Notes to the Financial Statements
for the Year Ended 31 December 2012

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 2012, 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”):

  • to the extent of life insurance segments I, II, III, VI, VII and IX as set out in Part A of the Appendix 1 to the Insurance Act
  • to the extent of non-life insurance segments 1, 2, 3, 4, 7, 8, 9, 10c, 13, 14, 15, 16 and 18 as set out in Part B of the Appendix 1 to the Insurance Act

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

  • agency activities undertaken in connection with insurance activities under the Insurance Act
  • advisory activities relating to insurance of individuals and legal entities under the Insurance Act
  • investigation into insurance claims undertaken on a contractual basis with an insurance company under the Insurance Act
  • mediation of financial services listed under (a) to (e):
    1. a) agency services in respect of building society savings programmes;
    2. b) agency services in respect of retirement benefit programmes;
    3. c) agency services in respect of the arrangement of consumer and mortgage loans;
    4. d) agency services in respect of the arrangement of credit cards;
    5. e) leasing agency services.
  • training activities for insurance brokers and independent loss adjusters.

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 2012

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 51.01 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 2012

  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 2012.

1.4. Changes and Amendments to the Commercial Register

In 2012 no changes or amendments to the Commercial register were made.

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 Company didn’t recognize any changes in the equity within the year 2012.

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 recalculated 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 2012.

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 2012.

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 2012 as follows:

  • Intangible fixed assets, including acquisition, are presented in lines 2 – 4; and
  • Tangible fixed assets (both depreciable and non-depreciable), including acquisition, are presented in line 21.

The Company recognised tax depreciation charges for tangible and intangible assets in 2012.

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 recalculated 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 recalculation.

The Company recalculated 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:

  • Supporting evidence underlying the insurance portfolio split by classes of individual insurance activities;
  • Historical series relating to individual classes of insurance activities that monitor the moment of claim origination and the moment of claim settlement (the Chain-Ladder method applied to quarterly data) – it is used for non-life insurance activities only;
  • The estimated aggregate claims ratio; and
  • The estimated claims need for a determined period of time is usually used for life insurance activities.

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 2012, the Company increased, in accordance with Section 63 (2) of the Insurance Act, the reserve for bonuses and discounts by CZK 194 million up to the final amount of CZK 648 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 2012.

No part in respect of the similar increases of CZK 174 million in 2011, 165 million and CZK 115 million made in 2010 and 2009, respectively, was used in 2012.

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:

  • Deferred expenses – primarily deferred acquisition costs of insurance policies;
  • Accrued income – particularly accrued revenues from term deposits;
  • Estimated receivables – primarily estimated funds to be collected from reinsurers (shares of insurance claims, commissions and profit shares) and an estimate for premiums not yet written in the operating systems; and
  • Estimated payables – primarily estimated balances of anticipated premiums ceded to the reinsurers, unpaid commissions, fees and unbilled supplies.

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:

  • Commission paid to insurance policy acquirers; and
  • Payment for medical assessments.

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 20.1% for non-life insurance and 79.9% 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

The Company has 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.

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 2012.

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 2012, the Company recognised a deferred tax liability.

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 recalculation 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 2012 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.

3. Additional Information to the Financial Statements

3.1. Tangible and Intangible Fixed Assets

Acquisition cost

(CZK thousand)  Additions Disposals 31 December 2012 31 December 2011
Depreciated tangible assets 4,586 24,787 35,691 55,892
of which: cars 315 947 8,709 9,341
  hardware 3,980 22,916 16,232 35,168
  office equipment 291 908 8,644 9,261
  furniture and fixtures 0 16 2,106 2,122
Amortised intangible assets 5,154 0 201,293 196,139
Non-depreciated tangible assets 0 0 236 236
Acquisition of assets 0 397 0 397
of which: intangible assets 0 397 0 397
  tangible assets 0 0 0 0
Total 9,740 25,184 237,220 252,664

