Annual Report 2010 - GENERALI CEE HOLDING

Annual Report 2010
1
Contents
GENERALI GROUP POLAND ....................................................................................................................... 3
A letter from the President of Generali Group Poland Management Board . ....................................................... 4
Company profiles . ........................................................................................................................................ 6
History.......................................................................................................................................................... 9
Product range.............................................................................................................................................. 11
Supervisory Board’s Reports........................................................................................................................ 15
SELECTED ITEMS OF MANAGEMENT REPORTS OF GENERALI T.U. S.A. AND GENERALI ŻYCIE T.U. S.A. . .. 18
Selected items of Management Reports of Generali T.U. S.A. ........................................................................ 19
Selected items of Management Reports of Generali Życie T.U. S.A. . .............................................................. 23
SELECTED ITEMS OF FINANCIAL STATEMENT OF GENERALI T.U. S.A. ................................................... 26
Selected items of Balance sheet .................................................................................................................. 27
Selected items of Profit and Loss Account.................................................................................................... 28
Selected items of Cash Flow Statement........................................................................................................ 29
Registered Auditor’s Opinion ....................................................................................................................... 30
SELECTED ITEMS OF FINANCIAL STATEMENT OF GENERALI ŻYCIE T.U. S.A ......................................... 31
Selected items of Balance sheet .................................................................................................................. 32
Selected items of Profit and Loss Account . .................................................................................................. 33
Selected items of Cash Flow Statement........................................................................................................ 34
Registered Auditor’s Opinion........................................................................................................................ 35
SELECTED ITEMS OF MANAGEMENT REPORT OF GENERALI
POWSZECHNE TOWARZYSTWO EMERYTALNE S.A. ................................................................................ 36
SELECTED ITEMS OF FINANCIAL STATEMENT OF GENERALI
POWSZECHNE TOWARZYSTWO EMERYTALNE S.A.................................................................................. 44
Selected items of Balance sheet .................................................................................................................. 45
Selected items of Profit and Loss Account .................................................................................................... 46
Registered Auditor’s Opinion ....................................................................................................................... 47
GENERALI ENERGY .................................................................................................................................. 48
2
GENERALI GROUP POLAND
3
A letter from the President
of Generali Group Poland
Management Board
Dear All,
Acting for the first time as the President of the Management Board of Generali Poland Group companies, I have
the pleasure of conveying the Annual Report of the Group for the year 2010. Last year was closed with gross
premium written in the amount of 1.7 B PLN as compared to 1.9 B PLN a year earlier. For us this was a time
of dynamic expansion in key market segments, and a slight drop in the year-to year gross premium written is due
to single events that had occurred in the year 2009, which makes these results not fully comparable.
Net profit of the companies in the group amounted to 20.0 M PLN in 2010 as compared with 24.4 M PLN a year
earlier. The result had been burdened both by the weather anomalies which significantly influenced the visibly
higher level of claims paid by the company, as well as by negative trends on the Polish motor insurance market.
Gross written premium on the non-life market amounted to almost 750 M PLN and was by 3% higher
in comparison to the previous year. Mass non-motor insurance was Generali’s most dynamically expanding
business line (increase by 29%), playing an increasingly important role in the company’s portfolio. To our satisfaction, the company also managed to systematically improve profitability of motor insurance line over the last
months of the year.
Gross written premium on the life market amounted to 990,6 M PLN as compared to 1.2 M PLN a year
before. A lower year-to-year volume of gross premium written from this segment of the market is a consequence
of a very high, yet single gross written premium in the fourth quarter of the year 2009 on the bank assurance
market, which slightly disturbs the comparability of our achievements. What is most important, though, is the
fact that we were expanding significantly faster than the competition (an increase by 27%) in the regular premium
product market, which constitutes the core of our market strategy. This is to be attributed both to an excellent
acquisition of new clients (APE increase by 30%), and a very good portfolio retention, which is Generali’s positive
distinctive feature on the market.
