Notes to the Financial Statements for the Year Ended 31 December 2011

1. General Information

1.1. Description of the Business and Principal Activities of the Company

Komerční pojišťovna, a.s., (hereinafter the “Company” or “KP”) was incorporated following its registration in the Commercial Register kept by the Municipal Court in Prague, Section B, File 3362, on 1 September 1995.

The principal operations are as follows

As of 31 December 2011, the Company is licensed to undertake insurance activities, reinsurance activities and activities relating to insurance and reinsurance activities as follows:

1. insurance activities pursuant to Section 13 (1) of the Insurance Act No. 277/2009 Coll., as amended (hereinafter the “Insurance Act”):

2. activities relating to insurance and reinsurance pursuant to Section 13 (1) of the Insurance Act:

Share capital

The share capital amounts to CZK 1,175,397,600 and consists of 6,580 ordinary registered shares with a nominal value of CZK 145,470 in the book-entry form and 3,000 ordinary registered shares with a nominal value of CZK 72,735 in the book-entry form. The Company's share capital is fully paid.

Shareholders as of 31 December 2011

Komerční banka, a.s., having its registered office at Prague 1, Na Příkopě 33/969, 114 07, incorporated with the Municipal Court in Prague, Section B, File 1360, Corporate ID: 45 31 70 54; a 48.99 percent shareholder.

SOGECAP S.A., having its registered office at 50, Avenue du Général de Gaulle, 92093 Paris, La Défense Cedex, identification number: 086380730 R.C.S. NANTERRE; a 51.00 percent shareholder.

Registered Office of the Company

Karolinská 1/650
186 00, Prague 8

The Company has no foreign branch.

1.2. Board of Directors and Supervisory Board as of 31 December 2011

  Position Name
Board of Directors Chairman Stéphane Corbet
Member Zdeněk Zavadil
Member Jiří Koutník
Member Šárka Šindlerová
Member William Hans Chonier
Supervisory Board Chairman Philippe Perret
Member Henri Bonnet
Member Pascal Bied-Charreton
Member Pavel Čejka
Member Martin Kalivoda
Member Jiří Potužil

Acting on behalf of the Company

The Board of Directors acts on behalf of the Company. No less than two members of the Board of Directors act jointly on behalf of the Board of Directors. The act of signing is conducted in such a manner that no less than two members of the Board of Directors attach their signatures to the written or printed name of the Company or the Company's stamp.

1.3. Equity Holdings in Other Businesses

The Company held no equity investments in other businesses as of 31 December 2011.

1.4. Changes and Amendments to the Commercial Register

As of 18 May 2011, the following changes were made:

a) registration of

b) removal of

As of 20 September 2011, Laurent Dunet was removed from the position of Member and Chairman of the Board of Directors.

As of 25 October 2011, the following changes were made:

a) registration of

As of 5 December 2011, the following changes were made:

a) registration of

b) removal of

1.5. Legal Relations

As of the balance sheet date, all of the Company's legal relations comply with the Insurance Act including the related implementation guidance notes. The Company operates both in life and non-life insurance segments.

1.6. Movements in Equity

The ordinary General Meeting held on 19 April 2011:

a) by CZK 33,570 per share for 6,580 pieces of shares having a nominal value of CZK 111,900; i.e. the nominal value changed from CZK 111,900 per share to CZK 145,470 per share.

b) by CZK 16,785 per share for 3,000 pieces of shares having a nominal value of CZK 55,950; i.e. the nominal value changed from CZK 55,950 per share to CZK 72,735 per share.

2. Accounting Policies

2.1. Basis of Accounting

In maintaining its accounting books and records and in preparing the financial statements, the Company complied with Accounting Act No. 563/1991 Coll., as amended, Decree No. 502/2002, which provides implementation guidance on certain provisions of the Accounting Act No. 563/1991 Coll., as amended, for reporting entities that are insurance companies (hereinafter “Decree 502”), and with Czech Accounting Standards for reporting entities that maintain their accounts under Decree 502.

The Company's accounting books and records are maintained in such a manner so as to ensure that the financial statements prepared on the basis of the accounting books and records give a true and fair view of assets, liabilities, equity and the financial position of the Company while complying with the prudence and going concern principles.

The financial statements are prepared on the accruals basis of accounting whereby the effects of transactions and other events are recognised when they occur and are reported in the financial statements of the periods to which they relate. Assets that are not remeasured at fair value and suffered impairment are stated at net recoverable amount.

The reporting currency used in the financial statements is the Czech crown (“CZK”) with accuracy to CZK thousand, unless indicated otherwise. The financial statements were prepared as of and for the year ended 31 December 2011.

2.2. Tangible and Intangible Fixed Assets

Tangible fixed assets include assets with an acquisition cost greater than CZK 40,000 on an individual basis and an estimated useful life exceeding one year. Tangible assets costing less than CZK 40,000 are expensed in the year of acquisition.

Intangible fixed assets include start-up costs greater than CZK 20,000 and other intangible assets with an acquisition cost greater than CZK 60,000 on an individual basis and an estimated useful life exceeding one year. Intangible assets costing less than CZK 60,000 are expensed in the year of acquisition.

In respect of information technologies, the Company invests in research and development; these expenses are principally related to the preparation of development studies and implementation of individual projects.

The Company creates provisions against tangible and intangible fixed assets if the inventory count highlights that their fair value is lower than their carrying value and the impairment is temporary. No provisions were recognised against fixed assets in the year ended 31 December 2011.

Depreciation of fixed assets is recorded on a straight line basis for accounting purposes. Accounting depreciation is based on the expected useful life of the tangible and intangible assets. The depreciation period is indicated below:

Category of assets Depreciation period in years
Cars 4
Furniture and fixtures 7–10
Software 4
AIA Software 5
Start-up costs 5

As a result of binding statutory requirements regarding the presentation of financial statements of insurance companies, the components of fixed assets shown above are classified on the face of the balance sheet as of 31 December 2011 as follows:

The Company recognised tax depreciation charges for tangible and intangible assets in 2011.

2.3. Financial Placements

Deposits

Deposits placed with financial institutions are measured at their nominal value upon acquisition. As of the year-end, these assets are remeasured at fair value. The fair value of short-term deposits placed with financial institutions is the nominal value including accrued interest. Deposits denominated in foreign currencies are retranslated into Czech crowns at the ruling exchange rate of the Czech National Bank and any foreign exchange rate difference is included in the valuation. Revaluation is recognised through the profit and loss account.

Debt Securities

Debt securities are stated at cost upon acquisition. Purchased accrued interest income is added to the cost of the investment. The difference between the cost of the jacket of debt securities and their nominal value is recorded to income or expense over the remaining maturity of these securities using the effective interest rate method. Accrued interest income on securities is reflected directly in the relevant account of these securities. The same types of securities are valued using a price determined by the FIFO method. Debt securities denominated in foreign currencies are retranslated into Czech crowns at the ruling exchange rate of the Czech National Bank and any foreign exchange rate difference is included in the fair value remeasurement.

