CIG PANNÓNIA LIFE INSURANCE PLC. QUARTERLY INFORMATION Q3 2011

Transcription

1 CIG PANNÓNIA LIFE INSURANCE PLC. QUARTERLY INFORMATION Q th November 2011

2 1. Summary CIG Pannónia Life Insurance Plc. (hereinafter: Issuer) publishes its quarterly information on this day. The purpose of this information is to publish the data compiled in accordance with the Hungarian Accountancy Act, unaudited and unconsolidated, as well as data disclosed on a voluntary basis to the Association of Hungarian Insurance Companies (MABISZ) by the Issuer, simultaneously with the present quarterly report, in a quarterly information. The data provided to MABISZ are included in Annex 1 to the present information. The Issuer publishes its report on the third quarter of the year separately from the present information. In that report, as required by the legislation, its consolidated, unaudited data in accordance with the international financial reporting standards (IFRS) are published for the first nine months of Main events of the first three quarters of 2011: Increase in operating efficiency, focus on cost consciousness and on achieving profitability. - During the first nine months of 2011, the Issuer achieved gross premium revenues of HUF 19,487 billion, as compared to HUF 15,201 billion in the same period of The 28% increase in gross premium revenues beside the increase in the initial sales of unit-linked life insurance policies came basically from the renewal premiums of the existing life insurance portfolio. The Issuer s financial position is stable, on 30 th September 2011 its equity capital totaled to HUF 6,612 million, providing financing for its operation. - The Issuer and its general insurance subsidiary, CIG Pannónia First Hungarian General Insurance cplc. concluded a tripartite strategic cooperation agreement with Gránit Bank cplc. - When the agreement on strategic cooperation concluded between the Issuer and Pannónia Pension Fund entered into effect, the investment service provider and pension fund service provider companies were set up and registered. - In order to considerably improve cost efficiency and operating profits,, the Issuer will continue its operations in Romania, in line with the practice already established in Slovakia, in the form of cross-border sales from now on. Sales in Romania take place exclusively through brokerage channels, primarily through a company belonging to the BROKERNET Group, having joined Romanian market this summer. - The registered capital of the Issuer s general insurance subsidiary has been increased, in order to enable the start of active operation. - The Issuer submitted the winning proposal in an open public procurement tender regarding the provision of insurance services in the framework of a collective scheme of life and accident insurance for the National Directorate General for Disaster Management supervised by the Ministry for Internal Affairs. The Issuer will provide insurance services relating to specified insurance events during a period of 36 months, for 11,000 insured persons, in the framework of a collective life and general insurance contract, against an insurance fee of HUF 24,000,000 (that is, twenty four million forints). - The BSE Index Committee made a decision on 23 rd September 2011 about the structure of the new BUX basket and the new BUMIX basket. The Issuer remains the member of both baskets, the share of the CIGPANNONIA in the capitalisation is 2.55% in the BUX index and, by the same, it ranks sixth in terms of weight in the index. (The of the Issuer are included in the BUX index with effect from 1 st April 2009, with a weight of 1.31%.) Most important events after the closure of the balance sheet: - the general assemblies of Pannónia Pension Fund, a member of the CIG Partnership, as absorbing and Évgyűrűk Private Pension Fund and Postás Private Pension Fund, as acquired pension funds made a decision on the merger of the pension funds concerned. - the Issuer made a decision on the appointment of a new Chief Operating Officer. The Issuer appointed Mr Balázs Birkás to this position. - The Issuer s clear goal is to become profitable by the year 2014 and, in order to achieve that, the Board has made certain decisions on restructuring and cost cutting in the third quarter of the year. Budapest, 16 th November 2011 CIG Pannónia Life Insurance Plc.

3 2. Financial Statements Main headlines in the Issuer s Income Statement Designation (A) (B) million HUF Change, % ( C) (A)/(C) Gross written premium % Gross acquisition costs % Change in the deferred acquisitions costs % Claims and benefits % Change in gross reserves % Profit or loss of insurance technical investments % Administration costs % Profit or loss of reinsurance and other technical results % Technical result % Non-technical result % Profit for the year % Main headlines in the Issuer s Balance Sheet Designation (A) (B) million HUF Change, % ( C) (A)/(C) Intangible assets % Investments % Investments for the benefit of unit-linked life insurance policyholders % Receivables % Other assets % Prepaid expenses and accrued income % Total assets % Equity % Subordinated capital % Technical reserves % Technical reserves for unit-linked life insurance policyholders % Provisions Liabilities % Accrued expenses and deferred income % Total equity and liabilities %