In the past year, despite legislative commotion on the market of pension insurance, Generali could take pride
in further expansion of our operations on that market. OFE Generali surpassed the threshold of 10 B PLN
of managed assets and was the leader of both rankings organized by the Polish Financial Supervision Authority
on a three-year return on investment rate. At the end of the year, Generali managed 782 thousand of pension
accounts, recording a 16% year- to – year increase, a result which is four times better than that of our market
competitors.
4
Dear All,
In the context of many market difficulties we had to face, I estimate Generali’s last year’s achievements
as promising, even more so considering our rate of expansion which in many market segments was faster than
that of the competitors.
Generali’s key target for non-life insurance in 2011 is the improvement of profitability in all main business lines.
I count on the market to become ready for the changes which will give us the possibility of competing not only
on the price level, but also on the quality of customer service level.
As far as life insurance is concerned, Generali wishes to focus on regular business, that is on classic and longterm life insurance products. Announced changes in pension system should stimulate Poles into additional
savings efforts and investments for the future, which can also result in further expansion of life insurance
products in Poland.
I would like the year 2011 to constitute a new beginning for Generali after all changes that had taken place,
including ones on the Management Board level. I am convinced that the strength of our company is going
to be defined by the core of our business strategy based on: multi-channel distribution, complexity of our product
offer, very good investments results, proximity and partnership for the company’s shareholders, our Clients and
all Business Partners in conjunction with efficient service and proper price.
Respectfully Yours,
Artur Olech
President of the Board of Management
of Generali Poland Group
5
COMPANY PROFILES
Company:
Headquarter:
Subscribed capital:
Shareholder:
Licence:
Scope of activity:
Generali Towarzystwo Ubezpieczeń S.A.
ul. Postępu 15 B
02-676 Warszawa
190.31 M PLN
Generali PPF Holding B.V.
5 July 1999
All groups of Division II*; remaining personal insurance
and property insurance
*indicated in the appendix to the legal act on insurance activity
Management Board:
Supervisory Board:
Artur Olech – President of the Board (since November 2010 )
Jiři Střelický – Member of the Board
Libor Mašícek – Member of the Board
Klára Starková – Chairman of the Supervisory Board
Luisa Coloni – Vice-Chairman of the Supervisory Board
Jaroslav Mlynář – Member of the Supervisory Board
Selected financial data
(Thousand PLN)
2005
2006
2007
2008
2009
2010
Gross written premium
281,894
247,734
403,193
600,138
730,512
749,978
Net written premium
103,833
92,410
163,722
537,526
561,202
603,749
Gross technical provisions*
365,594
386,431
516,803
683,341
865,978
1,013,892
Net technical provisions*
153,865
170,528
454,974
623,696
710,374
810,678
Investments
424,827
415,356
539,536
719,411
813,721
903,813
Subscribed capital
190,210
190,210
190,310
190,310
190,310
190,310
329
360
409
510
588
638
Number of employees
* Provisions include estimated subrogation
6
Company:
Headquarter:
Subscribed capital:
Shareholder:
Licence:
Scope of activity:
Generali Życie Towarzystwo Ubezpieczeń S.A.
ul. Postępu 15 B
02-676 Warszawa
61 M PLN
Generali PPF Holding B.V.
6 January 1998 r.
All groups of Division I*, life insurance
*indicated in the appendix to the legal act on insurance activity
Management Board:
Supervisory Board:
Klára Starková – Chairman of the Supervisory Board
Luisa Coloni – Vice-Chairman of the Supervisory Board
Jaroslav Mlynář – Member of the Supervisory Board
Selected financial data
(Thousand PLN)
2005
2006
2007
2008
2009
2010
Gross written premium
435,750
486,536
537,539
792,027
1,209,428
990,566
Net written premium
430,323
478,950
527,642
779,321
1,191,354
963,530
Gross technical provisions
664,794
948,901
1,110,337
1,086,907
1,897,344
1,816,261
Net technical provisions
663,451
947,595
1,108,354
1,083,137
1,889,817
1,807,948
Investments
756,722
1,048,360
1,186,239
1,110,863
1,883,614
1,804,780
61,000
61,000
61,000
61,000
61,000
61,000
173
177
219
279
292
337
Subscribed capital
Number of employees
7
Artur Olech – President of the Board (since November 2010)
Jiři Střelický – Member of the Board
Libor Mašícek – Member of the Board
Company:
Headquarter:
Subscribed capital:
Shareholder:
Licence:
Scope of activity:
Management Board:
Supervisory Board:
Selected financial data
(Thousand PLN)
Assets under management
Revenue from sales
Net income
Subscribed capital
Number of employees
8
Generali Powszechne Towarzystwo Emerytalne S.A.