The Company remeasures individual components of financial placements at fair values as of the balance sheet date, excluding the securities held until maturity and issued by an OECD member state (refer to below). The fair value of publicly tradable securities is defined as the value at which the security is traded on the Prague Stock Exchange or quoted by major securities dealers, as appropriate.

The gains or losses from the revaluation of securities are charged against equity (account 404) as all the securities held by the Company are not intended for trading.

The securities held until maturity, which were issued by an OECD member state and the rating of which, stated by at least two internationally recognised rating agencies, was defined at the level of the Czech Republic or higher, have been measured at amortised cost.

Derivatives

As part of the implemented investment strategy, KP hedges cash flows from foreign currency debt securities using cross-currency swaps. The purpose of hedging derivatives is to eliminate the currency risk posed by the holding of foreign-currency debt securities. Pursuant to the current legislation, KP classifies these derivatives as hedging derivatives and the gains or losses from the revaluation of swaps at their fair value are recognised in equity accounts. The fair value of swaps is calculated using the net present value of the fixed future cash flows from these derivatives.

Other Financial Placement Components

The gains or losses from the revaluation of other financial placement components, if any, are recognised in the profit and loss account (accounts 539 and 639).

The structure of the financial placement portfolio follows the obligatory limits set out in Insurance Act No. 277/2009 and Finance Ministry Decree No. 434/2009, which provides implementation guidance on certain provisions of the Insurance Act.

2.4. Receivables

Receivables are stated at nominal value.

Following the analysis of the recoverability of past due debts undertaken by the Company, individual groups of receivables were assigned specific coefficients for provisioning. The Company used coefficients of similar product groups for the newly sold products.

In determining debt provisioning levels, the risk (the number of past due days) attached to all amounts due from a specific debtor is considered to be equal to the risk (the number of past due days) of the oldest of these receivables.

2.5. Permanent or Long-Term Impairment of Assets

At the balance sheet date, the Company assesses whether there is any indication that assets, which are not measured at fair value or assets that are fair valued but the revaluation differences are included in the balance sheet, may be impaired.

2.6. Cash and Cash Equivalents

Cash comprises cash on hand and current bank accounts designed to secure the Company's operations. Term deposits, with the exception of foreign currency term deposits, which are also used to finance the Company's operations, are reported as a component of financial placements.

Cash equivalents comprise labels, meal vouchers, stamps, flexi pass vouchers and Prague public transport tickets.

Cash and cash equivalents are stated at nominal value.

2.7. Technical reserves

The Company records technical reserves pursuant to Insurance Act No. 277/2009, as amended, as follows:

Life Insurance Reserve

The life insurance reserve is created as a sum of reserves calculated under individual life insurance policies and represents the sum of the Company's liabilities net of the value of future premiums. The technical reserve includes the allocated share of profit and the costs associated with insurance administration. The life insurance reserve for traditional life insurance products is calculated using the “Zillmer” method where negative values are substituted with zero.

Unearned Premiums Reserve

The unearned premium reserve represents actual (or estimated as appropriate) written premiums that do not relate to the current reporting period and are calculated using a daily 'pro rata' method of the aggregate written premiums according to the number of days that relate to the current reporting period and to the following reporting periods.

Reserve for Outstanding Claims

The claim reserve, for both life and non-life insurance, consists of a reserve for insurance claims reported but not settled during the year ('RBNS') and a reserve for insurance claims incurred but not reported during the year ('IBNR').

The claim reserve also reflects the amount of the estimated claims handling costs associated with settling claims.

The RBNS is recognised as equal to the sum of reserves for anticipated insurance payments for individual reported, but unsettled claims according to estimated damage amounts arising from claims recorded as of the balance sheet date.

The IBNR is determined using actuarial methods based on an analysis of available information that includes, but is not limited to:

While the Board of Directors considers the balance of the reserve for outstanding claims to be fairly presented on the basis of the information available at the balance sheet date, the ultimate balance of liabilities may differ as a result of subsequent information and events and can result in significant changes in the final amounts. Changes in the reserve balance are reflected in the financial statements for the period in which they occur. The adopted approaches and estimates are assessed on a regular basis.

Reserve for Bonuses and Rebates

The reserve for bonuses and discounts is recorded to cover costs of bonuses and discounts provided to policy holders under insurance policies.

In respect of life insurance, this reserve also reflects a portion of income from financial placements held for anticipated but not yet awarded profit shares.

In 2011, the Company increased, in accordance with Section 63 (2) of the Insurance Act, the reserve for bonuses and discounts by CZK 174 million up to the final amount of CZK 454 million. The amount reflects the obligation of the Company to provide policy holders with relevant insurance claim payments and cannot be used for any other purpose. The Company undertakes to allocate the amount to individual policies by the relevant resolution of the Company adopted with the Company's full authority which complies with the provisions of insurance policies for profit shares in the following years but no later than within eight years from the recognition of this reserve, specifically to those persons who will be be the policy holders of the particular products that stipulate the right for the profit share to to the policy holder as of the last date of the calendar year in which the Company takes such decision.

If the Company does not take the above decision within eight years from the recognition of the reserve, it undertakes to allocate this amount (or its so far unallocated part) to policies (ie products that stipulate the right for the share profit for the policy holder) of individual policy holders who will be the policy holders on the last day of the 8th year from the recognition of the reserve. Each policy holder should receive an amount calculated as an average balance of the reserve of life insurance of the relevant policy holder during the 8th calendar year from the recognition of this reserve for bonuses and discounts/(divided) by the total average value of the reserve of life insurance of these policy holders (ie policy holders of those products that stipulate the right for the profit share to the share holder) during the eighth calendar year from the recognition of the reserve for bonuses and discounts *(multiplied by) the reserve for bonuses and discounts recognised in the year of recognition, or its unpaid part.

The reserve for bonuses and discounts was recognised in addition to the profit shares that were allocated to individual policies and that became part of the reserve of life insurance upon the allocation of shares for 2011.

No part in respect of the similar increases of CZK 165 million and CZK 115 million made in 2010 and 2009, respectively, was used in 2011.

Reserve for the Coverage of Obligations from the Used Technical Interest Rate (Deficiency Reserve)

The Company creates a reserve for obligations resulting from life insurance contracts. At the balance sheet date, the Company undertakes a test of the adequacy of life insurance technical reserves (the “liability adequacy test”) designed to verify the sufficiency of the total sum of amounts of life insurance reserves. The basic testing method is the model of discounted financial cash flows.

The result of the liability adequacy test is the minimum value of liabilities to the policy holders calculated when using the best estimate of the presumptions of the future development of input parameters adjusted for an additional charge reflecting risk and uncertainty.

The reserves are insufficient when the minimum value of insurance liabilities is greater than the amount of life provisions decreased by the corresponding outstanding acquisition costs. If the result of the liability adequacy test shows insufficiency of technical reserves, the Company creates a reserve equivalent to this deficiency.

The methodology for creating and using reserves for the coverage of obligations from the used technical interest rate is in accordance with Special Directive No. 3 of the Czech Society of Actuaries as of 22 September 2003.