4 3. Presentation of the Issuer s financial position the Issuer s data, according to the Hungarian Accounting Act, unaudited and unconsolidated, first three quarters of the year 2011 In the reporting period, the Issuer s gross written premium was HUF 19,487 million, which is 128 percent of the performance achieved in the previous year s similar period. Within that, the written premium from unitlinked life insurance was HUF 19,316 million, whilst the written premium from traditional life insurance was HUF 171 million. From policies sold in the first nine months of the year 2011, the written premium was HUF 6,799 million, representing a 4% increase on the same period of the previous year (HUF 6,542 million); at the same time, the company experienced a 158 percent increase in renewals of previously issued policies, with written premium from renewals hitting HUF 7,463 million, as opposed to HUF 2,894 million in the first nine months of Top-up premium payments reached HUF 5,225 million, originating mainly from unitlinked life insurance policies (HUF 5,221 million), while in the previous year s similar period written premium from top-up premium payments was HUF 5,765 million. Within premium revenue of HUF 19,487 million, the 27 percent share of top-up premiums is somewhat lower than the market average in this country, which is in line with the endeavor of the Issuer to maximize the share of regular premiums. For the Issuer, the driver of growth remained the sale of unit-linked life insurance policies, but parallel to that, sales of traditional products also increased. According to the Issuer s plans, in the future a growing emphasis will be placed on the sale of traditional products. Among expenses, the most important item is the amount of claims and benefits (HUF 4,367 million), including HUF 16 million related to traditional life insurance, and the rest to partial or full surrender of unitlinked life insurance policies. Another significant item is the expenditure on the change of gross technical reserves (HUF 3,792 million), including HUF 2,896 million relating to the increase in provisions for unitlinked life insurance. The increase in cancellation reserves was HUF 809 million, in accordance with the increased insurance premium receivables; the size of the other technical reserves cannot be considered as significant for the time being. The Issuer s gross operating costs amounted to a total of HUF 12,538 million in the first nine months of the year 2011, including acquisition costs of HUF 8,546 million, administration costs of HUF 3,808 million, claims settlement costs of HUF 43 million and investment costs of HUF 141 million. The acquisition costs increased proportionately to the dynamic increase in premiums written. Among the administration costs, HUF 1,147 million was related to tax and contribution payment liabilities arising from closing an employee share issue and the payment of a success fee for the completion of the Initial Public Offering, compensated by the reversal of the provision of HUF 671 million, created in the audited financial statements for the year 2010, accounted for as other income in the non-technical result. A major role in the development of operating costs was played by a dynamic increase in the headcount at the Issuer, with a stabilization of the headcount at levels needed in the long run, under the impact of cost rationalization measures announced in August. The investment result amounted to HUF 2,822 million loss, of which HUF 2,572 million loss belongs to unit-linked investments, The loss was mostly caused by the poor performance of investment funds in the Far East, Eastern Europe and South America, reflecting the trends observed in the markets during the second and third quarters of the year. The negative yield of 12%, calculated by dividing the loss with the average value of the portfolio, is in accordance with the performance of the MSCI World global stock index amounting minus 12.2%. On the whole, insurance earnings represent a loss of HUF 3,559 million, partially compensated by a noninsurance profit of HUF 443 million and thus the balance sheet earnings amounted to a loss of HUF 3,116 million as at The Issuer s balance sheet total was HUF 39,596 million, its financial position is stable; the company meets its liabilities in full. The total equity was HUF 6,612 million as at 30 th September 2011, which provided the solvency and operability required by law.

5 4. Executive summary Sales of new life insurance continued their dynamic increase: the Issuer sold new regular-premium policies representing annualized premium of HUF 7,067 million, of which unit-linked life insurances amount to HUF 6,909 million, while traditional life insurances to HUF 158 million. The annualized premium of new business in the same period of the previous year amounted to HUF 7,259 million, from that HUF 89 million connected to traditional and HUF 7,170 million to unit-linked policies. Unit-linked life insurance, new sales million HUF (A) (B) (C) Change, % (A)/(C) Number 11, ,268 12,439 96% Value, HUF million 6,909 10,199 7,170 96% In the first nine months of 2011, a total of 16,642 contracts were sold, of which 11,902 were unit-linked life insurance policies and 4,740 traditional life insurance policies. In August 2010, the Issuer produced outstanding sales results in connection with its flotation on the stock exchange, with a newly acquired value of HUF 1,977 million. In 2011, no comparable outstanding effect was observed; nevertheless, the Issuer reached the sales level of the year 2010 in the first nine months of the year. With new sales in the current year, the Issuer s closing stock of life insurance contracts increased to 40,912 units, the closing annualized premium thereof to HUF 20,584 million. A further improvement took place in the diversification of sales channels, in terms of annual value, with a major increase in sales of contracts through the BROKERNET Group; the volumes also increased with regard to sales through its tied agent network and the alternative network. As to policies sold in the first nine months of the year 2011, the share of the BROKERNET Group was 67%, of which 60% is related to sales in Hungary, and 7% to sales in Slovakia, with 11% from its tied agent network s performance and 22% from other channels. Market share indicators* Value of new sales unit-linked life insurance policies Value of new sales life insurance policies million HUF Market share million HUF Market share million HUF Market share % % % % % % Life insurance gross written % % % premium *At the time of preparing this quarterly report, the MABISZ market data on the third quarter of 2011 were not yet available.