Accumulated Depreciation

(CZK thousand) Additions Disposals 31 December 2012 31 December 2011
Depreciated tangible assets 5,172 24,788 22,352 41,968
of which: cars 1,842 947 6,110 5,215
  hardware 2,374 22,916 8,010 28,552
  office equipment 672 908 6,596 6,832
  furniture and fixtures 284 17 1,636 1,369
Amortised intangible assets 8,842 0 188,438 179,597
Total 14,014 24,788 210,790 221,564

Net Book Value

(CZK thousand)  31 December 2012 31 December 2011
Depreciated tangible assets 13,339 13,925
of which: cars 2,599 4,127
  hardware 8,222 6,616
  office equipment 2,048 2,429
  furniture and fixtures 470 753
Amortised intangible assets 12,855 16,542
Non-depreciated tangible assets 236 236
Acquisition of assets 0 397
of which: intangible assets 0 397
  tangible assets 0 0
Total 26,430 31,100

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

(CZK thousand)  31 December 2012 31 December 2011
Intangible assets (line 2) 12,855 16,939
Tangible movable assets (line 21) 13,575 14,161
Total 26,430 31,100

Depreciation of fixed assets charged to expenses for the year ended 31 December 2012 amounted to CZK 18,870 thousand (2011: CZK 32,083 thousand). In 2012, principal additions to tangible depreciated assets related to servers, including their accessories (CZK 3,980 thousand).

As for amortised intangible assets, the most significant item was the purchase of new software equipment (CZK 5,154 thousand). Disposals of depreciated tangible assets predominantly included the retirement of servers (CZK 22,916 thousand).

3.2. Financial Placements

Fair Value of Financial Placements (CZK thousand)

Group of assets 31 December 2012 31 December 2011
Debt securities issued by an EU member state or its central bank 15,397,713 12,312,303
Debt securities issued by banks of EU member states 3,420,747 4,890,562
Listed bonds issued by EU businesses 4,151,202 3,476,394
Listed municipal bonds 343,600 312,310
Listed debt securities issued by banks and trading companies of non-EU member states 2,323,352 370,400
Debt securities issued by EIB, ECB, EBRD or IBRD 0 0
Provision against securities 0 0
Total fixed income securities 25,636,614 21,361,970
Shares 255,821 232,261
Deposits with banks 903,000 789,000
Other financial placements – Cross Currency Swap (414,399) (413,408)
Total securities and deposits 26,381,036 21,969,822

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.

47 percent (2011: 45 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 2012, the volume of stock investments amounted only to 1 percent (2011: 1 percent).

In 2012, apart from the bonds denominated in CZK (acquisition cost: CZK 2.3 billion), eleven bonds denominated in EUR and USD were purchased and included in the investment portfolio. Their total acquisition cost was EUR 100.8 million and USD 23.7 million (an equivalent of CZK 3.04 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

KP portfolio of investments

3.3. Receivables

Analysis of receivables

(CZK thousand)  31 December 2012 31 December 2011
Receivables from direct insurance from policy holders 172,514 150,040
Receivables from agents (brokers) 0 0
Amounts due from reinsurance transactions 0 283
Other receivables from direct insurance and reinsurance 9,690 11,778
Total receivables from direct insurance and reinsurance 182,204 162,101
Operating prepayments 51,810 51,914
Other debtors 287,533 335,708
Amounts due from employees 0 0
Prepaid income tax 20,879 0
Total receivables 542,426 549,723

As of 31 December 2012, 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 2012, operating prepayments totalling CZK 51,810 thousand (2011: CZK 51,914 thousand) primarily included prepayments for the share in the profit of collective contracts of CZK 39,798 thousand (2011: CZK 39,321 thousand), a prepayment of CZK 1,701 thousand provided to AXA ASSISTANCE (2011: CZK 1,708 thousand) and a rental guarantee payment of CZK 7,555 thousand (2011: CZK 7,364 thousand).

As of 31 December 2012, other debtors primarily consist of receivables from the outstanding principal and security coupon amounting to CZK 282,960 thousand (2011: CZK 272,025 thousand).