ul. Postępu 15 B
02-676 Warszawa
145.5 M PLN
Generali T.U. S.A.: 100 % shares
8 January 1999
Generali OFE management
Rafał Markiewicz – Member of the Board
Piotr Pindel – Member of the Board
Jacek Smolarek – Member of the Board
Luisa Coloni – Chairman of the Supervisory Board
Jiři Straka – Vice-Chairman of the Supervisory Board
Karol Lutkowski – Member of the Supervisory Board
Maciej Zieliński – Member of the Supervisory Board
2005
2006
2007
2008
2009
2010
2,935,620
4,186,385
5,264,476
5,476,018
7,724,894
10,425,965
45,632
53,409
58,411
72,324
81,245
94,801
9,633
13,267
16,059
20,022
24,427
40,702
145,500
145,500
145,500
145,500
145,500
145,500
144
156
167
170
187
225
GENERALI IN POLAND - HISTORY
1837
The first Generali branches are established on the Polish territory.
1925
Generali obtains the right to conduct business on the whole territory of Poland.
1925-1939
1948
All private, national and foreign insurance companies, including Generali,
are denied the right to conduct business in Poland.
1998
Generali returns to Poland as Generali – Risk Consulting Sp. z o.o.
5 July 1999
Generali acquires a permit from the Ministry of Finance to operate in the area
of life insurance and the remaining personal and property insurance.
Two insurance companies are established: Generali Towarzystwo Ubezpieczeń
S.A. and Generali Życie Towarzystwo Ubezpieczeń S.A.
26 March 2002
Generali Holding signs an agreement with Zurich Financial Services
for the take-over of two insurance companies by Generali
(Zurich Towarzystwo Ubezpieczeń S.A., Zurich Towarzystwo Ubezpieczeń
na Życie S.A.) and Zurich Powszechne Towarzystwo Emerytalne S.A. managing
the Zurich Open Pension Fund.
6 November 2002
11 April 2003
8 May 2003
January 2004
9
In the interwar period, Generali operates offices in all major Polish cities,
including Warsaw, Lvov, Krakow, Katowice, Poznań, Lodz and Vilnius.
In cooperation with an Austrian company Erste Allgemeine Versicherung,
Generali purchases shares of three Polish companies: Generali Port – Polonia,
Patria and Varsaviana.
Generali Holding purchases shares of the Zurich Towarzystwo Ubezpieczeń
na Życie S.A., Zurich Towarzystwo Ubezpieczeń S.A. and Zurich Powszechne
Towarzystwo Emerytalne S.A., becoming the owner of these companies.
Zurich Powszechne Towarzystwo Emerytalne S.A. becomes Generali
Powszechne Towarzystwo Emerytalne S.A.
The fund’s name is changed from Zurich Open Pension Fund (OFE)
to Generali Open Pension Fund (OFE).
The completion of merger between Generali and Zurich in life
& non-life sectors.
1 January 2006
Generali established a car dealers’ insurance company – Generali AutoProgram
Sp. z o. o. (GAP).
December 2006
Polish Generali Group includes the following companies:
Generali Towarzystwo Ubezpieczeń S.A.
Generali Życie Towarzystwo Ubezpieczeń S.A.
Generali Powszechne Towarzystwo Emerytalne S.A.
Generali Finance Sp. z o. o.
Generali AutoProgram Sp. z o. o.
November 2007
January 2008
Final creation of Generali PPF Holding.
May 2008
Change of Generali’s headquarter.
May 2008
Start of “Direct”- a new sales channel.
September 2008
December 2008
January 2009
For the first time ever, Generali gross premiums written over 1 B PLN.
Generali Group’s record-high year. The Group closed the year with gross
premiums written at 1,392 M PLN.
New corporate website available at www.generali.pl.
