ANNUAL REPORT POISŤOVŇA SLOVENSKEJ SPORITEĽNE, A.S. VIENNA INSURANCE GROUP

Transcription

1 ANNUAL REPORT POISŤOVŇA SLOVENSKEJ SPORITEĽNE, A.S. VIENNA INSURANCE GROUP 2017

2 Table of Contents 3 Foreword of the Chairman of the Board of Directors 4 Company Details 5 Selected Indicators 6 Company structure 9 Vienna Insurance Group 11 Supervisory Board Report 12 Corporate Identity 13 Achievements and Awards 14 Product portfolio 15 Report on Business Activity 17 Report on the Financial Situation of the Company 19 Other Key Circumstances 21 Projected Development Annexes 22 Financial statement compiled in line with IFRS for the year ended 31 December

3 Foreword of the Chairman of the Board of Directors Dear Ladies and Gentlemen, 2017 was a successful year in particular for Poisťovňa Slovenskej sporiteľne, a.s. VIG, in fact it was the most successful year in the company s history. The foundation of this success is a strong team of professionals who have identified themselves with the company s principles such as quality and efficient work and building a stable and reliable insurance company representing the Vienna Insurance Group. The group has been operating in Central and Eastern Europe since 1990, and the proximity to customers has been underlined by around 50 group companies in 25 countries. The results achieved exceeded our plans. Both in written premium in the total amount of EUR million and the profit before tax in the total amount of EUR 18.0 million. Poisťovňa Slovenskej sporiteľne significantly exceeded the set goals and thus firmly contributed to the position of market leader of the Vienna Insurance Group in Slovakia. Thanks to our excellent business results we were awarded the prize for the most successful insurance company at the award ceremony of annual prizes of TREND weekly in This award has definitely ranked Poisťovňa Slovenskej sporiteľne, a.s. VIG among the best players on the Slovak insurance market. With all these successes, we can start 2018 optimistically. It will be a year of major changes and new challenges. We offer our helping hand to clients not only in the form of insurance claims, but we also help through social sponsorship. As in previous years, we supported socially disadvantaged people to give them a chance to find their place in society. Finally, I would like to thank our shareholders for their support, I wish to express my thanks to our partners, Slovenská sporiteľňa and Prvá stavebná sporiteľňa, last but not least I want to thank my colleague from the Board of Directors Viera Kubašová and all our team members, who have the greatest share in the successful development of Poisťovňa Slovenskej sporiteľne, a.s. VIG over the past few years. Kurt Ebner Chairman of the Board of Directors Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group 3

4 Company Details Business name Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group (hereinafter Company or Poisťovňa Slovenskej sporiteľne ) Registered office Tomášikova 48, Bratislava, Slovak Republic Headquarters Polus Tower 1, Vajnorská 100/A, Bratislava, SR Legal form Joint-stock company Company ID No.: Objects of Business / VAT No.: SK pursuing insurance activities for the area of life insurance as per the Act on Insurance, in the following fields of insurance cover: insurance payable on death, insurance payable at maturity or insurance payable on death or at maturity, investment-linked insurance, bodily harm or sickness insurance if it is a rider to the main policy. pursuing insurance activities for the area of non-life insurance as per the Act on Insurance to the scope of the following fields of cover: insurance against bodily harm, insurance against illness. pursuing activities of an independent financial agent in the insurance or reinsurance sector. Establishment , by registration to the Companies Register of the District Court of Bratislava I., entry ref no. 3085/B Share capital EUR Shareholders VIENNA INSURANCE GROUP AG WienerVersicherungGruppe 90 % KOOPERATIVA poisťovňa, a. s. ViennaInsuranceGroup 5 % Slovenská sporiteľňa, a. s. 5 % Board of Directors Ing. Martin Kaňa, Chairman to Kurt Ebner, Chairman from Ing. Viera Kubašová, member Supervisory board Dkfm. HansRaumauf - Chairman Mag. Erwin Hammerbacher - Vice-chairman Prof. Elisabeth Stadler - member JUDr. Judit Havasi - member Mag. Hans Meixner - member Ing. Daniel Morvay - member RNDr. Mária Maryniaková - member Distribution Channel Branch network of Slovenská sporiteľňa, a. s.. Retail network of Prvá stavebná sporiteľňa, a. s. Contact Sporotel: Poisťovňa Slovenskej sporiteľne, a. s. tel.: 02/ ViennaInsuranceGroup fax: 02/ Tomášikova 48 web: Bratislava 3 pslsp@pslsp.sk 4

5 Selected Indicators Financial indicators Total assets Shareholders equity Comprising, share capital Technical provisions Profit after tax Business indicators New business Gross written premium Other data Average payroll Data are given in thousands of Euros or as quantities, unless stipulated otherwise. The company reports data in line with the IFRS of the EU. New business is given as annualized premium, including riders. 5