Life Insurance Reserve where the Investment Risk is Assumed by the Policy Holder

This reserve is held to cover obligations of the insurance company to the policy holders for the life insurance products where it is the policy holder who bears the investment risk on the basis of the insurance contract; the Company has recognised this reserve since 2006 when the sale of these products began.

The reserve amount is determined as a sum of the liabilities to the policy holders in the amount of their shares of allocated premiums from individual contracts according to the principles specified in insurance contracts.

In compliance with Section 67 (3) of the Insurance Act, a reserve is recognised for a portion of liabilities from the insurance contracts which arise from (a) covering the risk of death and (b) funds placed in the guaranteed fund in accordance with Section 65 of the Insurance Act.

2.8. Reserves for Other Risks and Losses

The Company creates other reserves for risks that are not directly related to its insurance activities.

Specifically, the Company recorded a reserve for anticipated risks and losses associated with legal disputes, a reserve for outstanding vacation days, a reserve for auditing, annual letters to clients, annual report, and a restructuring reserve.

Restructuring Reserve

Following the reporting of significant losses in the year ended 31 December 2001 and in prior years, the parent company initiated a restructuring of the Company in 2002.

Based upon an analysis of anticipated costs resulting from this restructuring, the Company recorded, in 2002 and 2003, a reserve for the portion of those costs that can be recognised in the current period under applicable accounting regulations. This reserve is released to expenses as the actual costs are incurred.

2.9. Payables

Payables are stated at nominal value.

Payables to the policyholders principally comprise insurance premium prepayments and overpayments, and received payments temporary unmatched with the related receivables at the balance sheet date.

2.10. Temporary Assets and Liabilities

Temporary assets and liabilities principally comprise:

2.11. Gross Written Premiums

Gross written premiums include all premiums amounts stated in insurance policies during the period, regardless of whether these amounts relate partly or wholly to the following accounting periods.

Income from written premiums is recognised on an accruals basis by recording a reserve for unearned premiums in accordance with accounting procedures for insurance companies (refer to Note 2.7.).

2.12. Costs of Insurance Claims

Costs of insurance claims are recorded as equal to the amounts awarded for the settlement of claims and also include external costs of the Company incurred in processing claims. Costs of insurance claims are reduced by claims of recourse or other similar claims of the Company. The cost is recognised in the current period when the level of a payable to a client is acknowledged.

The costs of insurance claims (specifically life insurance claims) include not only the claims incurred (non-life insurance, death or endowment in respect of life insurance) but also client payments from capital life insurance accounts and the lump-sum settlement when this insurance is cancelled.

In settling non-life insurance claims the Company cooperates with WILLIS, s.r.o., AXA Assistance CZ, s.r.o., Gras Savoye and Mondial Assistance in respect of organisational, economic and technical advice, including investigations into insured events, preparation of full documentation in support of examining and settling these insured events.

2.13. Acquisition Costs of Insurance Policies

Acquisition costs of insurance policies include all direct and indirect costs incurred in acquiring insurance policies. Acquisition costs of insurance policies principally comprise:

Non-life insurance commissions are deferred in line with the proportion of the unearned premiums to premiums written or reflect the estimated period of validity of the policy to which the commission relates.

Acquisition costs of traditional life insurance products are deferred in the form of Zillmer life insurance reserves.

Life insurance commissions where the investment risk bearer is the policy holder are deferred in line with the unearned premiums reserve or reflect the estimated period of validity of the policy to which the respective commission relates.

2.14. Administrative Costs

Administrative costs consist of costs that are not directly involved in entering into insurance policies, such as consumption of material and fuel, travel expenses, rental expenses, advisory services, postal fees, other fees, wages and other social costs, or depreciation of assets.

If administrative costs are clearly identifiable, they are charged directly to the relevant technical life or non-life accounts during the year.

Other unallocated administrative costs are primarily posted to non-technical cost accounts and, at the year-end, they are re-allocated to life and non-life insurance technical accounts in a proportion that matches the allocation based on the ABC (Activity Based Costing) method, regulating the matching of costs to individual types of insurance. The proportion was 17.57% for non-life insurance and 82.43% for life insurance.

2.15. Financial Placement Costs and Income Recognition

Recognition of Costs and Income from Financial Placements and their Allocation between Life and Non-life Insurance

In 2011, the Company split its portfolio of securities into the following three parts:

i) portfolio of securities covering non-life insurance reserves,

ii) portfolio of securities covering life insurance reserves,

iii) portfolio of securities covering funds of the Company's equity.

Income from and costs of financial placements are primarily recorded on the life insurance technical accounts. At the year-end, net income not related to life insurance is re-allocated to the non-technical accounts and the relevant amount of income is re-allocated from the non-technical accounts to the non-life insurance technical accounts.

The Company uses the proportion of the average balances of life and non-life insurance technical reserves and equity as a basis for re-allocating expenses and income from financial placements.

Accounting Treatment for the Realisation of Financial Placements

The Company's accounts for the realisation of financial placements on a gross basis and accordingly records separately all the revenues arising from realisation as equal to the selling value of the relevant financial placement instruments and the costs as equal to their carrying value.

2.16. Other Costs and Income

Clearly identifiable costs and income are recorded directly on the life and non-life technical accounts during the year.

Costs that are not clearly identifiable are primarily recorded on the non-technical accounts and subsequently reallocated to the technical life or non-life accounts. As a basis for reallocating the costs and income, the Company uses separate coefficients for life and non-life insurance (refer to Note 2.14).

This treatment does not apply to taxes and fees, and other expenses not related to insurance and reinsurance.

2.17. Reinsurance

Under the terms of reinsurance arrangements, the reinsurer's share of premiums is calculated, invoiced and paid based on the premiums collected from reinsured policies. At the balance sheet date, the Company records an estimated payable in respect of the anticipated reinsurer's share of premiums not yet billed.

Under the terms of reinsurance arrangements, the reinsurer's share of claims is calculated and paid based on the actually settled insurance claims. The Company recognises estimated receivables in respect of the anticipated but not yet paid reinsurer's share of recorded insurance claims.

Under the terms of reinsurance arrangements, reinsurance commissions are calculated and paid based on the paid reinsurer's share of premiums reflecting loss experience. At the balance sheet date, the Company records an estimated receivable in respect of expected commissions from the reinsurer's share of premiums not yet collected.

The Company recognises its share of the reinsurer's profit when the entitlement to this profit share can be determined and ascertained with reasonable certainty. No profit shares were recognised as of 31 December 2011.

The reinsurer's share of reserves is determined pursuant to the reinsurer's share of collected premiums or insurance claims taking into account other relevant factors.

2.18. Income Taxation

The income tax for the relevant period consists of the due tax and the change in the deferred tax. The due tax consists of the tax calculated from the tax base using the tax rate valid in the current year and all additionally assessed taxes and refunds of the overpaid taxes of previous periods, as well as the reserve for the due tax, including the independent tax base (dividends received from abroad).

2.19. Deferred Income Tax

Deferred income tax is provided using the balance sheet method, for all temporary differences arising between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using tax rates effective in the periods in which the temporary tax difference is expected to be realised. The principal temporary differences arise from depreciation on tangible fixed assets, provisions against receivables, reserves and tax losses carried forward.