Aging Analysis of Receivables from Direct Insurance for Policy Holders:

  Months past due date 2012  
(CZK thousand) 0 – 3 4 – 6 7 – 12 over 12 Total
Industry and business 0 0 0 11,011 11,011
Merlin, Merlin Profi 7,576 1,037 23,162 390 32,165
Patron, Patron Profi 1,897 1,168 65 57 3,187
Other non-life products 4,460 80 61 825 5,426
Vital Invest 12,935 1,517 152 305 14,910
Vital 36,645 115 121 3,488 40,369
Other life insurance products 34,476 19,342 2,722 8,907 65,446
Total 97,989 23,259 26,283 24,983 172,514
  Months past due date 2011  
(CZK thousand)  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

Provisions against Receivables from Direct Insurance:

  Months past due date 2012  
(CZK thousand) 0 – 3 4 – 6 7 – 12 over 12 Total
Industry and business 0 0 0 11,011 11,011
Merlin, Merlin Profi 0 0 0 0 0
Patron, Patron-Profi 0 9 33 57 98
Other non-life products 0 76 58 815 949
Vital Invest 0 1,442 144 305 1,891
Vital 0 98 120 3,488 3,707
Other life insurance products 0 324 363 8,739 9,425
Total 0 1,949 718 24,415 27,081
  Months past due date 2011  
(CZK thousand) 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

The Company recognised the provisions against receivables only for individual policies.. In case of collective policies, i. e. Merlin and Profi Merlin products, the risk of default is on side of Komerční banka as a policy holder.

Apart from the provisions described above, the Company recognised provisions against other receivables.

As of 31 December 2012, a provision for the principal and two coupons of the Landsbanki bond 4.40/09 in the amount of CZK 239,360 thousand (2011: 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 0 thousand (2011: CZK 283 thousand). Receivables predominantly include unsettled shares of the reinsurer in insurance claims and unsettled commissions from the reinsurer.

3.4. Cash and Cash Equivalents

(CZK thousand) 2012 2011
Current accounts 82,477 36,060
Cash on hand 82 45
Cash equivalents 630 557
Provision against UB (67) (67)
Cash in route (1,402) 0
Total 81,720 36,595

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

(CZK thousand) 31 December 2012 31 December 2011
Deferred acquisition costs 68,513 39,541
of which: Non-life insurance commissions 24,522 19,448
of which: Life insurance commissions 43,991 20,093
Other deferred expenses 10,219 8,396
Accrued income 0 0
Estimated receivables 66,823 42,382
of which: Premiums 32,841 31,720
  Reinsurer´s commission and share in claims 654 2,404
  Other 33,328 8,258
Total 145,555 90,320

The balance of estimated premium receivables as of 31 December 2012 of CZK 32,841 thousand (2011: CZK 31,720 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 2012 of CZK 654 thousand (2011: CZK 2,404 thousand) results from the settlement of reinsurance balances mainly for the last quarter of 2012.

Other estimated receivables results mainly from not invoiced managerial fees related to Forte funds of CZK 30,765 thousand (2011: CZK 5,745 thousand)

For further details about reinsurance balances refer to Note 3.25.

3.6. Equity

(CZK thousand)  31 December 2012 31 December 2011
Share capital 1,175,398 1,175,398
Other capital funds 681,910 (185,185)
– valuation gains and losses of securities 886,405 10,173
– valuation gains and losses of derivatives (383,542) (392,286)
– valuation of up-front fees 339,001 153,489
– deferred tax (159,954) 43,439
Statutory reserve fund 52,493 39,941
Retained earnings 303,838 65,345
Accumulated losses brought forward 0 0
Profit/(loss) for the period 175,418 251,046
Total 2,389,057 1,346,544

