g le t s k t IG B n s t

Key Figures

Company ProfileOpening

StatementECO Indicators

Report of BOD Report of SVBVIG

Auditor’s Report Balance Sheet

Profit and Loss Account

Changes in Equity

Notes to the Financial Statements

Report onRelations

Non-financial Section

Board

Distribution Network

Key Figures

(in thousands CZK) 2012

Assets 29,262,587

Equity 3,355,574

Technicalprovisions 24,007,183

Profit(loss)ofcurrentaccountingperiod 1,018,418

Totalwrittenpremiums 10,702,266

ofthis:lifeassurance 9,897,341

non-lifeinsurance 804,925

Totalcostsofinsuranceclaims 6,745,877

ofthis:lifeassurance 6,556,934

non-lifeinsurance 188,943

01 Contents 02 YourEasyRoadtoLifeAssurance 03 CompanyProfile07 OpeningStatementbytheChairmanoftheBoard

ofDirectors 10 Development in theMost Important Economic Indicators 11 Members of the Company’s Excecutive Bodies

12 OrganizationalStructure14 ReportoftheBoardofDirectors 23 ReportoftheSupervisoryBoard26 InformationaboutVienna

InsuraceGroup 29ContentsofFinancialSection 111 Non-financialSection

Contents

01

02Pojišťovna České spořitelny, a.s., Vienna Insurance Group

PojišťovnaČeskéspořitelnyisoneofthelargestinsurancecom-

paniesinthefieldofbankassuranceontheCzechmarket.The

comprehensivesaleofourproducts,includingthesubsequent

clientservice,isprovidedthroughtwodistributionnetworks.

Branch Office Network of Česká spořitelna

Togetherwithmorethan4,600consultantsfromČeskáspoři-

telna,weensureourinsuranceproductsandcomprehensivesa-

lesandafter-salesserviceareavailabletoourclientsatmore

than680locationsintheCzechRepublic.

Pojišťovna České spořitelny’s External Network

Thankstotheroughly200externalcontractualpartners,who

ensureboththesaleofinsuranceproductsandalsoprofessio-

nalcustomerservice,wecanguaranteeourproductsarehighly

available.Ouradvisersareflexible;beingabletomeetatatime

orplacethatsuitstheclient’sneeds.

Your Easy Road to Life Assurance

03Annual Report 2012ICompanyProfile

In2012PojišťovnaČeskéspořitelnydefendeditsnotionalgold

medal in theZlatákoruna (GoldCrown) competitionandwon

silver in the Hospodářské noviny competition in the category

ofBestInsuranceCompanyoftheYear.InMarchthecompany

launchedanewproductonthemarket,Funeral Insurance. In

OctoberFLEXIunifiedtheratesforinsurancerisksandunder-

wentinnovation.Itnowoffersclientsdoubleindemnityfordeath

inacaraccident,itextended3rddegreedisabilityinsuranceby

long-termcareforfree,itenabledadvancepaymentofinsuran-

cebenefitandaftersevenyearswithoutahealthrecorditlooks

upontheclientashealthy.PojišťovnaČeskéspořitelnyattained

CZK 10.7 billion of written premiums and insured more than

1.9millionclients.IncooperationwithCentrumParapleitcon-

tinuestosupporthandicappedfellow-citizensandfamilieswith

children.Bambiriáda,aneventtosupportactiveandsafeways

forchildrentospendtheir freetime,alsoreceivedafinancial

contribution.Ouremployeesareactively involved in theDays

forCharity.

2011

This year Pojišťovna České spořitelny celebrated its achieve-

mentswith FLEXI Life Assurance,whichwon theZlatá koruna

(GoldenCrown)competition.At thesametime,wewonthetit-

le Best Insurance Company of 2011 and Most Client Friendly

Insurance Company 2011. At the start of the year FLEXI Life

Assuranceunderwentsomeinnovations,inwhichwepresented

auniqueprogramme,InSpiral,thatallowsthepolicyparameters

tobemodifiedtakingadvantageoftheproduct’sotherbenefits.

Wealsointroducedbonusesforloyaltyandnoclaimsorinsuran-

ceforrecreationalsportsrisks.WehaveoverCZK10billionin

Company Profile

Pojišťovna České spořitelny, a.s., Vienna Insurance Group 04

writtenpremiumsandinsuremorethan1.9millionclients. In

cooperationwithCentrumParaple(ParaplegicCentre)andSPID

handicap,o.p.s.,wecontinuesupportinghandicappedcitizens

andfamilieswithchildren.TheKrtekEndowmentFundforchil-

dren’soncologyalsoreceivedafinancialcontribution.Ourem-

ployeesareactivelyinvolvedintheDaysforCharity.

2010

InMarch2010,FLEXILifeAssurancecelebratedits10thanniver-

saryontheCzechmarketwithmorethan900,000peopleinsured.

Thecompany’slong-termeconomicstabilitywasstrengthenedby

thegeneralmeetinginMay,whenitwasdecidedtoincreasethe

basiccapitalbyCZK782.9milliontoatotalofCZK1.9billion.

PojišťovnaČeskéspořitelnyalsoenjoyedsuccessinvariouscom-

petitions.Our coreproduct FLEXI Life Assurancedefended its

victoryfromthepreviousyearintheZlatákoruna(GoldenCrown)

competitionintheLifeAssurancecategory.Wecamefirstplace

inthecategoryInsuranceCompanyof2009–LifeAssuranceand

inoneofthecompetition’smaincategories,InsuranceCompany

of2009,wedefendedourvictoryforthefourthtimeinarow.Petr

Zapletal,ChiefExecutiveOfficerofPojišťovnaČeskéspořitelny,

alsowonanawardinthefirstyearoftheInsuranceManofthe

Yearcompetition.Thesuccessof2010wasalsounderscored

bythefactthatforthefirsttimeinourhistorywemanagedto

exceedthelimitof9billioninwrittenpremiums.

2009

Atthebeginningof2009,wepresentedthenewcomprehensive

FLEXILifeAssurance,whichmergedtheproductsFLEXI,FLEXI

INVEST2008andFLEXIH-FIXintoasingleproduct.Thequalityof

thisinsuranceistestifiedtobythefactthatmorethan200,000

clientsmadeuseofFLEXILifeAssurancein2009andalsothe

numberofawardstheinsuranceproductwon.IntheFincentrum

BankoftheYearcompetitionFLEXILifeAssurancewontheLife

Assuranceof2009category,itwontwoofthehighestawards

in the ZlatáKoruna (Golden Crown) competition, those being

inthecategoriesofLifeAssuranceandInnovationoftheYear.

IntheInsuranceCompanyof2008competition,wewoninall

categoriesrelatingtolifeassurance.TheAssociationofCzech

InsuranceBrokersawardedusthehighestawardinthecatego-

riesofInsuranceCompanyof2008inLifeAssurance,Innova-

tionofInsuranceProducts,CooperationwithBrokersandinthe

categoryofSettlingClaims.TheFLEXILifeAssuranceproduct

crowneditssuccesswithavictoryinthecategoryofInsurance

Productof2008.In2009,thecompanynamewaschangedto:

PojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup.

2008

InSeptember2008PojišťovnaČeskéspořitelnybecameamem-

ber of the Vienna Insurance Group. In the same year FLEXI

INVEST2008 investment lifeassurancewasvotedwinner inthe

05Annual Report 2012ICompanyProfile

categoryofLifeAssuranceof2008intheMasterCardBankof

theYear2008competition.Atthesametime,wewontheSilver

Crown in the Life Assurance category. Likewise in2008, the

AssociationofCzechInsuranceBrokersawardedusInsurance

Companyof2007inLifeAssuranceandtheFLEXIproductwon

thehighestawardintheInsuranceProductcategory.Wewere

awardedthetitleofBestInsuranceCompanyintheareaofSet-

tlementandInnovationinInsuranceProducts.

2007

2007wasmarkedbyimportantproductchanges.Weinnovated

one of themost successful products, the FLEXI Flexible Life

Assurance,weintroducedanewtypeofinvestmentlifeassur-

ance,FLEXIH-FIX,andfor2008wepreparedaninnovationto

theFLEXIINVESTInvestmentLifeInsurance.

2006

During2006,westrengthenedourpositioninthelifeassurance

marketthusvindicatingourrankingamongthefivemajorlifeas-

surancecompanies.Inaddition,wegainedthetitleInsurance

Companyof2006intheLifeandAccidentInsurancecategory

in a survey organised by the Association of Czech Insurance

Brokers.Thenumberofourclientsexceededhalfamillion.

2005

In2005,wecameupwithseveralproductinnovations.TheKVA-

TROandHYPOTÉKACreditLifeAssuranceproductsmadetheir

markamonginsurancerepresentatives.Attheendoftheyear,

theproductportfolio insurancewasenrichedbyanew insur-

anceschemeforchildren,whichischaracterisedbyhighflex-

ibility,copyingtheneedsofthechildorthefamily.Itwentunder

thenameofJUNIORFlexibleLifeAssurance.

2004

From2004onwards,weonlyspecialiseinthesaleof lifeas-

surance,thatbeingbymeansoftheČeskáspořitelnabranch

networkandselectedexternalnetworks.However, theČeská

spořitelnaFinancialGroupcontinuestoofferitsclientscertain

productsbymeansofitsstrategicpartner.Weoperateasthe

“competencecentre“of theČeskáspořitelnaFinancialGroup

and,togetherwithastrategicpartner,theKooperativainsurance

company, we provide highly standardised general insurance

products intended for the Česká spořitelna branch network.

A significant addition to our products was the FLEXI INVEST

InvestmentLifeAssurancethatoffersclientsachoiceofthree

investmentprogrammesandawiderangeofinsuranceforlife

risks.


2003

Withregardtothedevelopmentoftheinsurancemarketinthe

CzechRepublicandtheEuropeanUnion,andalsowithregardto

thefactthatČeskáspořitelnaandtheErsteBankgroupspecial-

iseintheareaoflifeassuranceandbankassurance,inlate2003

theshareholdersofPojišťovnaČeskéspořitelnydecidedtosell

thenon-lifeinsurancepartofthecompanytoKooperativa.

2001

UndertheinfluenceofthetransformationofČeskáspořitelna

anditsentirefinancialgroup,asof17September2001wetook

onthenewnameofPojišťovnaČeskéspořitelny.Thechangein

thebusinessnameisrelatedtothechangesinthecorporate

colours,namesandlogosoftheentireČeskáspořitelnaFinan-

cialGroup,whicharebasedonthecompositionofitsmajority

owner –ErsteBank. Therewerealso changes in theareaof

providingservices toclientsand thecompany’smanagement

culture.Therewasdevelopmentinsalesofourinsuranceprod-

uctsofferedinČeskáspořitelna’snetworkofbranches,inwhat

isnowcalledbankassurance.

2000

Within the framework of privatisingČeská spořitelnawealso

underwentathoroughlegalandfinancialaudit.Thisresultedin

anewshareholderenteringattheendof2000.ThelargestAus-

trianlifeassurancecompany,SparkassenVerischerungamem-

beroftheErsteBankFinancialGroup,acquireda45%stakein

thecompanybyincreasingthebasiccapitalbyCZK500million.

WeputFLEXIFlexibleLifeAssuranceonthemarket,aunique

productforanewgeneration.

1995–1999

In 1995, we were the first insurance company in the Czech

Republic toput insurance for very seriousdiseasesonto the

market,duringwhichaclaimismadeinthecaseofadisease

diagnosis.Animportantmilestoneintheinsurancecompany’s

historywasthecapitalinputofČeskáspořitelnain1995,which,

inadditiontotherequiredcapitalbase,broughtthebackground

ofthestrongestfinancialgroupintheCzechRepublic.Theim-

portanceofagoodqualityshareholderstructurewasdemon-

stratedin1997,whenthewhole insurancemarketwasnega-

tivelyhitbytheimpactofextensiveflooding.

1992–1994

PojišťovnaČeskéspořitelnywasfoundedin1992usingCzech

privatecapital.InJanuary1993,webeganourinsuranceactivi-

tiesunderthenameŽivnostenskápojišťovna.Ouraimwasto

provideinsuranceservices,inparticulartotherisingbusiness

sphere.Withthedevelopmentofinsuranceactivities,wealso

startedtoexpandourofferofinsuranceschemesforthegen-

eralpublic.

07Výroční zpráva 2012IÚvodníslovopředsedypředstavenstva

Opening Statement

Pojišťovna České spořitelny, a.s., Vienna Insurance Group

Opening Statement by the Chairmanof the Board of Directors

Dearclients,shareholders,businessfriends,

IamgladtosaythatthisyeartooIcanconfirmthatPojišťovna

Českéspořitelnydidwellin2012.Wearestillworkingonstrength-

eningourposition inthemarket;we’re improvingourcoreprod-

uct,FLEXILifeAssurance,whichhasbeenhighlyacknowledged

bybothexpertsand thegeneral public. These facts reflect the

goodworkdonebythecompany’spartnersandemployees.We’ve

managedtostrengthenourpositionontheinsurancemarketat

atimewhenclientsarecautiousandconsiderverycarefullywhere

toinvesttheirmoney.Butthecompetitionisgainingground.Just

likeus,otherplayersinthefieldoflifeassurancearefightingfor

clients,andtheytoohavesomethingtoofferthem.Foralongtime

nowit’snotthelowestpricethatwinsthrough,ratheritisaclient-

friendlyapproach,first-rateservicesandaninterestingproduct.

2012broughtwithitamajorchangeinthewaywelookatpric-

inginsurance.Thegenderfactornolongerexistswhenpricing

risks.Therefore,at theendof the year FLEXILifeAssurance

unifiedtheratesformenandwomenandpresentedinteresting

productinnovations.

Weofferclientsdoubleindemnityduringatrafficaccident,achoice

oftwoinsurancepackagesforveryseriousdiseasesoranex-

tensionofthemaximumperiodofbenefitindailycompensation

insurance forchildren to365days.Weallowadvancesettle-

mentforclaimsthatoccurredfrom1November2012andneed-

edmore thanamonthof treatment. In addition, after seven

yearswithoutanythingontheirhealthrecords,weviewclients

ashealthy.


09Annual Report 2012IOpeningStatementbytheChairmanoftheBoardofDirectors

TheawardsthattheFLEXILifeAssurancegainedtestifytothe

qualityoftheproductsandtheprofessionalapproachofCom-

panyemployeesand thatof itspartners. For the fourth time

nowwe’vetakenfirstplaceintheLifeAssurancecategoryinthe

Zlatákorunacompetitionandwecamesecondintheeconomic

dailyHospodářskénoviny’scompetitionforthebestinsurance

companyin2012.

We also managed to attain ten billion seven hundred million

crowns inwrittenpremiums,despitethestagnationof the in-

surancemarket,ourwrittenregularpremiumscontinuetogrow.

Thankstothehighcommitmentofemployeesandpartners,we

hold thirdplaceamong insurance companiesoffering life as-

surance,withourwritteninsurancecontractsholdingamarket

shareof12.1%.

Irealisethatwhengainingaclient’strusttheconsultanttakes

onboth the roleofanadviserand thatofa reliablepartner.

Someonewhoknowshowto listentotheclient’swishesand

needs, canhelp to choose themost suitable product and is

alwaysathandwheneversomethingchangesorhappensinthe

client’slife.SoIgivemyheartfeltthankstoallourpartnerswho

knowhowtoputforwardaprofessionalargumentandexplain

thingsinhumanterms.

It’shardtogainaclient’strustwithoutstrongarguments.And

a high-quality competitive product makes for compelling ar-

guments.The lion’sshareofcreditgoes toPojišťovnaČeské

spořitelnyemployeesforthequalityoftheproductandtheex-

cellentservicesthatarerelatedtothecontinuousimprovement

ofprocessesinthecompany.Igivemyheartfeltthankstoallmy

colleaguesfortheircommitment.

Thepositivesignalsfromourclientsarethedrivingforcethat

compelsustokeepontherightcourse.Acourseensuringtheir

custom.Ibelievethatourclientswillcontinuetofindusareli-

ableinsurancepartnerinthefuture.

Petr ZapletalChairmanoftheBoardofDierctors


Development in the Most ImportantEconomic Indicators

(in thousands CZK) 2009 2010 2011 2012

Assets 20,421,310 24,428,665 27,044,503 29,262,587

Equity 2,209,387 2,746,078 2,694,637 3,355,574

Financialplacements 18,953,205 22,541,660 24,742,299 26,780,771

Technicalprovisions 17,344,804 20,739,591 22,935,205 24,007,183

Profit(loss)ofcurrentaccountingperiod 619,151 603,105 417,615 1,018,418

Totalwrittenpremiums 6,962,601 9,202,722 10,679,693 10,702,266

ofthis:lifeassurance 6,855,813 8,519,754 9,892,180 9,897,341

non-lifeinsurance 106,788 682,968 787,513 804,925

Totalcostsofinsuranceclaims 4,058,139 3,503,734 5,144,551 6,745,877

ofthis:lifeassurance 4,005,190 3,401,100 4,960,058 6,556,934


Numberofpoliciesconcluded

asat31.December(pcs) 673,978 734,441 774,902 789,964

ofthis:lifeassurance 631,332 688,063 726,187 740,970


Avaragenumberofemployees 173 196 221 239

11Annual Report 2012IMembersoftheCompany’sExcecutiveBodiesat31December2012

Members of the Company’s Excecutive Bodies at 31 December 2012

Members of the Supervisory Board

Chairman of the Supervisory Board

MartinDiviš–ChairmanoftheBoardofDirectorsofKoopera-

tivaPojišťovna,a.s.,ViennaInsuranceGroup

Vice-chairman of the Supervisory Board

ErwinHammerbacher–memberoftheBoardofDirectorsof

SparkassenVersicherungAG

Member of the Supervisory Board

KarelKopecký–HeadoftheLegalandComplianceDepartment

ofPojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup


PetrKohoutek–HeadoftheInsuranceDepartmentofPojišťovna

Českéspořitelny,a.s.,ViennaInsuranceGroup


RolandGröll–memberoftheBoardofDirectorsofViennaInsur-

anceGroupAGWienerVersicherungGruppe

TheremainingseatintheSupervisoryBoardwasvacantat31

December2012.AnewmemberVeronikaMaderová–Headof

theSalesandMarketingDepartmentofČeskáspořitelna–pen-

zijníspolečnostwasvotedin22March2013(thischangehas

notbeenenteredintheCommercialRegister).

Board of Directors

Chairman of the Board of Directors

PetrZapletal

Vice-chairman of the Board of Directors

JaroslavKulhánek

Member of the Board of Directors

LiborMánek


Organizational Structure to 31 December 2012

TheCompanydoesnothaveanybranchabroad.

BoARD of DIReCtoRS

Vice-chairman of theBoard of Directors

Chairman of theBoard of Directors

Committee for InvestmentStrategy

Committee for Managing and Control System and for Risk Management

SuPeRVISoRy BoARD CoMMIttee foR AuDIt

financeSection

Controllingand

Reporting

Accounting

AssetManagement

Maintenance

SoftwareDevelopment

HardwareSupport

SoftwareSupport

Actuaries

Informationtechnology

Section

Marketingand PR

SalesReporting

SalesDevelopment

DistributionNetworkSupport

Sales SupportSection

RegionalManagers

HelpDesk

Client ServiceSection

externalNetwork Section

RegionalSales

Managers

Risk Insuranceand ProductDevelopment

Methodology

ProductDevelopmentApplications

ProductDevelopment

Section

RegionalSales

Managers

DePuty Ceo

Legal andCompliance

PolicyAdministration

organizationalDepartment

ClaimsHandling

RiskManagement,

Internal Controland Security

underwriting

HumanResources

InsuranceSection

AdministrativeSection

BancassuranceSection

Member of theBoard of Directors

DePuty Ceo

GeNeRAL MeetING

Ceo

DePuty Ceo

Výroční zpráva 2012IProfilspolečnosti 13

úvodní slovo předsedy představenstva

Report of theBoard of Directors


2012didnotbringanysurprisesandinessencecopiedtheex-

pecteddevelopmentintheareaofeconomicindicators.Itcanbe

statedthatthedebtcrisis,strengthenedbythedeclineingrowth

of an ever increasing number of EuropeanUnion countries, is

reflectedmoreandmoreinanexport-dependenteconomy,which

theCzechRepublicmostdefinitelyis.Areflectionofthisdevelop-

mentwasafallininterestratestothelowestlevelever,aslow-

downofgrowthinGDPassociatedwithafurtherweakeningof

thepopulation’swillingnesstoincreaseconsumption.