6 Company Structure The majority shareholder of Poist ǒvn ǎ Slovenskej sporitel ňe, a. s. Vienna Insurance Group is VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe with a 90 % subscription to its share capital. Kooperativa poist ǒvn ǎ, a. s. Vienna Insurance Group a Slovenská sporitel ň ǎ, a. s. each hold 5 % stakes. VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe Vienna Insurance Group (hereinafter also VIG or Group ) boasts the best rating as part of the main index of the Vienna stock exchange, the ATX. Vienna Insurance Group is an international insurance group based in Austria s capital, developing insurance solutions in line with personal and local needs, making it one of the leading insurance companies in Austria and Central and Eastern Europe (CEE). On the Austrian market, Vienna Insurance Group is represented by the companies Wiener Städtische Versicherung VIG, Donau Versicherung AG and Sparkassen Versicherung AG. KOOPERATIVA poisťovňa, a.s. ViennaInsuranceGroup KOOPERATIVA poisťovňa, a. s. ViennaInsuranceGroup offers individuals and business entities a range of over 60 products in life and non-life insurance. It provides its services to 1.5 million clients. established on 30 October The major shareholder is one of the most significant insurance companies in Austria, Vienna Insurance Group AG Wiener Versicherung Gruppe with representation in Central and Eastern Europe. In 2001, KOMUNÁLNA poisťovňa, a. s. Vienna Insurance Group was affiliated to the VIG group in Slovakia, and in 2008 also Poisťovňa Slovenskej sporiteľne, when Erste Group Bank culminated the sale of its insurance companies in Central and Eastern Europe to Vienna Insurance Group. Slovenská sporiteľňa, a. s. Slovenská sporiteľňa is the largest bank in Slovakia with almost 2.3 million clients. It has long held the leading position in terms of total assets, personal loans, client deposits, and in the number of branches and ATMs. It offers a comprehensive range of services at 270 branch points and 8 regional corporate centers across Slovakia. Slovenská sporiteľňa has been generating excellent economic results for an impressively long time. In 2001, the bank became a member of Erste Group, one of the largest financial groups in Central Europe, with over 46,000 employees serving 16 million clients at almost 2,600 branches in seven European countries (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia and Serbia). The first private universal insurance company, KOOPERATIVA poisťovňa, a. s. Vienna Insurance Group was 6

7 Board of Directors Kurt Ebner Chairman of the Board of Directors He holds a degree from the Technical University of Vienna in Insurance Mathematics. He has been a part of Wiener Städtische Versicherung since 1976, he has since held several management positions in various companies of Vienna Insurance Group. He performed most of his professional duties in Austria, Poland Croatia, Hungary and Slovakia. Kurt Ebner was named the Chairman of the Board of Directors Poisťovňa Slovenskej sporiteľne on 16. October Ing. Viera Kubašová Member of the Board of Directors A graduate of the Slovak University of Technology in Bratislava, she has 20 years of experience in the insurance and finance business. Her association with Poisťovňa Slovenskej sporiteľne started while she was still with Slovenská sporiteľňa, where she worked on the project to establish the insurer. Once it was formed, she entered the Company as Head of Finance and as Confidential Clerk during the period from December 2003 to May She has been a member of the Board of Directors of Poisťovňa Slovenskej sporiteľne since 1 May In 2010, she became a member of the extended management and from 2014, a member of the Board of Directors of KOOPERATIVA poisťovňa, a. s. Vienna Insurance group. 7

8 Organizational structure Supervisory Board CEO CFO Board of Dire ctors Legal & Compliance dpt. Sales Managemnt & Insurance Brokerage Actuarial dpt. Risk Management dpt. Policy Services, Underwriting and Claims dpt. Sales Support & Marketing dpt. Financial dpt. Internal Audit IT dpt. Asset Management dpt. Organizational structure as of 31. December

9 Vienna Insurance Group We focus on providing our customers in Austria and CEE with custom products and services tailored to their needs. Our strategy is geared towards long-term profitability and steady earnings growth, making us a reliable partner in rapidly changing times. Over 25,000 employees work for the Vienna Insurance Group (VIG), at around 50 companies in 25 countries. We develop insurance solutions in line with personal and local needs, which have made us one of the leaders in the insurance industry in Austria and Central and Eastern Europe (CEE). Expertise and stability The Vienna Insurance Group is an international insurance group headquartered in the Austrian capital. After the fall of the Iron Curtain in 1989, VIG expanded rapidly from a purely Austrian business into an international group. VIG is synonymous with stability and expertisee in providing financial protection against risks. The Group s origins date back to Almost two centuries of experience, coupled with a focus on our core competence of providing insurance coverage, forms a solid and secure basis for the Group s 20 million-plus customers. Focus on Central and Eastern Europe Besides Austria, VIG places a clear emphasis on Central and Eastern Europe as its home market. The Group generates more than half of its premium income in CEE. VIG s operations are also focused on this region. This primarily reflects the forecasts for economic growth in CEE, which is predicted to be twice as high as in Western Europe, as well as the current level of insurance density, which is still well below the EU average. Local market presence For VIG, protecting customers financially against risk is a responsibility. The Group pursues a multi-brand strategy based on established local markets as well as local management. Ultimately, the Group s success and closeness to its customers is down to the strengths of each individual brand and local know-how. Strong finances and credit rating VIG has an A+ rating with stable outlook from well-known rating agency Standard & Poor s, meaning that it remains the top-rated company on the Vienna Stock Exchange s index of leading shares, the ATX. The Vienna Insurance Group is listed in both Vienna and Prague. Wiener Städtische Versicherungsverein a stable core shareholder with a long- 70% of VIG s shares. The term focus owns around remaining shares are in free float. Furtherr information on Vienna Insurance Group is available at or in the VIG Group Annual Report. 9