3.7. Technical Reserves

(CZK thousand) 31 December 2012 31 December 2011
Name of reserve Gross balance Reins. share Net balance Net balance
Life insurance reserve 22,536,068 0 22,536,068 19,500,670
Life insurance reserve where the investment risk is assumed by the policy holder 5,136,987 0 5,136,987 3,867,361
of which:        
Vital Invest, Brouček, Modrý Vital Invest 5,136,987 0 5,136,987 3,867,361
IBNR reserve 71,120 3,317 67,803 82,664
of which:        
Non-life insurance 45,485 2,964 42,521 59,178
PpaP (industrial and business insurance) 0 0 0 0
P&C (property and casualty insurance) 673 292 381 446
Card insurance 11,334 2,672 8,662 23,687
Merlin, Merlin Profi 476 0 476 649
Patron, Patron Profi 2,376 0 2,376 2,215
Other non-life insurance 30,626 0 30,626 32,182
Life insurance 25,635 353 25,282 23,486
Vital 1,816 0 1,816 265
Mortgages 10,789 0 10,789 9,588
Insurance of consumer loans and credit cards 9,129 0 9,129 10,880
Other life insurance 3,901 353 3,548 2,753
RBNS reserve 338,594 70,880 267,714 249,138
of which:        
Non-life insurance 176,738 69,706 107,033 111,550
PpaP (industrial and business insurance) 124,795 59,685 65,110 68,120
P&C (property and casualty insurance) 2,189 1,221 968 978
Card insurance 42,800 8,800 34,000 37,619
Merlin, Merlin Profi 2,895 0 2,895 2,272
Patron, Patron Profi 2,466 0 2,466 1,671
Other non-life insurance 1,594 0 1,594 891
Life insurance 161,855 1,174 160,681 137,588
Vital 117,929 0 117,929 92,430
Mortgages 8,929 234 8,695 6,880
Insurance of consumer loans and credit cards 8,920 0 8,920 8,165
Other life insurance 26,077 940 25,137 30,113
Reserve for bonuses and discounts 712,831 0 712,831 524,411
of which:        
Non-life insurance 495 0 495 774
PpaP (industrial and business insurance) 0 0 0 0
P&C (property and casualty insurance) 495 0 495 774
Life insurance 712,336 0 712,336 523,638
Vital 59,489 0 59,489 64,221
Vital Invest, Brouček, Modrý Vital Invest 4,787 0 4,787 5,356
Other life insurance 648,060 0 648,060 454,060
Reserve for unearned premiums 56,920 276 56,644 52,758
of which:        
Non-life insurance 39,742 157 39,585 35,381
P&C (property and casualty insurance) 1,001 157 844 618
Card insurance 329 0 329 0
Patron, Patron Profi 13,554 0 13,554 16,623
Other non-life insurance 24,858 0 24,858 18,140
Life insurance 17,178 119 17,059 17,376
Vital Invest 1,744 0 1,744 1,542
Vital 468 0 468 567
Mortgages 1,988 0 1,988 2,081
Other life insurance 12,978 119 12,859 13,186
Reserve for the coverage of obligations from the used TIR 234,679 0 234,679 144,129
Vital 227,238 0 227,238 140,826
Life insurance 7,441 0 7,441 3,303

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

(CZK thousand) 2012 2011
Balance of the reserve for claims as of 1 January 170,626 152,160
Claims paid in the current period arising from claims from the prior period 15,386 17,851
Balance of the reserve for claims as of 31 December 124,325 105,452
Result of claims settlement 30,915 28,856

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

(CZK thousand) 2012 2011
Balance of the reserve for claims as of 1 January 1,521 1,955
Claims paid in the current period arising from claims from the prior period 543 610
Balance of the reserve for claims as of 31 December 883 957
Result of claims settlement 95 388

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 2012 31 December 2011
Reserve for corporate income tax 36,454 45,178
Reserve for legal disputes and similar risks 13,559 13,174
Restructuring reserve 7,500 7,500
Total reserve for other risks and losses 57,513 65,852

The reserve for legal disputes and similar risks represents a reserve for estimated losses of 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.

The balance of the restructuring reserve as of 31 December 2012 was the same as of 31 December 2011. During the reporting period, the reserve was not released in relation to the sales network agent settlement.

3.11. Payables

(CZK thousand)  31 December 2012 31 December 2011
Payables from direct insurance to the policy holders 152,186 113,686
Payables to agents 96 115
Payables from reinsurance transactions 15,229 4,452
Other payables from direct insurance and reinsurance 1,901 71
Total payables from direct insurance and reinsurance 169,412 118,325
Payables to staff from dependent activities 9,939 7,512
Settlement balances with social security and health insurance institutions 4,293 4,575
Payables to financial institutions 0 0
Other payables 169,593 6,209
Other direct taxes 2,200 1,713
Other indirect taxes and fees 2,199 2,703
Total payables 357,636 141,037

None of the Company’s payables were secured by a pledge or any other encumbrance as of 31 December 2012.