In 2011, the Company recognised a deferred tax asset on the basis of negative valuation differences on financial placements.

2.20. Foreign Currency Retranslation

Transactions during the year were retranslated at the Czech National Bank's exchange rate prevailing as of the transaction date or at the rate at which the transaction was realised. Assets and liabilities denominated in foreign currencies at the year-end are retranslated using the Czech National Bank's exchange rate prevailing as of that date. Foreign exchange rate gains and losses are recognised through the profit and loss account, except for the foreign-currency debt securities for which these foreign exchange gains or losses are included in remeasurement at fair value.

2.21. Consolidation

These financial statements have been prepared on an unconsolidated basis. The Company's financial information is included in the consolidated financial statements of Komerční banka, a.s., having its registered office at Na Příkopě 33/969, Prague 1, 114 07, and SOGECAP S.A., having its registered office at 50, avenue du Général De Gaulle, 92093 Paris la Defense Cedex, which can be obtained at the same place.

2.22. Use of Estimates

The presented financial statements for the year ended 31 December 2011 are based on the best estimates available as of the reporting period-end which specifically relate to the determination of fair values of financial instruments, impairment of assets and determination of reserves. Management of the Company believes that the financial statements give the truest and fairest view of the Company's financial results and financial position using all relevant and available information at the financial statements date.

2.23. Changes in Accounting Policies

In 2011, the Company started to select the proportionate part of payroll expenses related to the development of internal software systems so that it could report them for the period to which they, together with the respective realised income, relate on an accrual basis. Completion of internal development and implementation of these software systems are the condition upon which the adjustment can be commenced. The time period during which such expenses have to be accrued is four years.

The total balance of the selected payroll expenses for 2011 is CZK 5,013 thousand, of which CZK 681 thousand has already been accrued.

3. Additional Information to the Financial Statements

3.1. Tangible and Intangible Fixed Assets

Acquisition cost
(CZK thousand) Additions Disposals 31 December 2011 31 December 2010
Odepisovaný hmotný majetek 7,278 2,277 55,892 50,891
of which: cars 2,023 1,580 9,341 8,898
hardware 4,856 608 35,168 30,920
office equipment 321 0 9,261 8,940
furniture and fixtures 78 89 2,122 2,133
Amortised intangible assets 2,107 0 196,139 194,032
Non-depreciated tangible assets 0 0 236 236
Acquisition of assets 14,057 14,080 397 420
of which: intangible assets 2,084 2,107 397 420
tangible assets 11,973 11,973 0 0
Total 23,442 16,357 252,664 245,579
Accumulated Depreciation
(CZK thousand) Additions Disposals 31 December 2011 31 December 2010
Depreciated tangible assets 7,333 2,277 41,968 36,912
of which: cars 1,804 1,580 5,215 4,991
hardware 4,561 608 28,552 24,599
office equipment 684 0 6,832 6,148
furniture and fixtures 283 89 1,369 1,175
Amortised intangible assets 23,367 0 179,597 156,230
Total 30,699 2,277 221,564 193,142
Net Book Value
(CZK thousand) 31 December 2011 31 December 2010
Depreciated tangible assets 13,925 13,980
of which: cars 4,127 3,907
hardware 6,616 6,322
office equipment 2,429 2,793
furniture and fixtures 753 958
Amortised intangible assets 16,542 37,801
Non-depreciated tangible assets 236 236
Acquisition of assets 397 420
of which: intangible assets 397 420
tangible assets 0 0
Total 31,100 52,437

The assets shown in the tables above represent tangible and intangible fixed assets reported within the following balance sheet lines:

(CZK thousand) 31 December 2011 31 December 2010
Intangible assets (line 2) 16,939 38,221
Tangible movable assets (line 29) 14,161 14,216
Total 31,100 52,437

Depreciation of fixed assets charged to expenses for the year ended 31 December 2011 amounted to CZK 32,083 thousand (2010: CZK 39,550 thousand). In 2011, principal additions to tangible depreciated assets related to servers, including their accessories (CZK 4,856 thousand).

As for amortised intangible assets, the most significant item was the purchase of new software equipment (CZK 2,108 thousand). Disposals of depreciated tangible assets predominantly included the retirement of four cars (CZK 1,580 thousand).

3.2. Financial Placements

Fair Value of Financial Placements
Group of assets (CZK thousand) 31 December 2011 31 December 2010
Debt securities issued by an EU member state or its central bank*) 12,312,303 11,112,225
Debt securities issued by banks of EU member states 4,890,562 4,069,655
Listed bonds issued by EU businesses 3,476,394 2,571,061
Listed municipal bonds 312,310 194,423
Listed debt securities issued by banks and trading companies of non-EU member states 370,400 500,094
Debt securities issued by EIB, ECB, EBRD or IBRD 0 0
Provision against securities 0 0
Total fixed income securities 21,361,970 18,447,458
Shares 232,261 145,559
Deposits with banks 789,000 440,048
Other financial placements – Cross Currency Swap (413,408) (116,593)
Total securities and deposits 21,969,822 18,916,472

The financial placement of assets originated from the Company's technical reserves complies with the requirements set out in respect of the structure of financial placements by the Insurance Act and Decree No. 434/2009 Coll., which provides implementation guidance on the Insurance Act.

45 percent (2010: 52 percent) of financial placements are allocated to government bonds issued by the Czech Republic. Financial placements have also been allocated to debt securities issued by banks, bonds issued by businesses (registered both in the Czech Republic and abroad), municipal bonds, shares and bank deposits.

Investments in shares represent an additional instrument added to the portfolio at the beginning of 2007. The limit for these investments is 1 percent of the total volume of the portfolio. At the end of 2011, the volume of stock investments amounted only to 1 percent (2010: 0.76 percent).

In 2011, apart from the bonds denominated in CZK (acquisition cost: CZK 2.8 billion), nine bonds denominated in EUR and USD were purchased and included in the investment portfolio. Their total acquisition cost was EUR 73 million and USD 10 million (an equivalent of CZK 2 billion). The future foreign-currency cash flows from these investments were hedged against the currency risk by the retranslation of cash flows from the foreign-currency bonds into Czech crowns at a previously stipulated exchange rate using the cross-currency swaps. The foreign-currency bonds were purchased because of their higher yield offered by issuers on the European financial market compared to the domestic market.

KP Portfolio of Investments

3.3. Receivables

Analysis of receivables
(CZK thousand) 31 December 2011 31 December 2010
Receivables from direct insurance from policy holders 150,040 123,393
Receivables from agents (brokers) 0 0
Amounts due from reinsurance transactions 283 6,249
Other receivables from direct insurance and reinsurance 11,778 11,034
Total receivables from direct insurance and reinsurance 162,101 140,676
Operating prepayments 51,914 43,185
Other debtors 335,708 262,228
Amounts due from employees 0 7
Prepaid income tax 0 0
Total receivables 549,723 446,096

As of 31 December 2011, other receivables from direct insurance and reinsurance arise from the delay between the transfer of insurance claim payments through the client payment check system and their settlement (i.e. the settlement of receivables against the related account payables to the policy holders).

