Report of the Board of Directors

The main goal of Komerční pojišťovna is to offer a broad range of insurance products and financial tools to provide protection to its clients and support them in achieving their personal wishes and goals. Komerční pojišťovna uses a single license for the delivery of services within the whole EU and cooperates with partner companies in the Société Générale Group in Bulgaria, Romania and Germany.

The business strategy of Komerční pojišťovna is based on four pillars:


Bank-insurance business model in cooperation with Komerční banka

  • – Savings and unit-linked life insurance
  • – Risk life insurance
  • – Non-life insurance

Cooperation with other partners in the KB Financial Group – Modrá pyramida stavební spořitelna, ESSOX, Penzijní fond KB

  • – Savings and unit-linked life insurance
  • – Risk life insurance
  • – Non-life insurance

External business partners

  • – Risk life insurance

International cooperation within the Société Générale Group

  • – Non-life insurance

Macroeconomic Overview 2011

In 2011 the Czech economy reached a year-on-year growth of 1.7% (measured by GDP).

All in all, 2011 was characterized by unemployment rate stabilization; however, it still remains high, having reached 8.6 % in December 2011.

Inflation was below 2% during the first nine months of 2011 and reached 2.4% toward the end of the year. The average inflation rate was 1.9%.

While the revenues from Czech government bonds were decreasing in Q1 to Q3 2011, the trend changed in Q4, when their revenues started growing slowly once again.

Development of the Insurance Market in the Czech Republic

After several years of growth, the total written premium decreased by 0.3% year-on-year in 2011. However, the life insurance market as such kept growing, even though at a slower level than in the years before, namely 1.9% year-on-year.

The interest of clients in products with a single premium payment was rather poorer in 2011 and, after a major boost in 2010, single-paid life insurance recorded a year-on-year decline of 2.4%. The total premium for life insurance grew year-on-year to more than CZK 45.3 billion.

KP's Position in the Insurance Market

In spite of the prevailing difficult economic situation in the Czech Republic, Komerční pojišťovna managed to reach its planned sales targets for savings as well as risk insurance products in 2011.

In the long run, Komerční pojišťovna achieves excellent results particularly thanks to its offer of competitive products, which provide special valuation to their clients despite the unstable situation on the financial markets. Depending on the product type, Komerční pojišťovna ensured an attractive appreciation of 2.4 to 3.0% for its clients in 2011.

Komerční pojišťovna did also well to increase its sales of products outside the group of Komerční banka. 2011 was a successful year in terms of distribution of KP's risk life insurance within the networks of external distributors, marking significant growth of total written premiums.

In the international insurance market, KP continued in its successful cooperation with SG Group companies. The volume of total written premiums on non-life insurance products offered by foreign partner companies was also much higher year-on-year.

In 2011, Komerční pojišťovna continued in a trend triggered in the previous years and claimed a strong position in the life insurance market, where it ranked fifth, with a 9.9% market share, in the volume of written premiums during the first three quarters.

At the end of 2011, the Czech Insurance Association adjusted its statistical calculations and this change in reporting methodology had a profound effect on the general ranking and the life insurance market shares of the individual insurance companies. According to the new rules, only 10% of the total volume of written single premiums is included in the statistics annually. Since single premiums account for a major part of KP's total written premiums, Komerční pojišťovna ranked 10th in the life insurance segment.

In 2011, KP created a reserve for bonuses and discounts in the amount of CZK 174 million for the clients' future profit sharing, see clause 2.7 in the Notes to the Financial Statements.

For non-life insurance, Komerční pojišťovna recorded a 11.9% decline vs. 2010 in 2011. This downward trend was especially due to a change in Komerční banka's product offering of travel insurance as a benefit attached to payment cards. Komerční pojišťovna therefore launched interesting projects that promised to increase written premiums for non-life insurance, e.g. new non-life insurance products tied to credit cards.