On theonehand these factswere reflected in thegrowthof

income from the financial placement of funds from technical

provisions.Ontheotherhand,thisdevelopmentmeantanother

lacklustreyearforlifeassurancewithatotalannualincreasein

thestipulatedpremiumofjust1.9%.

In2012thepensionandtaxreformscametoanendandinthe

courseoftheyeartheirlegislativeformwasalsocompleted.

Ontheinsurancemarketforlifeassurancetherewascontinued

competitioninthefieldofmotivatingdistributors,offersofnew

productsandseekingformstoreducethepercentageofpre-

maturelyterminatedinsurancepolicies.Thehighexpectations

andperhapsthenervousnessofallplayersinthemarketwas

accentuatedupto thedatetheunificationof insurancerates

forwomenandmencameintoeffectonthebasisofadecision

bytheEuropeanCourtofJustice.Byitself,thefactthatmore

favourable rates forwomencame toanendmeantacertain

resurgenceinsalesof insuranceuntilthenewrateswereim-

plementedand intheendeventheconcentrationofchanges

andadjustmentstoinsuranceledtoacertainrevivalinthelife

Report of the Board of Directors

15Annual Report 2012IReportoftheBoardofDirectors

assurancemarket.Inthecourseof2012theprocessofimprov-

ingthemanagementofinsurancecompaniesaccordingtothe

requirementsofSolvencyIIcontinued.

ThemaintasksoftheBoardofDirectorsofPojišťovnaČeské

spořitelnyfor2012were:toensuretheplanneddynamicgrowth

inwrittenpremiumsand improve theirquality, implement the

requirementsarisingfromthetransitiontoauniformrateofin-

suranceformenandwomenwhilstensuringfortheownersthe

expectedprofitabilityoftheinsuranceactivityandfurthermore

toincreasethequalityoftheservicesforclientsandbusiness

partners.

Thebusinessgoalssetfor2012stemmedfromaprovenmix

ofdistributionpaths,basedonfurtherdevelopmentinthesale

ofinsuranceinthebranchnetworkofČeskáspořitelna,includ-

ingtheexpansionoffinancialservicesintheformofcomplex

financial products, and to cooperate with external business

partners. The product offer was built on the carrier product

FLEXI Life Assusurance for both distribution channels, whilst

bankingproductsweresupplementedwithlimitedamountsof

theFLEXIPREMIUMemissions(singlepremiumunit-linkedlife

assurance).Furthermoregroupinsurancetocovertherisksas-

sociatedwithenteringintoacreditagreementwasprovidedin

theČSnetwork.Thisfinancialproduct,offeredinonecontract,

combinesabankingproductandprovidesinsuranceprotection

incaseofinabilitytorepayaloanduetolossofjob,disability

ordeath.Thisrepresentsacomprehensivefinancialservicefor

theclient.

TheinsurancemarketforlifeassuranceintheCzechRepublic

onlyincreasedslightlyin2012,by1.9%,andthetotalvolume

ofwrittenpremiumsforlifeassuranceamountedtoCZK47.4

billion. Thestructureof contractualwrittenpremiumsbypay-

mentmethodrepresentsgrowthof2.2%withavolumeofCZK

44.7billionforregularpremiums.Singlepaymentinsurancefell

by3.2%toCZK2.7billion(singlepremiumscalculatedona10

yearbasis).

Thedevelopmentof insuranceatPojišťovnaČeskéspořitelny

copied the market trends. Total written life assurance only

slightly exceeded the level of 2011. In the structure of writ-

ten premiums by payment method, considerable growth was

achievedonthepartofregularpremiumsthatbeing9.68%.In

comparisonwithlastyearsinglepaymentinsurancepremiums

fellby9%.Theabsoluteamountofwritteninsurancecameto

CZK10,702.3million.

In2012PojišťovnaČeskéspořitelny increasedtheproportion

ofregularpremiumstothetotalwrittenpremiums.Writtenin-


surance for regular premiums amounted to 57% of the total

portfolio.ThetotalwrittenregularpremiumsamountedtoCZK

6,071million.SinglepaymentpremiumsreachedCZK4,631.1

millionmakingup43%oftheinsurancecompany’stotalwritten

premiumsforlifeassurance.Thevolumeofwrittenlifeassur-

ancepremiumsmakestheinsurancecompanythethird-largest

lifeassurance companyon themarket. Thebusiness results

achieved this year represent a total market share of the life

assurancemarketof12.08%.Non-lifeinsurancegrewyear-on-

yearby2.21%,whichcorrespondstowrittenpremiumsamount-

ingtoCZK804.9million.Itconcernsseparateaccidentinsur-

anceandinsuringsickleaveandlossofemploymentespecially

for Česká spořitelna clients. The development of the market

shareisdocumentedinthechartsbelow.

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Total Lifeassurance Non-lifeinsurance

Development of the market share in the insurance market by written premium (%)

2010 2011 2012

6.09%

7.46% 7.49%

0.85% 1.11% 1.14%

12.08%

13.74% 13.74%

Total Lifeassurance Non-lifeinsurance

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

Development of the market share in the insurance market by specified insurance (%)

2010 2011 2012

*with a converted single payment premium on the basis of 10 years

4.20%

5.53%5.18%

0.85% 1.11% 1.14%

10.26%

11.40% 12.08%


The commercial success of Pojišťovna České spořitelny, its

mannerofcommunicatingwithclientsanditssalesserviceto

businesspartners,wereallawardedbytheprofessionalpublic

in2012,thatbeingwiththeaward:

– Zlatá koruna (Golden Crown) 2012 – 1st place in the Life As-

surance category

– Hospodářské noviny (economic Newspaper) Prize – Best

Insurance Company of 2012

Products

Productinnovationswereshiftedtotheendoftheyearincon-

nectionwith the transition to theunified insuranceprices for

menandwomen (on thebasisofadecisionof theEuropean

CourtofJustice-ontheabrogationoftheequalapproachtothe

sexesinthecaseoflifeinsuranceproductsby22.12.2012).

PartofthechangestotheproductsarisingfromtheEuropean

CourtofJusticedecisionwerefurtherproductinnovationsthat

strengthenthefocusofPojišťovnaČeskéspořitelnytothetruly

seriousrisksassociatedwithday-to-daylife.Inconnectionwith

this,theinsurancecompanyadjustedtheconditionsfordeter-

miningtheamountofindemnityfromsettlingclaimsinfavour

of these risks.Forclearand transparentcommunicationwith

clients,theconditionsforappraisingtheextentofdamageto

healthwerepublishedontheinsurancecompany’swebsite.

Inadditiontothisadjustment,insurancebenefitswereincreased

intheeventofthedeathoftheinsuredpersoninatrafficac-

cidenttodoubletheagreedinsuredamount,butnotmorethan

toCZKonemillion.Veryseriousillnessesarenowavailablein

twovariantswiththeoptionsofeitheracompleteinsurancefor

24seriousillnesses,orforinsuranceofthemostcommonlyoc-

curringlifestylediseases(myocardialinfarction,cancer,sudden

vasculareventsandtotalrenalfailure).

Furthermodificationstotheproductsforthebenefitofourcli-

entswerefocusedoninsurancefordailycompensationandlong-

termcareinthecaseofrecognising3rddegreeinvalidity.

During2012theclientswhomeettheconditionsforawarding

ano-claimsbonusorabonusforloyalty,wereinformedabout

thestatusoftheirbonusinthecontextoftheannualreports.

The loyaltyprogrammeencourages the responsiblebehaviour

oftheclientforthelong-termformofinsuranceprotectionand

forputtingbypartsofthefundsforthepost-productiveageand

theprogrammefurtherrewardstheclientfornoclaims.

In 2012, we also continued expanding the computerisation

of the process for concluding insurance policies by our busi-

nesspartners.Thiscommunicationspeedsuptheprocessof

concluding an insurance policy, extends the possibilities of


checkingthepoliciesconcludedandundoubtedlycontributesto

costsavings.Forthepurposesofsimulatinginsurancewepro-

videclientswiththeoptionofcalculatinginsurancewithanInsur-

anceCalculator.Inthefieldofinsuranceadministrationtherewas

afurtherexpansionofthepopularproductofČeskáspořitelna

-SERVIS24.Here theclient canfind informationabout their

insurance, make selected changes to the insurance and pay

outstandingpremiumsintheformofE-invoices.

FLEXILifeAssuranceisstillamongourtopoffersanditsproper-

tiescovertherequirementsforcoveringliferisksandtherequire-

mentsforlong-terminvestmentofthefunds.Currentlythisinsur-

anceisabletocoveralloftheindividualrequirementsforrisk

asdefinedbytheclient,almostwithoutlimitation.Moreover,the

extentoftheinsurancecoverissupplementedbyabove-standard

optionstocovertherequirementsforinvestingthefunds.

In2012wesupported thecharacterof theFLEXIproducton

thebasisofalong-termapproachintheformoftheslogan“We

likechanges”.Thiscommunicationisbasedontheattributeof

opennessinthesenseofopeninsurance,i.e.insurance,which

isfullyaccessibletotheconstantchangesinlife’ssituations.

Groupcontracts,whicharebasedoncooperationwithČeská

spořitelna,stillkeepasolidplaceintheoffer.Thisproductis

acomprehensiveofferoffinancialproductsintheformofban-

cassurance. Group insurance is a supplement to the bank-

ing product and is offered in the branch network of Česká

spořitelna.Thisinsurancecoverstheriskofdeathanddisability

ofthebank’sclients, includinginsuranceforinabilitytorepay

aloanduetojoblossorinabilitytowork,andsecuresclients

theirabilitytorepayaloanevenincomplicatedsituations.

Anoutlineofthedevelopmentandstructureofinsurancepre-

miumsinthelastthreeyearsisshowninthefollowinggraphs.

Totalinsurance Lifeassurance Non-lifeinsurance

12,000

10,000

8,000

6,000

4,000

2,000

02010 2011 2012

Developments in written premium (inthousandsCZK)

9,203

8,520

9,892 9,897

788 805

10,680 10,702

683


Ontheonehandregularpremium’sgrowingpercentageisinflu-

encedbythegrowthofnon-lifeinsuranceinassociationwiththe

provisionofinsuranceservicestoclientsofČeskáspořitelnain

theformofgroupinsurance,butalsobythelong-termstrategy

focusedonagrowthinregularlifeassurancepremiums.

Financial results

The insurancecompanyended2012withapost taxprofitof

CZK1,018.4millionaccordingtotheCzechAccountingStand-

ards(CAS).Theeconomicresultisareflectionofdevelopments

onfinancialmarkets,andinparticularthesignificantincrease

inthepriceofbonds.Thehigherprofitfrominsuranceactivities

the structure of written premium in 2012

Lifeassurance(92.48%) Non-lifeinsurance(7.52%)

Developments in written premium(inthousandsCZK)

Regularpremium Singlepaymentpremium

7,000

6,000

5,000

4,000

3,000

2,000

1,000

02010 2011 2012

4,810

5,589

6,071

5,0914,631

4,393


alsocontributedtothegrowthinprofit.Weachievedthesepri-

marilyasaresultoftheabove-mentionedchangesassociated

withcoverageofseriouslifeevents.

Total technical provisionsamounted toCZK24,007.2million.

Onthebalancesheetdatetheseprovisions’structurewas:pro-

visionsforunearnedpremiumsamountingtoCZK38.1million,

provisionsforlifeassuranceCZK19,528.9million,provisions

for claims CZK 1,287.9 million and other provisions of CZK

128.5million.In2012,theabsolutegrowthoftotalprovisions

was CZK 1,071.9 million compared to 2011. Life provisions

stagnated,thereasonisthemassivepayoutofclaimssettle-

mentattheendoftheinsuranceperiodandalsotheamountof

writtenpremiumsofsinglepaymentpolicies,whichwasstillbe-

lowexpectations.Technicalprovisionsforlifeassurance,where

theinvestmentriskisbornebythepolicyholder,increasedyear-

on-year bymore than40% to a total ofCZK3,023.7million.

Theirgrowthisaffectedbytheabove-mentionedemissionsof

FLEXIPREMIUMandthegrowthinthepricesoftheunits.The

resultingamountofprovisionsiscreatedinaccordancewiththe

currentlegislationandmeansthenecessarysecurityforcover-

ingfuturesettlementsfromclaims.

Thedevelopmentoftheeconomicresultsandthebalancesheet

fortheperiodfrom2012,iscapturedintheaccompanyingcharts.

earnings from 2010 – 2012(inmillionCZK)

30,000

22,500

15,000

7,500

0

Development of the balance sheet sum(inmillionCZK)

2010 2011 2012

24,42927,045

29,263

2010

1,200

1,000

800

600

400

200

0

603

418

1,018

2011 2012


Above all, the volume of technical provisions specified the

funds’ financial placement,which representsmore than82%

ofthecompany’sassets.Theportfoliooffinancialplacements

is spread between different types of financial instruments in

accordancewiththecurrentlegislationandinaccordancewith

the requirementsof the regulator (CNB).Thestructureof the

portfolioofinvestments,whichisgivenintheattachedchart,

is drawn up so as to cover the long-term insurance commit-

mentsandatthesametimetoensurethesafetyofourclients’

investments.Thefinancialplacementsaremanagedincoopera-

tionwiththeprofessional investmentbankingdepartmentsof

Českáspořitelna.

Pojišťovna České spořitelny meets the requirements and de-

mandsonsolvencyandexceedsthesetlimitsonthesolven-

cymarginplacedon lifeassurance. It thuscreatessufficient

assuranceforitsclientstocoverthecommitmentsstemming

from the insurance policies it has concluded. In the area of

reinsurancePojišťovnaČeskéspořitelnybaseditselfonapru-

dentstructureanditslong-termcooperation,aboveallwiththe

renownedreinsurerSWISSRE.

the structure of technical provisions in 2012

Lifeassuranceprovision(81.35%)

Provisionsforunearnedpremiums(0.16%)

Provisionsforoutstandingclaims(5.36%)

Lifeassurancetechnicalprovisionwheretheinvestmentriskisbornebythepolicyholders(12.59%)

Otherprovisions(0.54%)


The management and control system of Pojišťovna České

spořitelny

During2012,theBoardcontinuedinitsendeavourstoensurethe

insurancecompany’smanagementandcontrolsystemisstable,

functional andeffective. Themanagement and control system

coveredalltheinsurancecompany’sactivitiesandthemanage-

mentpermanentlymonitors its functionalityandeffectiveness.

Thesystemenablesriskstobemethodicallyandsystematically

assessedandmanaged.Thecontrolsystemischaracterisedby;

–ensuringitsfunctionalities;

–modifyingboththeorganisationandprocessessothatthere

isnoconflictofinterestsandthatthecompany’scommercial

andotheractivitiesareseparated;

– identifying risks that the company is exposed to during its

activities, including theprocesses leading to theirmanage-

mentandcontrol.

Through year long project management, the Board continued

theprocessofimplementingtherequirementsofSolvencyII.

Intheyearunderassessment,PojišťovnaČeskéspořitelnyve-

rifieditsfinancialstabilityonthebasisofcasestudiesaccor-

dingtothesetparametersintheframeworkoftheVIGholding.

Accordingtothe internalandexternalcontrolsandauditsca-

rried out, the company’s management and control system is

effectiveandgivestheBoardsufficientinformationtoeffective-

lyandprudentlymanagethecompany.

the structure of financial placement in 2012

Fixedincomesecurities(77.48%)

Variableincomesecurities(shares)(0.62%)

Variableincomesecurities(funds)(5.97%)

Bankdeposits(4.42%)

Other(0.23%)

Financialplacementoflifeassurancewheretheinvestmentriskisbornebythepolicyholders(11.29%)

23Annual Report 2012IReportoftheSupervisoryBoard

Report of the Supervisory Board

In2012,theSupervisoryBoardofPojišťovnaČeskéspořitelny,

a.s.,ViennaInsuranceGroup,continuouslyperformedthetasks

assigned to itby lawand theCompany’sArticlesofAssocia-

tion.AsthesupervisionandcontrollingbodyoftheCompany,

theSupervisoryBoardoversawtheBoardofDirector’sexercise

ofitsauthorityaswellastheCompany’sbusinessoperations.

TheSupervisoryBoardwaskeptregularlyinformedoftheCom-

pany’s operations, financial situation, checked fulfillment of

GeneralMeetingresolutions,reviewedreportsoftheexternal

auditorandprovidedtheCompany’smanagementwithsugges-

tionsandrecommendationsonhowtoimprovethesituationin

theCompany.TheSupervisoryBoardreviewedthesubmittedfi-

nancialstatementsofPojišťovnaČeskéspořitelny,a.s.,Vienna

InsuranceGroup,asatDecember31,2012andcametothe

conclusion that theaccounting recordswerekept inaclearly

supportablemannerinaccordancewithvalidaccountingregula-

tionsandtheCompany’sArticlesofAssociation.

TheAnnualFinancialStatementswereauditedbythecompany

KPMGČeská republikaAudit,s.r.o.,whichconfirmed that the

financialstatementspresentfairly,inallsubstantialrespects,

the assets, liabilities and shareholder’s equity of Pojišťovna

Českéspořitelny,a.s.,ViennaInsuranceGroup,asofDecember

31,2012andtheresultofitsbusinessoperationsfor2012in

accordancewiththeAccountingActandotherapplicableregu-

lationsoftheCzechRepublic.TheSupervisoryBoardtookthe

Auditor’sreportintoaccount.

TheSupervisoryBoardcheckedtheReportonRelationsinac-

cordancewith§66asection9and10oftheCommercialCode


submittedbytheBoardofDirectorsoftheCompanyandstated

thatPojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup,

didnotincuranydamageasaconsequenceofcontracts,other

legalactsorothermeasuresconcluded, takenoradoptedby

PojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup,dur-

ingtheaccountingperiodof2011infavouroratinstigationof

individualrelatedpersons.

TheSupervisoryBoardalsodiscussedand took intoaccount

theReportonactivityoftheCommitteeforAuditofPojišťovna

České spořitelny, a.s., Vienna Insurance Group for the year

2012.

Basedonallthesefacts,theSupervisoryBoardrecommends

thattheGeneralMeetingapprovesthestateoftheCompany’s

assetsand liabilitiesasatDecember31,2012and thepro-

poseddistributionof theCompany’sprofit for2012 including

paymentofdividendsinaccordancewiththeproposalsubmit-

ted by theBoard ofDirectors of PojišťovnaČeské spořitelny,

a.s., Vienna Insurance Group, for discussion of the General

Meeting.

Výroční zpráva 2012IProfilspolečnosti 25



Information about Vienna Insurance Group

Vienna Insurance Group is one of the leading listed insurance

companies in Austria and the Central and eastern european

region, with around 24,000 employees generating a premium

volume of approximately euR 9.7 billion. Around 50 compa-

nies in 24 countries form a group with a long tradition, strong

brands and high customer-orientation. the Company is a clear

market leader in its core markets, offering an extensive range

of products and services in both the life and non-life insurance

segments.

Progressive insurer – conservative investor

ViennaInsuranceGroup(VIG)isaprogressiveinsurerthatcon-

sciously focuseson itscorecompetence:the insurancebusi-

ness. In largepartdue to its risk-conscious,conservative in-

vestmentpolicy,VIGstandsforsecurityandfinancialstability

–asaninsurer,employer,businesspartnerandissuer inthe

capitalmarkets. Thiswasalsounderlinedby theStandard&

Poor’s ratingagency,which renewed itsA+ ratingwithstable

outlookfor2012.ThismakesViennaInsuranceGroupthebest-

ratedcompanyintheATXleadingindexoftheViennaStockEx-

change.TheCompany’slistingonthePragueStockExchangein

2008highlightsVIG’sstrategicorientationtowardstheCentral

andEasternEuropeaneconomicarea(CEE).

ViennaInsuranceGroupalsohastheaimofcreatingandpro-

motingsociallyresponsibleandsustainableconditionsforasoci-

etyworthlivingin.VIGthereforefeelsobligatedtoinvolveitself

in cultural and social concerns in order to remain true to its

fundamentalgoalofvalue-orientedgrowth.