As of 31 December 2011, operating prepayments totalling CZK 51,914 thousand (2010: CZK 43,185 thousand) primarily included prepayments for the share in the profit of collective contracts of CZK 39,321 thousand (2010: CZK 33,439 thousand), a prepayment of CZK 1,708 thousand provided to AXA ASSISTANCE (2010: CZK 1,701 thousand) and a rental guarantee payment of CZK 7,364 thousand (2010: CZK 7,348 thousand).

As of 31 December 2011, other debtors primarily consist of receivables from the outstanding principal and security coupon amounting to CZK 272,025 thousand (2010: CZK 258,125 thousand).

Aging Analysis of Receivables from Direct Insurance for Policy Holders:

(CZK thousand) Months past due date 2011
0–3 4–6 7–12 Over 12 Total
Industry and business 0 0 0 26,941 26,941
Merlin, Merlin Profi 108 932 25,649 1,460 28,149
Patron, Patron Profi 2,198 52 108 909 3,268
Other non-life products 544 80 93 788 1,505
Vital Invest 14,658 1,078 141 983 16,860
Vital 7,394 406 288 3,483 11,570
Other life insurance products 27,363 19,508 3,169 11,707 61,747
Total 52,265 22,056 29,448 46,271 150,040
(CZK thousand) Months past due date 2010
0–3 4–6 7–12 Over 12 Total
Industry and business 0 0 84 26,903 26,987
Merlin, Merlin Profi 83 494 4,345 0 4,922
Patron, Patron-Profi 2,434 49 159 819 3,461
Other non-life products 486 56 160 755 1,457
Vital Invest 6,182 112 149 722 7,165
Vital 9,197 1,002 1,016 4,376 15,591
Other life insurance products 15,318 23,613 5,326 19,553 63,810
Total 33,700 25,326 11,239 53,128 123,393

Provisions against Receivables from Direct Insurance:

(CZK thousand) Months past due date 2011
0–3 4–6 7–12 Over 12 Total
Industry and business 0 0 0 26,941 26,941
Merlin, Merlin Profi 0 0 0 0 0
Patron, Patron-Profi 0 10 54 909 973
Other non-life products 0 78 86 778 941
Vital Invest 0 1,024 134 983 2,141
Vital 0 361 285 3,483 4,129
Other life insurance products 0 554 898 11,684 13,136
Total 0 2,027 1,457 44,778 48,262
(CZK thousand) Months past due date 2010
0–3 4–6 7–12 Over 12 Total
Industry and business 0 0 84 26,903 26,987
Merlin, Merlin Profi 0 0 0 0 0
Patron, Patron-Profi 0 10 80 819 909
Other non-life products 0 49 156 756 961
Vital Invest 0 107 142 721 970
Vital 0 918 1,009 4,376 6,303
Other life insurance products 0 1,129 2,301 19,553 22,983
Total 0 2,213 3,772 53,128 59,113

In addition to the provisions against receivables from policy holders, the Company recognised provisions against other receivables.

As of 31 December 2011, a provision for the principal and two coupons of the Landsbanki bond 4.40/09 in the amount of CZK 239,360 thousand (2010: CZK 239,360 thousand) was recognised in respect of other receivables.

Receivables Arising from Reinsurance Transactions

The amount of receivables arising from reinsurance transactions is CZK 283 thousand (2010: CZK 6,249 thousand). Receivables predominantly include unsettled shares of the reinsurer in insurance claims and unsettled commissions from the reinsurer.

3.4. Cash and Cash Equivalents

Year (CZK thousand) 2011 2010
Current accounts 36,060 5,292
Cash on hand 45 48
Cash equivalents 557 469
Provision against UB (67) (67)
Total 36,595 5,742

The Company recognised a full provision against its current account maintained with Union banka, amounting to CZK 96 thousand in 2003. In 2004 and 2010, this outstanding receivable was partly settled in the amount of CZK 29 thousand. The underlying provision was reduced by the same amount. The Company will record the provision until the liquidation of Union banka is completed.

3.5. Temporary Assets

Analysis of temporary assets
31 December 2011 31 December 2010
Deferred acquisition costs 39,541 12,381
of which: Non-life insurance commissions 19,448 11,218
of which: Life insurance commissions 20,093 1,162
Other deferred expenses 8,396 3,281
Accrued income 0 8
Estimated receivables 42,382 37,552
of which: Premiums 31,720 31,025
Reinsurer´s commission and share in claims GetEnvPathname 2,404 3,199
Other 8,258 3,328
Total 90,320 53,222

The balance of estimated premium receivables as of 31 December 2011 of CZK 31,720 thousand (2010: CZK 31,025 thousand) represents premiums under policies that have been entered into but not recorded in the operating system by the closing date.

The balance of estimated receivables from reinsurer's commission and share of reinsurer as of 31 December 2011 of CZK 2,404 thousand (2010: CZK 3,199 thousand) results from the settlement of reinsurance balances mainly for the last quarter of 2011.

For further details about reinsurance balances refer to Note 3.25.

3.6. Equity

(CZK thousand) 31 December 2011 31 December 2010
Share capital 1,175,398 904,152
Other capital funds (185,185) 101,609
- valuation gains and losses of securities 10,173 (12,413)
- valuation gains and losses of derivatives (392,286) (64,995)
- valuation of up-front fees 153,489 202,851
- deferred tax 43,439 (23,834)
Statutory reserve fund 39,941 32,985
Retained earnings 65,345 204,429
Accumulated losses brought forward 0 0
Profit/(loss) for the period 251,046 139,116
Total 1,346,544 1,382,292