Sales through distribution channels other than Komerční banka also recorded a year-on-year increase. The volume of written premiums for risk life insurance sold by MPSS increased by 15%. Compared to 2010, the total premiums doubled, particularly thanks to the sales of the unit-linked life insurance Vital Invest. In addition, the total written premiums sold by ESSOX also saw an increase, namely by 8%.

Product Portfolio and New Products in 2011

2011 brought several new and interesting products by Komerční pojišťovna. In April the company launched an insurance product sold together with Komerční banka's credit cards Lady karta and A karta, which help their holders protect their shopping.

In April 2011 Komerční pojišťovna introduced its new product Vital Invest also in the distribution network of MPSS financial advisors. The clients can now purchase this product not only in KB offices, but also from MPSS advisors.

The sale of a new accident insurance product MojePojištění plateb kicked off in July 2011. In case of unexpected events, regular expenditures paid from the client's current account each month are covered on the client's behalf.

In cooperation with KB, Komerční pojišťovna redesigned its insurance product Merlin, offered along with payment cards. The product now covers all of the client's cards and offers new, extended coverage that even includes personal things and selected bank fees.

The risk life insurance for Komerční banka's mortgage loans was also redesigned; at present the product covers the needs of a larger group of clients.

In 2011, Komerční pojišťovna continued extending its offer of Forte and Optimo guaranteed funds.

1. Unit-linked and capital life insurance - Vital product family

Vital Invest – unit-linked life insurance

This is a modern and flexible product that not only protects the client, but also brings an innovative guarantee of return on investment in case of the client's death. This guarantee ensures the return of invested funds to the client's relatives even in case of significant market fluctuations. In Vital Invest, KP also offers a guaranteed appreciation fund with the yield of 2.7% in 2011. Our offer also includes the Forte and Optimo guaranteed funds, some of which offer not only the possibility to participate in the yields of capital markets, but also the certainty of a guaranteed yield.

Brouček - children's unit-linked life insurance

The product allows parents to save an amount necessary for their children to start their adult life and, at the same time, it gives them an opportunity to insure themselves and their child against unexpected events. Assistance services are included in the product as well.

Program Vital – life insurance with an employer's contribution

This capital life insurance for employees offers an interesting appreciation and tax benefits. This programme allows companies and their employees to play an active part in their pension insurance to improve their standard of living at a higher age. It is up to each employer to decide which group of employees should be motivated and what the amount for motivation should be to increase their loyalty to the company. For this product it is possible to take an opportunity to arrange insurance contracts directly with the employer.

Vital Premium – savings life insurance for KB's private banking clients

KB's key clients are offered by Komerční pojišťovna a very flexible savings product with an attractive guaranteed yield. In 2011, the value of the clients' funds increased by 3.0%.

2. Risk-oriented insurance products

Risk life insurance

Risk life insurance covers the clients' crucial risks and helps them to overcome financial losses due to death, disability pension, long-term disease or involuntary loss of job.

Risk life insurance for loans

This insurance option protects the client against an inability to repay a loan. The client can decide which of the four main life risks he or she wants to be insured against. In the case of death or disability, KP shall pay the balance of the loan instead of the client; in case of incapacity for work or loss of job, KP shall pay the client's loan instalments.

Merlin, Vega and Super Vega – insurance against loss and misuse of payment or credit cards

Today, each payment card can be fully secure if it is insured. At a very good price, the card is protected against abuse, plus the insurance covers any costs related to a loss of keys or identification documents. It also covers the purchase of a new mobile phone if the client's old phone is misused. In November 2011 the product Merlin was redesigned and now offers also insurance of personal things and coverage of selected bank fees in KB. The client does not bear any loss participation. KP offers this type of product also to other SG Group companies within the European Union.

Profi Merlin – insurance against loss or misuse of payment or credit cards for entrepreneurs

Insurance of credit and payment cards also focuses on the segment of entrepreneurs and companies. At a favourable price, the client can obtain insurance against card abuse, payment of stop-listing fees, stolen cash withdrawn from an ATM, business proceeds stolen on the way to a KB branch or stolen or misused mobile phone. In November 2011 the product Profi Merlin was redesigned and now offers also insurance of personal things and coverage of selected bank fees in KB. The product is arranged without any loss participation.