April 2009
Generali OFE- second time in a row- the winner of a prestigious ranking
prepared by daily newspaper “Rzeczpospolita”.
June 2009
The title of the best life insurance company in 2008 and 2nd place in the best
PTE category. Generali OFE the winner of “Gazeta Wyborcza” ranking.
October 2009
May 2010
Third time in a row Generali OFE placed first in prestigious ranking by daily
newspaper “Rzeczpospolita”.
“Fair Play” Award of the brokerage industry for Generali.
June 2010
Generali laureate in a contest Student Product of the Year in the category
“Student Pension” (monthly magazine “Dlaczego”).
June 2010
Generali PTE a winner in the ranking of The Top Financial Institutions
(“Rzeczpospolita” 22.06.2010).
August 2010
October 2010
November 2010
10
Andrzej Jarczyk becomes a President of Generali Group in Poland.
A new, refreshed web site of Generali Direct service.
Generali OFE the best by a three-year return on investment in the KNF ranking
(10/06/2010) and the winner of “Rzeczpospolita” ranking.
Mr Artur Olech becomes a President of Generali Group in Poland.
PRODUCT RANGE
Insurance for individual clients
Life insurance
1. LEW PARTNER life and endowment insurance
2. LEW JUNIOR dowry insurance
3. LEW SENIOR life insurance
4. EVENTO accident package
5. EVENTO accident package (for AFI Group)
6. Generali ProFamilia
7. Generali ProFamilia – M1 version
8. Children’s saving plan
9. Systematic pension and investment plan
10. Insurance plan for short-term family welfare
11. Life insurance with insurance capital plan Generali Beneficio with regular premium
12. Life insurance with insurance capital plan Generali Beneficio with singular premium
13. Life insurance with insurance capital plan Generali OmniProfit with regular premium
14. Life insurance with insurance capital plan Generali OmniProfit with singular premium
15. Life insurance with insurance capital plan OVB Future Invest
16. Life insurance with insurance capital plan Prospero with regular premium
17. Term annuity life insurance
18. Life insurance with IKE rider
19. IKE BRE life insurance with insurance capital plan
20. Life insurance with insurance capital fund LEOLIFE (new)
21. Life insurance with insurance capital fund LEOLIFE (transferred)
22. Life insurance with insurance capital funds DB Invest in Future – active saving
23. Life Insurance unit linked Generali „Insurance with future” with regular premium
24. Investment collateral – term and health insurance
11
Property insurance
1. LEW DOMOWNIK comprehensive household insurance
2. LEW PRYWATNIE third party liability in private life insurance
3. LEW BUDOWNICZY buildings and buildings under construction insurance
4. LEW LOKATOR household and third party liability insurance
5. PAKIET DIAMENTOWY – all risk insurance
6. Generali PRESTO – insurance package for small and medium size companies
7. Generali dla spółdzielczości – collective property insurance
8. Compulsory third party liability insurance of farmers and the compulsory insurance
of buildings being included in an arable farm
9. Voluntary insurance of possessions in an arable farms
10. Luggage insurance in vehicle
11. The home insurance as parts of a building multitenant (Direct)
12. House insurance (Direct)
13. Insurance of permanent elements and household movables (Direct)
14. Third party liability insurance (Direct)
Personal insurance
1. Personal accident insurance
2. Travel insurance – PODRÓŻNIK
3. Foreign travel insurance
4. Personal accidents insurance – permanent disability (L- 1) (Direct)
Motor insurance
1. Third party liability for vehicle owners covering losses caused I domestic and international traffic
2. Green Card
3. Motor own damage and theft insurance (autocasco)
4. Personal accident insurance for drivers and passengers of the vehicle
5. Personal accident insurance for drivers of the vehicle
6. LEW POMOCNIK – Generali Assistance insurance
7. LEW ADWOKAT – legal protection insurance in road traffic
8. Motor Third Party Liability Border Insurance
12
Insurance for corporate clients
Group life insurance
1. CERTUM group life insurance
2. CERTUM MAX group life insurance
3. Group life insurance – for small and medium-sized companies
4. Employee pension schemes
5. Individual prolongation of group life insurance
6. Group life and health insurance II
7. CZESNE group life insurance
Group non-life insurance
1. Group Health Insurance II
2. Accidental group insurance
Property insurance
1. Property insurance
• Fire and allied perils insurance
• Burglary and robbery property insurance
• All risk property insurance
• Business interruption insurance
• Commercial property insurance
2. Technical insurance