3.7. Technical Reserves

(CZK thousand) 31 December 2011 31 December 2010
Name of reserve Gross balance Reins. share Net balance Net balance
Life insurance reserve 19,500,670 0 19,500,670 16,363,107
Life insurance reserve where the investment risk is assumed by the policy holder 3,867,361 0 3,867,361 2,530,139
of which:
Vital Invest 3,867,361 0 3,867,361 2,530,139
IBNR reserve 87,445 4,781 82,664 90,020
of which:
Non-life insurance 63,514 4,335 59,178 65,281
PpaP (industrial and business insurance) 0 0 0 0
P&C (property and casualty insurance) 777 331 446 497
Card insurance 27,691 4,004 23,687 28,358
Merlin, Merlin Profi 649 0 649 786
Patron, Patron Profi 2,215 0 2,215 2,300
Other non-life insurance 32,182 0 32,182 33,340
Life insurance 23,931 446 23,486 24,739
Vital 265 0 265 201
Mortgages 9,588 0 9,588 9,791
Insurance of consumer loans and credit cards 10,880 0 10,880 13,095
Other life insurance 3,198 446 2,753 1,652
RBNS reserve 329,789 80,650 249,138 245,022
of which:
Non-life insurance 191,635 80,085 111,550 115,516
PpaP (industrial and business insurance) 135,153 67,034 68,120 70,813
P&C (property and casualty insurance) 2,185 1,208 978 1,102
Card insurance 49,463 11,844 37,619 38,368
Merlin, Merlin Profi 2,272 0 2,272 2,254
Patron, Patron Profi 1,671 0 1,671 2,448
Other non-life insurance 891 0 891 531
Life insurance 138,154 566 137,588 129,507
Vital 92,430 0 92,430 95,228
Mortgages 6,880 0 6,880 7,947
Insurance of consumer loans and credit cards 8,165 0 8,165 9,238
Other life insurance 30,679 566 30,113 17,094
Reserve for bonuses and discounts 524,411 0 524,411 355,694
of which:
Non-life insurance 774 0 774 865
PpaP (industrial and business insurance) 0 0 0 0
P&C (property and casualty insurance) 774 0 774 865
Life insurance 523,638 0 523,638 354,829
Vital 64,221 0 64,221 74,829
Vital Invest 5,356 0 5,356 0
Other life insurance 454,060 0 454,060 280,000
Reserve for unearned premiums 53,061 303 52,758 43,757
of which:
Non-life insurance 35,560 179 35,381 26,398
P&C (property and casualty insurance) 797 179 618 327
Card insurance 0 0 0 0
Patron, Patron Profi 16,623 0 16,623 18,527
Other non-life insurance 18,140 0 18,140 7,544
Life insurance 17,500 124 17,376 17,358
Vital Invest 1,542 0 1,542 1,326
Vital 567 0 567 646
Mortgages 2,081 0 2,081 2,051
Other life insurance 13,310 124 13,186 13,335
Reserve for the coverage of obligations from the used TIR 144,129 0 144,129 247,625
Vital 140,826 0 140,826 240,900
Life insurance 3,303 0 3,303 6,725

3.8. Result of Non-Life Insurance Claims Settlement – Run-Off Analysis (Net)

(CZK thousand) 2011 2010
Balance of the reserve for claims as of 1 January 152,160 145,222
Claims paid in the current period arising from claims from the prior period 17,851 14,210
Balance of the reserve for claims as of 31 December 105,452 104,568
Result of claims settlement 28,856 26,443

3.9. Result of Life Insurance Claims Settlement – Run-off Analysis (Net)

(CZK thousand) 2011 2010
Balance of the reserve for claims as of 1 January 1,955 2,356
Claims paid in the current period arising from claims from the prior period 610 659
Balance of the reserve for claims as of 31 December 957 1,084
Result of claims settlement 388 613

The run-off analysis (net) of life insurance products is presented for accident riders. The run-off in respect of insurance capital products is neutral.

3.10. Reserve for Other Risks and Losses

(CZK thousand) 31 December 2011 31 December 2010
Reserve for legal disputes and similar risks 58,352 13,065
Restructuring reserve 7,500 7,500
Total reserve for other risks and losses 65,852 20,565

The reserve for legal disputes and similar risks represents a reserve for estimated losses from pending litigations and other estimated losses on transactions entered into by the year-end, specifically in relation to industrial and business insurance. Based on all information available, management of the Company established and updated this reserve as an appropriately prudent estimate of the ultimate balance of costs associated with the matters referred to above.

As of 31 December 2011, the balance of the reserve for legal disputes and similar risks was CZK 58,352 thousand (2010: CZK 13,065 thousand). The 2011 increase in the reserve predominantly includes the recognition of the reserve for corporate income tax due in the amount of CZK 43,985 thousand (2010: CZK 0 thousand).

The balance of the restructuring reserve as of 31 December 2011 was the same as of 31 December 2010. During the reporting period, the reserve was not released in relation to the sales network agent settlement.

3.11. Payables

(CZK thousand) 31 December 2011 31 December 2010
Payables from direct insurance to the policy holders 113,686 102,204
Payables to agents 115 8
Payables from reinsurance transactions 4,452 1,986
Other payables from direct insurance and reinsurance 71 0
Total payables from direct insurance and reinsurance 118,325 104,198
Payables to staff from dependent activities 7,512 7,142
Settlement balances with social security and health insurance institutions 4,575 4,141
Payables to financial institutions 0 0
Other payables 6,209 18,132
Other direct taxes 1,713 2,570
Other indirect taxes and fees 2,703 1,955
Total payables 141,037 138,138

None of the Company's payables were secured by a pledge or any other encumbrance as of 31 December 2011.

As of 31 December 2011, the Company records overdue payables from direct insurance to the policy holders (older than 5 years, in the amount of CZK 8,059 thousand; 2010: CZK 9,447 thousand). These consist of unpaid claims and overpayments of premiums.

Other payables that do not relate to insurance predominantly include unpaid invoices (older than 5 years: CZK 0 thousand).

3.12. Temporary Liabilities

Analysis of Temporary Liabilities
(CZK thousand) 31 December 2011 31 December 2010
Deferred income 0 0
Estimated payables 282,734 283,856
of which: Reinsurer's share in premiums 6,240 3,674
Commissions to acquirers 219,264 215,730
Insurance claims 2,308 604
Other 54,922 63,848
Total temporary liabilities 282,734 283,856

Estimated commissions payables to acquirers of CZK 219,264 thousand (2010: CZK 215,730 thousand) represent an estimate of unpaid commissions for the acquisition of insurance policies. This balance predominantly consists of commissions not paid to ESSOX amounting to CZK 69,744 thousand (2010: CZK 65,699 thousand) and commissions not paid to Komerční banka, a.s. totalling CZK 128,026 thousand (2010: CZK 102,259 thousand).

Other temporary liabilities of CZK 54,922 thousand (2010: CZK 63,847 thousand) principally comprise unbilled supplies of CZK 45,701 thousand (2010: CZK 55,241 thousand) and costs of staff bonuses for 2011 amounting to CZK 8,378 thousand (2010: CZK 7,928 thousand).

3.13. Taxation

Income Tax

In the 2011 fiscal year, the Company utilised the remaining part of accumulated losses from previous periods and the tax due totals CZK 43,985 thousand. The tax stemming from the independent tax base is CZK 1,193 thousand.

Deferred Tax

The Company's deferred tax assets amounted to CZK 56,992 thousand as of 31 December 2011, of which CZK 43,438 thousand was recognised in equity and CZK (18,483) thousand in the profit and loss account.