MojePojištění plateb – payments insurance

The payment insurance MojePojištění plateb provides for money needed to pay regular monthly expenses from the client's current account kept in Komerční banka in case of a long-term incapacity for work, disability, loss of job or sudden death. The amount of regular payments is determined on the basis of regular payments made from the insured person's account, such as rental, electricity, phone bills etc.

Profi pojištění plateb - payments insurance

The payment insurance Profi pojištění plateb provides for money needed to pay regular monthly expenses from the client's corporate account kept in Komerční banka in case of a long-term incapacity for work, disability or sudden death.

Travel insurance

Komerční pojišťovna covers a full range of risks associated with travelling, i.e. medical expenses, loss of luggage, accident and liability for damage. KP provides travel insurance also within the framework of payment and credit cards of Komerční pojišťovna, and also for partners from the SG Group within the EU.

Risk life insurance for credit cards and consumer loans

KP offers coverage of the risk of death, permanent disability, incapacity for work and loss of job for the owners of credit cards and clients who take advantage of consumer loans from KB and ESSOX.

Insurance for credit cards Lady karta and A karta

This insurance is an automatic part of a credit card, protects the clients' shopping and mitigates the impacts of any unforeseeable events. The product covers insurance of purchased goods, an extended guarantee, purchase of goods on the Internet and insurance of the lowest amount. The ticket cancellation insurance reimburses the costs of a cultural or any other event if the clients cannot participate for unforeseeable reasons. As part of their credit card, the clients can also enjoy home assistance services and the Lifestyle service, which provides ticket reservation for cultural and sport events and can help order gifts. The owners of Lady karta can also take advantage of purse insurance, which insures their purse and its content against theft and robbery.

Comments on the Financial Results

Net profit

In 2011, according to Czech Accounting Standards, the net profit of Komerční pojišťovna reached CZK 251 million. According to International Financial Reporting Standards used for consolidation purposes with KB, the net profit amounted to CZK 166 million.

Gross written premiums

In 2011, the gross written premiums amounted to CZK 6,851 million. In 2011 Komerční pojišťovna was particularly successful in life insurance operations, where KP collected premiums amounting to CZK 6,593 million.

In 2011 Komerční pojišťovna continued in its international cooperation in non-life insurance. The volume of written premiums within the framework of international cooperation tripled year-on-year.

Structure of gross written premiums

The structure of gross written premiums was similar to 2010. Savings life insurance, especially products with a guaranteed appreciation and Forte and Optimo funds offered within Vital Invest, accounted for the biggest part. These products remain very attractive for the clients in terms of appreciation. Risk life and non-life insurance grew slightly in 2011.

Portfolio structure

As regards the basic structure of the investment portfolio, there were no significant changes and Komerční pojišťovna continued focusing on conservative titles most of all. Fixed-income bonds account for 95% of the portfolio, making it possible to guarantee a fixed yield to the clients. The Czech Republic's government bonds constitute a major part of the portfolio (44%), followed by bonds issued by banks and corporations located within the EU, time deposits in bank, and shares.


As at 31 December 2011, total equity amounted to CZK 1,347 million, a 2.6% decrease compared to 2010. Total assets at 31 December 2011 reached CZK 26,257 million, i.e. a year-on-year growth of 21%.

Technical reserves

As at 31 December 2011, the volume of technical reserves reached CZK 24.5 billion, which marks a 23% increase year on year.

Human resources

Mobility is one of the crucial tools for developing SG Group's personnel. The rules of mobility of career management in KP were introduced in 2011. At the same time, specific aids were created for managers to facilitate their communication with those employees who expressed their interest in intra-SG mobility. As part of the controlled process, five employees were given an opportunity of further professional development at a new position, one of them in SOGECAP's new office in Poland. At the same time, Komerční pojišťovna welcomed new colleagues from other SG Group companies.