• Construction machinery insurance
• Machinery breakdown
• All risk electronic equipment insurance
• Construction all risks insurance
• Erection all risks insurance
• Motor own damage and theft insurance (autocasco) for track vehicles
3. Third party liability insurance
4. Aerial insurance
5. Transport insurance
• Cargo insurance
• Carrier’s third party liability insurance in domestic and international transport
• Shipper’s third party liability insurance
6. Financial insurance
• Insurance Guarantees
• Bancassurance
13
Group personal insurance
1. Personal accidents insurance for children, secondary school children and employees
of educational institutions
2. Personal accidents insurance students and employees of colleges
3. Personal accident insurance for sports organizations
4. Travel insurance – PODRÓŻNIK
5. Foreign travel insurance – corporate policies for business travels
Motor insurance
1. Third party liability for vehicle owners covering losses caused by domestic and international traffic
2. Green Card
3. Motor own damage and theft insurance (autocasco)
4. Personal accident insurance for drivers and passengers of the vehicle
5. Personal accident insurance for drivers of the vehicle
6. LEW POMOCNIK – Generali Assistance insurance
7. LEW ADWOKAT – legal protection insurance in road traffic
8. Motor Third Party Liability Border Insurance.
Generali PTE S.A. offer
Membership in Generali OFE
14
SUPERVISORY
BOARD’S REPORTS
Report of the Supervisory Board of Generali T.U. S.A.
for the financial year 2010
The Supervisory Board fulfilled its responsibilities according to the law and the Articles of Associations
in the financial year 2010.
During the meetings with the Management Board the Supervisory Board was regularly informed about the current
company’s situation and supervised Company’s management by the Management Board.
The Supervisory Board examined the financial statements of the Company as well as the Management
Board’s report on the Company’s operations for the financial year 2010 and has no objections to its content.
The Supervisory Board confirms that according to its best knowledge and due care, these are prepared
in accordance with the laws, Company’s books and documents as well as with factual state, they reflect correctly and
reliably the results of Company’s economic activity, financial and assets status in the financial year 2010.
The Supervisory Board examined the opinion of chartered auditor - PricewaterhouseCoopers Sp. z o.o.,
confirming proper preparation of the financial statement and the Management Board’s report on the Company’s
operations for the financial year 2010.
The Supervisory Board shares the Management Board’s opinion on the loss coverage.
In connection with the above the Supervisory Board recommends the General Assembly to pass the following
resolutions:
1) Approving of Management Board’s Report on Company’s operations for the financial year 2010;
2) Approving of Company’s Financial Statement for the financial year 2010;
3) Covering the loss for the financial year 2010 in the amount of 20,075,612.83 PLN with the future profits
of the Company;
4) Granting Members of Management Board the vote of approval the performance of their duties
in the financial year 2010.
Warsaw, the 31st of March 2011.
15
Klára Starková
Luisa Coloni
Jaroslav Mlynář
Chairman of the Supervisory Board
Vice-Chairman of the Supervisory Board
Member of the Supervisory Board
Report of the Supervisory Board of Generali Życie T.U. S.A.
for the financial year 2010
The Supervisory Board fulfilled its responsibilities according to the law and the Articles of Associations
in the financial year 2010.
During the meetings with the Management Board the Supervisory Board was regularly informed about the current
company’s situation and supervised Company’s management by the Management Board.
The Supervisory Board examined the financial statements of the Company as well as the Management Board’s
report on the Company’s operations for the financial year 2010 and has no objections to its content. The Supervisory
Board confirms that according to its best knowledge and due care, these are prepared in accordance with
the laws, Company’s books and documents as well as with factual state, they reflect correctly and reliably
the results of Company’s economic activity, financial and assets status in the financial year 2010.
The Supervisory Board examined the opinion of chartered auditor - PricewaterhouseCoopers Sp. z o.o.,
confirming proper preparation of the financial statement and the Management Board’s report on the Company’s
operations for the financial year 2010.