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12 Corporate Identity Vision Modern Life Insurance Company. Mission Reliable insurer for whole life. Strategy Quality, effective, simple, innovative. 12

13 Achievements and Awards TREND weekly has awarded the twentieth annual awards for extraordinary business results. Poisťovňa Slovenskej sporiteľne, a.s. VIG took first place. It has been awarded The Insurance Company of the year 2017 for the second time. Thus, defending its position as the most successful insurer. Poisťovňa Slovenskej sporiteľne, a.s. VIG places regularly in the ranking of the best insurance companies. It's already its seventh placement in the top three, which signifies that it is not a random success but a result of longlasting work. 13

14 Product Portfolio In line with the strategy, the insurance company offers a lean portfolio of life and non-life insurance. Products are simple and flexible which enables them to cover the customer needs in the scope of life and accident insurance or sickness insurance. Capital investment life insurance ŽIVOT This flexible product combines insurance, saving and investing. The product adapts to the current possibilities and needs of clients. Clients can choose between a solely capital form or combined capital-investment forms, whether they wish the insurance to be more focused on risk cover or on the saving element. With progressive payment of premium, clients have the option of taking out rider insurance for accidental death, permanent disability, fractures, serious illness or hospitalization. The insurance policy can cover the parent with all their children. Capital life insurance Funeral insurance A specific purpose form of insurance cover that provides funds for arranging a dignified final farewell and for easing the negative financial impact on those left behind. Funeral insurance offers cover in the event of death up to the age of 85. The premium can be paid progressively or as a lump sum. Payment protection insurance Loan protection insurance Insurance cover for the event of death by whatever cause, total and permanent disability, incapacity to work and loss of employment. It is offered with consumer loans and loans secured by real estate when taking out a loan with Slovenská sporiteľňa. The loan borrower is the insured person. Poisťovňa Slovenskej sporiteľne offers this product in cooperation with Poisťovňa Cardif Slovakia and KOOPERATÍVA poisťovňa, a. s. Vienna Insurance Group. Accidental risk insurance SPOROIstota Insurance of death by whatever cause and for injury that causes death or leaves the insured with permanent bodily harm. It is intended for holders of current accounts, natural persons or persons with account handling rights. Considering the scope of insurance cover and the low price, it serves as a good addition to lump sum payment of life insurance. Group accident insurance Children savings book insurance It is compulsory risk insurance to the bank product Children savings book. Insurance of death by injury for parents listed in the child s birth certificate. The Insurance sum is in the amount of EUR 7,000 and is paid directly to Children savings book. This insurance is offered to children in the age 0-18 who own the above bank product. Individual accident insurance Children savings book insurance PLUS Individual risk insurance that can be entered into together with the bank product Children savings book. This is insurance of death by injury of parents listed in the child s birth certificate. Alongside Children savings book insurance, clients can increase the sum paid to the child in case they lose their parent to EUR 27,

15 Report on Business Activity Activities and standing of the Company on the insurance market After several years of stagnation, the Slovak life insurance market has come to life, with a volume of 1.25 billion EUR that represents a year-on-year increase of 6.2%. Poisťovňa Slovenskej sporiteľne also made a significant contribution to this growth, which is also evidenced by a 73% increase in the written premium compared to The company thus not only confirmed the excellent results of previous years but also exceeded them well. PSLSP achieved a written premium volume of EUR thousand. This was higher by EUR 65.1 mil compared to the volume of written premium in Written premium in life insurance achieved a volume of EUR thousand. Thanks to these results PSLSP confirmed its standing among the top insurers on the Slovak life insurance market and moved to third place in this ranking. Thanks to the excellent results of PSLSP, the Vienna Insurance Group was ranked 1st in the life insurance market and defended its position from previous years. The market share of the VIG Group was 37.1%, with a written premium of EUR 464,587 thousand. This result has also been achieved by the excellent results of the PSLSP in Slovak life insurance market (Written premium in thousands of EUR) Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group Written premium (in thousands of EUR) Market share of Company 7,18 % 7,56 % 12,31% Vienna Insurance Group on the Slovak life insurance market Written premium (in thousands of EUR) Market share of Vienna Insurance Group 33,06 % 33,91 % 37,1 % Market ranking of Vienna Insurance Group Source: Slovak Insurance Association (SLASPO) 15