As of 31 December 2012, the Company records overdue payables from direct insurance to the policy holders (older than 5 years, in the amount of CZK 13,103 thousand; 2011: CZK 8,059 thousand). These consist of unpaid claims and overpayments of premiums.

Other payables that do not relate to insurance predominantly include deferred tax liability in CZK 150,193 thousand and unpaid invoices (older than 5 years: CZK 0 thousand).

3.12. Temporary Liabilities

Analysis of Temporary Liabilities

(CZK thousand)  31 December 2012 31 December 2011
Deferred income 0 0
Estimated payables 230,783 282,734
of which: Reinsurer’s share in premiums 6,367 6,240
  Commissions to acquirers 191,143 219,264
  Insurance claims 2,184 2,308
  Other 31,089 54,922
Total temporary liabilities 230,783 282,734

Estimated commissions payables to acquirers of CZK 191,143 thousand (2011: CZK 219,264 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 68,854 thousand (2011: CZK 69,744 thousand) and commissions not paid to Komerční banka, a.s. totalling CZK 92,809 thousand (2011: CZK 128,026 thousand).

Other temporary liabilities of CZK 31,089 thousand (2011: CZK 54,922 thousand) principally comprise unbilled supplies of CZK 24,280 thousand (2011: CZK 45,701 thousand) and costs of staff bonuses for 2012 amounting to CZK 6,073 thousand (2011: CZK 8,378 thousand).

3.13. Taxation

Income Tax

The tax due in the fiscal year 2012 totals CZK 35,042 thousand. The tax stemming from the independent tax base is CZK 1,412 thousand.

Deferred Tax

The Company’s deferred tax liability amounted to CZK (150,192) thousand as of 31 December 2012, of which CZK (159,954) thousand was recognised in equity and CZK (3,792) thousand in the profit and loss account in 2012 as decrease of deferred tax asset due to fixed assets and reserves.

(CZK thousand) 31 December 2012 31 December 2011
Deferred tax arising from:    
Net book value of tangible and intangible fixed assets 7,251 11,051
Non-current financial assets (159,954) 43,438
Reserve 2,510 2,503
Total deferred tax (150,193) 56,992

3.14. Non-Life Insurance

(CZK thousand)  2012 2011
Gross written premiums 286,621 257,522
PpaP (industrial and business insurance) 0 (1)
P&C (property and casualty insurance) 1,387 1,657
Card insurance 50,818 43,901
Merlin, Merlin Profi 135,293 114,895
Patron, Patron Profi 35,620 37,174
Other non-life insurance 63,503 59,896
Gross earned premiums 282,375 248,434
PpaP (industrial and business insurance) (247) (351)
P&C (property and casualty insurance) 1,432 1,701
Card insurance 50,755 43,901
Merlin, Merlin Profi 131,806 116,198
Patron, Patron Profi 38,689 39,078
Other non-life insurance 59,940 47,907
Gross costs of insurance claims 50,985 33,047
PpaP (industrial and business insurance) 425 (9)
P&C (property and casualty insurance) 2,244 2,951
Card insurance 20,123 22,001
Merlin, Merlin Profi 14,244 2,617
Patron, Patron Profi 2,639 2,762
Other non-life insurance 11,310 2,725
Reinsurance balance (4,795) (1,607)
Acquisition costs of insurance policies 64,409 73,004
– commissions 66,359 77,371
– other acquisition costs 0 2,690
– release of deferred expenses and accrued income 0 0
– recognition of deferred expenses and accrued income (1,950) (7,057)

3.15. Life insurance

(CZK thousand)  2012 2011
Gross written premiums 5,862,149 6,593,375
Earned premiums 5,862,536 6,593,454
Gross costs of insurance claims 1,882,356 1,893,290
Reinsurance balance (115,631) (8,276)
Acquisition costs of insurance policies 180,486 166,593
– commissions 202,759 184,172
– other acquisition costs 1,627 1,352
– deferred expenses and accrued income (23,901) (18,931)