The Supervisory Board shares the Management Board’s opinion on profit’s allocation.
In connection with the above the Supervisory Board recommends the General Assembly to pass the following
resolutions:
1) Approving of Management Board’s Report on Company’s operations for the financial year 2010;
2) Approving of Company’s Financial Statement for the financial year 2010;
3) Distributing of profit for the financial year 2010 in the amount of 29,820,220.57 PLN in a manner requested
by the Management Board, i.e. allocating it in whole for the increase of the reserve capital with the possibility
of its allocation in the future between the Company`s shareholders;
4) Granting Members of Management Board the vote of approval the performance of their duties in the financial
year 2010.
Warsaw, the 31st of March 2011.
16
Klára Starková
Luisa Coloni
Jaroslav Mlynář
Chairman of the Supervisory Board
Vice-Chairman of the Supervisory Board
Member of the Supervisory Board
Report of the Supervisory Board of Generali Powszechne
Towarzystwo Emerytalne S.A. for the financial year 2010
The Supervisory Board fulfilled its responsibilities according to the law and Articles of Associations
in the financial year 2010.
During the meetings with the Management Board the Supervisory Board was regularly informed about
the current company’s situation and supervised Company’s management by the Management Board.
The Supervisory Board examined the financial statements of the Company and of Generali Otwarty Fundusz
Emerytalny (“Fund”) as well as the Management Board’s report on the Company’s operations for the financial year
2010 and has no objections to their content. The Supervisory Board confirms that according to its best knowledge
and due care, these are prepared in accordance with law, Company’s and Fund’s books and documents as well
as with factual state, they reflect correctly and reliably the results of Company’s economic activity, financial and
assets status of the Company and of the Fund in the financial year 2010.
The Supervisory Board examined the opinion of chartered auditor - PricewaterhouseCoopers Sp. z o.o., confirming
proper preparation of the financial statements and the Management Board’s report on the Company’s operations
for the financial year 2010.
The Supervisory Board shares the Management Board’s opinion on profit’s allocation.
In connection with the above the Supervisory Board recommends the General Assembly to pass the following
resolutions:
1) Approving of Management Board’s Report on Company’s operations for the financial year 2010;
2) Approving of Company’s and Fund’s Financial Statement for the financial year 2010;
3) Allocating the profit from the financial year 2010 in a manner requested by the Management Board,
i.e.: allocating the profit in whole to the reserve capital with the possibility of its allocation in the future
be tween the Company`s shareholders;
4) Granting Members of Management Board the vote of approval the performance of their duties
in the financial year 2010.
Warsaw, the 31st of March 2011.
17
Luisa Coloni
Jiři Straka
Chairman of the Supervisory Board
Vice-Chairman of the Supervisory Board
Karol Lutkowski
Maciej Zieliński
Member of the Supervisory Board
Member of the Supervisory Board
SELECTED ITEMS
OF MANAGEMENT REPORTS
OF GENERALI T.U. S.A.
AND GENERALI ŻYCIE T.U. S.A.
18
SELECTED ITEMS
OF MANAGEMENT REPORT
OF GENERALI T.U. S.A.
1. Key events in 2010 and post balance sheet key events
In comparison with the year 2009 in the year 2010 Generali T.U. S.A. recorded increase in the volume of the written
premium by 2.7%. Generali T.U. S.A. moved to the 9 position (from 8) in relation to the insurance market share.
It should be said that in the year 2010 the Management Board decided to increase the prices for car and property
insurance what resulted in the drop of the sales dynamic.
Year 2010 was characterized by further development of the particular sales channels. The cooperation with the car
dealers, started already in 2006 (in co-operation with the service company GAP Sp. z o. o.), resulted in the written
premium in year 2010 of 150.7 M PLN. Simultaneously the further development of the sales net related to the
corporate insurance was continued and the development of the Bancassurance sales channel.