16 16,70% 15,04% 68,24% risk loan insurance and risk accident insurance funeral insurance capital investment life insurance Composition of new business in 2017 The number of new insurances in 2017 was pcs. As in the past years, in 2017, the dominant product in the number of insurance was credit insurance. 110,556 of this insurance accounted for 68.2% of the total number of insurances signed in There was a very significant shift in the number of insurances the company achieved in the sale of capital investment insurance. Compared to 2016, the PSLSP recorded a 22.5% increase. In numerical terms, this represents 27,078 units sold, which is 4,982 more than the previous year. Traditionally, the company has also been able to rely on a representative for capital life insurance. It is represented by 24,384 pieces of funeral insurance. A significant year-on-year increase was also recorded in capital life insurance. With a total of 24,384 funeral insurance for 2017, this number is higher by 4, ,2% 0,8% 0,7% 11,2% 30,1% risk loan insurance and accident-oriented risk insurance funeral insurance Premium written in 2017 Historical results were achieved by PSLSP in written premium in 2017, which is also confirmed by a 73% increase compared to The dominant share of the overall capital investment policy is the capital investment life insurance. This carrier product contributed to the total insured volume of EUR 88,215 thousand, which is 57.2% of the share of the premium. The increase in funeral insurance also accounts for 30.1% of this type of insurance, which was the second highest share in The third basic pillar of premiums written is risk insurance and, above all, credit insurance. The company confirmed the results of 2016 with a premium amounting to EUR 17,333.9 thousand. capital-investment life insurance capital life insurance 16

17 Report on the Financial Situation of the Company 2017 was the most successful year in Poist ǒvn ǎ Slovenskej sporitel ňe, a. s. Vienna Insurance Group (hereinafter Poist ǒvn ǎ or the Company) 15-year history. Poist ǒvn ǎ recorded an increase in profit before tax to EUR 18 mil (EUR 12.5 million in 2016), which represents an increase by 44% and a significant increase in written premiums. The assets of the Company increased by almost 29% in 2017 and as of achieved a value of EUR million. Due to the high premium written, the Company also recorded a significant positive position in the net cash flow from operating activities at the level of EUR 112 million (EUR 40 million in 2016). The growth and composition of new premium production, rigorous cost management and the result of investing financial assets contributed to these results. The financial results of the Company depend on the situation on the financial markets. In recent years the situation, besides fundamental aspects, has been vastly dependent on the monetary policy of the main central banks. During the year 2017, the US Central Bank (FED) acceded three times to raise its main interest rate, which ended year at %. At the same time, in October, it ended the quantitative easing program. The gradual departure from the markedly relaxed monetary policy was due to the good performance of the US economy and the significant strengthening of the labor market. On the opposite side of the Atlantic, the ECB remains at -0.40% for daytime sterilization operations with commercial banks and 0% for main refinancing operations. Since April, the ECB has cut the purchase of assets on the financial market to EUR 60 billion continued at this pace until the end of the year. Since January 2018, it has decreased the monthly purchase of assets to EUR 30 billion and this should last at least until September The ECB is driven to slowing down the quantitative easing with the rising economic growth rate and declining unemployment. But as inflation is not yet reaching target value, interest rates will remain at the current levels even longer, and they will start to decline significantly beyond the QE program's horizon. In Europe, a number of elections took place last year (the Netherlands, France, Austria, and Germany). There were fears that the anti-european far-right parties could gain a significant foothold. This eventually did not happen and the political situation in Europe stabilized and calmed down. The release of tensions had an impact on the narrowing of corporate bond spreads, which led to a decline in their yield to maturity. The 10-year yield of Slovak government bonds declined slightly in 2017 from 0.94% at the beginning of the year to 0.89% at the end of the year. The stock markets had another very successful year. Profitability of companies on a global scale rose by 1.5% more than analysts expected. In addition to low interest expense, future positive expectations are reflected in the economic activities of companies. The International Monetary Fund has increased the world economic growth forecast to 3.9% in 2018 and Thanks to a conservative and responsible approach to investment, the Company maintains a stable financial position over the long term. An important step for its preservation is also the management of the technical interest rate for capital life insurance products in line with developments on the financial markets. This management is important for the long-term maintenance of the ability to repay the Company's liabilities to policyholders. 17