27Annual Report 2012IInformationaboutViennaInsuranceGroup

Focus on Austria and Central and Eastern Europe

ViennaInsuranceGroup,whoserootsreachbackto1824,was

quicktoidentifythemanygrowthopportunitiesofferedbyCen-

tralandEasternEurope.StartingfromitsbaseinAustria,the

CompanywasoneofthefirstWesternEuropeaninsurancecom-

paniestoentertheCEEregionandhasbeenexpandingthere

formorethan20years.Intheprocess,VIGhasdevelopedfrom

asuccessfullocalinsurancecompanytoaleadinginternational

insurancegroupwitharound50insurancecompaniesin24Eu-

ropeancountries.

More than 50% of Group premiums and earnings now come

fromtheCEEregion.VIGisaclearoverallmarketleaderinits

coremarkets,andinthelifeandnon-lifeinsurancesegments,

placingitinanexcellentpositiontotakeadvantageofthelong-

termopportunitiesofferedbyCentralandEasternEurope.

WithestablishmentofVIGRE,theGrouphasalsohaditsown

reinsurancecompanysince2008,andthelocationofitsregis-

teredofficeintheCzechRepublicunderscorestheimportance

oftheCEEregionasagrowthmarketforVIG.

Trust in local entrepreneurship

TheAustrianVIGcompanieshaveofferedanextensiveproduct

portfolioinboththelifeandnon-lifeareasformanyyears.The

low insurance density and large populations ofmanyCentral

andEasternEuropeancountriesoffer enormouspotential for

furthergrowthoverthemediumandlongterm.Inordertobe

asuccessfulinsurerinthisregion,onehastounderstandcus-

tomerneeds.ThisisthereasonthatVIGplacesitstrustinthe

soundmarketknowledgeoflocalmanagementandtheexperi-

enceof its localemployees.Thecombinationof localmarket

expertiseandproductknow-howputsViennaInsuranceGroup

inanoptimalpositiontocontinueconsolidatingitsmarketpo-

sition in Austria whilst at the same time benefiting from the

risingstandardoflivingintheCEEregion,withtheassociated

increaseintheneedforinsurance.

Close customer relationships based on a multi-brand stra-

tegy and multi-channel distribution

Allcustomersareuniqueintermsoftheirpersonallivingcircum-

stances,needforsecurityandretirementprovisions,andthe

waytheyliketoreceiveadvice.Thisrequiresconsiderableflex-

ibilityininsuranceproducts,aswellasforesightandprudence.

Vienna Insurance Group is aware of this and is represented

bymorethanonecompanyorbrandandabroaddistribution

networkinmostofitsmarkets.Eventhougheveryoneofthe

approximately50insurancecompanieshasitsownidentityand

individualstrengths,theyallfollowacommongoal:tomaintain

acloserrelationshipwithcustomersthanothersdo.


Partnership with Erste Group

ThestrategicpartnershipestablishedwithErsteBankin2008

facilitateslong-termcooperationbetweenthetwoleadingfinan-

cialservicesprovidersintheregion,whicharebothfirmlyan-

choredinCentralandEasternEurope.Bothcompaniesbenefit

equallyfromthiscollaboration.ErsteGroupbranchesdistribute

VIGinsuranceproductsand,inreturn,VIGcompaniesofferEr-

steGroupbankproducts.

People behind every number

Theapproximately24,000employeesofthe50insurancecom-

panies in theGroup are a key success factor. In addition to

thecommitment,professionaladvisoryservicesandexcellent

service they provide, these VIG employees stand out for the

diversityoftheindividualcountriestheyrepresent.Theongoing

developmentoftheiremployeesisofkeyimportance,sinceonly

acombinationoflocalmarketunderstandingwiththepersonal

andprofessionalqualificationsofeachemployeecan lead to

thebestproductsolutions.Toenablewomentoreachtheirfull

potential,VIGalsohasthegoalofcreatingtheconditionsnec-

essarytomakeentryandpromotionwithintheGroupmoreat-

tractivetofemaleemployees.

Výroční zpráva 2012IProfilspolečnosti


29

30 Independent Auditor’sReport 32 BalanceSheet36 ProfitandLossAccount40 StatementofChangeinEquity43 Notesto

theFinancialStatements97 ReportonRelations111 Non-financialSection

Contents of Financial Section

Pojišťovna České spořitelny, a.s., Vienna Insurance Group

Independent Auditor’s Report

30

Annual Report 2012IIndependentAuditor’sReport 31


Balance Sheet as at 31 December 2012

(In thousands CZK) Line No. Gross Adjustment Net Prior period

ASSetS

B.Intangiblefixedassets,thereof: 2 315,880 253,674 62,206 63,854

C.Financialplacements(investments) 5 23,757,088 23,757,088 22,587,119

I.Landandbuildings(realestate),thereof: 6 54,700 54,700 49,920

a)Landandbuildings–self-occupied 7 54,700 54,700 49,920

II.Financialinvestmentinsubsidiariesandassociates 8 303,959 303,959 0

3.Shareswithasignificantinfluence 11 303,959 303,959 0

III.Otherfinancialplacements 13 23,398,429 23,398,429 22,537,199

1.Sharesandothervariable-yieldsecurities,otherparticipatinginterests 14 1,459,535 1,459,535 1,401,326

2.Bondsandotherfixed-incomesecurities 15 20,750,365 20,750,365 20,158,169

a)Securitiesvaluedatfairvaluethroughprofitandloss 8,158,343 8,158,343 7,946,630

b)OECDbondsheldtomaturity 10,048,554 10,048,554 8,950,349

c)Othersecuritiesheldtomaturity 2,543,468 2,543,468 3,261,190

6.Depositswithfinancialinstitutions 18 1,182,746 1,182,746 999,742

7.Otherfinancialplacements 19 5,783 5,783 -22,038

33Annual Report 2012IBalanceSheetasat31December2012


ASSetS

D.Financialplacementsforthebenefitoflifeassurancepolicyholderswhobear

theinvestmentrisk 21 3,023,683 3,023,683 2,155,181

E.Debtors 22 620,074 105,032 515,042 447,905

I.Receivablesarisingfromdirectinsuranceoperations 23 171,953 104,900 67,053 59,428

1.Receivablesduefromthepolicyholders 24 152,954 87,276 65,678 56,316

2.Receivablesduefromintermediaries 25 18,999 17,624 1,375 3,112

II.Receivablesarisingfromreinsuranceoperations 26 312,307 312,307 229,377

III.Otherreceivables 27 135,814 132 135,682 159,100

F.Otherassets 28 181,044 40,397 140,647 93,188

I.Tangiblefixedassetsotherthanlandandbuildings(realestate),andinventories 29 120,232 40,397 79,835 48,932

II.Cashonaccountsinfinancialinstitutionsandcashinhand 30 60,812 60,812 44,256

G.Temporaryassetaccounts 32 1,763,921 1,763,921 1,697,256

I.Accruedinterestandrent 33 7,129 7,129 7,751

II.Deferredacquisitioncosts,thereof: 34 1,584,955 1,584,955 1,507,332

a)Inlife-assurancebusiness 35 1,584,877 1,584,877 1,507,060

b)Innon-lifeinsurance 36 78 78 272

III.Othertemporaryassetaccounts,thereof: 37 171,837 171,837 182,173

a)Estimatedreceivables 38 146,903 146,903 147,253

totAL ASSetS 39 29,661,690 399,103 29,262,587 27,044,503



LIABILItIeS

A.Equity 40 3,355,574 2,694,637

I.Registeredcapital,thereof: 41 1,900,100 1,900,100

IV.Othercapitalfunds 46 95,721 56,168

V.Statutoryreservefundandotherfundsfromprofit 47 274,652 254,071

VI.Profitorlossbroughtforward 48 66,683 66,683

VII.Profitorlossforthefinancialyear 49 1,018,418 417,615

C.Technicalprovisions 51 21,906,363 922,863 20,983,500 20,780,024

1.Provisionforunearnedpremiumsofwhich: 52 67,851 29,764 38,087 44,279

a)Provisionforunearnedpremiumsrelating

tolifeassuranceclasses 53 35,739 13,687 22,052 28,357

b)Provisionforunearnedpremiumsrelating

tonon-lifeinsuranceclasses 54 32,112 16,077 16,035 15,922

2.Lifeassuranceprovision 55 19,528,968 19,528,968 19,380,795

3.Provisionforoutstandingclaimsofwhich: 56 2,034,767 746,870 1,287,897 1,275,231

a)Provisionforoutstandingclaimsrelating

tolifeassuranceclasses 57 1,785,291 576,799 1,208,492 1,197,529

b)Provisionforoutstandingclaimsrelating

tonon-lifeinsuranceclasses 58 249,476 170,071 79,405 77,702

4.Provisionforbonusesandrebatesofwhich: 59 171,226 146,229 24,997 25,309

a)Provisionforbonusesandrebatesrelatingtolifeassuranceclasses 60 24,813 24,813 25,143

b)Provisionforbonusesandrebatesrelating

tonon-lifeinsuranceclasses 61 146,413 146,229 184 166

35


LIABILItIeS

6.Provisionforliabilitiesfromthetechnicalinterestrateapplied 63 103,551 103,551 54,410

D.Lifeassurancetechnicalprovisionwheretheinvestmentriskisbornebythepolicyholders 71 3,023,683 3,023,683 2,155,181

E.Provisionsforotherrisksandlosses 72 244,011 100,837

2.Provisionsfortaxation 74 244,011 100,837

F.Depositsreceivedfromreinsurers 76 635,780 370,142

G.Creditors 77 784,117 676,919

I.Payablesarisingfromdirectinsuranceoperations 78 306,174 357,277

II.Payablesarisingfromreinsuranceoperations 79 381,156 281,839

V.Otherpayables,thereof: 83 96,787 37,803

a)Taxliabilitiesandpayablesduetosocialsecurityandhealthinsuranceinstitutions 84 20,651 5,609

H.Temporaryliabilityaccounts 86 235,922 266,763

I.Accruedexpensesanddeferredrevenues 87 0 2,906

II.Othertemporaryliabilityaccounts,thereof: 88 235,922 263,857

a)Estimatedpayables 89 235,922 263,857

totAL LIABILItIeS 90 29,262,587 27,044,503

Annual Report 2012IBalanceSheetasat31December2012


(In thousands CZK) Line No. Base Subtotal Result Prior period

I. teCHNICAL ACCouNt foR NoN-LIfe INSuRANCe

1.Earnedpremiums,netofreinsurance: 1 x x x x

a)Grosspremiumswritten 2 804,925 x x x

b)Outwardreinsurancepremiums 3 735,589 69,336 x x

c)Changeinthegrossprovisionforunearnedpremiums(+/-) 4 261 x x x

d)Changeintheprovisionforunearnedpremiums,reinsurers’share(+/-) 5 148 113 69,223 65,598

2.Allocatedinvestmentreturntransferredfromthenon-technicalaccount(itemIII.6.) 6 x x 20,638 3,921

3.Othertechnicalincome,netofreinsurance 7 x x 24,774 25,731

4.Claimsincurred,netofreinsurance: 8 x x x x

a)Claimspaid: 9 x x x x

aa)Grossamount 10 188,943 x x x

ab)Reinsurers’share 11 139,283 49,660 x x

b)Changeintheprovisionforoutstandingclaims(+/-): 12 x x x x

ba)Grossamount 13 10,287 x x x

bb)Reinsurers’share 14 8,586 1,701 51,361 20,554

5.Changesinothertechnicalprovisions,netofreinsurance(+/-) 15 x x 0 0

6.Bonusesandrebates,netofreinsurance 16 x x 2,154 1,563

Profit and Loss Account as at 31 December 2012

37


7.Netoperatingexpenses: 17 x x x x

a)Acquisitioncosts 18 x 2,039 x x

b)Changeindeferredacquisitioncosts(+/-) 19 x 194 x x

c)Administrativeexpenses 20 x 8,872 x x

d)Reinsurancecommissionsandprofitparticipation 21 x 22,691 -11,586 -9,679

8.Othertechnicalexpenses,netofreinsurance 22 x x 20,653 21,290

10.Sub-total,balance(result)onthetechnicalaccount

fornon-lifeinsurance(itemIII.1.) 24 x x 52,053 61,522

II. teCHNICAL ACCouNt foR LIfe ASSuRANCe

1.Earnedpremiums,netofreinsurance: 25 x x x x

a)Grosspremiumswritten 26 x 9,897,341 x x

b)Outwardreinsurancepremiums 27 x 1,215,174 x x

c)Changeintheprovisionforunearnedpremiums,netofreinsurance(+/-) 28 x -6,304 8,688,471 9,103,798

2.Incomefromfinancialplacements(investments): 29 x x x x

a)Incomefromparticipatinginterests,withaseparateindication

ofthatderivedfromcontrollinginfluence 30 x x x

b)Incomefromotherinvestments,withaseparateindicationofthatderived

fromcontrollinginfluence,ofwhich: 31 x x x x

ba)Incomefromlandandbuildings(realestate) 32 0 x x x

bb)Incomefromotherfinancialplacements(investments) 33 1,135,149 1,135,149 x x

c)Valueadjustmentsonfinancialplacements 34 x 0 x x

d)Incomefromdisposaloffinancialplacements 35 x 5,283,472 6,418,621 4,047,896

3.Unrealisedgainsonfinancialplacements 36 x x 688,465 454,657

4.Othertechnicalincome,netofreinsurance 37 x x 97,824 57,104

5.Claimsincurred,netofreinsurance: 38 x x x x

Annual Report 2012IProfitandLossAccountasat31December2012



a)Claimspaid: 39 x x x x

aa)Grossamount 40 6,556,934 x x x

ab)Reinsurers’share 41 514,595 6,042,339 x x

b)Changeintheprovisionforoutstandingclaims(+/-): 42 x x x x

ba)Grossamount 43 260,372 x x x

bb)Reinsurers’share 44 249,409 10,963 6,053,302 4,593,951

6.Changesinothertechnicalprovisions,netofreinsurance(+/-): 45 x x x x

a)Lifeassuranceprovisions: 46 x x x x

aa)Grossamount 47 148,173 x x x

ab)Reinsurers’share 48 0 148,173 x x

b)Othertechnicalprovisions,netofreinsurance 49 x 917,643 1,065,816 2,324,394

7.Bonusesandrebates,netofreinsurance 50 x x 274,501 268,280

8.Netoperatingexpenses: 51 x x x x

a)Acquisitionscosts 52 x 1,511,849 x x

b)Changeindeferredacquisitioncosts(+/-) 53 x -77,817 x x

c)Administrativeexpenses 54 x 531,096 x x

d)Reinsurancecommissionsandprofitparticipation 55 x 350,951 1,614,177 1,906,743

9.Expensesconnectedwithfinancialplacements(investments): 56 x x x x

a)Investmentmanagementcharges,includinginterest 57 x 488,041 x x

b)Valueadjustmentsonfinancialplacements 58 x 0 x x

c)Bookvalueofdisposedfinancialplacements 59 x 5,100,988 5,589,029 3,380,171

10.Unrealisedlossesonfinancialplacements(investments) 60 x x 0 686,556

11.Othertechnicalexpenses,netofreinsurance 61 x x 84,991 47,119

13.Sub-total,balance(result)onthetechnicalaccountforlifeassurance(itemIII.2.) 63 x x 1,211,565 456,241

39Annual Report 2012IProfitandLossAccountasat31December2012


III. NoN-teCHNICAL ACCouNt

1.Resultofthetechnicalaccountfornon-lifeinsurance(itemI.10.) 64 x x 52,053 61,522

2.Resultofthetechnicalaccountforlifeassurance(itemII.13.) 65 x x 1,211,565 456,241

3.Incomefromfinancialplacements: 66 x x x x

a)Incomefromparticipatinginterests,withaseparateindicationofthatderived

fromcontrollinginfluence 67 x x x

b)Incomefromotherinvestments,withaseparateindicationofthatderived

fromcontrollinginfluence: 68 x x x x

ba)Incomefromlandandbuildings 69 66 x x x

bb)Incomefromotherfinancialplacements(investments) 70 8,808 8,874 x x

c)Valueadjustmentsonfinancialplacements 71 x 13,091 x x

d)Incomefromdisposaloffinancialplacements 72 x 73,843 95,808 9,788

5.Expensesconnectedwithfinancialplacements: 74 x x x x

a)Investmentmanagementcharges,includinginterest 75 x 1,438 x x

b)Valueadjustmentsonfinancialplacements 76 x 0 x x

c)Bookvalueofdisposedfinancialplacements 77 x 73,732 75,170 5,867

6.Allocatedinvestmentreturntransferredtothetechnicalaccount

fornon-lifeinsurance(itemI.2.) 78 x x 20,638 3,921

7.Otherprofits 79 x x 23 0

8.Othercosts 80 x x 0 0

9.Incometaxonordinaryactivities 81 x x 244,367 99,724

10.Profitorlossonordinaryactivitiesaftertax 82 x x 1,019,274 418,039

15.Othertaxesnotshownundertheprecedingitems 87 x x 856 424

16.Profitorlossforthefinancialyear 88 x x 1,018,418 417,615


Statement of Change in Equity for 2012

other Profit (loss)

Registered funds Changes in Statutory Retained for the current

(In thousands CZK) capital from profit valuation reserve fund earnings year total

BALANCEAT1/1/2011 1,900,100 4,480 8,978 219,630 9,785 603,105 2,746,078

Additionstofunds 3,054 30,156 569,895 -603,105

Utilisationoffunds -3,249 -3,249

Changeinvaluationoffinancialplacements 47,190 47,190

Increase/reductioninregisteredcapital

Paymentofdividends -512,997 -512,997

Profit/lossforthecurrentyear 417615 417,615

BALANCe At 31/12/2011 1,900,100 4,285 56,168 249,786 66,683 417,615 2,694 637

41Annual Report 2012IStatementofChangeinEquityfor2012

other Profit (loss)

Registered funds Changes in Statutory Retained for the current

(In thousands CZK) capital from profit valuation reserve fund earnings year total

BALANCEAT1/1/2012 1,900,100 4,285 56,168 249,786 66,683 417,615 2,694,637

Additionstofunds 3,405 20,881 393,329 -417,615

Utilisationoffunds -3,705 -3,705

Changeinvaluationoffinancialplacements 39,553 39,553

Increase/reductioninregisteredcapital

Paymentofdividends -393,329 -393,329

Profit/lossforthecurrentyear 1,018,418 1,018,418

BALANCe At 31/12/2012 1,900,100 3,985 95,721 270,667 66,683 1,018,418 3,355,574


Notes tothe FinancialStatements

Structure of Shareholders

90%ViennaInsuranceGroup

5%Českáspořitelna

5%Kooperativa

43Annual Report 2012INotestotheFinancialStatementsfor2012

I. GENERAL CONTENTS

I. 1. Description and principal activitiesPojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup(“theCompany“)wasenteredintotheCommercialRegisteron1October

1992(Identificationnumber:47452820).

Shareholders of the Company as at 31 December 2012:

VIENNAINSURANCEGROUPAGWienerVersicherungGruppe 90%

Kooperativapojišťovna,a.s.,ViennaInsuranceGroup 5%

Českáspořitelna,a.s. 5%

TheCompanyreceivedalicensetocarryoninsuranceactivitieson16December1992.TheCompanycommenceditsinsurance

activitieson1January1993.

Notes to the Financial Statements for 2012


the Company carries on the following classes/groups of insurance:

Life assurance

–Assuranceondeath,assuranceonsurvivaltoacertainage,andassuranceonsurvivaltoacertainageordeath

–Pensioninsurance

–Accidentorsicknessinsuranceasasupplementtotheabovetypesofinsurance

–Marriageinsuranceandsavingsinsurancetoprovidefundstoraisechildren

–Insuranceconnectedwithaninvestmentfund/unit-linkedinsurance

Non-life insurance

– Accidentandsicknessinsurance

– Insuranceforvariousfinanciallosses

Apartfromtheabove,theCompany’sprincipalactivitiesincludealsonon-lifeinsurancebusiness,whichtheCompanyhasnotbeen

activelyprovidingsince2January2004.Thesearenon-lifeinsuranceclassesNo.3,5,7,8,9,11,13,15and18listedinPartBof

AppendixNo.1toActNo.277/2009Coll.,andgroupse)andf)ofnon-lifeinsurancelistedinPartCoftheAppendixtotheInsuranceAct.

