budget balance in Corporate tax 2008 THUF E.) PROFIT BEFORE TAX - 1,075,637 Total deductible items (Section 7) depreciation - 59,796 Total disallowed items (Section 8) depreciation + 59,796 grant + 9, ,721 MODIFIED TAXABLE BASE - 1,065,712 Tax liability 0 3. ADDITIONAL INFORMATION 3.1 Preferential share purchase option CIG Közép-európai Biztosító Zrt. is offering clients the chance to buy shares under preferential conditions. Eligible clients can only take advantage of this preferential share purchase option if the Insurer raises capital 20

21 with an initial public offering and therefore the issued shares are introduced into stock exchange trading. The preferential share purchase option relates to such shares. The only persons eligible to buy shares under this preferential arrangement are those designated as the policyholder or insured party when concluding insurance policies for unit-linked life insurance underlying the preferential share purchase. However, this preferential share purchase is subject to there being no premium arrears on the underlying life insurance policy in question. The quantity of shares which can be bought under preferential conditions depends on the initial annual insurance premium of the life insurance policy, and is not influenced by the insurance premiums paid by the start of the share subscription period. The total issue value of shares available under the preferential arrangement based on a given unit-linked life insurance policy cannot be more than 50% of the initial annual premium of the life insurance contract underlying the eligibility for the share purchase. Preferential share purchase options only relate to unit-linked life insurance policies whose initial annual insurance premium is at least HUF 400,000 or EUR 1,600. The shares acquired by means of the preferential share purchase embody the same rights as the ordinary shares previously issued by the Insurer. When buying the preferential shares the Insurer grants a discount of 20% from the issue price. Until the reporting date, 2,392 option contracts were signed. The Insurer plans to sell no more than 10,000 options. 3.1 Remuneration of elected office-bearers In accordance with a general meeting decision, the elected office-bearers of the Insurer received remuneration of THUF 12,109 throughout 2008 and no advances or loans were disbursed to them. 3.2 Employees The following table shows the wages and staff data of payroll employees (without commissions): Administrative staff Sales employees Risk assessors Other employees Total Wages (THUF) 194,069 27,959 17,168 43, ,002 Other staff expenses (THUF) 5,090 3, ,620 10,501 Average headcount

22 Budapest, 24 April 2009 Chief Executive Officer Accounting Manager Chief Actuary 22

23 Appendix 1 Cost of unit-linked investments Name of instrument Quantity Cost Pioneer International Mixed Fund 16,928,372 30,273,386 Pioneer Hungarian Bond Fund "A" 93,677, ,402,447 Pioneer Hungarian Equity Fund 14,349,018 33,350,431 Concorde ,735,468 37,666,815 Ishares MSCI China 733, ,168,492 Lyxor MSCI India 112, ,828,043 Pioneer Emerging Markets Equity 193, ,597,888 Credit Suisse Bond Fund (LUX) Convert Europe "B" 3,172 8,251,796 Berkshire Hathaway-CL B ,677,695 D ,721,838 Total instruments 135,729,314 1,529,938,831 HUF 23

24 Appendix 2 Market value of unit-linked investments HUF Name of instrument Quantity Exchange rate Market value Pioneer International Mixed Fund 16,928, ,459,979 Pioneer Hungarian Bond Fund "A" 93,677, ,637,588 Pioneer Hungarian Equity Fund 14,349, ,541,884 Concorde ,735, ,780,933 Ishares MSCI China 733, ,434,289 Lyxor MSCI India 112, ,289,095 Pioneer Emerging Markets Equity 193, ,573,987 Credit Suisse Bond Fund (LUX) Convert Europe "B" 3, ,062,620 Berkshire Hathaway-CL B 660 3, ,596,725 D ,728,329 Forward transactions 48,432,150 Liquid assets 6,764,804 Money in transit 507,596,544 Other assets -12,792,119 Total instruments 135,733,146 1,955,106,808 24