18 he return on investment of the investment portfolio covering the traditional technical provisions declined slightly in Since the bulk of the portfolio is made up of bonds, debt purchases in 2017, at the current low yields, have reduced the average return. On the other hand, the average technical interest rate of the insurance portfolio fell from 1.98% at the beginning of the year to 1.71% at the end of the year. In 2017, the investment appreciation was once again higher than the average guaranteed technical interest rate, which allowed the re-allocation of 2.25% share of premiums to the clients. In addition to investments serving to cover traditional insurance and own funds the Company s portfolio also includes assets covering technical provisions from managed investment life insurance and index-linked life insurance with a predefined investment strategy. These investments appreciated during the course of the by more than EUR 5.6 million year which represents an average output of 2.5% per annum. Proposal for the distribution of profit for 2017 Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group ended the year 2017 with a profit after tax of EUR13.0 million. The Company has fulfilled all the legal conditions for the payment of dividends, therefore the Board of Directors the company proposes to pay part of the profit in the form of dividends. 18

19 Other Key Circumstances Impact of the accounting entity on employment and the environment As of 31 December 2016, Poisťovňa Slovenskej sporiteľne employed 77 full-time employees. The organizational structure included 2 members of the Board of Directors, 10 employees in management posts and 7 employees on maternity leave. From the total of 77 employees, 62.3 % are women and 37.7 % men. During 2016, the Company recorded a fluctuation rate of 9%, with an annual decline by more than 7%. The ratio of employees with higher education to those with a middle school education was 3:1. The average age of an employee is 39 years old. Besides the salary, the company offers its employees a variety of employee benefits divided into 5 basic programs: Health program, Loyalty program, Family program, Education and Cafeteria. The most commonly used employee benefits were the ones from the Cafeteria system, medical check-ups, injury insurance, pension contributions, flexible work time, and free time for regeneration. Poisťovňa Slovenskej sporiteľne employees have in 2017 actively participated on vocational educational programs organized by companies in Slovakia and other EU countries. Educational investment in 2017 represented on average EUR 450 per employee. Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group confirmed its market position and was among the top insurers on the market in Risk Management market risks, to general risks, which is the risk of the failure of a counterpart, concentration risk and operational risks. Besides this, the Company monitors risks following from business activity, such as reputation and strategic risk. Risk management forms an inseparable part of Company operation. Risk management processes are focused on securing the financial force and supporting sustainable growth. The Company has implemented a complex system of tools and measures the aim of which is monitoring and assessment of risks. In 2017 the company focused on the follow processes targeted to effective risk management: Valuation of assets and liabilities - Calculation of technical provisions in accordance with the requirements of the Solvency II (Calculation of technical provisions) Calculation of the Solvency Capital Requirement and own resources Inventory of risks System of internal control Own risk and solvency assessment, including an assessment of potential risks affecting the Company's key indicators Submission of information to supervisory authorities quantitave statements according to the requirements of the supervisory authorities. During 2017, the Company has on quarterly basis analyzed the possible exceeding of limits for the position of solvency, capital requirements for solvency and risk bearing capacity (RBC). Monitoring of limits is an important part of risk management and serves as early warning of insolvency danger for the Company. Based on the activities associated with the insurance business the Company is exposed to underwriting and 19

20 . Company satisfies the requirements of solvency in accordance with valid legislation and throughout the year has not recorded any significant facts that may endanger the financial stability of the Company. Therefore, the Company provides their clients with sufficient security of covering liabilities following from insurance policies. Risk management is dealt with in a separate part of the notes to the financial statements. Company philanthropy and charity Company employees actively participate in the long-term voluntary project Social Active Day with the aim of helping people living in the crisis center Brána do života in Bratislava. Both long-term and new projects have been supported by grants as well. For the 6th year the varied year-round volunteer activities give space to the staff of Poisťovňa Slovenskej sporiteľne to be an integral part of philanthropic projects and activities that share moments of happiness with a good purpose. Verifying adequacy of technical provisions Technical provisions of the Company as of the day the Financial Statements were compiled were calculated and established as per the applicable formulas and principles for their establishment and release, on the basis of the original actuarial assumptions. The Company verified the adequacy of technical provisions by conducting a test of adequacy of the provisions using the method of discounted cash flows, this with the use of the best estimates of future development of actuarial and economic conditions. All insurance contracts were included in the test, with riders evaluated together with primary insurance. The company tests the adequacy of its reserves on its portfolio individually for three homogeneous groups: The conducted test of adequacy demonstrated the sufficiency of reserves for all three monitored groups. The details are given in the Notes to the Financial Statements Information on received bank loans and on other bank loans As of 31 December 2017, the Company had not taken out any bank or other loans. Equity participations Poisťovňa Slovenskej sporiteľne, a. s. ViennaInsuranceGroup holds no equity participations in other companies h. Litigations In 2017, the Company was a party to seven passive litigations and is currently a party to one active litigation. The Company does not anticipate any significant impact on its financial situation from these litigations. Acquisition of own shares Poisťovňa Slovenskej sporiteľne did not acquire any of its own shares, short-term commercial papers, business stakes and equities, or short-term commercial papers and business stakes of the parent company to its portfolio in the 2017 accounting period. Expenditure on Research & Development Poisťovňa Slovenskej sporiteľne did not spend any funds on research and development. Events of significance occurring after the reporting period traditional insurance with shares of surplus, traditional insurance without shares of surplus, investment insurance. No events occurred after the balance sheet date that could have a significant influence on the reflection of circumstances that are the subject of reporting. 20