The Company’s principal activities include also activities relating to insurance business pursuant to Section 3 (1) (n) of the

InsuranceAct,i.e.intermediaryactivitycarriedoninconnectionwithinsurancebusinessundertheInsuranceAct,advisoryacti-

vityinconnectionwithinsuranceofindividualsandcorporateentities,investigationofclaimscarriedonunderacontractwith

aninsurancecompany,intermediaryactivityintheareaofbuildingsavingschemesandsupplementarypensioninsurance,and

educationactivityforinsuranceintermediariesandindependentlossadjusters.

Registered office

PojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup

nám.Republiky115

53002Pardubice


Members of the Board of Directors, Supervisory Board and Audit Committee as at 31 December 2012:

Board of directors

Chairman:RNDr.PetrZapletal,MBA,NaZahrádkách307,Praha4,Šeberov

Vice-chairman: Ing.JaroslavKulhánek,Zalomená175,HradecKrálové11,Roudnička

Member: Ing.LiborMánek,Křemže,Lomená379(membersince12January2012,until31December2011Ing.FrantišekMareš,

Palackého1932,Pardubice,ZelenéPředměstí)

StatementsofwillandsigningofdocumentsonbehalfoftheCompanymustalwaysbeconductedjointlybytwomembersofthe

Board.NoauthorisationforindividualrepresentationinanymatterrelatedtooperationoftheCompanyispossible.Whensigning

documentsonbehalfoftheCompany,therequirednumberofrepresentativesshalladdtheirsignaturesandstatetheirofficesto

theprintedorwrittennameoftheCompany.

Proxy

Ing.FrantišekMareš,Palackého1932,Pardubice,ZelenéPředměstí (since23March2012,until11January2012 Ing.Libor

Mánek,Křemže,Lomená379,zipcode38203)

Supervisory Board

Chairman: Ing.MartinDiviš,MBA,Praha6,Liboc,DivokáŠárka39,zipcode16400

Vice-chairman: Mag.ErwinHammerbacher,Seyring,Helmaweg29,2201,Austria

Members: JUDr.KarelKopecký,Pardubice,Bělehradská396,zipcode53009

Ing.PetrKohoutek,Chrudim,Vaňkova1341,zipcode53701

Mag.RolandGröll,1170Vienna,NeuwaldeggerStr.37/1(membersince28April2011,until14April2011Ing.VítRozsypal,

Divišov,NaSídlišti350,zipcode25726,wasamemberoftheboard)

theremainingseatisvacant(Ing.AlešMamica,Praha9,Lipí1247/60,zipcode19300,wasamemberuntil30November2011)


Audit Committee

Ing.MartinDiviš,MBA

Dr.PeterHagen

Ing.HynekVodička

I. 2. Compliance with legislationAtthebalancesheetdatetheCompanyfullycompliedwithActNo.277/2009Coll.,onInsurance,asamended(“theInsurance

Act“), Act No. 37/2004 Coll., on Insurance Contract, as amended, Act No. 38/2004 Coll., on Insurance Intermediaries and

IndependentLossAdjusters,asamended,includingtheapplicableimplementingregulations,andwithotherlegislationinforce.

I. 3. Basis of preparation of the financial statementsTheaccounting recordsof theCompanyaremaintainedand thefinancialstatementsof theCompanyhavebeenprepared in

accordancewithActNo.563/1991Coll.,onAccounting,asamended,RegulationNo.502/2002Coll.,toimplementcertainprovi-

sionsofActNo.563/1991Coll.,onAccounting,asamended,foraccountingunits,whichareinsurancecompanies,asamended

(“RegulationNo.502/2002Coll.“),andwiththeCzechAccountingStandardsforaccountingunitsthatmaintaintheiraccounting

recordsincompliancewithRegulationNo.502/2002Coll.andotherrelevantlegislation.

TheaccountingrecordsoftheCompanyaremaintainedinsuchamannerthatthefinancialstatementspreparedbasedonthese

recordspresentatrueandfairviewoftheaccountingandfinancialpositionoftheCompany.

I. 4. Significant accounting policies(a) tangible and intangible fixed assetsTangibleandintangiblefixedassetsarestatedatacquisitioncost.

TangiblefixedassetscostinglessthanTCZK40andintangiblefixedassetscostinglessthanTCZK60arechargedtotheprofit

andlossaccountintheyearinwhichtheyareacquired.Theannualdepreciationratereflectstheassets’expectedusefullives.


Thefollowingdepreciationratesareusedfortheindividualassetclasses:

fixed assets Method Depreciation period in years

Software Straight-line 4

Motorvehicles Straight-line 4

ITequipment Straight-line 3

Fixturesandfittings Straight-line 8

Other Straight-line 15

(b) Investments

Land and buildings (real estate)

Landandbuildings(realestate)areinitiallyrecordedattheiracquisitioncostandarenotsubsequentlydepreciated.

Atthebalancesheetdate,landandbuildings(realestate)arevaluedattheirfairvalue.Thefairvaluemeansthemarketvaluede-

terminedbyanexpertappraisalasthepriceforwhichsuchlandandbuildings(realestate)couldbesoldonthedateofvaluation.

Thefairvalueisdeterminedthroughaseparatevaluationofeachitemoflandandbuildingsbyanexpertappraisalasattheba-

lancesheetdate.


Anychangeinthefairvalueoflandandbuildings(realestate)isrecognisedinequity.

Debt securities

Attheacquisitiondatedebtsecuritiesarestatedatacquisitioncost.

Acquisitioncostistheamountforwhichadebtsecurityhasbeenacquiredandincludesaproportionatepartofanyaccruedinte-

restandexpensesdirectlyassociatedwiththeacquisition.

TheCompanyamortisespremiumsanddiscountsonalldebtsecurities.Premiumsanddiscountsareamortisedtotheprofitand

lossaccountonthebasisoftheeffectiveinterestratemethodfromthedateofacquisitiontotheirmaturity.

Amortiseddebtsecuritiesarerevaluedattheirfairvalueasatthebalancesheetdatewiththeexceptionofbondsheldtomaturity

thathavebeenissuedbyamemberstateoftheOrganisationforEconomicCooperationandDevelopmentandawardedarating

attheleveloftheCzechRepublicorhigherbyatleasttworeputableratingagencies(“OECDbondsheldtomaturity“).

TheCompanyrecognisestheOECDbondsheldtomaturityattheiramortisedcostasatthebalancesheetdate.

Fairvaluemeansthemarketpricepublishedbyadomesticorforeignstockexchangeorotherpublic(organised)market.The

Companyappliesthemostrecentpublishedmarketpriceasatthedateofthefinancialstatements(balancesheetdate).Ifthere

isnoavailablepriceorifitdoesnotsufficientlyrepresentthefairvalue,thefairvalueisdeterminedonthebasisofaqualified

estimate.

Amortisedcostmeansthepriceusedwhenfirstrecognised(theacquisitioncost),whichisgraduallyincreasedbyaccruedinterest

income,adjustedbyamortisationofthediscount/premiumanddecreasedbytheamountofadjustments.


Debtsecuritiesareclassifiedassecuritiesvaluedatfairvaluethroughprofitandlossorsecuritiesavailableforsale,OECDbonds

heldtomaturityandothersecuritiesheldtomaturity.

Achangeinthefairvalueofdebtsecuritiesvaluedthroughprofitandlossoravailableforsaleisrecognisedintheprofitandloss

account.Achangeinthefairvalueofdebtsecuritiesheldtomaturitythatarerevaluedatfairvalueisrecognisedinequity.

Wheredebtsecuritiesaredenominatedinaforeigncurrency,theirvalueistranslatedtoCzechcrownsusingthecurrentexchange

ratepublishedbytheCzechNationalBank(“CNB”).Theappropriateexchangeratedifferenceisincludedinthefairvalue.

Shares and other variable-yield securities

Attheacquisitiondate,sharesandothervariable-yieldsecuritiesareaccountedforatacquisitioncost.

Acquisitioncostistheamountforwhichthesharesorothervariable-yieldsecuritieswereacquiredandincludesallexpenses

directlyassociatedwiththeacquisition.

Atthebalancesheetdate,sharesandothervariable-yieldsecuritiesarerevaluedattheirfairvalue.

Fairvaluemeansthemarketpricepublishedbyadomesticorforeignstockexchangeorotherpublic(organised)market.The

Companyappliesthemostrecentpublishedmarketpriceasatthedateofthefinancialstatements(balancesheetdate).Ifno

marketpriceisavailableorifitdoesnotsufficientlyrepresentthefairvalue,thefairvalueisdeterminedonthebasisofaqualified

estimate.

Sharesandothervariable-yieldsecuritiesareclassifiedassecuritiesvaluedatfairvaluethroughprofitandlossorsecurities

availableforsale.Thechangeinfairvalueofsharesorothervariable-yieldsecuritiesisrecognisedintheprofitandlossaccount.


Wheresharesandothervariable-yieldsecuritiesaredenominatedinaforeigncurrency,theirvalueistranslatedbasedonthe

currentexchangeratepublishedbyCNB.Theappropriateexchangeratedifferenceisincludedinthefairvalue.

Participating interests

Participating interests incontrolledpersonsareparticipations inanotherenterprise inwhichtheCompanyholdsacontrolling

influence.Inaddition,othercaseswheretheinsurancecompanyisacontrollingpersonarereportedunderthisitem.

ParticipatinginterestswithsubstantialinfluenceareparticipationsinanotherenterpriseinwhichtheCompanyholdsasubstantial

influence.Unlessproventothecontrary,substantialinfluenceisconsideredtobeaholdingofatleast20%ofthevotingrights.

Participatinginterestsintheformofsecuritiesissuedbythecontrolledpersonsorpersonsinwhichtheaccountingunitexercises

substantialinfluence,andwhichareheldfortradingorareavailableforsaleareshowninitemC.II.2Debtsecurities.

Attheacquisitiondate,participatinginterestsarestatedattheiracquisitioncost.Theacquisitioncostistheamountforwhichthe

participatinginterestswereacquiredandincludesallexpensesdirectlyassociatedwiththeacquisition.

Atthebalancesheetdate,participatinginterestsarerevaluedattheirfairvaluebasedonaCompany’sshareonnetassetvalue.

Changesinfairvaluearerecognisedinequity.

Deposits with financial institutions

Depositswithfinancialinstitutionsareinitiallyrecognisedatnominalvalue.Atthebalancesheetdate,theseassetsarerevaluedattheir

fairvalue.Thefairvalueofshort-termdepositswithfinancialinstitutionsisdeterminedastheirnominalvalueincludingaccruedinterest.

DepositsdenominatedinaforeigncurrencyaretranslatedtoCzechcrownsusingthecurrentexchangeratepublishedbyCNB,

andtheappropriateexchangeratedifferenceisincludedinthefairvalue.ChangesinfairvaluearereflectedintheCompany’s

profitandlossaccount.


Derivatives

Derivativesarevaluedatfairvalue.Thefairvalueoffinancialderivativesisdeterminedasthepresentvalueofexpectedcash

flowsfromthesetransactions.

Financialderivativesthatdonotmeettherequirementsfortheapplicationofhedgeaccountingor,ifappropriate,derivativesin

respectofwhichtheCompanyhasdecidednottoapplyhedgeaccountingarecarriedatfairvalueandthegainsorlossesarising

fromtheirrevaluationarerecognisedintheprofitandlossaccount.ThederivativesareusedbytheCompanytohedgecurrency

risks,i.e.currencyswaps.

(c) financial placements for the benefit of life assurance policyholders who bear the investment riskFinancialplacementsforthebenefitoflifeassurancepolicyholderswhobeartheinvestmentriskareaccountedforseparately

fromotherfinancialplacements.

Atthebalancesheetdate,financialplacementsforthebenefitoflifeassurancepolicyholderswhobeartheinvestmentriskare

revaluedattheirfairvalue.InordertopreservethetrueandfairviewoftheCompany’sresultfortheyear,allchangesresulting

fromrevaluationatfairvaluearerecognisedintheCompany’sprofitandlossaccount.

(d) AdjustmentsTheCompanyestablishesadjustmentstoreceivablesandotherassetsexceptforfinancialplacementsreportedatfairvalue.

Adjustmentsrepresentatemporarydecreaseinthevalueofindividualassets.Theamountofthedecreaseisdeterminedonthe

basisofaprofessionalriskassessmentcarriedoutbytheCompany’smanagement.

Adjustmentstoreceivablesfrompolicyholdersareestablishedbasedonananalysisoftheirrecoverability.Theanalysisincludes

anageinganalysisofthereceivables.


AdjustmentstoOECDbondsheldtomaturityareaccountedforonlyifthereisariskthatthenotionalprincipalamountofthebond

orthebondyieldorboththevalueandtheyieldwouldnotberepaid.

(e) Impairment of assetsAtthebalancesheetdate,theCompanyassesseswhetherthoseassets,whicharenotcarriedatfairvalueorforwhichchanges

infairvaluearerecognisedinequity,areimpaired.Impairmentofanassetisrecognisedintheprofitandlossaccount.

(f) Deferred acquisition costsDeferredacquisitioncostsrepresent theproportionofacquisitioncosts incurredduring thecurrentfinancialyear that relates

totherevenuesofsubsequentfinancialyears.AttheendofeachfinancialyeartheCompanycarriesoutaliabilityadequacytest

todeterminewhethertheamountofthedeferredacquisitioncostsisappropriate.

Non-life insurance

Inrespectofnon-life insurance,deferredacquisitioncostsarebasedontotalacquisitioncosts incurredinthecurrentperiod

andtheratioofthegrossprovisionforunearnedpremiumsatthebalancesheetdatetothetotalgrosspremiumswrittenforthe

financialyear.Deferredacquisitioncostsaredeterminedforallindividualclassesofnon-lifeinsurance.

Life assurance (other than assurance connected with an investment fund / unit-linked insurance)

InlifeassurancetheCompanydeterminesdeferredacquisitioncostsusingthezillmerisationmethod,whichisthemethodused

tocalculatethelifeassuranceprovision,seepointI.4.(i).

Life assurance connected with an investment fund / unit-linked insurance

Deferredacquisitioncostsinunit-linkedassurancearedeterminedusingactuarialmethodsandreflectingtheexpectedcancellati-

onratebasedonthevalueofexpectedfuturedeductionsfrominitialfeesandfromthepresentvalueofprofitsfollowingfromthe

negativevalueofprovisionswhicharedeterminedusingtheprospectivemethod.


(g) Income taxIncometaxontheprofitfortheyearcomprisescurrentincometaxandthechangeindeferredtax.Currentincometaxcomprisesthe

taxliabilitycalculatedfromthetaxbaseusingtheeffectivetaxrateandanyadditionalpaymentsorrefundsoftaxforpreviousyears.

Deferredtaxisprovidedonalltemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialrepor-

tingpurposesandtheamountsusedfortaxationpurposesandothertemporarydifferences(taxlossescarriedforward,ifany)

multipliedbytheincometaxratesexpectedtobevalidfortheperiodsinwhichthetaxasset/liabilityisexpectedtobeutilised.

Adeferredtaxassetisrecognisedonlytotheextentthatthereisnodoubtthatfuturetaxableprofitswillbeavailableagainst

whichthisassetcanbeutilised.

(h) Provision for unearned premiumsTheprovisionforunearnedpremiumsiscreatedinrespectoflifeassuranceandnon-lifeinsurance,exceptforsinglepremium

lifeassurance.Theprovisionamountrepresentsthepartofgrosspremiumswrittenwhichistobeallocated,intermsoftime,to

thesubsequentfinancialyearortofuturefinancialyearsandisdeterminedasthesumofallamountscalculatedforindividual

contractsusingthe“proratatemporis“method.

(i) Life assurance provisionThelifeassuranceprovisioncomprisesthesumoftheprovisionsforindividuallifeassurancepolicies.Thelifeassuranceprovi-

sionrepresentsthevalueoffutureliabilitiesoftheCompanyandiscalculatedusingactuarialmethods,includingprofitshares

declaredandallocatedandaprovisionforexpenses,relatedtotheadministrationofcontracts,afterdeductingthevalueoffuture

premiums.

TheCompanyaccountsfortheprovisionusingthezillmerisationmethod.Thezillmerisationmethodresultsinthedeferralofacquisi-

tioncostsforlifeassurancecontracts.Thesecostsareincludedwithinthelifeassuranceprovisionthroughactuarialmethodsafter

eliminatingtemporarynegativebalances,whicharecapitalisedandpresentedasdeferredacquisitioncosts.Theacquisitioncosts

arecapitalisedanddeferredinaccordancewiththeprudenceprincipleandtakingintoaccounttheriskoflapsesandcancellations.


Forunit-linkedassurancethatinvolvesinvestmentfundswheretheCompanyguaranteesaminimumreturnoninvestment,this

partoftheprovisionsisaccountedforasalifeassuranceprovision.Theprovisioniscalculatedbasedonthenumberandprice

ofunitscreditedtotheinsurancecontracts.

Withsomeunit-linkedassurancecontracts,anoclaimsbonusoraloyaltybonuscanbearrangedinaccordancewiththeinsurance

termsandconditionsandthetariffofrates.Withinthedefinedassessmentperiod,thebonusisrecognisedaspartofthelife

assuranceprovisionandamountstotheestimatedpresentvaluedeterminedbasedondiscountingandnetoftheexpectedproba-

bilityofbreachofthetermsandconditionsuntiltheendoftheassessmentperiod.Uponfulfilmentoftheconditionsattheendof

theassessmentperiod,thebonusiscreditedtotheinsurancecontractinformofpurchasedunitsanditbecomesacomponent

partofthecapitalvalueofthecontract.

(j) Provision for outstanding claimsTheprovisionforoutstandingclaimsinrespectofbothlifeandnon-lifeinsurancecomprisestheamountofexpectedcostsin

respectofclaims:

a)reportedbutnotsettledduringtheperiod(RBNS),

b)incurredbutnotreportedduringtheperiod(IBNR).

Theprovisionforoutstandingclaimsreportedbytheendoftheyearrepresentsthesumofallamountscalculatedforindividual

claims.

Theprovisionforoutstandingclaimsincurredbutnotreportedasatthebalancesheetdateisdeterminedusingthechainladder

method.

Theprovisionforoutstandingclaimsincludesanestimateofallrelatedexternalandinternalclaimshandlingcosts.Theprovision

foroutstandingclaimsisreducedbythevalueofsalvageandothersimilarrecoveries.


Whencalculatingtheprovisionforoutstandingclaims,nodiscountingiscarriedout.

AlthoughtheBoardofDirectorsconsiderstheprovisionforoutstandingclaimstobefairlystatedonthebasisoftheinformation

currentlyavailabletothem,theultimateliabilitymayvaryasaresultofsubsequenteventsornewinformation,whichmayresult

insignificantadjustmentstotheamountsprovidedfor.Adjustmentstotheamountsoftheprovisionsarereflectedinthefinan-

cialstatementsfortheperiodinwhichtheadjustmentsaremade.Theproceduresandmethodsusedinmakingestimatesare

reviewedregularly.

(k) Provision for bonuses and rebatesTheprovisionforbonusesandrebatesiscreatedinaccordancewiththerespectivetermssetoutininsurancecontracts,i.e.the

GeneralTermsandConditionsofInsuranceorspecificcontractualarrangements.

Changesintheprovisionforbonusesandrebatesarepresentedintheprofitandlossaccountunder“Bonusesandrebates”.

(l) Provision for liabilities arising from the applied technical interest rate and other calculation parametersTheCompanycarriesoutalifeassuranceliabilityadequacytestasatthebalancesheetdate(“theliabilityadequacytest”)inor-

dertoassesstheadequacyofthelifeassuranceprovisions(provisionforunearnedpremiums,lifeassuranceprovision,provision

foroutstandingclaims,provisionforbonusesandrebatesandlifeassuranceprovision,wheretheinvestmentriskisbornebythe

policyholder).

Theliabilityadequacytestisperformedusingdiscountedprojectedcashflows.

Theliabilityadequacytestresultsintheminimumvalueofliabilitiestopolicyholdersbasedonbestestimatesofthefuturedeve-

lopmentofentryparametersadjustedbymarketvaluemargins.

Wherethisamountexceedsthetotalamountofthelifeassuranceprovisionsreducedbytherespectiveunamortisedacquisition


costsandotherintangibleassets,thedeficiencyisrecognisedthroughtheestablishmentofaprovisionforliabilitiesarisingfrom

theappliedtechnicalinterestrateandothercalculationparameters.

IncompliancewithSection66(2)oftheInsuranceAct,theCompanyinformedČNBaboutthemethodforcalculatingtheprovision

forliabilitiesarisingfromtheappliedtechnicalinterestrateandothercalculationparameters.