In the year 2010 the results of the changes in tariffs, particularly in the motor, personal and accident insurance were
equalized by the catastrophic events, which occurred in year 2010 and had negative impact on financial results
of Generali T.U. S.A. and whole property insurance market in Poland. The catastrophic events, which had
the highest impact on the Company’s financial results were:
•
the snowfall, at the beginning of 2010
•
two floods at the turn of May and June and in August
The total impact on the technical net result of the above mentioned events was -40,8 M PLN.
Additionally the financial result 2010 was influenced by the fine imposed by UOKiK (Office of Competition
and Consumer Protection) in the amount of 700 k PLN.
After the balance-sheet date, there were no key events, which would materially influence the Company’s
situation.
2. Financial situation
In the year 2010 the Company recorded an increase of the balance sheet amount by 109 M PLN. to the level
of 1,185 M PLN, mainly as a result of an increase in the value of the financial investments, including an increase
of shares in related parties and in other investments (increase by 90 M PLN). On the liabilities side the net technical
reserves increased by 102 M PLN. In 2010 it is noticeable, that the reinsurance balances increased.
In the year 2010 Generali T.U. S.A. recorded the gross written premium in total value of 750 M PLN. The biggest
share in the portfolio recorded car insurance products (about 63%). The second position regarding the premium
volume has corporate insurance portfolio (24.6%).
19
In comparison to the written premium collected in 2009 practically in all business lines the two-digit increase
was recorded. The highest increase stated in absolute amounts was noted in car insurance. The increase
amounted about 17.4 M PLN. The second increase area was personal insurance, the increase amounted
to about 10.9 M PLN.
The significant influence on the deterioration of the technical result in 2010 had increase of the loss ratio.
The deterioration of the claims ratio was mainly in the corporate and household insurance, mainly due to the
catastrophic events, which occurred in 2010. Its impact on net technical result was 40.8 M PLN.
High security ratios
The Company still maintains high security ratios. The ratio reflecting the coverage of solvency margin with own
funds was 130.3% and remains of stable level in comparison with the prior year (146.3%). The ratio reflecting
the coverage of technical provisions with assets remains on the secured level and amounted to 109.6% as at the
end of December 2010 compared to 104.2% as at the end of December 2009.
Generali T.U. S.A. keeps high safety level of technical reserves due to:
•
increase in frequency of the property claims (both in MTPL insurance and in Autocasco),
resulting between other from the increase in the insurance crime during the crisis
•
increase in the value of the personal claims (affects MTPL insurance), particularly annuities,
due to the intensified activities of law offices
•
changes in law (i.e. issue of the compensation for the death of related person) and lack of the unique
jurisdiction, leading to permanent deterioration of the position of the insurance companies and increase
in risks related to car insurance, with contemporary increase in the price competition between incurance
companies
Expected financial situation
We expect that the Company will keep the market position with simultaneous improvement of the portfolio
profitability and maintenance of the high security ratios.
3. Expected Company’s development
Main targets for the year 2011 include:
20
•
Further development resulting in the increase in market share
•
Improvement of profit after tax in comparison with the year 2010
•
Improvement of the profitability of the offered products
•
Continued development of the co-operation with the regional multiagencies
with main scope for sale of property and car insurance
•
Continued development of the co-operation with the car dealers
•
Continued development of the co-operation with regional brokers in the area of corporate insurance
•
Automation of internal processes
4. Description of the risks relating to financial instruments
Interest rate risk borne by investments
Interest rate risk is the risk that individual items of the assets can fluctuate because of changes in market interest
rates. In the case of our Company the interest rate risk relates mainly to the fact of having in the investment
portfolio the debt securities. The interest rate risk relates to both debt securities with variable interest and
with fixed interest. Debt securities with fixed interest are exposed to the risk of changes in fair value. The process
of interest rate risk management, which exists in the Company, is aimed at restriction of the negative influence
of the changes in the interest rates on investment income. The limitation is realized through proper selection
of the financial instruments with variable and fixed interest and their diversification in respect of the maturity
and the coupons frequency.
The value of the debt securities with variable interest as at 31 December 2010 and 31 December 2009
amounted respectively to: 160,696,929.22 PLN and 95,832,224.95 PLN, and the value of the debt securities with
fixed interest as at 31 December 2010 and 31 December 2009 amounted respectively to: 376,212,379.47 PLN
and 454,515,036.17 PLN.