21 Projected Development Poisťovňa Slovenskej sporiteľne is a modern financial institution that also defended its stable position on the life insurance market in Key factors for the company remain the same provide the clients with high-quality, fast and available services. One of our main goals is to be a stable partner for our client throughout their whole life. It currently offers its services to almost half a million clients. Permanent year on year increase in the number of clients is a sign of their confidence. It will start 2018 with all of its successes will be a year of fundamental changes and a number of new challenges. One of the strategic goals of the Vienna Insurance Group is the developing of the area of bank insurance. In order to strengthen its bank insurance position Poisťovňa Slovenskej sporiteľne, a.s. Vienna Insurance Group is planning to merge with Kooperativa poisťovňa, a.s. Vienna Insurance Group in The Board of Directors of the company on negotiated the intent of merging Poisťovňa Slovenskej sporiteľne, a.s. Vienna Insurance Group and KOOPERATIVA poisťovňa, a.s. Vienna Insurance Group (hereinafter KOOPERATIVA ) according to which, with effect to Poisťovňa Slovenskej sporiteľne voluntarily closes without liquidation with a legal successor with the company KOOPERATIVA as the successor and all assets, liabilities and equity, including the rights and obligations of the PSLSP company's employment relationships shall pass to the effective date of the merger to KOOPERATIVA which will become the universal legal successor of PSLSP. The National Bank of Slovakia as a financial supervisory authority, on 19 December 2017 granted a prior consent to the merger of the companies. Both the merger and the draft of the merger agreement were submitted to the Extraordinary General Meeting of the Company for approval by the Board of Directors on The clients of Slovenská sporiteľňa, the largest bank in Slovakia, will continue to be offered tailor-made special products under the brand name of the bank. They will benefit from a wider product range in the field of insurance, such as new types of motor insurance and a richer range of services. By combining the resources and competencies of both companies implies the creation of a strong, stable, leadingedge insurance company. 21

22 FINANCIAL STATEMENTS COMPILED IN COMPLIANCE WITH IFRS AS ADOPTED BY THE EUROPEAN UNION POISŤOVŇA SLOVENSKEJ SPORITEĽNE, A.S. VIENNA INSURANCE GROUP december

23 Table of Contents Independent Auditor s Report Financial Statements as of 31. December Balance Sheet 2 Comprehensive Profit and Loss Statement 3 Report of Changes in Equity 4 Report on Cash Flows Note to the Financial Statements 6 General Information 7 Summary of Basic Accounting Policy 17 Critical Accounting Estimates and Judgments in Applying Accounting Policies 18 Application of new Accounting Standards and Interpretations 19 New Reporting Standards that the Company does not apply Prematurely 23 Other Financial and Insurance Assets 25 Other Assets 27 Technical Provisions and Related Insurance Liabilities 28 Trade and Other Accounts Payable 29 Changes in Technical Provisions 31 Share Capital and Other Funds 32 Gross Written Premium 33 Income from Fees and Commissions 34 Result of Reinsurance 35 Profit and Loss from Asset Allocation 36 Claims and Insurance Benefits before Reinsurance 37 Operating and Other Expenses 38 Income Tax and Specific Levy from Profit 40 Insurance Risk Management 45 Financial Risk Management 49 Capital Management 50 Fair Value of Financial Instruments 55 Financial Instruments by Category 57 Transactions with Associates 58 Events after the Reporting Period

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30 Balance Sheet In EUR thousands Note 31. December December 2016 ASSETS Loans 20, Bonds: - held to maturity 20, at fair value through profit or loss 20, classified as loans and receivables 20, available for sale 20, Equity securities: - available-for-sale 20, at fair value through profit or loss 20, Other financial and insurance assets 6, Other assets 7, Corporate income tax receivable Cash and cash equivalents TOTAL ASSETS LIABILITIES Provision for life insurance and related insurance liabilities 8, Provision for investment insurance Trade and other payables Deferred tax liability Corporate income tax liability and specific levy from profit TOTAL LIABILITIES EQUITY Share capital Statutory reserves Other capital funds Difference in valuation from available-for-sale assets Retained earnings TOTAL EQUITY TOTAL EQUITY AND LIABILITIES Notes on pages 5 to 58 comprise an integral part of these Financial statements.