Several of KP's senior managers could participate in a management development programme along with their colleagues from SG Insurance. This development programme strengthens managerial skills using the MBTI diagnostics and the development of informal relationship with managers worldwide. Within this programme, the managers participate in seminars and development projects. The first training session took place in autumn 2011 and another one is scheduled for spring 2012.

At the beginning of the year, KP identified talented employees with a high managerial potential and, in cooperation with KB, engaged them in a two-year development programme. Subject to compliance with very tough criteria, two of Komerční pojišťovna's employees were already approved for participation in Komerční banka's exclusive development programme Challenging.

The development of the HR Partner project continued in 2011. This especially involved improvement of HR Partners' knowledge concerning operation of the company's individual sections, improvement of long-term relationships with our employees and, last but not least, enhancement of specialized expertise.

In spring, our employees had a second chance to take part in an international employee satisfaction survey SG Barometer. The survey covered 83% of KP's personnel, which marks a high degree of commitment to the employer. Based on the survey and ensuing focus group discussions with our employees, an action plan was drawn up and the results were presented to the staff.

Internal processes

In the course of the year, internal processes were being adequately adapted to the implementation of new products as well as to the modifications of existing products; this especially involved the addition of a new distribution channel for the sale of unit-linked life insurance – stavební spořitelna Modrá pyramida, a subsidiary of Komerční banka. Other new features comprised an insurance cover for the payment cards Lady karta and A karta and a redesign of the product Patron – MojePojištění plateb.

From the point of view of increased client comfort, the biggest change in operational innovation consisted in a presentation of the insurance portfolio for client at Komerční banka's web portal MojeBanka. Other process innovation projects undertaken in 2011 included most importantly an automated transfer of non-technical changes initiated in Komerční banka's offices, which eliminates their manual input in Komerční pojišťovna's back office. Additional innovation projects involved completion of a modification of the current reminder regime, consisting primarily in the implementation of soft collection techniques.

To ensure a consistent form and unified level of detail in the descriptions of internal processes, Komerční pojišťovna started using the tool “Enterprise architect” in 2011. Its implementation utilized experience of Komerční banka.

As part of our client service improvement efforts, a CRM project oriented at creating a single tool to serve clients through a telephone centre was undertaken in 2011. This system allows our operators to work with a full view of the client's portfolio of insurance contracts, ensuring maximum comfort and speed of response to the client.

In the course of the year, much of the company's internal capacity focused on improving and refining our distribution services through external partners among insurance brokers. A new form of communication with distributors was implemented and new formats deployed for executing insurance contracts and accelerating their approval process. Moreover, the capacities of our internal support teams focusing on this distribution channel were optimized.

The integration of IT infrastructure in Komerční banka's data centre, implemented in November, brought a major synergic effect. Aside from lower costs in this area, the change also resulted in a significant increase in the quality of security and end user services.

As regards security, Komerční pojišťovna implemented a new business continuity management methodology - “STAMP”, globally coordinated at the level of the financial group Société Générale, which ensures higher efficiency in crisis management.

In Komerční pojišťovna also encompasses environmental protection. KP actively participates in the Green Firm project.

Komerční pojišťovna, part of the Société Générale Financial Group, focuses on life insurance as well as on the sale of other types of insurance that suitably complement the banking and other financial products of its partners within SG Group. KP's products are mostly distributed via KB Group members, especially through the distribution network of KB, but also by the company's external partners among insurance brokers.

Dětské investiční životní pojištění BroučekChildren's unit-linked life insurance Brouček gives parents the possibility to build some capital for their children that is needed for their good start in life as well as the possibility to insure them and their children against unexpected events. It is a unique combination of an attractive financial appreciation and a guaranteed financial security in complicated situations. Brouček is highly variable; you can either save money or enjoy a higher degree of protection.

In 2011, the priorities in human resources management included improvement of the mobility process in KP and, in connection with the introduction of a new operational model for the HR Department, further enhancement of the competencies of HR Partners.