Deferred tax arising from (CZK thousand): 31 December 2011 31 December 2010
Net book value of tangible and intangible fixed assets 11,051 11,361
Non-current financial assets 43,438 (23,834)
Tax loss of previous years 0 10,825
Reserve 2,503 0
Total deferred tax 56,992 (1,648)

3.14. Neživotní pojištění

(CZK thousand) 2011 2010
Gross written premiums 257,522 292,379
PpaP (industrial and business insurance) (1) 83
P&C (property and casualty insurance) 1,657 1,957
Card insurance 43,901 93,297
Merlin, Merlin Profi 114,895 134,137
Patron, Patron Profi 37,174 41,215
Other non-life insurance 59,896 21,690
Gross earned premiums 248,434 287,554
PpaP (industrial and business insurance) (351) (141)
P&C (property and casualty insurance) 1,701 2,003
Card insurance 43,901 93,298
Merlin, Merlin Profi 116,198 131,047
Patron, Patron Profi 39,078 42,581
Other non-life insurance 47,907 18,766
Gross costs of insurance claims 33,047 38,609
PpaP (industrial and business insurance) (9) 657
P&C (property and casualty insurance) 2,951 3,241
Card insurance 22,001 26,114
Merlin, Merlin Profi 2,617 3,874
Patron, Patron Profi 2,762 2,580
Other non-life insurance 2,725 2,143
Reinsurance balance (1,607) (3,106)
Acquisition costs of insurance policies 73,004 73,871
- commissions 77,371 72,730
- other acquisition costs 2,690 4,197
- release of deferred expenses and accrued income 0 0
- recognition of deferred expenses and accrued income (7,057) (3,056)

3.15. Life insurance

(CZK thousand) 2011 2010
Gross written premiums 6,593,375 8,689,260
Earned premiums 6,593,454 8,685,273
Gross costs of insurance claims 1,893,290 1,782,406
Reinsurance balance (8,276) (5,944)
Acquisition costs of insurance policies 166,593 183,828
– commissions 184,172 175,576
– other acquisition costs 1,352 9,370
– deferred expenses and accrued income (18,931) (1,118)
Summary of life insurance, written premiums
(CZK thousand) 2011 2010
Individual contracts 6,392,256 8,488,822
of which: insurance contracts where the investment risk is assumed by the policy holder 4,677,376 3,782,373
Collective contracts 201,119 200,438
Life insurance - total 6,593,375 8,689,260
Single premiums 5,725,417 7,835,291
of which: insurance contracts where the investment risk is assumed by the policy holder 1,691,850 3,724,856
Regular premiums 867,958 853,969
of which: insurance contracts where the investment risk is assumed by the policy holder 23,029 57,517
Life insurance - total 6,593,375 8,689,260
Insurance contracts without premium 0 0
Insurance contracts with premium 6,593,375 8,689,260
of which: insurance contracts where the investment risk is assumed by the policy holder 1,714,880 3,782,373
Life insurance - total 6,593,375 8,689,260

3.16. Territorial Analysis of Total Premiums Written

The Company entered into insurance contracts in the Czech Republic, Slovakia, Bulgaria, Romania and Germany.

Written premiums arise from contracts into which the Company entered (CZK thousand): 2011 2010
in the EU member state where it has its registered office 6,810,973 8,968,273
in other EU member states 39,924 13,366
Total premiums written 6,850,897 8,981,639

3.17. Summary of Commissions

For the year ended 31 December 2011, the aggregate balance of commissions in respect of direct insurance was CZK 235,555 thousand (2010: CZK 248,306 thousand) and was segmented as follows:

Year (CZK thousand) 2011 2010 2011 2010
Life insurance Non-life insurance
Expenses on commissions 165,241 175,576 70,314 72,730

Commissions in 2011 were predominantly billed by Komerční banka, a.s., in the amount of CZK 193,718 thousand (2010: CZK 228,477 thousand) – cumulatively for both life and non-life insurance.

3.18. Financial Placements Income and Expense

For the year ended 31 December 2011, the net income on the Company's financial placements amounted to CZK 803,902 thousand (2010: CZK 710,985 thousand), of which the net income from assets generated from technical reserves amounted to CZK 759,198 thousand (2010: CZK 650,359 thousand).

As discussed in Note 2.15, income and expense from financial placements are recorded primarily on the life insurance technical account during the reporting period.

At the year-end, net financial income unrelated to life insurance is re-allocated to the non-technical accounts and subsequently re-allocated to the non-life insurance technical accounts. For the year ended 31 December 2011, this re-allocated balance was CZK 16,582 thousand (2010: CZK 16,473 thousand).

Year (CZK thousand) 2011 2010
  Life insurance Non-life insurance Life insurance Non-life insurance
Year-end net balances of reserves 24,215,383 291,483 19,668,572 295,564
Income from reserves 742,615 16,582 633,886 16,473

3.19. Administrative Expenses

The total amount of administrative expenses was CZK 253,170 thousand in 2011 (2010: CZK 238,178 thousand). The administrative expenses are analysed as follows:

(CZK thousand) 2011 2010
Staff cost (wages, social security and health insurance) 132,241 131,253
Rent 17,707 18,268
Advisory services 22,668 6,825
Telecommunication 2,505 3,349
Training 1,993 3,677
Banking and postal fees 9,398 9,505
IT costs 13,503 15,962
Depreciation 32,159 38,190
Other administrative costs 20,996 11,149
Total 253,170 238,178

The costs of the audit of the financial statements amounted to CZK 1,768 thousand in 2011 (2010: CZK 1,706 thousand).

3.20. Other Technical Income and Expenses and Non-Technical Account

Other income from non-life insurance primarily includes the use of provisions against receivables in the amount of CZK 6,686 thousand (2010: CZK 1,144 thousand).

Other technical expenses of non-life insurance amounting to CZK 19,877 thousand (2010: CZK 43,363 thousand) mainly include the shares in profit totalling CZK 18,327 thousand (2010: CZK 41,881 thousand).

Other technical income of life insurance primarily includes the management fee for the sale of Forte funds amounting to CZK 28,446 thousand (2010: CZK 12,744 thousand).

Other technical expenses of life insurance include items relating to the cost of profit sharing in the amount of CZK 106,135 thousand (2010: CZK 97,442 thousand).

Other income from the non-technical accounts amounted to CZK 21,388 thousand (2010: CZK 6,159 thousand), of which the release of the reserve for other risks totals CZK 14,956 thousand (2010: CZK 3,339 thousand).

Other costs of the non-technical accounts amounted to CZK 17,723 thousand (2010: CZK 4,972 thousand), of which the principal balances relate to the charge for the reserve for surrenders in the amount of CZK 3,992 thousand (2010: CZK 0 thousand), and other reserves in the amount of CZK 4,133 thousand (2010: CZK 2,069 thousand).

3.21. Reallocation of Costs between Technical and Non-Technical Accounts

The aggregate balance of costs re-allocated between the life insurance technical accounts, the non-life insurance technical accounts and the non-technical accounts on the basis as disclosed in Note 2.16 was CZK 250,340 thousand (2010: CZK 253,354 thousand) as of 31 December 2011.