ThechangeinthisprovisionispresentedinitemII.6.b)intheprofitandlossaccount.

(m) Life assurance provision where the investment risk is borne by the policyholdersThe lifeassuranceprovisionwherethe investmentrisk isbornebythepolicyholders is intendedtocoverthe liabilitiesof the

Companyduetoinsuredpersonsinthoseclassesoflifeassurancewhere,basedonaninsurancecontract,theinvestmentrisk

isbornebythepolicyholders.

Theamountoftheprovisionisdeterminedasthesumofliabilitiesduetoinsuredpersonsintheamountoftheirsharesofinvested

premiumsfromindividuallifeassurancecontractsinaccordancewiththeprinciplesincludedintheinsurancecontracts.

(n) Reinsurers’ share of technical provisionsTechnicalprovisionsarepresentedasanetliability,i.e.afterdeductionofthereinsurers’share.Theamountofthisshareiscal-

culatedbasedonthetermsoftherelatedreinsurancecontracts,themethodofsettlementwithreinsurersandinconsideration

oftheprudenceprinciple.

TheCompanypresentsthereinsurers’shareoftheprovisionforunearnedpremiums,theprovisionforoutstandingclaimsandthe

provisionforbonusesandrebates.Thereinsurersdonotparticipateintheothertechnicalprovisions.

(o) ProvisionsProvisionsareintendedtocoverrisks,lossesandotherrespectivepayables,whichareclearlydefinedandtheoccurrenceofwhich

iseitherprobableorcertainbutwhoseamountortimingareuncertain.


Provision for taxes

Theprovisionfortaxesisestablishedatthebalancesheetdateandamountstotheestimatedcorporateincometaxliabilitydue.

Theutilisation(release)oftheprovisionisaccountedforwhenthetaxreturnisfiled.

(p) Gross premiums writtenGrosspremiumswrittencompriseallamountsdueduringthefinancialyearinrespectofinsurancecontractsregardlessofthe

factthatsuchamountsmayrelateinwholeorinparttofuturefinancialyears.

(q) Claims paidClaimspaidcomprisetheamountassessedforpaymentbasedontheclaimsinvestigationprocess,externalandinternalclaims

handlingcostsandadeductionforthesalvagevalueandotherrecoveries.

Claimspaidarerecordeduponcompletionoftheinvestigationoftheclaimandintheamountoftheassessedsettlement.

(r) Acquisition costsAcquisitioncostscomprisealldirectandindirectcostsarisingfromtheconclusionofinsurancecontracts.

(s) expenses and income from financial placements

Allocation of expenses and income from financial placements between life assurance and non-life insurance accounts:

Expensesandincomefromfinancialplacementswhicharedirectlyrelatedtolifeassuranceactivitiesarerecordedinthelifeas-

surancetechnicalaccount.

Otherexpensesandincomefromfinancialplacementswhicharenotrelatedtolifeassuranceactivitiesarerecordedinitiallyinthe

non-technicalaccountandsubsequentlyallofthemtransferredtothenon-lifeinsurancetechnicalaccount.


Method of accounting for realised gains and losses upon disposal of financial placements

Thedisposaloffinancialplacementsisrecognisedonagrossbasis,wherebytherevenuesfromdisposalintheamountofthe

sellingpriceoftherelevantfinancialinstrumentsarerecordedseparatelyfromtheexpensesintheamountofthecarryingvalue

oftherelatedfinancialplacements.

(t) Allocation of items between life assurance and non-life insuranceInordertoaccountforitemscommontobothlifeassuranceandnon-lifeinsurance,theCompanyusesamethodincompliance

withRegulationNo.502/2002Coll.Underthismethodindividualitemsaregroupedaccordingtotheclassofinsurancetowhich

theyrelate.Foritemsthatcannotbeallocateddirectly,theratioofpremiumswrittenandclaimspaidforindividualclassesof

insurancetototalpremiumswrittenandtotalclaimspaidisusedasabasisforallocationofexpensesandincomebetweenlife

assuranceandnon-lifeinsurance.

expenses and revenues from financial placements

Expensesandrevenuesfromfinancialplacementsareallocatedbetweenlifeassuranceandnon-lifeinsuranceusingthemethod

statedinpointI.4.(u).

other expenses and revenues

Duringtheaccountingperiod,clearlyattributableexpensesandrevenuesarerecordeddirectlyinthelifeassuranceornon-life

insurancetechnicalaccountorthenon-technicalaccount.Expensesandrevenuesthatcannotbedirectlyattributedarerecorded

primarilyinthenon-technicalaccountandsubsequentlyallocatedtothetechnicalaccountforlifeassuranceornon-lifeinsurance

usingthemethodstatedinpointI.4.(v).

Theallocationisnotappliedtotaxes,fees,orotherexpensesincurredoutsideinsuranceorreinsuranceactivities.


(u) foreign currency translationTransactionsduringtheyeararerecordedattheCNBexchangerateeffectiveasatthetransactiondateorattherateatwhich

thetransactionwasrealised.

Atthebalancesheetdate,foreigncurrencyassetsandliabilitiesaretranslatedattheCNBofficialrateforthatdate.Unlessstated

otherwise,foreigncurrencygainsandlossesarerecordedintheprofitandlossaccount.

I. 5. Changes in accounting policies and proceduresBasedontheparentcompany’srequestandwiththeintentiontounifythemethodofvaluationofdisposedinvestments,the

Companyin2012switchedfromtheFIFOmethodtotheweighted-averagecostmethod.Thenewweighted-averagecostoffinan-

cialassets(whereapplicable)isnewlydetermineduponeachadditiontospecificinvestmentcategoriesasdefinedinaccordance

withtheexistingcategorisationoftechnicalreserves.Themanagementbelievesthatthechangeofthepolicydoesnothaveany

significantimpactontherelatedprofitandlossaccountitems.

I. 6. Risk managementIncompliancewithRegulationNo.434/2009Coll.,toimplementcertainprovisionsoftheActonInsurance,theCompanyhas

ensuredthattheset-upoftheinternalcontrolsystemcoversallofitsoperations.

Theset-upoftheinternalcontrolsystemenablesconsistentandsystematicriskmanagement.

TheCompanyisexposedtoinsurancerisk,whichnaturallyresultsfromtheunderwritteninsurancecontractsaswellasother

risks,mainlythemarketrisk,creditrisk,operationalrisk,liquidityriskandconcentrationrisk.

Thepoliciesandproceduresforriskmanagementarecomprehensiveandinterrelatedwiththepoliciesandproceduresformain-

tenanceofthecapitaldeterminedtocovertheserisks.


TheriskmanagementintheCompanyistheresponsibilityoftheBoardofDirectors.

(a) Non-life insurance riskTheCompanyisexposedtoinsuranceriskandunderwritingrisksfollowingfromthesaleofnon-lifeinsuranceproducts.

Insuranceriskrelatestouncertaintyinrespectoftheperiod,frequencyandamountofdamagecoveredbyinsurancecontracts.

Themostsignificantcomponentsofinsuranceriskarethereserveriskandthepremiumrisk.Thepremiumamountisdetermined

usinghistoricalassumptions,whichmaydifferfromtheactualsituation.Theriskoftrend,riskofestimate,changeinassumption

etc.mayhaveasignificantimpactondeterminingtheamountofprovisions.Theliabilityadequacytestsandanalysisofsensitivity

tochangeinassumptionsareusedtoeliminatethereserverisk.

InordertomanagetheinsurancerisktheCompanyappliesinternalpoliciesfordevelopmentandvaluationofproducts,determi-

nationofthetechnicalprovisionsamount,reinsurancestrategyandunderwritingrules.

Concentration of insurance risk

Concentrationofinsuranceriskmayexistintheeventthataparticulareventoraseriesofeventsmayimpactsignificantlyupon

theCompany’sliabilities.Theconcentrationofinsuranceriskthendeterminestheextentofthepossibleimpactoftheseevents

ontheamountoftheCompany’sliabilities.Suchconcentrationmayarisefromasingleinsurancecontractorthroughasmallnum-

berofrelatedcontracts,andrelatestocircumstancesthatgaverisetosignificantliabilities.Concentrationofinsuranceriskmay

arisefromaccumulationofrisksinframeofseveralindividualgroupsofcontracts;itmayalsoariseinlow-frequency,high-severity

eventsorintheeventofsignificantlitigationsorlegislativeamendments.

Geographic concentration

The risksunderwrittenby theCompanyareprimarily located in theCzechRepublic. From thegeographicalpointof view, the

Companyhasnosignificantconcentrationofexposuretoanygroupofpersonsinsured,measuredbysocial,professionalorage

criteria.


Reinsurance strategy for non-life insurance

TheCompanyreinsuressomeoftherisksitunderwritesinordertocontrolitsexposurestolossesandprotectitsowncapital

resources.Innon-lifeinsurance,theCompanyhasbaseditsreinsuranceschemeonacontractwithanexternalreinsurer.

TheCompanyconcludesproportionatereinsurancetreatiestoreduceitsnetexposure.Themaximumnetexposurelimits(own

retentions)forparticularbusinesslinesarereviewedannually.

TheCompanycooperateswithreinsurersrated“A”andhigherandcarriesoutregularmonitoringoftheirfinancialcondition.

(b) Life assurance riskTheCompanyisexposedtorisksresultingfromanunfavourabledevelopmentofassumptionscomparedtotheirdeterminingat

themomentofvaluationofproducts.Thisinvolves,forexample,theriskofunfavourabledevelopmentofmortalityorsurvival,risk

ofadifferentdevelopmentofinvestmentreturn,riskresultingfromanunexpecteddevelopmentofcostinflationorbehaviourof

clientsuponcancellationofthecontract.IntheabovecasestheCompanyisexposedtothedangerofalossresultingfromthe

discrepancybetweencollectedpremiumsandclaimspaid,investmentreturnsandexpenses.

Otherrisksare,forexample,theobjectiveandsubjectiveriskoftheinsured.Theobjectiveriskisdeterminedbyobjectivefactors

suchastheage,sex,healthconditionorprofession.Thesubjectiveriskisdeterminedbysubjectivefactorssuchastheeffortof

theinsuredtosurviveormaintainahealthylifeorthepoorfinancialconditionoftheinsured.

OtherriskstowhichtheCompanyisexposedareasfollows:

–Riskswithalow-frequencyoccurrenceandasignificantimpact,whichinlifeassurancemayrepresentanyclaimthataffects

severalpersonsinsuredatthesametimeandinthesameplace(e.g.naturaldisasters)

–Riskofconcentrationofhighsumsassured,whichdonotconstituteasignificantpartoftheportfoliobutwhichmayhavesigni-

ficantimpactontheamountofsettlementsandasaresultalsotheprofit(loss)oftheCompany.


Thegoalofriskmanagementisidentification,quantificationandeliminationofrisksinordertopreventchangesthathaveanega-

tiveimpactontheprofit(loss)oftheCompanyandtheCompany’sequity.

TheCompanyappliesprofittestingwhenvaluinginsuranceproductsandfurthertheliabilityadequacytestinordertoidentify,

quantifyandeliminatetherisks.Profittestingisusedtodetermineadequateinsuranceratesfortheinsuranceandfinancialgua-

ranteesforindividualproductsandforthedeterminedassumptions.

Thepurposeoftheliabilityadequacytestistoassesstheamountofthelifeassuranceprovisionsintermsoftheupdatedas-

sumptions.Thelevelofsensitivityoftheresultstoachangeintheindividualassumptionsisalsoacomponentoftheseproce-

dures.

Inrespectoftheobjectiveandsubjectiverisksoftheinsured,theserisksmustbeassessedindividuallyuponconclusionofthe

contract,primarilyintheeventofahighersumassured.Thereareproceduresforidentifyingandassessingtheserisks;aspart

ofsuchproceduresitisnecessarytocarryoutaqualifiedassessmentofthehealthcondition,or,ifappropriate,thefinancialcon-

ditionoftheclient,ortoassessthelevelofrisktowhichtheinsuredisexposed.Basedoninformationonthehealthcondition,

subjectiveriskandotheractuarialrisks,thepremiumrateisdetermined.Inadditiontoasurchargeonthepremium,certainrisks

maybeexcludedfromtheinsurance,ortheamountofthesumassuredmaybelimited.

TheCompanyhasnosignificantconcentrationofexposuretoanygroupofpersonsinsured.

Inordertomanagetheinsurancerisk,theCompanyprimarilyusesreinsuranceandaprudentunderwritingpolicy.

Reinsurance strategy for life assurance

TheCompanyreinsuressomeoftherisksitunderwritesinordertocontrolitsexposurestolossesandprotectitsowncapitalre-

sources.TheCompanyhasbaseditsreinsuranceschemeonacomplementarycombinationofcontractswithexternalreinsurers.

Inlifeassurance,theCompanyconcludesnon-proportionatereinsurancetreatiestoreduceitsnetexposure.


TheCompanycooperateswithreinsurersrated“A”andhigherandcarriesoutregularmonitoringoftheirfinancialcondition.

(c) Market riskTheCompanyisexposedtomarketrisk,whichfollowsfromtradingpositionsininterestrate,currencyandequityinstrumentsthat

areallexposedtocommonandspecificchangesinthemarket.

Themainexposureisthattherevenuesfrominvestmentswillnotbesufficienttocovertheliabilitiesfrominsurancecontracts.

Themarketriskisconstantlymonitored,measuredandmanagedusingAsset/Liabilitymanagement(ALM).Thebasicmethodof

ALMinvolvesadjustingtheduedateofassetstotheliabilitiesfrominsurancecontracts.

Asset/Liability management (ALM)

ThebasicgoalofALMistoachievebalanceinthestructureofassetsandliabilities,inparticularfromthepointofviewoftheir

maturity,interestratesandcurrencystructure.Theaimistoensurethattheassetspermanentlygeneratesufficientcashflows

intherequiredcurrencystructurenecessarytocoverthedueliabilitiestoclients(includingtheguaranteedrevenues)andatthe

sametimetoensurethatthesystemenablesthegenerationofadequateprofitforshareholders.

ForthispurposetheCompanyperformsregularmonitoringofassetsandliabilities,followedbyALMcalculation,whichenables

theCompanytomonitorandcomparethestructureofitsassetsandliabilitiesintermsoftheirmaturity,achievedandguaranteed

interestratesandintermsoftheircurrencystructure.Thistypeofoutputisoneoftheunderlyingtoolsformakingdecisionson

thefurtherallocationoffinancialinvestments.

Interest rate risk

TheCompanyisexposedtointerestrateriskduetotheimpactofup-to-datemarketinterestratefluctuations.Thefairvalueand

investmentreturnmaybothgrowordecreaseasaresultofthesefluctuations.


Besideschangesinthevalueofassets,theinterestratefluctuationsmayalsoresultinchangesofliabilities.

Basedonacashflowanalysis,theCompanypreparestheportfolioofsecuritiesthevalueofwhichchangestogetherwithachange

inthevalueofliabilitiesuponachangeintheinterestrate.

Theriskofchangesincashflowsasaresultofachangeininterestraterepresentsexposureprimarilytotheinsurancecontracts

withaguaranteedinterestrate,wheretheclientcomparestherevenueguaranteedbythecontractwiththerevenueofferedinthe

market.Wherethemarketinterestratesincrease,sometypesofcontractsmayshowanincreaseinthelapserate,orviceversa.

Price fluctuation risk

TheCompanyisexposedtoapricefluctuationrisk,whichconsistsinthefactthatthevalueofthefinancialinstrumentwillchange

duetochangesinthemarketprices.Thesechangesmaybecausedbyfactorsspecifictoasingleinstrumentorbytheissuersof

theinstrumentsorbyfactorsaffectingallinstrumentstradedinthecapitalormoneymarkets.

TheCompanymanagesitsuseofequityinvestmentsbymaintainingadiversifiedportfolio.

Měnové riziko

TheCompanyisexposedtocurrencyriskthroughtransactionsinforeigncurrenciesandthroughitsassetsandliabilitiesdeno-

minatedinforeigncurrencies.AsthecurrencyinwhichtheCompanypresentsitsfinancialstatementsistheCzechcrown(CZK),

movementsintheexchangeratesbetweenthesecurrenciesandtheCZKaffecttheCompany’sfinancialstatements.

TheCompanyusescurrencyswapsinordertohedgeagainstcurrencyrisk.

(d) Credit riskTheCompanyisexposedtothecreditrisk,whichfollowsfromthecounterpartyfailingtopaytheamountsdueinfull.


ThemainareasoftheCompany’sexposuretothecreditrisk:

–Reinsurer’sshareininsuranceliabilities

–Reinsurer’sdebt,whichrelatestoaclaimthathasalreadybeenpaid

–Outstandingpremiums

–Receivablesfrominsuranceintermediaries

–Counterpartyriskrelatingtocurrencyswaps

–Riskoffailuretorepaytheprincipalorincomefromfinancialinvestments

Concentrationsofcreditriskarisewheregroupsofcounterpartieshavesimilareconomiccharacteristicsthatwouldcausetheir

abilitytomeettheircontractualobligationstobesimilarlyaffectedbychangesineconomicorotherconditions.

Thecreditriskislimitedbyexternallimitsregulatingthestructureoffinancialplacement(RegulationNo.434/2009Coll.,toim-

plementcertainprovisionsoftheActonInsurance).

Theoutstandingpremiumsareregularlymonitored,andthemethodofcreatingadjustmentsisdescribedinpointI.4.d).

RecoveryofdebtfrominsuranceiscarriedoutbytheCompanyincooperationwithexternalpartners.

(e) operational riskOperationalriskistheriskarisingfromthefailureofinternalprocesses,humanresourcesorsystems,ortheriskoflossthatmay

ariseduetoexternalevents,includingtheriskoflossarisingfromabreachof,ornoncompliancewith,alegalstandard.

LossmeansanyharmordamageincurredbytheCompany.

TheCompanymonitorstheserisks,designsmodificationstoworkproceduresandprocessestoeliminatethelossevents,and

buildsasystemtoanalyseoperationalrisks.


(f) Liquidity risk

TheCompanyisexposedtorequirementsforliquidityonadailybasis.Theserequirementsarerelatedtoclaimsettlements.The

liquidityriskisariskthatthecashnecessaryforpaymentofliabilitieswillnotbeavailableattheduedateandatadequatecost.

Theneedforliquidityiscontinuouslymonitoredinordertoensurenecessaryresources.

TheCompanyhasaccesstoadiversefundingbase,andincompliancewiththelegislationinforceithasinvestedasufficient

portionofitsfinancialplacementinliquidfinancialinstruments.


(in thousands CZK) SoftwareIndustrial and similar rights total

Acquisitioncostat1/1/2012 287,225 295 287,520

Additions 28,753 28,753

Disposals -98 -295 -393

Acquisition cost at 31/12/2012 315,880 0 315,880

Accumulateddepreciationat1/1/2012 223,666 0 223,666

Depreciation 30,106 30,106

Disposals -98 -98

Accumulated depreciation at 31/12/2012 253,674 0 253,674

Netbookvalueat1/1/2012 63,559 295 63,854

Net book value at 31/12/2012 62,206 0 62,206

II. 2. Investments(a) Land and buildings (real estate)

operating (in thousands CZK) 2012 2011

Land 538 538

Valuationdifferences 1,362 1,382

Buildings 69,429 64,400

Valuationdifferences -16,629 -16,400total operating land and buildings at fair value 54,700 49,920

Themostrecentvaluationoflandandbuildings(realestate)basedonanexpertappraisalwascarriedouton31December2012.

II. ADDITIONAL DISCLOSURES IN RESPECT OF THE BALANCE SHEET

II. 1. Intangible fixed assetsIntangiblefixedassetsoftheCompanyasat31December2012comprisethefollowingitems:


(b) Participating interests with significant influence

Share of registered

capital in %

Acquisition cost

fair value

total registered

capital

total

equity

Profit or loss for the

financial year

Dividend income/

profit share

V.I.G.ND,uzavřenýinvestičnífonda.s.

total 299,773 303,959 N/A N/A N/A 0

Thefinancialdataarebasedonnon-auditedpreliminaryfinancialstatementsasat31December2012.In2011,theCompanydid

notownanyparticipatinginterestswithsignificantinfluence.