Summary of life insurance, written premiums

(CZK thousand) 2012 2011
Individual contracts 5,658,476 6,392,256
of which: insurance contracts where the investment risk is assumed by the policy holder 1,106,216 1,756,157
Collective contracts 203,672 201,119
Life insurance – total 5,862,149 6,593,375
Single premiums 4,982,593 5,725,417
of which: insurance contracts where the investment risk is assumed by the policy holder 1,079,549 1,732,394
Regular premiums 879,555 867,958
of which: insurance contracts where the investment risk is assumed by the policy holder 26,667 23,763
Life insurance – total 5,862,149 6,593,375
Insurance contracts without premium 0 0
Insurance contracts with premium 5,862,149 6,593,375
of which: insurance contracts where the investment risk is assumed by the policy holder 1,106,216 1,756,157
Life insurance – total 5,862,149 6,593,375

3.16. Territorial Analysis of Total Premiums Written

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

(CZK thousand) 2012 2011
Written premiums arise from contracts into which the Company entered:    
in the EU member state where it has its registered office 6,083,713 6,810,973
in other EU member states 65,057 39,924
Total premiums written 6,148,770 6,850,897

3.17. Summary of Commissions

For the year ended 31 December 2012, the aggregate balance of commissions in respect of direct insurance was CZK 268,302 thousand (2011: CZK 235,555 thousand) and was segmented as follows:

Life insurance Non-life insurance
(CZK thousand) 2012 2011 2012 2011
Expenses on commissions 201,943 165,241 66,359 70,314

3.18. Financial Placements Income and Expense

For the year ended 31 December 2012, the net income on the Company’s financial placements amounted to CZK 883,271 thousand (2011: CZK 803,902 thousand), of which the net income from assets generated from technical reserves amounted to CZK 836,776 thousand (2011: CZK 759,198 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 2012, this re-allocated balance was CZK 15,952 thousand (2011: CZK 16,582 thousand).

  2012 2011
(CZK thousand) Life insurance Non-life insurance Life insurance Non-life insurance
Year-end net balances of reserves 28,824,738 262,461 24,215,383 291,483
Income from reserves 820,824 15,952 742,615 16,582

3.19. Administrative Expenses

The total amount of administrative expenses was CZK 248,996 thousand in 2012 (2011: CZK 253,170 thousand). The administrative expenses are analysed as follows:

(CZK thousand)  2012 2011
Staff cost (wages, social security and health insurance) 138,716 132,241
Rent 17,498 17,707
Advisory services 21,926 22,668
Telecommunication 1,974 2,505
Training 2,559 1,993
Banking and postal fees 6,433 9,398
IT costs 12,967 13,503
Depreciation 18,870 32,159
Other administrative costs 28,052 20,996
Total 248,996 253,170

The costs of the audit of the financial statements amounted to CZK 1,790 thousand in 2012 (2011: CZK 1,768 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 16,797 thousand (2011: CZK 6,686 thousand).

Other technical expenses of non-life insurance amounting to CZK 44,067 thousand (2011: CZK 19,877 thousand) mainly include the profit shares totalling CZK 26,753 thousand (2011: CZK 18,327 thousand).

Other technical income of life insurance primarily includes the management fee for the sale of Forte funds amounting to CZK 43,257 thousand (2011: CZK 28,446 thousand).

Other technical expenses of life insurance include items relating to the cost of profit sharing in the amount of CZK 105,793 thousand (2011: CZK 106,135 thousand).

Other income from the non-technical accounts amounted to CZK 6,443 thousand (2011: CZK 21,388 thousand), of which the positive exchange rate difference totals CZK 3,448 thousand (2011: CZK 9,427 thousand).

Other costs of the non-technical accounts amounted to CZK 4,381 thousand (2011: CZK 17,723 thousand), of which the negative exchange rate difference totals CZK 4,457 thousand (2011: CZK 9,309 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 245,742 thousand (2011: CZK 250,340 thousand as of 31 December 2012).