3.22. Transactions with Related Parties

  2011 2010 Text
Amounts owed to the Group entities 823,303 597,671
of which: Komerční banka, a.s. 51,224 71,473 Estimated accrued expenses – Profit sharing
2,051 12,171 Paid commissions for insurance arrangement
75,651 71,380 Estimated accrued expenses – Commissions
755 1,020 Estimated accrued expenses –Trade payables
243 219 Bank Fees
198 184 Trade payables
413,408 116,593 Payables from the cross currency swaps
153,489 202,851 Up-front fee from the cross currency swaps
142 0 Payables from insurance
of which: ESSOX. s.r.o. 69,299 64,822 Estimated accrued expenses – Profit sharing
140 208 Paid commissions for insurance arrangement
of which: ESSOX SK, s.r.o. 445 877 Estimated accrued expenses – Profit sharing
of which: MPSS, 2,100 2,010 Estimated accrued expenses – Commissions
of which: SG 4,186 6,056 Estimated accrued expenses –Trade payables
of which: Sogecap 31,622 41,533 Estimated accrued expenses –Trade payables
of which: SGEB 1,834 369 Estimated accrued expenses – Profit sharing
504 553 Estimated accrued expenses – Commissions
of which: BRD 6,694 1,854 Estimated accrued expenses – Commissions
2,973 0 Estimated accrued expenses – Profit sharing
of which: BRD Finance 0 1 Estimated accrued expenses – Profit sharing
726 342 Estimated accrued expenses – Commissions
of which: PFKB 4,428 2,131 Payables from insurance
320 307 Trade payables
of which: HB 475 624 Estimated accrued expenses – Profit sharing
104 93 Estimated accrued expenses – Commissions
of which: Credibul 267 0 Estimated accrued expenses – Profit sharing
25 0 Estimated accrued expenses – Commissions
Amounts due from the Group entities 985,935 565,877
of which: Komerční banka, a.s. 810,818 441,919 Current accounts and deposits
5,967 6,715 Accrued commissions
15,706 19,762 Estimated accrued income – premiums
38,462 8,415 Receivables from insurance
23 23 Prepayments
0 8 Trade receivables
of which: ESSOX, s.r.o. 37,701 31,819 Prepayments
32,981 37,590 Receivables from insurance
10,365 9,066 Estimated accrued income – premiums
332 333 Accrued commissions
of which: Komerční banka Bratislava, a.s. 840 711 Current accounts and deposits
of which: Credibul 123 0 Estimated accrued income – premiums
of which: HB 512 289 Current accounts and deposits
703 600 Accrued commissions
214 158 Estimated accrued income – premiums
482 428 Receivables from insurance
of which: BRD 9,542 1,614 Accrued commissions
2,590 1,068 Estimated accrued income – premiums
6,668 345 Current accounts and deposits
of which: BRD Finance 1,052 396 Accrued commissions
529 141 Estimated accrued income – premiums
of which: MPSS 429 539 Estimated accrued income – premiums
of which: PFKB 530 165 Estimated accrued income – premiums
of which: SGEB 1,266 1,177 Accrued commissions
1,117 597 Estimated accrued income – premiums
6,914 1,999 Current accounts and deposits
of which: Sogecap 69 0 Trade receivables
Expenses with the Group entities 685,125 687,893
of which: Komerční banka, a.s. 48,749 72,191 Expenses on profit sharing
9,039 10,294 Use of trademark + advertising
3,638 3,445 Bank Fees
748 491 Accrued expenses – Commissions
280,922 158,821 Accrued expenses – Cross currency swaps
2,684 2,648 Offices lease related expenses
5,301 4,484 Financial investment related expenses
211,700 228,477, Commissions
0 87 Forms
644 133 Advisory
of which: SG 3,482 5,674 Advisory
of which: Komerční banka Bratislava, a.s. 11 11 Bank Fees
of which: ESSOX, s.r.o. 71,533 64,250 Expenses on profit sharing
of which: ESSOX SK, s.r.o. 440 919 Expenses on profit sharing
of which: MPSS, a.s. 10,545 6,378 Commissions
of which: Credibul 25 0 Expenses on profit sharing
260 0 Commissions
of which: BRD 6 2 Bank Fees
8,130 172 Commissions
1,806 0 Expenses on profit sharing
of which: BRD Finance (1) 0 Expenses on profit sharing
907 109 Commissions
of which: HB 447 0 Expenses on profit sharing
1,493 1,339 Commissions
of which: PFKB 2,124 0 Contribution of the Company
of which: SGEB 9 7 Bank Fees
1,465 0 Expenses on profit sharing
4,260 1,353 Commissions
of which: Sogecap 14,758 126,608 Advisory
Income with the Group entities 621,091 611,141
of which: Komerční banka, a.s. 4,423 3,975 Interest from current accounts and deposits
281,038 144,464 Accrued interest – cross currency swaps
195,637 352,363, Written premiums
of which: ESSOX, s.r.o. 98,827 91,174 Written premiums
of which: ESSOX SK, s.r.o. 548 1,069 Written premiums
of which: MPSS, a.s. (110) 5,258 Written premiums
of which: BRD 23,909 2,330 Written premiums
3 0 Interest from current accounts and deposits
of which: BRD Finance 2,145 637 Written premiums
of which: Credibul 423 0 Written premiums
of which: HB 2,524 4,342 Written premiums
of which: PFKB 2,172 682 Written premiums
of which: SGEB 9,465 4,718 Written premiums
8 2 Interest from current accounts and deposits
79 0 Advertising
of which: Sogecap 0 127 Advisory

3.23. Profit/(Loss)

(CZK thousand) 2011 2010
Non-life insurance 109,027 143,444
Life insurance 139,964 (46,504)
Non-technical account (before tax) 2,287 42,208
Profit/(loss) before tax 251,277 139,148
Other taxes 232 32
Profit/(loss) for the accounting period 251,046 139,116

3.24. Staff Costs and Similar Costs

Staff and similar costs paid by the Company were as follows:

2011
(CZK thousand) Average recalculated headcount Wages
and salaries
Social security and health insurance Other staff costs Total staff
costs
Staff 147 76,090 25,732 4,633 106,455
Management 5 20,223 5,243 320 25,786
Total 152 96,313 30,975 4,953 132,241
2010
(CZK thousand) Average recalculated headcount Wages and salaries Social security and health insurance Other staff costs Total staff costs
Staff 144 75,112 25,323 4,462 104,897
Management 5 21,473 4,568 315 26,356
Total 149 96,585 29,891 4,777 131,253
Bonuses paid to administrative, management, supervisory and other bodies
(CZK thousand) 2011 2010
Bonuses to the Supervisory Board 26 31
Bonuses to the Board of Directors 1,048 1,117

As of 31 December 2011, thirteen employees of the Company have been provided with business cars for both business and private purposes. The Company has provided no other advances, borrowings or loans to the members of its statutory, executive and supervisory bodies in addition to this benefit.

3.25. Reinsurance

The aggregate reinsurance result
(CZK thousand) 2011 2010
Reinsurer's share of premiums (22,536) (18,941)
Reinsurer's share of insurance claims 10,694 7,771
Commissions 1,959 2,120
Reinsurance balance (9,883) (9,050)
Reinsurer's share in the creation and use of reserves (3,038) (28,342)
Reinsurance result (12,921) (37,392)
The amounts due from and to reinsurers:
(CZK thousand) 31 December 2011 31 December 2010
Receivable from reinsurers 283 6,249
Estimated receivable 2,404 3,199
Payable to reinsurers (4,523) (1,986)
Estimated payable (6,240) (3,674)
Net receivable (payable) from reinsurers (8,075) 3,788

4. Off-balance Sheet Commitments

The Company is not aware of any off-balance sheet commitments.

5. Other Significant Post Balance Sheet Events

At the financial statements date, management of the Company is not aware of any events that would require adjustment of the Company's financial statements.