(c) Shares and other variable-yield securities, other participating interests

(in thousands CZK) fair value Acquisition cost

2012 2011 2012 2011

Issued by financial institutions

–ListedonarecognisedCRexchange 78,525 74,466 68,048 87,672

–Listedelsewhere 755,796 702,461

–Unlisted 1,294,080 410,242 1,229,531 432,427

Issued by non-financial institutions


–Listedelsewhere 18,204 16,581total 1,459,535 1,401,326 1,392,190 1,382,251

2012 (in thousands CZK)

10.48 299,773 303,959 2,671,000 2,905,098 64,024 0


SecuritieslistedelsewherearetradedmainlyonEuropeanandUSmarkets.Unlistedsecuritiesissuedbyfinancialinstitutions

compriseparticipationcertificates/units.

Outofsecuritiesclassifiedas“Issuedbyfinancialinstitutionslistedelsewhere”asat31December2011securitiesamounting

toTCZK243,252atfairvalue(TCZK236,490atcost)werereclassifiedto”Unlistedsecurities”tounifythereportingstructure

ofthefinancialgroup.Theoutstandingsecuritiesquotedonanothermarketissuedbyfinancialinstitutionsasat31December

2011wererealizedduring2012.

(d) Debt securities valued at fair value through profit and loss and available for sale securities


2012 2011 2012 2011



–Listedelsewhere 1,313,610 994,955 1,278,269 977,884

–Unlisted 247,277 240,448 200,720 200,720


–ListedonarecognisedCRexchange 103,865 100,000

–Listedelsewhere 68,599 353,386 59,850 342,380

–Unlisted

Issued by government sector

–ListedonarecognisedCRexchange 5,007,721 4,989,633 4,740,979 4,935,789

–Listedelsewhere 704,530 591,642 642,649 588,943total 8,158,343 7,946,630 7,723,573 7,829,432

SecuritieslistedelsewherearetradedmainlyonEuropeanmarkets.


(e) oeCD bonds held to maturity

(in thousands CZK)

fair value Amortised value Acquisition cost

2012 2011 2012 2011 2012 2011–ListedonarecognisedCRexchange 11,192,871 9,224,015 10,048,554 8,950,349 9,909,906 8,796,624

total oeCD bonds held to maturity 11,192,871 9,224,015 10,048,554 8,950,349 9,909,906 8,796,624

(f) other debt securities held to maturity


2012 2011 2012 2011


–ListedonarecognisedCRexchange

–Listedelsewhere 619,979 1,034,897 509,257 959,257

–Unlisted 368,538 358,360 299,150 299,150



–Listedelsewhere 1,383,061 1,702,790 1,199,371 1,549,371

total other debt securities held to maturity 2,543,468 3,261,190 2,157,190 2,957,190


(g) Deposits with financial institutions

(in thousands CZK) 2012 2011Duewithin1year 882,746 699,742

Duein1to5years 300,000 300,000total 1,182,746 999,742

BankdepositintheamountofTCZK300,000maturesin2014.

(h) other financial placements – derivatives

other derivatives – derivatives held for trading

fixed term contracts with a positive fair value (in thousands CZK)

Nominal value fair value

2012 2011 2012 2011Termcurrencytransactions 1,147,213 5,783

total 1,147,213 5,783

fixed term contracts with a negative fair value (in thousands CZK) 2012 2011 2012 2011Termcurrencytransactions 2,248,744 -22,038

total 2,248,744 -22,038

TheCompanyconcludesderivativessolelytohedgeagainstcurrencyrisk.Alltheabovefinancialinstrumentswereconcludedat

theinterbankmarket(OTC).

Nominal value fair value


NominalvalueoffixedtermcontractsistheamountinCZKoftheCompany’sshort-termcurrencyposition.Fairvalueoffixed

termcontractsistherevaluationofthecontractsasatthebalancesheetdate,i.e.thedifferencebetweenthepresentvaluesof

expectedcashinflowsandoutflows.

Remaining maturity of derivatives

At 31 December 2012 (in thousands CZK)Within

3 months3 months to

1 year1 to

5 yearsMore than

5 years Not specified total

other derivatives – intended for tradingTermcurrencytransactions 5,783 5,783

At 31 December 2011 (in thousands CZK)Within

3 months3 months to

1 year1 to

5 yearsMore than

5 years Not specified total

other derivatives – intended for tradingTermcurrencytransactions -22,038 -22,038

II. 3. Financial placements for the benefit of life assurance policyholders who bear the investment risk

Description

(in thousands CZK)

fair value Acquisition cost

2012 2011 2012 2011

Sharesandothervariable-yieldsecurities 701,778 785,573 740,959 903,999

Debtsecurities 2,321,905 1,369,608 1,854,285 1,098,235total 3,023,683 2,155,181 2,595,244 2,002,234


II. 4. Currency structure of the financial placement

Variable-yield securities fixed income securities Deposits and other financial placements

Securities where the investment risk is borne

by the policyholders2012 2011 2012 2011 2012 2011 2012 2011

CZK 1,084,176 522,449 20,004,264 19,042,440 1,167,285 861,000 3,023,683 2,155,181

EUR 161,508 151,084 746,101 1,115,729 18,042 80,896

GBP 77,531 25,842 252 -90

USD 440,279 697,961 2,950 35,898

PLN 3,990 total 1,763,494 1,401,326 20,750,365 20,158,169 1,188,529 977,704 3,023,683 2,155,181

Variable-yieldsecuritiescompriseaparticipatinginterestwithsignificantinfluenceamountingtoTCZK303,959(2011:TCZK0).

II. 5. Receivables

31 December 2012

(in thousands CZK)Receivables from

policyholders

Receivables from insurance intermediaries

Receivables from

reinsurance operations

other receivables total

Due 22,289 312,307 135,640 470,236

Overdue 130,665 18,999 174 149,838total 152,954 18,999 312,307 135,814 620,074Adjustment 87,276 17,624 132 105,032total net 65,678 1,375 312,307 135,682 515,042

Currency (in thousands CZK)


31 December 2011

(in thousands CZK)Receivables from

policyholders

Receivables from insurance intermediaries

Receivables from reinsurance

operations

other receivables total

Due 13,011 2,167 229,377 158,752 403,307

Overdue 114,044 10,035 480 124,559total 127,055 12,202 229,377 159,232 527,866Adjustment 70,739 9,090 132 79,961total net 56,316 3,112 229,377 159,100 447,905

other receivables

(in thousands CZK) 2012 2011Inter-companyreceivables 2,645 2,461

Incometaxprepayments 119,967 150,353

Otherreceivables 13,202 6,418total other receivables 135,814 159,232


II. 6. Other assets(a) Dlouhodobý hmotný majetek

(a) tangible fixed assets Cars It equipment

fixtures and

fittings other

Acquisition of assets and

advances paid totalAcquisitioncostat1/1/2012 25,227 47,903 18,316 10,976 1,448 103,870

Additions 11,917 33,389 7,631 33 2,016 54,986

Disposals -6,778 -31,345 -1,936 -1,557 -41,616

Acquisition cost at 31/12/2012 30,366 49,947 24,011 11,009 1,907 117,240Accumulateddepreciationat1/1/2012 10,938 36,484 10,566 441 58,429

Depreciationexpense 6,718 10,962 1,646 195 19,521

Disposals -5,057 -30,992 -1,504 -37,553Accumulated depreciation

at 31/12/2012 12,599 16,454 10,708 636 0 40,397Netbookvalueat1/1/2012 14,289 11,419 7,750 10,535 1,448 45,441

Net book value at 31/12/2012 17,767 33,493 13,303 10,373 1,907 76,843

Asat31December2012,theCompanyalsoreportedinventoriesintheamountofTCZK2,992(2011:TCZK3,491).


II. 7. Temporary asset accounts(a) Deferred acquisition costs for life assurance contracts

(in thousands CZK) 2012 2011Lifeassuranceconnectedwithaninvestmentfund/unit-linked 1,584,877 1,507,060

total 1,584,877 1,507,060

ThecalculationoftheamountreportedinDeferredacquisitioncostsforunit-linkedinsurancecontractsdependsontwocalcula-

tionbases.ThevolumeofexpectedfuturedeductionsoftheinitialallocationfeesisusedtocreateanassetofTCZK722,986

(2011:TCZK797,771)andthevolumeofthenegativecapitalvalueofinsurancecontractsisusedtocreateanassetofTCZK861,891

(2011:TCZK709,289).

(b) estimated receivables

(in thousands CZK) 2012 2011Estimatedwrittenpremiums 114,908 115,553

Estimatedreinsurancecommissions 17,166 23,926

Estimatedtrailerfees 1,078 1,402

EstimatedshareintheprofitofthereinsurerBNP 11,082 5,590

Other 2,669 782total 146,903 147,253

estimated written premiums

TheCompanydisclosesinestimatedreceivablesanestimateofthewrittenpremiumsforDecemberinrespectofgeneralinsuran-

cecontractswherethepolicyholdersreporttotheCompanyonamonthlybasisinarrears.


(c) other temporary asset accounts

(in thousands CZK) 2012 2011

Prepaidexpensesrelatingtocommissionsonpremiumsnotyetrecorded 23,404 33,122

Other 1,530 1,798

total 24,934 34,920

II. 8. Equity(a) Share capitalTheregisteredsharecapitalcomprises8,180registeredordinarysharesinbookedformwithanominalvalueofTCZK45and

15,320ordinarybearershareswithanominalvalueofTCZK100.Asat31December2012,100%,i.e.TCZK1,900,100,ofthe

sharecapitalwaspaidup.Intheaccountingperiod2012and2011,thesharecapitaldidnotchange.

Issue

(in thousands CZK)type of

security formaNominal

valueNumber of securities total volume

Information on public marketability

CZ0008040706 share book-entry 45,000 8,180 368,100,000 Notmarketable

CZ0008040698 share book-entry 100,000 15,320 1,532,000,000 Notmarketable

total 23,500 1,900,100,000

ThesharecapitalamountcomplieswiththerequirementsoftheInsuranceAct,withregardtotheinsuranceclassesinwhichthe

Companyisauthorisedtocarryoninsuranceactivities.


(b) other capital funds

(in thousands CZK) 2012 2011Revaluationofassetsandliabilitiesatfairvalue 95,721 56,168

total 95,721 56,168

Revaluation of assets and liabilities at fair value

(in thousands CZK) 2012 2011Balance at 1/1 56,168 8,978

Changeinfairvalueoffinancialplacement 48,831 58,259

Changeindeferredtax -9,278 -11,069Balance at 31/12 95,721 56,168

Planned distribution of the current period profit

(in thousands CZK)

Profit for the current period 1,018,418

Transfertostatutoryreservefund 50,921

Transfertosocialfund 4,730

Dividend(CZK36.84pershare) 865,655Profit to be added to retained earnings 97,112

Proposeddistributionofprofitissubjecttotheapprovalofthegeneralmeeting.


II. 9. Technical provisions(a) Life assurance provision

(in thousands CZK) 2012 2011Unzillmerisedprovision 6,621,381 6,718,895

Zillmeradjustment 11,557 8,162

Eliminationofnegativereserves 2,342 3Zillmerised provision presented in the balance sheet 6,612,166 6,710,736Flexiprovision 12,378,190 12,323,713

Provisionforprofitsharecommitments 325,383 259,859

Annuityprovision 8,366 8,626

Provisionforbonuses 204,863 77,861total life assurance provision 19,528,968 19,380,795

(b) Provision for outstanding claimsTheprovisionforoutstandingclaimsattheendofthefinancialyeariscreatedasfollows:

(in thousands CZK) 2012 2011RBNS 351,912 253,200

IBNR 935,985 1,022,031total 1,287,897 1,275,231

Claims run-off result

Theclaimsrun-offresult isthedifferencebetweentheprovisionforoutstandingclaimsasat31December2011,theclaims

paymentsduring2012 (with respect toclaims includedwithin thisprovision)and the residualamountof thisprovisionasat

31December2012.


(in thousands CZK) 2012 2011Grossprovisionforoutstandingclaimsasat1January 1,764,107 1,489,871

Claimspaymentsinthecurrentperiodinrespectofpriorperiodclaims 963,580 840,117

Provisionforoutstandingclaimsasat31Decemberintendedforpriorperiodclaims

notpaidyet 654,114 458,322

Run-offresult 146,413 191,432

Thegrossrun-offresultbyclassesofinsurance:

Class of insurance (in thousands CZK) 2012 2011Accidentandsickness–non-lifeinsurance 12,619 47,952

Otherlosses–non-lifeinsurance 5,238 14,702

Assuranceondeath,assuranceonsurvival 13,223 -5,059

Accidentandsicknessinsuranceasarider 79,439 142,602

Marriageinsurance 96 19

Lifeassuranceconnectedwithaninvestmentfund/unit-linked

(notincludingaccidentalriders) 35,798 -8,784total 146,413 191,432

II. 10. Provisions

type of provision (in thousands CZK)opening balance Creation Release

Closing balance

Provisionfortaxes 100,837 244,011 100,837 244,011total 100,837 244,011 100,837 244,011

TheincometaxprepaymentsofTCZK119,967(2011:TCZK150,353)arerecognisedinOtherreceivables.


II. 11. Payables

31. December 2012

(in thousands CZK)Payables to

policyholders

Payables to insurance

intermediaries

Payables from reinsurance operations other payables total

Due 173,534 132,332 381,156 94,660 781,682

Overdue 0 308 2,127 2,435total 173,534 132,640 381,156 96,787 784,117

31. December 2011

(in thousands CZK) Payables to

policyholders

Payables to insurance

intermediaries

Payables from reinsurance operations other payables total

Vesplatnosti 210,644 146,494 281,839 34,034 673,011

Posplatnosti 27 112 3,769 3,908total 210,671 146,606 281,839 37,803 676,919

Otherpayablescomprisethefollowingitems:

(in thousands CZK) 2012 2011Payablestoemployees 37,517 6,466

Socialsecurityandhealthinsuranceliabilities 10,685 3,119

Payablestosuppliers 12,927 9,421

Deferredtaxliability 25,692 16,307

Othertaxliabilities 9,966 2,490

total 97,787 37,803


(a) Social security and health insurance liabilitiesLiabilitiesinrespectofsocialsecurityandhealthinsurancetotalTCZK10,685(2011:TCZK3,119)ofwhichTCZK6,773(2011:

TCZK2,183)relatestosocialsecurityandTCZK3,912(2011:TCZK936)relatestohealthinsurance.Noneoftheseliabilitiesare

overdue.

(b) tax liabilitiesTaxliabilitiesamounttoTCZK9,966(2011:TCZK2,490),noneofwhichisoverdue.

(c) Long-term payables (maturity over five years)TheCompanydoesnothaveanylong-termpayableswithremainingmaturityoverfiveyears.

(d) Payables and receivables due to or from reinsurersTheCompanyhasanetpayabletoreinsurersintheamountgiveninthefollowingtable:

(in thousands CZK) 2012 2011Receivablesfromreinsurers 312,307 229,377

Payablestoreinsurers 381,156 281,839

Depositsduetocedents 635,780 370,142

Net (+ receivable, - payable) -704,629 -422,604

ThedepositofTCZK635,780(2011:TCZK370,142) isrelatingtoreinsurancecontractswithVIENNAINSURANCEGROUPAG

WienerVersicherungGruppe.


II. 12. Temporary liability accounts(a) other temporary liability accounts

(in thousands CZK) 2012 2011

Accruedexpenses 2,906

Estimatedpayables 235,922 263,857

total 235,922 266,763

Adetailedbreakdownofestimatedpayablesisasfollows:

(b) estimated payables

(in thousands CZK) 2012 2011Alliancepartnercommission 84,958 81,449

Performance-basedcommissionofinsuranceintermediaries 28,000 36,114

Lawsuitsandlitigations 5,721 5,820

Annualextraordinarybonusesanduntakenholidays 14,095 57,802

Assetmanagementfees 26,751 11,469

Operatingsystemrepairsandmaintenance 6,717 1,270

Reinsurancepremiumsonpremiumnotyetrecorded 60,786 61,533

Advancepaymentsforservicesrelatingtorent 2,837 2,627

Servicesnotyetinvoicedbyothercreditors 6,057 5,773total 235,922 263,857


Alliance partner commission

TheCompanydisclosesunderalliancepartnercommissiontheexpectedamountofcommissionrelatingtoadistributionagree-

mentbetweenentitiesofErsteBankfinancialgroupandentitiesofViennaInsuranceGroup.

estimated reinsurance premiums

TheCompanydisclosesunderestimatedreinsurancepremiumsanestimateoftherelevantreinsurers’shareintheestimateof

grosspremiumwrittendisclosedintheestimatedreceivables,seepointII.7.(b).

II. 13. Inter-company receivables and payables(a) other inter-company receivables and payables

Company name

(in thousands CZK) 2012 2011 2012 2011Short-term 286,931 202,123 308,960 203,776

Kooperativapojišťovna,a.s.,

ViennaInsuranceGroup 3,257 2,461 2,149 242

VIENNAINSURANCEGROUPAGWiener

VersicherungGruppe 283,674 199,662 306,811 203,534total 286,931 202,123 308,960 203,776

AsspecifiedinsectionII.11.(d),theCompanyalsorecordsadepositrelatingtoreinsurancecontractswithVIENNAINSURANCE

GROUPAGWienerVersicherungGruppe.

Allsignificanttransactionswithrelatedpartieswerecarriedoutundercommonmarketconditions.

Receivables Payables


III. ADDItIoNAL DISCLoSuReS IN ReSPeCt of tHe PRofIt AND LoSS ACCouNt

III. 1. Non-life insuranceNon-lifeinsurancefor2012and2011dividedbyclassesofinsurance:

(in thousands CZK)Class of

insurance

Gross premiums

written

Gross premiums

earnedGross

claims paid

Gross operating expenses

Reinsurance balance

Direct insuranceAccidentandsickness 1,2

2012 545,026 544,765 180,218 9,594 -91,946

2011 544,068 542,947 175,541 16,836 -86,626

Miscellaneouslosses 16

2012 259,899 259,899 19,012 1,511 -72,339

2011 243,445 243,445 17,179 928 -66,896

total

2012 804,925 804,664 199,230 11,105 -164,285

2011 787,513 786,392 192,720 17,764 -153,522


III. 2. Life assuranceGrosspremiumswritteninlifeassurance:

(in thousands CZK) 2012 2011Individualpremium 9,191,499 9,218,323

Premiumsundergroupcontracts 705,842 673,857total 9,897,341 9,892,180Regularpremium 5,266,241 4,801,345

Singlepremium 4,631,100 5,090,835total 9,897,341 9,892,180Premiumsfromnonprofit-sharingcontracts 1,323,291 1,011,139

Premiumsfromprofit-sharingcontracts 6,341,932 7,509,061

Premiumsfromcontractswheretheinvestmentrisk

isbornebypolicyholders 2,232,118 1,371,980total 9,897,341 9,892,180Reinsurance balance -108,188 -74,464

III. 3. Total amount of gross premiums written by countryIn2012and2011,thetotalamountofgrosspremiumswrittenwasgeneratedoncontractsconcludedintheCzechRepublic.


III. 4. Bonuses and rebatesTheCompanygrantedthefollowingbonusesandrebatesbasedonpolicytermsandconditionsandinsurancecontracts:

(in thousands CZK) 2012 2011Gross

Non-lifeinsurance 369,727 334,018

Lifeassurance 274,831 266,491total gross amount 644,558 600,509Reinsurers’share(non-lifeinsurance) 367,592 332,536total net amount 276,966 267,973

InaccordancewiththeproceduresstatedinpointII.9.(d)oftheNotestheCompanyaccountedforthefollowingchangesinthe

provisionforbonusesandrebates:

2012 (in thousands CZK) Hrubá výše Podíl zajišťovatelů Čistá výšeNon-life insurance

Creation 405,325 403,235 2,090

Release 371,662 369,591 2,071

Changeofbalance 33,663 33,644 19Life assurance Creation 274,501 274,501

Release 274,831 274,831

Changeofbalance -330 -330total change of balance 33,333 33,644 -311


2011 (in thousands CZK) Gross Reinsurer’s share NetNon-life insurance

Creation 371,032 369,469 1,563

Release 335,566 334,084 1,482

Changeofbalance 35,466 35,385 81Life assurance Creation 268,384 268,384

Release 266,595 266,595

Changeofbalance 1,789 1,789total change of balance 37,255 35,385 1,870

III. 5. Commissions and other acquisition costs for insurance contracts

2012 2011

(in thousands CZK)Non-life

insuranceLife

assurance totalNon-life

insuranceLife

assurance totalCommissions

Initial 491 1,315,890 1,316,381 5,406 1,473,586 1,478,992

Renewal 4,567 252,594 257,161 7,199 235,337 242,536total commissions 5,058 1,568,484 1,573,542 12,605 1,708,923 1,721,528Otheracquisitioncosts 1,548 195,959 197,507 1,308 203,122 204,430

Changeindeferredacquisitioncosts 194 -77,817 -77,623 -153 -147,976 -148,129total commissions and other acquisition costs 6,800 1,686,626 1,693,426 13,760 1,764,069 1,777,829

TheCompanydisclosesrenewalcommissionsinadministrativeexpenses.