31 Comprehensive Profit and Loss Statement In EUR thousands Note Gross written premium Change in Unearned premium reserve Gross earned premium Share of reinsurer in earned premium Net earned premium Interest income Income from fees and commissions Profits minus losses from asset allocation Other revenues Transaction administration costs for asset allocation Claims and insurance benefit costs before reinsurance Share of reinsurer on claims and insurance benefit costs 10, Acquisition costs of insurance contracts Operating and other expenses Income before tax Income tax and specific levy from profit INCOME FOR REPORTING PERIOD Other comprehensive profit / loss: Items that will be reclassified subsequently to profit or loss Financial assets available for sale - Revaluation in year Losses minus profits reclassified to income upon sale Deferred tax Other comprehensive income in total, minus tax COMPREHENSIVE INCOME FOR REPORTING PERIOD Notes on pages 5 to 58 comprise an integral part of these Financial statements.

32 Report of Changes in Equity In EUR thousands Note Share capital Statutory reserve fund Other capital funds Revaluation funds Retained earnings Own capital in total As of 1. January Income for the period Other comprehensive income Total comprehensive income Payment of dividends As of 31. December Income for the period Other comprehensive income Total comprehensive income Payment of dividends As of 31. December Notes on pages 5 to 58 comprise an integral part of these Financial statements.

33 Report on Cash Flows In EUR thousands Note Cash flows from operating activities Received premium Received commission Payments for insurance benefits Cash flows from guaranteed return on investments Cash flows from reinsurance Commission payments for intermediaries Payments to employees and suppliers Other taxes and levies Other operating cash flows Income tax paid and specific levy from profit Net cash generated from operating activities Cash flows from investing activities Interest received Received dividends and other incomes from securities Cash flows from acquisition of tangible and intangible assets Cash flows from sale of tangible and intangible assets Cash flows from acquisition of financial investments Cash flows from sale of financial investments Net cash used in investing activities Cash flows from financing activities Dividends paid Net cash used in financing activities Net growth of cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Net change in cash and cash equivalents Notes on pages 5 to 58 comprise an integral part of these Financial statements.

34 NOTESTO THE FIANANCIAL STATEMENTS POISŤOVŇA SLOVENSKEJ SPORITEĽNE, A.S. VIENNA INSURANCE GROUP december

35 General Information These financial statements have been compiled as annual financial statements of the company Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group for the year of 2017 in line with International Financial Reporting Standards ( IFRS ) as adopted by the European Union. The financial statements were approved by the Board of Directors of the Company on 27 February The financial statements for the preceding reporting period were approved on 21 March 2017 by the General Meeting of the Company. Death insurance cover,endowment assurance or both death insurance and endowment cover, Investment fund insurance cover, Accident and illness insurance, provided that it is additional insurance, Non-life insurance in the segments of accident and illness insurance, Activities of an independent financial agent in the insurance or reinsurance sector. Poisťovňa Slovenskej sporiteľne, a. s. Vienna Insurance Group (hereinafter Company ) was established on 20 September 2002 and commenced operations on 27 January It is registered in the Companies Register of the District Court of Bratislava I under entry no. 3085/B. The company s identification number is and its taxpayer identification number is The Company is not an unlimited liability partner in other accounting entities. As of 31 December 2017, Vienna Insurance Group AG Wiener Versicherung Gruppe was its parent company, with its registered office at Schottenring 30, 1010 Wien, Austria, and Wiener Städtische Wechselseitige Versicherungsanstalt Vermogensverwaltung was its final controlling entity. The ownership structure of the Company remained unchanged in 2017 as well as in From 1 January 2018, the Company's operations from the accounting point of view are considered to be operations carried out on behalf of the successor company, which is KOOPERATIVA poisťovňa, a.s. Vienna Insurance Group, due to merger (Note 25). Basic activities of the accounting entity The Company conducts life and non-life insurance, namely: The company is active in the Slovak Republic nationwide through its Slovenská sporiteľňa a.s. and Prvá stavebná sporiteľňa, a.s branches. Registered office The company s registered office is Tomášikova 48, Bratislava 3, Slovak Republic. Currency of financial statements The financial statements are quoted in EUR in thousands, unless stated otherwise. As of the Company s Board of Directors was made up of: Chairman Kurt Ebner (since and until Ing. Martin Kaňa) and member Ing. Viera Kubašová. The Supervisory Board was made up of Chairman Dkfm. Hans Raumauf, Vice-chair Mag. Erwin Hammerbacher and members Mag. Hans Meixner, Prof. Elisabeth Stadler, JUDr. Judit Havasi, Ing. Daniel Morvay and RNDr. Mária Maryniaková. The company maybe be represented as of and Ing. Anna Samuelová and Ing. Richard Schiffer. As of 31 December 2017 the average number of employees was 74 (in 2016: 69), out of which 10 were management employees 10 (2016: 10). 6