3.22. Transactions with Related Parties

2012 2011 Text
Amounts owed to the Group entities 963,285 823,011  
Of which: Komerční banka, a.s. 53,484 51,224 Estimated accrued expenses – Profit sharing
7,661 2,051 Paid commissions for insurance arrangement
39,113 75,651 Estimated accrued expenses – Commissions
1,314 755 Estimated accrued expenses –Trade payables
245 243 Bank Fees
534 198 Trade payables
414,399 413,408 Payables from the cross currency swaps
330,330 153,489 Up-front fee from the cross currency swaps
16 142 Payables from insurance
Of which Essox, s.r.o. 66,828 69,299 Estimated accrued expenses – Profit sharing
1,955 140 Paid commissions for insurance arrangement
Of which: Essox SK, s.r.o. 0 445 Estimated accrued expenses – Profit sharing
272 0 Estimated accrued expenses – Commissions
Of which: MPSS, a.s. 3,606 2,100 Estimated accrued expenses – Commissions
1,373 0 Trade payables
Of which: SG 3,872 4,186 Estimated accrued expenses –Trade payables
Of which: Sogecap 6,500 31,622 Estimated accrued expenses –Trade payables
231 0 Trade payables
14,350 0 Payables from insurance
Of which: SGEB 4,861 1,834 Estimated accrued expenses – Profit sharing
1,077 504 Estimated accrued expenses – Commissions
Of which: BRD 2,009 6,694 Estimated accrued expenses – Commissions
7,091 2,973 Estimated accrued expenses – Profit sharing
Of which: BRD Finance 54 0 Estimated accrued expenses – Profit sharing
559 726 Estimated accrued expenses – Commissions
Of which: PFKB 0 4,428 Payables from insurance
428 320 Trade payables
Of which: HB 517 475 Estimated accrued expenses – Profit sharing
604 104 Estimated accrued expenses – Commissions
Of which: Sogelease 1 0 Estimated accrued expenses – Commissions
Amounts due from the Group entities 3,529,503 2,956,867  
Of which: Komerční banka, a.s. 951,192 810,818 Current accounts and deposits
4,920 5,967 Accrued commissions
14,873 15,706 Estimated accrued income – premiums
49,985 38,462 Receivables from insurance
23 23 Prepayments
400,255 0 Financial placements
Of which: Essox, s.r.o. 37,945 37,701 Prepayments
31,809 32,981 Receivables from insurance
10,081 10,365 Estimated accrued income – premiums
335 332 Accrued commissions
Of which: Essox SK, s.r.o. 23 0 Accrued commissions
23 39 Receivables from insurance
233 401 Prepayments
Of which: Komerční banka Bratislava, a.s. 0 840 Current accounts and deposits
Of which: HB 2,680 512 Current accounts and deposits
2,950 703 Accrued commissions
1,031 214 Estimated accrued income – premiums
4,263 482 Receivables from insurance
Of which: BRD 13,014 9,542 Accrued commissions
2,590 2,590 Estimated accrued income – premiums
16,407 6,668 Current accounts and deposits
Of which: BRD Finance 1,546 1,052 Accrued commissions
667 529 Estimated accrued income – premiums
Of which: MPSS 2,025 429 Estimated accrued income – premiums
Of which: PFKB 0 530 Estimated accrued income – premiums
Of which: SG 1,957,450 1,965,010 Financial placements
Of which: SGEB 1,262 1,266 Accrued commissions
1,528 1,117 Estimated accrued income – premiums
17,961 6,914 Current accounts and deposits
727 0 Receivables from insurance
Of which: SGCIB 1,704 5,605 Trade receivables
Of which: Sogecap 0 69 Trade receivables
Of which: Sogelease 1 0 Estimated accrued income – premiums
Expenses with the Group entities 825,142 712,725  
Of which: Komerční banka, a.s. 54,150 48,749 Expenses on profit sharing
6,804 9,039 Use of trademark + advertising
3,715 3,638 Bank Fees
1,044 748 Accrued expenses – Commissions
386,011 280,922 Accrued expenses – Cross currency swaps
2,771 2,684 Offices lease related expenses
6,771 5,301 Financial investment related expenses
203,766 211,700 Commissions
637 644 Advisory
13,925 16,950 Expenses on instance claims
4,067 455 Other expenses
Of which: SG 3,840 3,482 Advisory
2,208 0 Other expenses
Of which: Komerční banka Bratislava, a.s. 0 11 Bank Fees
Of which: Essox, s.r.o. 70,320 71,533 Expenses on profit sharing
8,926 9,190 Expenses on instance claims
Of which: Essox SK, s.r.o. 303 440 Expenses on profit sharing
Of which: MPSS, a.s. 11,746 10,545 Commissions
608 1,290 Use of trademark + advertising
Of which: BRD 6 6 Bank Fees
16,166 8,130 Commissions
3,795 1,806 Expenses on profit sharing
Of which: BRD Finance 54 (1) Expenses on profit sharing
1,595 907 Commissions
Of which: HB 3,814 447 Expenses on profit sharing
503 1,493 Commissions
Of which: PFKB 2,369 2,124 Contribution of the Company
Of which: SGEB 11 9 Bank Fees
3,241 1,465 Expenses on profit sharing
7,238 4,260 Commissions
Of which: Sogecap 5,473 14,758 Advisory
(736) 0 Advertising
Of which: Sogelease 1 0 Commissions
Income with the Group entities 760,310 729,400  
Of which: Komerční banka, a.s. 6,420 4,423 Interest from current accounts and deposits
323,273 281,038 Accrued interest – cross currency swaps
234,584 195,637 Written premiums
76 60 Other income
255 0 Výnosy z finančního umístění
Of which: SG 93,766 80,226 Výnosy z finančního umístění
Of which: Essox, s.r.o. 97,227 98,827 Written premiums
Of which: Essox SK, s.r.o. 319 548 Written premiums
Of which: MPSS, a.s. 0 (110) Written premiums
Of which: BRD 32,577 23,909 Written premiums
6 3 Interest from current accounts and deposits
Of which: BRD Finance 2,997 2,145 Written premiums
Of which: HB 8,639 2,524 Written premiums
Of which: PFKB 0 2,172 Written premiums
Of which: SGEB 17,577 9,465 Written premiums
11 8 Interest from current accounts and deposits
0 79 Advertising
Of which: SGCIB 43,257 28,446 Other income
Of which: Sogecap (104,537) 0 Written premiums
3,859 0 Other income
Of which: Sogelease 4 0 Written premiums