Otheracquisitioncostsprimarilycomprisecostsforwagesandsalaries,promotion,advertisingandotheradministrativeexpenses

associatedwiththeconclusionofinsurancecontracts.

III. 6. Administrative expenses

(in thousands CZK) 2012 2011Personnelexpenses(payroll,socialsecurityandhealthinsurance,remunerationtomembersoftheSupervisoryBoard,BoardofDirectorsandAuditCommittee) 90,377 82,680

Renewalcommissions 257,161 242,536

Rentandrelatedservices 7,173 6,772

Consultancyandexternalaudit 20,127 2,676

Consumptionoflow-valuetangibleandintangibleassetsandothermaterial 8,775 9,904

Depreciationandrepairsandmaintenanceoftangibleassets 25,814 16,430

Operatingsystemsadministrationandmaintenance 28,560 20,978

Postalandtelecommunicationservices 26,460 23,847

Bankfees 12,893 12,030

Otherservices 21,020 22,173

Otheradministrativeexpenses 41,608 44,666total administrative expenses 539,968 484,692

Otherpersonnelexpensesareincludedinotheradministrativeexpenses.


III. 7. Other technical expenses and income

2012 (in thousands CZK) Gross Reinsurer’s share NetNon-life insuranceOthertechnicalexpenses 20,653 20,653

Othertechnicalincome -24,774 -24,774Balance – non-life insurance -4,121 0 -4,121Life assurance

Othertechnicalexpenses 84,991 84,991

Othertechnicalincome -97,824 -97,824Balance – life assurance -12,833 0 -12,833

2011 (in thousands CZK) Gross Reinsurer’s share NetNon-life insuranceOthertechnicalexpenses 21,290 21,290

Othertechnicalincome -25,731 -25,731Balance – non-life insurance -4,441 0 -4,441Life assuranceOthertechnicalexpenses 47,119 47,119

Othertechnicalincome -57,104 -57,104Balance – life assurance -9,985 0 -9,985


III. 8. Employees and managementPersonnelexpensesandaveragecalculatednumberofemployeesbyindividualcategoriesfor2012and2011:

Personnel expense – type

(in thousands CZK) year

employee category

totalAcquisition, sales Claims handling Administration

Payrollexpense2012 69,187 10,013 76,342 155,542

2011 64,994 9,494 66,226 140,714

Socialsecurityandhealthinsurance2012 18,648 3,504 15,669 37,821

2011 21,899 3,259 18,525 43,683

Otherpersonnelexpenses2012 3,604 1,021 3,416 8,041

2011 3,234 922 3,106 7,262

total personnel expenses2012 91,439 14,538 95,427 201,404

2011 90,127 13,675 87,857 191,659

Averagenumberofemployees2012 109 29 101 239

2011 98 27 96 221

Theabovefiguresdonotincluderemunerationpaidtostatutory,executiveandsupervisoryboardmembers.

Asat31December2012,themanagementoftheCompanycomprised12managers:theCEO,3deputyCEOsand8sectiondirec-

tors.Personnelexpenses(payroll,socialsecurityandhealthinsurance,otherpersonnelexpenses)relatingtomanagerstotalled

TCZK39,978in2012(2011:TCZK43,677).

ExpensesrelatingtothejobpositionsofdeputyCEOinchargeofthesalesdivision,salesdivisionsectiondirectorsandproduct

managementdirectorarepresentedunderacquisitioncosts.Expensesrelatingtoothermanagementpositionsarepresented

underadministrativeexpenses.


(a) Statutory, executive and Supervisory Board members’ remunerationTheCompanyhasprovidedthefollowingmonetaryandnon-monetaryremunerationtothestatutory,executiveandsupervisory

boardmembersforthefinancialyears2012and2011:

(in thousands CZK) 2012 2011MembersoftheBoardofDirectors 180 180

Proxyholder 60 60

MembersoftheSupervisoryBoard 830 658

AuditCommittee 13 13total remuneration paid 1,082 911

ThemembersoftheCompany’sBoardofDirectorsareatthesametimeemployeesoftheCompanyexercisingtheofficesof

DeputyCEOsortheCEOoftheCompany.

TheproxyholderisalsoanemployeeoftheCompany,exercisingtheofficeofDeputyCEO.

Themembersof theBoardofDirectorsandtheproxyholder receivemonthly remunerationofCZK5,000.TheChairmanand

Vice-chairmanoftheSupervisoryBoardreceiveannualremunerationofEUR5,000;theothermembersoftheSupervisoryBoard

receiveannualremunerationofEUR4,000.

ThemembersoftheAuditCommitteereceiveannualremunerationofEUR500undertheconditionthattheydonotreceiveremu-

nerationasmembersofanyotherexecutiveorsupervisorybodyoftheCompany.

TheCompanypresentednoreceivablesfrommembersoftheBoardofDirectors,SupervisoryBoard,AuditCommitteeortheproxy

holderrelatingtoloansgrantedoradvancespaid,eitherin2012or2011.


(b) Information on remuneration for statutory auditorsRemunerationforstatutoryauditorsisincludedintheCompany’sadministrativeexpenses.ThetotalamountofTCZK1,308(2011:

TCZK1,497)consistsofthefollowingitems:

(in thousands CZK) 2012 2011Statutoryaudit 1,284 1,344

Othernon-auditingservices 24 153total remuneration 1,308 1,497

III. 9. Expense allocation between technical accounts and non-technical accountAsatthebalancesheetdate,thetotalamountofexpensesallocatedbetweenthetechnicalaccountsforlifeassurance,non-lifeins-

uranceandthenon-technicalaccountbymeansofthemethodstatedinnoteI.4.(t)amountedtoTCZK58,112(2011:TCZK48,732).

III. 10. Result of non-technical accountTheresultofthenon-technicalaccountasat31December2012amountedtoTCZK23(2011:TCZK0).

III. 11. Result before taxTheresultbeforetaxasat31December2012amountedtoTCZK1,262,785(2011:TCZK517,339).


III. 12. Taxation(a) Income tax in the profit and loss account

(in thousands CZK) 2012 2011Provisionforcurrentperiodincometax 244,011 100,837

Differencebetweenthecurrentincometaxrelatingtopriorperiodsandreleaseoftheprovisionforincometaxrelatingtopriorperiods 249 -551

Changeindeferredtaxasset/Changeindeferredtaxliability 107 -562Income tax in profit and loss account 244,367 99,724


(b) Deferred tax assets and liabilitiesDeferredtaxassetsandliabilitiesareasfollows:

temporary differences Assets Liabilities Net(in thousands CZK) 2012 2011 2012 2011 2012 2011Tangiblefixedassets 5,930 4,846 -5,930 -4,846

Intangiblefixedassets 2,114 2,005 -2,114 -2,005

Receivables 1,045 1,045 1,045 1,045

OthertemporarydifferencerecordedinProfitandlossaccount 3,760 2,675 3,760 2,675

Effectonprofitandlossaccount 4,805 3,720 8,044 6,851 -3,239 -3,131

Revaluationofassetsandliabilities 22,453 13,175 -22,453 -13,175

Effectonequity 22,453 13,175 -22,453 -13,175

Deferredtaxasset/(liability) 4,805 3,720 30,497 20,026 -25,692 -16,306

Off-settingofrelatingdeferredtaxassetsandliabilities -4,805 -3,720 -4,805 -3,720Deferred tax asset/(liability) 0 0 25,692 16,306 -25,692 -16,306

InaccordancewiththeaccountingpolicydescribedinpointI.4.(g),deferredtaxwascalculatedusingthetaxratesvalidforthe

periodsinwhichthetaxasset/liabilityisexpectedtobeutilised,i.e.19%.

IV. OTHER DISCLOSURES

IV. 1. Group relationsTheCompanyhasnotconcludedacontrollingagreementwithitsmajorityshareholderVIENNAINSURANCEGROUPAGWiener

VersicherungGruppehavingitsregisteredofficeinVienna,Austria.Areportonrelationsbetweenrelatedpartieswillbeapartof

theannualreport.


IV. 2. Transactions not disclosed in the balance sheetTheCompanyisnotawareofanyevenpotentialcommitmentsnotdisclosedinthebalancesheet.

IV. 3. Contingent liabilities(a) LitigationsTheCompanyisthedefendantinalawsuitarisingfromdisagreementoverthesizeofsettlementasregardsclaimsreportedand

settledinthetotalamountofTCZK9,982.AprovisionforreportedclaimsofTCZK11,164hasbeenestablishedtoprovidefor

thesecontingentliabilities,whichcompriseanestimateofthesettlementandotherexpenses,primarilytherelatedcourtfees.

IV. 4. Subsequent eventsTheCompany’smanagementisnotawareofanymaterialsubsequenteventsthathaveoccurredsincethebalancesheetdatethat

wouldrequireanadjustmenttothefinancialstatementsasat31December2012.

InPardubice,on22February2013

RNDr. Petr Zapletal, MBA Ing. Jaroslav KulhánekChairmanoftheBoardofDirectors Vice-chairmanoftheBoardofDirectors

97Annual Report 2012IReportonRelationsfor2012

Pojišťovna České spořitelny, a.s., Vienna Insurance Group, with its main office in Pardubice,nám.Republiky115,postcode53002

BusinessIDNo.:47452820,registeredintheCommercialRegisterkeptattheRegionalCourtinHradecKrálové,sectionB,insert

855(hereinafterreferredtoas“the Compiler”)ispartoftheGroup(concern)VIENNAINSURANCEGROUPAGWienerVersicherung

Gruppe,inwhichtherelationsreferredtoinAnnexNo.1existbetweentheCompilerandthecontrollingpersonsandfurtherbetween

theCompilerandthepersonscontrolledbythesamecontrollingpersons(hereinafterreferredtoas“relatedpersons”).

ThisreportonrelationsbetweenthepersonslistedbelowwaspreparedinaccordancewiththeprovisionsofSection66a(9)of

ActNo.513/1991Coll.,theCommercialCode,asamended,fortheaccountingperiod1.1.2012to31.12.2012(hereinafter

the“accountingperiod”).IntheaccountingperiodthefollowingagreementsweresignedbetweentheCompilerandthepersons

listedbelowandthefollowinglegalactsandotherdefactomeasureswereadoptedorimplemented:

Report on Relations in accoradance with § 66a of the Commercial Code for 2012


AN OVERVIEW OF THE ENTIRE CONCERN OF VIENNA INSURANCE GROUP AG WIENER VERSICHERUNG GRUPPE, OR PERSONS WHOSE RELATIONSHIPS ARE DESCRIBED

A. VIG consolidated financial statements – equity participation as of 31 December 2004, including equity

VIeNNA INSuRANCe GRouP AG, Wiener Gruppe Verischerung insurance company, Schottenring30,A1010Vienna,registeredin

theCommercialRegisterheldattheCommercialCourtinViennasectionFN,insert75687F(hereinafterthe“WienerStädtische”)

Share in capital Last in % (controlling equity annual financialACCouNtING uNIt holding pursuant to IfRS) (thous. euR) statementConsolidated companies“GrünerBaum“Errichtungs-undVerwaltungsges.m.b.H,Vienna 100.00 26,311 2012“Schwarzatal“GemeinnützigeWohnungs-undSiedlungsanlagen-GmbH,Vienna 55.00 104,423 2012“WIENERRE“akcionarskodrustvozareosiguranje,Belgrade 100.00 6,515 2012“WIENERSTÄDTISCHEOSIGURANJE“akcionarskodrustvozaosiguranje,Belgrade 100.00 12,375 2012AlpenländischeHeimstätteGemeinnützigeWohnungsbau-undSiedlungsgesellschaftm.b.H.,Innsbruck 94.00 94,954 2012AndělInvestmentPrahas.r.o.,Prague 100.00 26,747 2012ARITHMETICAVersicherungs-undFinanzmathematischeBeratungs-Gesellschaftm.b.H.,Vienna 100.00 387 2012ASIGURAREAROMANEASCA–ASIROMVIENNAINSURANCEGROUPS.A.,Bucharest 99.10 75,265 2012BENEFIATowarzystwoUbezpieczennaZycieS.A.ViennaInsuranceGroup,Warsaw 100.00 23,021 2012BENEFIATowarzystwoUbezpieczenS.A.ViennaInsuranceGroup,Warsaw 100.00 18,973 2012BlizzardRealSp.zo.o.,Warsaw 100.00 1,675 2012BMLVersicherungsmaklerGmbH,Vienna 100.00 821,799 2012BULSTRADLIFEVIENNAINSURANCEGROUPJointStockCompany,Sofia 95.11 4,832 2012BULSTRADVIENNAINSURANCEGROUPPUBLICLIMITEDCOMPANY,Sofia 98.00 38,625 2012


Share in capital Last in % (controlling equity annual financialACCouNtING uNIt holding pursuant to IfRS) (thous. euR) statementBusinessInsuranceApplicationConsultingGmbH,Vienna 100.00 2,172 2012BusinessparkBrunnEntwicklungsGmbH,Vienna 100.00 1,817 2012CALICAL“Globus“,Kiev 80.00 5,281 2012CAMEHoldingGmbH,Vienna 100.00 28,318 2012CAPITOL,a.s.,Bratislava 100.00 637 2012CENTERHotelbetriebsGmbH,Vienna 80.00 633 2012CentralPointInsuranceIT-SolutionsGmbH,Vienna 100.00 96,002 2012Českápodnikatelskápojišťovnaa.s.,ViennaInsuranceGroup,Prague 100.00 94,203 2012COMPENSAHoldingGmbH,Wiesbaden 100.00 20,740 2012CompensaLifeViennaInsuranceGroupSE,Tallinn 100.00 10,880 2012CompensaTowarzystwoUbezpieczenNaZycieSpolkaAkcyjnaViennaInsuranceGroup,Warsaw 100.00 51,194 2012CompensaTowarzystwoUbezpieczenSpolkaAkcyjnaViennaInsuranceGroup,Warsaw 99.89 72,247 2012DBR-LiegenschaftenGmbH&CoKG,Stuttgart 100.00 11,932 2012DBR-LiegenschaftenVerwaltungsGmbH,Stuttgart 100.00 23 2012Deutschmeisterplatz2ObjektverwaltungGmbH,Vienna 100.00 3,203 2012DonauBrokerlineVersicherungs-ServiceGmbH,Vienna 100.00 27,004 2012DONAUVersicherungAGViennaInsuranceGroup,Vienna 99.24 155,842 2012DVIBGmbH,Vienna 100.00 29,199 2012ELVPBeteiligungenGmbH 100.00 19,532 2012ErsteosiguranjeViennaInsuranceGroupd.d.,Zagreb 95.00 10,493 2012ERSTEViennaInsuranceGroupBiztositóZrt.,Budapest 95.00 6,586 2012GemeinnützigeIndustrie-Wohnungsaktiengesellschaft,Leonding 55.00 208,783 2012GemeinnützigeMürz-YbbsSiedlungsanlagen-GmbH,Kapfenberg 55.00 90,005 2012GesundheitsparkWien-OberlaaGesellschaftm.b.H.,Vienna 100.00 26,587 2012GPIHB.V.,Amsterdam 91.11 6,811 2012HELIOSViennaInsuranceGroupd.d.,Zagreb 100.00 26,987 2012InteralbanianSh.a.,Tirana 78.33 3,255 2012InternationalInsuranceCompanyIRAOLtd.,Tiflis 100.00 7,061 2012


Share in capital Last in % (controlling equity annual financialACCouNtING uNIt holding pursuant to IfRS) (thous. euR) statementInterRiskLebensversicherungs-AGViennaInsuranceGroup,Wiesbaden 100.00 25,338 2012InterRiskTowarzystwoUbezpieczenSpolkaAkcyjnaViennaInsuranceGroup,Warsaw 99.98 92,806 2012InterRiskVersicherungs-AGViennaInsuranceGroup,Wiesbaden 100.00 43,460 2012INTERSIGSh.A.,Tirana 75.00 3,887 2012JAHORINAOSIGURANJEa.d.,Pale 97.56 11,937 2012JointStockInsuranceCompanyWINNER-ViennaInsuranceGroup,Skopje 100.00 3,778 2012JSC“GPIInsuranceCompanyHolding“,Tiflis 90.00 9,427 2012KÁLVINTOWERImmobilienentwicklungs-undInvestitionsgesellschaftm.b.H.,Budapest 100.00 2,222 2012Kapitolpojišťovacíafinančníporadenství,a.s.,Brno 100.00 6,735 2012Komunálnapoisťovna,a.s.ViennaInsuranceGroup,Bratislava 100.00 42,025 2012KOOPERATIVApoist’ovna,a.s.ViennaInsuranceGroup,Bratislava 100.00 276,629 2012Kooperativa,pojišťovna,a.s.ViennaInsuranceGroup,Prague 98.39 553,203 2012KvarnerViennaInsuranceGroupdionickodrustvozaosiguranje,Rijeka 99.36 42,249 2012KvarnerWienerStädtischeNekretnined.o.o.,Zagreb 100.00 381 2012LVPHoldingGmbH,Vienna 100.00 670,539 2012MAPBürodienstleistungGesellschaftm.b.H.,Vienna 100.00 70,040 2012MH54ImmobilienanlageGmbH,Vienna 100.00 26,322 2012NEUEHEIMATGemeinnützigeWohnungs-undSiedlungsgesmbH,Linz 99.81 110,107 2012NeueHeimatOberösterreichHoldingGmbH,Vienna 90.00 59,212 2012OMNIASIGVIENNAINSURANCEGROUPS.A.,Bucharest 98.56 42,595 2012PassatRealSp.zo.o.,Warsaw 100.00 2,797 2012PFGHoldingGmbH,Vienna 89.23 113,271 2012PFGLiegenschaftsbewirtschaftungsGmbH&CoKG,Vienna 92.88 53,704 2012Poist’ovnaSlovenskejsporitel’ne,a.s.ViennaInsuranceGroup,Bratislava 95.00 30,353 2012PojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup,Pardubice 95.00 133,417 2012Privatejoint-stockcompanyInsuranceCompany“UkrainianInsuranceGroup“,Kiev 100.00 13,138 2012PrivateJoint-StockCompany“JUPITERLIFEINSURANCEVIENNAINSURANCEGROUP“,Kiev 97.80 3,736 2012PRIVATEJOINT-STOCKCOMPANYUKRAINIANINSURANCECOMPANY“KNIAZHAVIENNAINSURANCEGROUP“,Kiev 99.99 11,572 2012