6 The Issuer entered the Slovakian market in September 2010, where life insurance products are sold in the form of cross-border services. In Slovakia, the Issuer sells unit-linked life insurance products denominated in euro, through the Slovakian subsidiary of the BROKERNET Group. Contracts to the annual value of HUF 486 million were sold in Slovakia in the first nine months of The policies sold by the Issuer s Romanian branch euro-denominated investment-linked life insurance products and mixed life insurance policies launched in the first quarter of 2011 represent an annualized premium of HUF 111 million. In order to considerably improve cost efficiency and operating profits, from now on the Issuer will continue its operations in Romania, in line with the practice already established in Slovakia, in the form of cross-border sales. Procedures relating to closing the branch; acquisition of operations and group redundancies has started. The Issuer complied with its duty to report changes in its operations to HFSA. Sales in Romania take place exclusively through brokerage channels, primarily through a company belonging to the BROKERNET Group, which entered the Romanian insurance brokerage market this summer. In the first quarter of the year, the Issuer signed a letter of intent with the Pension Fund of Electricity Companies on long-term strategic cooperation. The agreement entered into force in the second quarter of the year; the Pension Fund was renamed the Pannónia Pension Fund and it became a member of the CIG partnership. The contractual parties, in order to explore the synergies of such cooperation to the maximum extent, started their collective work and, as a result, a strategy creation panel was set up. At the date of this report s publication, the Court of Registration had already registered the investment service provider and fund service provider companies, established in the framework of this cooperation. With this cooperation, the Issuer is a new player in the domestic market for private and voluntary pension funds. The purpose of creating the investment service provider company is to implement the investments of assets coming from the private and voluntary pension funds, the life and non-life provisions, the Issuer s own equity, other resources created within the Group and, if appropriate, from external assignments. Upon the issue of licenses, the operation of these companies can start; the authorization process is ongoing at the time of publishing this report. For the operations of the Issuer, the sale of unit-linked life insurance products in Hungary is and is expected to remain of significant importance and serve as a basis for achieving profitability by the year Cost rationalization measures implemented, the restructuring of the operation in Romania implementation of sales as a cross-border service and the structural rearrangement launched after the balance sheet date also serve this goal.

7 5. Number of employees, ownership structure The number of the Issuer s employees was 164 persons, as of on 30 th September Breakdown of the Issuer s equity capital (30 th September 2011) Series of Face (HUF/each) value Issued number of Total nominal value (HUF) Series A 40,- 63,283,203 2,531,328,120,- Size of capital - - 2,531,328,120,- Number of votes attached to the (30 th September 2011) Series of Issued number of Number of voting Voting power per share Total voting powers Number of treasury Series A 63,283,203 63,283, ,283,203 0 Total: 63,283,203 63,283,203-63,283,203 0 The Issuer s ownership structure (30 th September 2011) Number of Ownership stake Voting power Domestic private persons % % Domestic institutional % % Foreign private persons % % Foreign institutional % % Unspecified item % % Total % 100 % The Issuer assigned KELER to keep the shareholder s register. If, on occasion of ownership verification, an account manager with clients holding CIGPANNONIA does not provide data regarding the shareholders, the owners of the unidentified are recorded as unspecified item in the shareholder s register.

8 I. Appendix Presentation of the life insurance business line s portfolio of the Issuer at the end of the subject period (pieces) Opening Portfolio as at 1 January 2011 New business Closing portfolio as at 30 September 2011 Traditional life insurances Life insurance for death coverage Endowment Life Insurance Accident and Health Insurance riders Unit-linked life insurance Life insurance business line in total Presentation of the life insurance business line s portfolio of the Issuer at the end of the subject period Opening Portfolio as at 1 January 2011 New business in Thousand HUF Closing portfolio as at 30 September 2011 Traditional life insurances Life insurance for death coverage Endowment Life Insurance Accident and Health Insurance riders Unit-linked life insurance Life insurance business line in total

9 The Issuer s gross written premium according to the business lines at the end of the subject period Total Premium Top-up payable out of the revenue in Thousand HUF Earned premium Traditional life insurances Life insurance for death coverage Endowment Life Insurance Accident and Health Insurance riders Unit-linked life insurance Life insurance business line in total Actuarial reserves of single/top-up premium life insurance policies at the end of the subject in Thousand HUF Sum of actuarial reserves Single Premium Top-up premium Reserves on unit-linked life insurance policies 0 0 Total traditional life insurance Cost of the Issuer at the end of the subject period Acquisition cost Administrati on cost Claim settlement cost Investment cost in Thousand HUF Total Life business line in total Out of this: unit-linked life insurance