3.23. Profit/(Loss)

(CZK thousand)  2012 2011
Non-life insurance 121,989 109,027
Life insurance 34,014 139,964
Non-technical account (before tax) 57,860 56,097
Profit/(loss) before tax 213,863 305,088
Corporate income tax and other taxes 38,445 54,042
Profit/(loss) for the accounting period 175,418 251,046

3.24. Staff Costs and Similar Costs

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

2012

(CZK thousand) FTE Wages and
salaries
Social security and health insurance Other staff
costs
Total staff
costs
Staff 149 87,272 29,169 2,431 118,872
Management 5 16,668 2,788 389 19,845
Total 154 103,940 31,957 2,820 138,717

2011

(CZK thousand) FTE Wages and
salaries
Social security and health insurance Other staff
costs
Total staff
costs
Staff 146 76,090 25,732 4,633 106,455
Management 5 20,223 5,243 320 25,786
Total 151 96,313 30,975 4,953 132,241

Bonuses paid to administrative, management, supervisory and other bodies

(CZK thousand)  2012 2011
Bonuses to the Supervisory Board 24 26
Bonuses to the Board of Directors 990 1,048

As of 31 December 2012, fourteen 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)  2012 2011
Reinsurer’s share of premiums (132,654) (22,536)
Reinsurer’s share of insurance claims 9,657 10,694
Commissions 2,571 1,959
Reinsurance balance (120,426) (9,883)
Reinsurer’s share in the creation and use of reserves (11,260) (3,038)
Reinsurance result (131,686) (12,921)

The amounts due from and to reinsurers:

(CZK thousand)  31 December 2012 31 December 2011
Receivable from reinsurers 0 283
Estimated receivable 654 2,404
Payable to reinsurers (17,130) (4,523)
Estimated payable (6,367) (6,240)
Net receivable (payable) from reinsurers (22,843) (8,075)

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.


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