Share in capital Last in % (controlling equity annual financialACCouNtING uNIt holding pursuant to IfRS) (thous. euR) statementPROGRESSBeteiligungsges.m.b.H.,Vienna 60.00 15,278 2012ProjektbauGesmbH,Vienna 100.00 19,558 2012ProjektbauHoldingGmbH,Vienna 90.00 21,327 2012RaySigortaA.S.,Istanbul 94.26 38,299 2012S.C.BCRAsigurarideViataViennaInsuranceGroupS.A.,Bucharest 92.36 26,150 2012SECURIAmajetkovosprávnaapodielovás.r.o.,Bratislava 100.00 9,400 2012SeniorenResidenzFultererparkErrichtungs-undVerwaltungsGmbH,Innsbruck 100.00 4,356 2012SeniorenResidenzVeldidenaparkErrichtungs-undVerwaltungsGmbH,Innsbruck 66.70 8,869 2012SIGURIAEMAHDEVIENNAINSURANCEGROUPSh.A.,Tirana 87.01 11,000 2012SparkassenVersicherungAGViennaInsuranceGroup,Vienna 95.00 529,787 2012SVZGmbH,Vienna 100.00 26,429 2012SVZIGmbH,Vienna 100.00 26,429 2012TBIBULGARIAEAD,Sofia 100.00 41,089 2012TBIHFinancialServicesGroupN.V.,Amsterdam 100.00 259,092 2012UNIONViennaInsuranceGroupBiztositóZrt.,Budapest 100.00 33,168 2012V.I.G.ND,uzavřenýinvestičnífonda.s.,Prague 100.00 124,209 2012Vienna-LifeLebensversicherungAktiengesellschaft,Bendern 100.00 11,502 2012VIGFUNDuzavřenýinvestičnífond,a.s.,Prague 100.00 99,955 2012VIGREzajišťovna,a.s.,Prague 100.00 127,034 2012VIGREALESTATEDOO,Bělehrad 100.00 12,890 2012VIGRealEstateGmbH,Vienna 100.00 71,494 2012VIG-CZRealEstateGmbH,Vienna 100.00 71,431 2012VLTAVAmajetkovosprávníapodílováspol.sr.o.,Prague 100.00 5,134 2012WGPVHoldingGmbH,Vienna 100.00 77,585 2012WIENERSTÄDTISCHEBeteiligungsGmbH,Vienna 100.00 853,823 2012WIENERSTÄDTISCHEFinanzierungsdienstleistungsGmbH,Vienna 100.00 847,239 2012WIENERSTÄDTISCHEVERSICHERUNGAGViennaInsuranceGroup,Vienna 99.90 937,962 2012WienerVereinBestattungs-undVersicherungsserviceGesellschaftm.b.H.,Vienna 100.00 1,624 2012WSVImmoholdingGmbH,Wien 100.00 169,178 2012


Share in capital Last in % (controlling equity annual financialACCouNtING uNIt holding pursuant to IfRS) (thous. euR) statementCompanies consolidated by the equity methodAISServis,s.r.o.,Brno 100.00 2,594 2012Benefita,a.s.,Prague 100.00 619 2012CeskaKooperativaLondonLtd.,London 100.00 844 2012CPPServis,s.r.o.,Prague 100.00 31 2012CROWN-WSFspol.sr.o.,Prague 30.00 13,791 2012ErstegemeinnützigeWohnungsgesellschaftHeimstätteGesellschaftm.b.H.,Vienna 99.77 205,735 2012Gewista-Werbegesellschaftm.b.H.,Vienna 33.00 56,024 2012GlobalExpert,s.r.o.,Pardubice 100.00 553 2012HOTELYSRNI,a.s.,Prague 72.43 7,678 2012KámenOstromeř,s.r.o.,Ostroměř 100.00 251 2012KIP,a.s.,Prague 100.00 9,027 2012MedialBeteiligungs-Gesellschaftm.b.H.,Vienna 29.63 33,482 2012Mělnickázdravotní,a.s.,Prague 100.00 4,846 2012NeulandgemeinnützigeWohnbau-Gesellschaftm.b.H.,Vienna 50.12 62,129 2012SIMMOAG,Vienna 10.04 500,060 2012SanatoriumAstoria,a.s.,KarlovyVary 75.06 4,031 2012SOZIALBAUgemeinnützigeWohnungsaktiengesellschaft,Vienna 50.12 264,687 2012SURPMO,a.s.,Prague 100.00 1,034 2012TECHGATEVIENNAWissenschafts-undTechnologieparkGmbH,Vienna 60.00 31,388 2012Unigeo,a.s.,Ostrava-Hrabová 100.00 6,586 2012UrbanbauGemeinnützigeBau-,Wohnungs-undStadterneuerungsgesellschaftm.b.H.,Vienna 50.12 89,331 2012

unconsolidated companies AkcionarskodrustvozazivotnoosiguranjeWienerStädtischePodgorica,Podgorica 100.00 1,130 2011AREALISLiegenschaftsmanagementGmbH,Vienna 50.00 403 2011BBC-BuildingC,s.r.o.,Prague 100.00 18,884 2012Beteiligungs-undImmobilienGmbH,Linz 25.00 14,085 2011


Share in capital Last in % (controlling equity annual financialACCouNtING uNIt holding pursuant to IfRS) (thous. euR) statementBeteiligungs-undWohnungsanlagenGmbH,Linz 25.00 136,081 2011BulstradHealthInsuranceAD,Sofia 97.00 998 2011CAPITOLSpolkazo.o.,Warsaw 100.00 668 2011DIRECT-LINEDirektvertriebs-GmbH,Vienna 100.00 43 2011EBSWohnungsgesellschaftmbHLinz,Linz 99.99 24,281 2011EXPERTASchadenregulierungs-Gesellschaftm.b.H.,Vienna 100.00 853 2011GEOHOSPITALSLLC,Tiflis 100.00 25,289 2012HORIZONTPersonal-,Team-undOrganisationsentwicklungGmbH,Vienna 100.00 202 2011JointStockInsuranceCompanyWINNERLIFE-ViennaInsuranceGroupSkopje 100.00 2,735 2011ÖsterreichischesVerkehrsbüroAktiengesellschaft,Vienna 36.58 134,563 2011PACDoverieAD,Sofia 92.58 17,366 2011PalaisHansenImmobilienentwicklungGmbH,Vienna 43.26 16,120 2011PFGLiegenschaftsbewirtschaftungsGmbH,Vienna 74.64 47 2011RenaissanceHotelRealbesitzGmbH,Vienna 40.00 1,235 2011RISKCONSULTSicherheits-undRisiko-ManagementberatungGesellschaftm.b.H.,Vienna 51.00 551 2011Schulring21BürohausErrichtungs-undVermietungsGmbH&CoKG,Vienna 100.00 4,812 2011Schulring21BürohausErrichtungs-undVermietungsGmbH,Vienna 100.00 14 2011SeniorenResidenzgemeinnützigeBetriebsgesellschaftmbH,Vienna 100.00 462 2011TowarzystwoUbezpieczennaZycie“Polisa–Zycie“SpolkaAkcyjna,Warsaw 96.49 7,166 2011UntereDonaulände40GmbH&CoKG,Vienna 100.00 13 2011UntereDonaulände40GmbH,Vienna 100.00 15 2011VBV-BetrieblicheAltersvorsorgeAG,Vienna 23.56 48,854 2011Versicherungsaktiengesellschaft“Kupala“,Minsk 98.26 1,901 2011ViennaInsuranceGroupPolskaSpolkazograniczonaodpowiedzialnoscia,Warsaw 100.00 5,914 2011ViennaInternationalUnderwritersGmbH,Vienna 100.00 108 2011WILAGmbH,Vienna 100.00 Established2012WNHLiegenschaftsbesitzGmbH,Vienna 100.00 Established2012WohnungsanlagenGesellschaftm.b.H.,Linz 100.00 231,852 2011WSVVermögensverwaltungGmbH,Vienna 100.00 Established2012


B. CONCLUSION

WithregardtothelegalrelationsbetweentheCompilerandrelatedpersonsthatwehavereviewed,itisclearthattheCompilerhas

notsufferedanyinjuryasaresultofagreements,otherlegalactsorothermeasurestaken,adoptedorconcludedbytheCompiler

inthefinancialyear2012intheinterestoforattheinitiativeofindividualrelatedpersons.

Pardubice,4February2013

Pojišťovna České spořitelny, a.s., Vienna Insurace Group

RNDr. Petr Zapletal, MBA Ing. Jaroslav Kulhánek Ing. Libor MánekChairmanoftheBoard Vice-chairmanoftheBoard Boardmember


DESCRIPTION OF THE RELATIONS TO THE CONTROLLED PERSONS: VIENNA INSURANCE GROUP AG WIENER VERSICHERUNG GRUPPE ANNEX NO. 1 TO THE REPORT ON RELATIONS

1. AGREEMENTS1.1. Sales services

IntheaccountingperiodtheCompilerhasprovided/receivedservicesonthebasisofagreementsenteredintoinpreviousaccoun-

tingperiodsorinthecurrentaccountingperiod:

Name of contract

AgreementonCooperationwhenusingbuildingNo.115andNo.1400inPardubiceNo.02/10

Agreementonsublet-tingnon-residentialspacesforaspeci-fiedperiod,inthewordingofAddendumNo.9of5.6.2012andAddendumNo.10of25.10.2012(No.129/04)

Contracting party

Kooperativapojiš-ťovna,a.s.,ViennaInsuranceGroup,Templová747,11001Prague


Date concluded

20.1.2010

10.12.2004

effective date

1.1.2010

2.1.2004

Subject of the contract

Regulationofmutualrightsandobligationswhenusingnon-residentialspaceinbothpropertiesservingbothparties

RentingofofficesNos.241,361and431withatotalfloorspaceof1378,74m2inthebuildingatnám.Republiky1400,Pardubice

Note


Name of contract

Agreementonsublettingnon-residentialspaceNo.01/10(foraspecifiedperioduntil30.9.2013–subletterKooperativa)

Liabilityinsurancefordamagecausedbyvehicleoperation

InsurancepolicyNo.2268707823



InsurancepolicyNo.2060001407aboutsupplementaryinsurance–H73inthewordingofsupplements1to31

Contracting party


Kooperativapojišťovna,a.s.,Templová,747,11001Prague




Date concluded

20.1.2010

17.12.1999

29.2.2012

16.2.2011

30.12.2010

29.10.2010

effective date

1.1.2010

from1.1.2000

1.3.2012until28.2.2015

1.3.2011until29.2.2012

1.1.2011until31.12.2013

1.11.2010


RentofofficeNo.371,withatotalareaof298,22m2atnám.Republiky1400,Pardubice

Compulsorycorporatevehicleinsurancepolicy

Corporatevehicleaccidentinsurance

Corporatepropertyinsuranceandliabilityinsurancepolicy

VehicleinsuranceNA100PRO–thirdpartyaccident

Note


Name of contract


AgreementonsettlementofthecostsincurredinconnectionwithcarryingoutthedutiesofamemberoftheBoardofDirectorsrefNo.64/2011

Agreementoncostsharing

Contracting party




Date concluded

22.7.2011

30.6.2011

16.12.2010

effective date

1.8.2011until30.7.2014

1.1.2011

1.1.2011


GroupliabilityinsuranceforemployeesofPojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroup,fordamagecausedwhilstcarryingouttheirprofession

Thesubjectoftheagreementisregulationoftheconditionsforcostaccounting

Outsourcingintheareasof:–internalaudit,

includingthecontinuousmonitoringofthecontrolandmonitoringsystem;

–informationtechnologies

–processingselectedsalaryadministrationactivities

Note


Name of contract

LicenseagreementMOSES102/07

QuotasharereinsuranceAgreement–Personalaccidentbusiness

Generalconditions(43/11)Specialconditions(44/11)

SAPCPmaintenanceandlicences

ServiceagreementMoSesKnow-howtransferSparkassenVersicherungAG

Contracting party

SparkassenVersicherungAktiengesellschaft

VIENNAINSURANCEGROUPAGWienerVersicherungGruppe

VIENNAINSURANCEGROUPAGWienerVersicherungGruppe

SparkassenVersicherungAGViennaInsuranceGroupWiplingerstrasse36-38,1010Vienna,Austria

Date concluded

14.11.2007

10.5.2011

3.5.2012

30.6.2009

27.9.2011

effective date

1.10.2007

1.1.2011

1.1.2012

1.1.2010

1.7.2011


LicenceandmaintenancefortheMOSESsystem

50%ofthequotashareforaccidentinsurance

LicensesandmaintenancefortheSAPsystemmod.CP

AgreementonsupportandtrainingforPČSworkersintheuseofprojectionsoftware

Note


1.2 Agreement on Mediating Activities

TheCompilerhasenteredintothefollowingAgreementonMediatingActivities,onthebasisofwhichitprovidedthefollowing:

Name of contract

Agreementonexclusivecommercialrepresentation,No.4600-400500/01-2005-A(134/04)

Agreementoncommercialrepresentation

Contracting party



Date concluded

29.12.2004

1.4.2010or22.12.2011

effective date

1.1.2005

1.4.2010or1.1.2012


Mediatingthesaleofnon-lifeinsurance

MediatingthesigningofinsurancepoliciesforComprehensiveInsuranceforParticipantsofPensionSchemes,i.e.FLEXILifeAssurance

Note

AddendumNo.6–pilotsaleofCarInsuranceČSproductCS3witheffectfrom16.1.2012AddendumNo.7–rightsandobligationsofparticipants,salesovertheinternetwitheffectfrom1.9.2012

SalebymeansofthecompanyKapitol,22.12.2011newcontractconcludedwithsalesextendedtoFLEXILifeAssurancewitheffectfrom1.1.2012


Comments:

Allrelationsreferredtointhisannexhavearisenbetweenrelatedpersons,thosebeingPojišťovnaČeskéspořitelny,a.s.,Vienna

InsuranceGroupandtheVIENNAINSURANCEGROUPAG,WienerVerischerungGruppe.Whenenteringintotheserelations,the

lawsinforceintheCzechRepublicwererespectedandthepricesweredeterminedwithregardtotheprovisionsofthelawon

incometax,i.e.atnormalmarketpricesatthetimeofenteringintothesecontractualrelations.Duringtheaccountingperiodnot

oneofthecontractingpartiesappliedforanypropertydamage.

PursuanttoActNo.38/2004Coll.,insurancemediationisgovernedinthecontractualrelationsbydefiningthemutualrightsand

obligationsofthecontractingparties,withthecurrentdefinitionoftheconditionsfortheprocess,aclaimandthepaymentof

feesforservicesprovidedrelatedtosellinginsurance.Partoftheseagreementsisauthorisationgrantedbytherelatedperson

forprovidingtheseservicesundertheconditionslaiddownbytheabove-mentionedact.

Annual Report 2012INon-financialSection 111

Non-financial Section

1. FURTHER FORESEEABLE DEVELOPMENTS IN THE COMPANY’S ACTIVITIESWith its written premiums Pojišťovna České spořitelny, a.s.,

ViennaInsuranceGroup,(hereinaftertheCompany)holdsthird

placeinthelifeassurancemarket.

TheCompany’slong-termbusinessstrategyisgroundedinthe

managementandplanningofproductinnovations,buildingloy-

altyamongourclientsandbusinesspartners,increasingthe

stabilityoftheinsuranceportfolioandcontinuouslyimproving

the client service for business partners and the end-consu-

mersofinsuranceservices.

Further developmentwill be led by an attempt to ensure the

demands for continuously meeting the Company’s business

objectivesand itsfinancialstability.Meeting this taskwillbe

verychallenging.TheCompany’sactivityislimitedbytheever-

growingcompetition,bothasconcernsproductsinthecontext

oflifeassurance,aswellasinthefieldofsubstitutionproducts,

whichareprovidedintheframeworkofimplementingthepen-

sion reform. The economic situation has been worsening for

some timenow. This is reflected in the lowest interest rates

ever,whichreducestheinvestmentattractivenessofthepro-

ductsofferedandincreasesthepressureonthecostsalloca-

ted.Thisenvironmentisdeterminedintermsoftighterregula-

tionof the insurance industryandrapidlyevolving legislation.

In themedium term, theCompanywill have to dealwith the

approved reforms in taxation, thepensionandhealthsystem

andwithanamendmentoftheCivilCode.


In2012theCompanycontinuedwithitscommunicationsbased

ontheconceptof“Welikechanges”,themainfootingofwhichis

theFLEXILifeAssuranceproduct.Thephilosophyofthisproject

willchangetheformof“enteringintoaninsurancecontract”used

sofarandwillreplaceitwithanewconcept,basedontheconcept

of“openinsurancecontracts”.Inaddition,in2012theCompa-

ny’scommunicationsputagreateraccentonthetrulyseriousris-

ksassociatedwithnormallife,and,inassociationwiththis,revi-

sedthetermsofsettlinginsuranceclaimsinfavouroftheserisks.

Attheendof2012,therewerechangesintheproductssothat

theseproductscomplywiththerequirementslaiddownbythe

EuropeanCourtofJusticeDecisionontheunificationofprices

forinsuringmenandwomen.Atthesametimeasthischange

therewerecertainotherchangestoproducts,inparticular:dou-

bleindemnityintheeventofdeathinatrafficaccident,achoice

ofinsuranceforseriousdiseases,insuranceoflong-termcare

fordisabilityinsuranceandmore.

TomaintainloyaltyandresponsibilitytheCompanyiscontinuing

intheloyaltyprogramme,whichencouragesitsclientstowards

a long-term partnership. This programme provides no-claims

bonuses. For the first timesince introducing thisprogramme

this year clientswill be informedabout thestatusof thebo-

nusesfor2012intheirinsurancecontracts.

The Company is constantly innovating its insurance manage-

mentprocedures.Proofofthiscareistheongoingcomputeris-

ationofinsurancecontractadministration.LastyeartheCom-

pany further developed these innovations, which were aimed

atstreamlining theacquisitionprocessby the introductionof

electronicinsurancecontractformsforourbusinesspartners.

AnewversionoftheInternetInsuranceCalculatorwasprepa-

red,whichallowsourclientstosetupindividualinsurancetai-

loredtotheirrequirements.AfterarrangingwithČeskáspořitel-

na,itslargestdistributor,theCompanyaddedanapplicationto

oneofitsmostpopularservices“SERVIS24”.Thisapplication

supportsinsurance.Inthismannerourjointclientsobtaincom-

prehensive information about their insurance, they canmake

selectedchangestoinsuranceand,through“E-document”and

“E-invoice”,gettherequisitedocumentsandevenpayinsuran-

cepremiumsinthismanner.

Theentireprocessofinnovatinginsurancemanagementisfo-

cusedonincreasingproductivity,savingtimeandmoney,inclu-

dingraisingthequalityoftheoutputsrelatedtoprocessingin-

surancecontracts.TheCompanywillcontinueinthistrendin

thenextperiod.

113Annual Report 2012INon-financialSection

2. ACTIVITIES IN THE FIELD OF RESEARCH AND DEVELOPMENTDue to the nature of its activities, the Company has limited

options in the field of research and development. Therefore,

developmentconcentratesonintegratingnewinformationtech-

nologiesandformsofcommunicationintotheprocessofprovi-

dinginsuranceservices.

3. ENVIRONMENTAL PROTECTION AND LABOUR RELATIONS

ThenatureoftheCompany’sbusinessputstheminimumbur-

denontheenvironment.Duringitsactivitiesitmeetstherequi-

rementsplacedonitbyCzechlaw.Despitethelimitedoptions,

giventhesubjectmatterofthebusiness,theCompanyalways

bearstheissueofenvironmentalprotectioninmind.Lastyear

webegansortingwasteanddisposingof itdependingon its

character.Averysignificantdecisionwasmadeinthefieldof

renewingtheITinfrastructurewiththeaimofnotonlyensuring

ithasadequatecapacityandquality,butalsowithregardtofull

recyclingandsignificantenergysavingsinrunningtheCompany.

Intheareaoflabourrelations,theCompanystrivestobeamuch-

sought-afteremployer.Thereforeitalwayspaysagreatdealof

attention todeveloping itsemploymentpolicyandsocialpro-

grammes,withtheaimofbeinganattractiveemployer inthe

labourmarket.TheCompanyusesmodernmethodsforincen-

tive systems in human resourcesmanagement,with the use

ofsurveysforbonuses,carriedoutincooperationwiththeHay

Group.TheCompanyprovidesemployeeswithawiderangeof

financialandnon-financialbenefits.TheCompanycontinuously

assessestheconditionsoftheworkingenvironment,tomeet

theconditionsforfulfillingworktasksandcomplyingwithsafety

atworkprinciples,includingregularandcontractuallyensured

healthcareforitsemployees.Employeetrainingandprofessio-

nal development is oneof theCompany’s developmental pri-

orities. The company has introduced a system for assessing

anddevelopingemployees,onthebasisofwhichitsstaffare

allowed various forms of education, including increasing and

broadeningtheirqualifications.

4. THE COMPANY’S ORGANISATIONAL BODIES ABROADThecompanyhasnoorganisationalbodiesabroad.

5. ADDITIONAL REQUIREMENTS UNDER SPECIFIC LEGISLATION The Company meets the requirements for the subject of bu-

siness–insurance–inparticular,thoselaiddownbytheIns-

uranceAct,or,bytheActonInsuranceIntermediariesandon

IndependentLossAdjusters.Therearenomorespecificrequi-

rementsfortheCompany’sactivities.


PojišťovnaČeskéspořitelny,a.s.,ViennaInsuranceGroupPardubice,nám.Republiky115,53002CompanyNo.:47452820Infoline:+420800207207E-mail:[email protected]:www.flexi.cz

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