36 Summary of Basic Accounting Policy Basis for preparation of financial statements These financial statements were compiled under the historical cost convention, with the exception of financial assets available for sale and financial assets at fair value through profit or loss. The following text states the basic accounting principles and methods. These were applied consistently in the current and the previous accounting periods, unless otherwise stated. Financial instruments basic terms of measurement Depending on their classification, financial instruments are measured at fair value or at amortized cost using the effective interest method, as described below. Fairvalue is the price that the owner would have received from the sale of the asset or that the debtor would have paid for the transfer of liability in a standard transaction between parties on the market, on the day of valuation. The best proof of fair value is the price on the active market. A market is deemed active if transactions with the said assets or liabilities are made with sufficient frequency and volume so that it continually provides the information about the price. The fair value of financial instruments traded on the active market is determined as the sum of their quoted prices and their volumes owned by the Company. This procedure is applied also where the daily volume traded on the market is not sufficient to be able to absorb the volume owned by the accounting entity and the instruction to sell a position within a single transaction could affect the quoted price. The quoted price used for valuation of an asset is the quoted bid price and the quoted price for valuation of liabilities is the quoted ask price. When the closing rate is not available for the given day of valuation, the market price is determined by the market makers. If the market price cannot be determined even by the market makers, the closing price of the security is used not more than 30 calendar days from the day the valuation is made. If it is not possible to determine the market price using the price acquired by the above methods, the price is calculated from the yield produced by interpolation between the closest points of the yield curve for the given type of security. Where there is no financial market for the particular investment, the fair value is determined using valuation techniques which include reference to the current fair value of another similar instrument or by analysis of discounted cash flows. The fair value is analyzed depending on the level in the fair value hierarchy as follows: (i) level one represents valuation of the market price (unadjusted) from the active market for identical assets or liabilities, (ii) level two represents valuation using techniques or other models whose fundamental inputs are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices), and (iii) level three represents the valuation whose inputs are not based on observable market data (i.e. there are subjectively set input parameters). For the purposes of financial reporting, it is assumed that any shifts between the levels in the fair value hierarchy always occurred only by the end of the reporting period. Transaction costs are costs directly associated with the purchase, issue or sale of a financial instrument. These costs would not have been 7

37 incurred if the transaction had not occurred. Transaction costs include fees and commissions paid to intermediaries (including employees working as intermediaries), advisors, brokers and dealers, fees to regulatory agencies and stock markets, and transfer taxes and fees. Transaction costs do not include discounts or surcharges, costs of financing or internal administrative costs. Amortized costs determined by the effective interest method is the value representing the amount at which the financial instrument was carried at the time of acquisition, minus payments of principal, plus accrued interest, and minus any adjusting entries for impairment of financial assets. Accrued interests include accrued transaction costs and the difference between the acquisition cost and the nominal value using the effective interest method. Interest accrued in this way is part of the valuation of financial instruments in the balance sheet. The effective interest method is the method of calculating the redemption value and for setting interest income and costs for the given period with the aim of achieving a constant interest rate (effective interest rate). The effective interest rate is one that precisely discounts estimated future cash flows (with the exception of future loan losses) for the period the financial instrument exists, or for a shorter period, to the net carrying value of the financial instrument. The effective interest rate discounts cash flows of instruments with variable interest rate until a further change of the interest rate is made, excepting a bonus or discount, which reflects credit risk above the variable interest rate specified for the financial instrument, and with the exception of the other variables that do not change along with the market interest rate. These bonuses or discounts are accrued throughout the whole expected life of the financial instrument. Calculation of the current value includes all fees between the parties, paid or received, which are an integral part of the effective interest rate. Initial measurement of financial instruments Financial instruments at fair value through profit or loss are carried at the fair value at the time of acquisition or creation. Other financial instruments are measured at the time of acquisition or creation by the fair value plus transaction costs. The best evidence of the fair value at the time of acquisition is the transaction price. The profit or loss at the time of acquisition is accounted only if the difference between the transaction price and the fair value could be supported by the price from other simultaneously executed transactions on the market with the same financial instrument or by the valuation model, the inputs of which only comprise of data from available markets. Current purchases and sales of financial assets are reported on the date the deal is financially settled, being the date when the Company receives or supplies the said asset. This method is used thoroughly for all purchases and sales of financial assets. De-recognition of financial assets The Company derecognizes financial assets in the following cases: (a) the asset or receivable was paid off or the right to income from this asset has expired in some other way or (b) the Company has transferred the right to the cash flows from the financial asset or has concluded an agreement on the transfer of income from the said asset immediately after receipt, which complied with the set conditions, whereby: (i) in fact it transferred all risks and rewards of ownership of the asset or (ii) it did not transfer nor retain in essence all risks and rewards of ownership, but retained control. Control remains on the side of the Company in the event that the counterparty is practically not able to sell the said asset as a whole to an independent party without the sale being subject to further restrictions. Securities held to maturity This class of financial instrument represents securities quoted on the active market with firmly fixed or determinable payments, which the Company intends and is able to retain till maturity. The security may not be classified as held to maturity if the Company or issuer is entitled to request its premature payment, because the price paid for such a right is not consistent with the objective to hold the security to maturity. The company management sets the classification of securities as held to maturity at the time of acquisition and revaluates it to the end of each reporting period. Securities held to maturity are carried at amortized cost set by the effective interest method. 8