Taking into consideration the Company’s asset structure, in particularly the financial asset structure and its sensitivity to the interest rate changes, it should be noted the interest rate risk born by the Company is low. At the same
time, the Company conducts ongoing analysis of the assets sensitive to interest rate changes, what considerably
influence the optimization of the risk born.
Debt securities with variable interest rate owned by the Company, as at the end of the year 2010, had the frequency
of 1, 3 and 6 months.
Credit risk borne
Credit risk is the risk of the loss, resulting from the third parties failure to discharge an obligation towards
the Company. In relation to financial assets such as cash and cash equivalents, assets available for sale and
receivables, the Company’s credit risk occurs when the counterparty is not able to repay its debts, and maximum
exposure (value of the loss) is equal to the book value of the assets.
Taking into consideration fact, that the Company invests majority of its assets into the financial instruments issued
by the State Treasury and the cash is deposited in banks quoted on the stock Exchange, with safe and constantly
monitored rating, the Management Board evaluate the credit risk of the financial instruments on the middle level.
The investments in debt securities issued by other parties than the State Treasury are made within limits defined
by law and after the analysis of the financial standing of the issuer, what decreases the risk of such investments.
Accepted by the Company goals and methods of financial risk management
The purpose of the Company investment policy is the maximisation of the investment return rate with the simultaneous maintenance of the investments security and the Company’s liquidity.
The risks related to investment portfolio are controlled by:
1. proper adaptation of the modified duration index, depending in the market situation and the expectations
of the Investment Department for the portfolio of debt securities.
2. system of limits, which include the credit and concentration risk, in relation to the single issuer
(or the group of the assets in the investment portfolio).
3. hedging of the foreign currency position in relation to assets denominated in foreign currency.
4. system of limits in relation to the maturity of the individual classes of corporate debt securities.
5. system of limits for open foreign currency position.
6. system of limits relating to individual transactions.
21
5. Risks and threats to the Company’s activity
The negative influence on the Company’s activity could have the failure to achieve the goals as a result
of the increase in the unemployment rate and decrease in purchase power of the society. This could result
in the decrease of the gross written premium volume and as a consequence with the incurred expenses could
result in the worsening of the net financial result.
The next treat is still very slow increase on the market in relation to property and personal accident insurance.
In comparison to the EU there is still very low level of the expenditure for insurance per capita. From one side
it very high potential market, on the other very slow insurance market development shows that the insurance
awareness of Poles increases very slowly.
Rising competition (between others further popularization of direct sale) can result in worsening profitability
of portfolio.
22
SELECTED ITEMS
OF MANAGEMENT REPORT
OF GENERALI ŻYCIE T.U. S.A.
1. Key events in 2010 and post balance sheet key events
In 2010 new following products were introduced:
1. Modification of the group life insurance for small and middle companies „Packet Certum”.
2. „PROSPERO” – investment-insurance product for individual clients.
In year 2010 the Company reduced the activity related with single premiums from short term life insurance
products sold by bancassurance, at the same time recording the dynamic increase of the written premium with regular
payments.
After the balance-sheet date, there were no key events, which would materially influence the Company’s
situation.
2. Financial situation
Maintaining the balance sheet amount on the similar level
In comparison to previous year in 2010 the Company recorded increase of the balance sheet amount
by 3.6 M PLN to level of 2,156.7 M PLN. The decrease of the provisions for life insurance amounting to 459.8 M PLN
resulted from matured short term life insurance products sold by bancassurance and decrease of the written
single premiums from this type of products. The drop in the provisions for life insurance was partially compensated
by dynamic increase in the provisions for life insurance where the investment risk is borne by the policyholders
in the amount of 386.7 M PLN due to the increase in the written premium. The other item influencing the amount
of the balance sheet amount was the increase in deferred acquisition costs by 78.6 M PLN due the sales
increase, mainly from individual policies.
Decrease of the gross premium written by 18.1%
In 2010 gross premium written collected by Generali Życie T.U. S.A. dropped by 18.1% (from 1,209.4 M PLN
in 2009 to 990.6 M PLN in 2010). The decrease resulted from the drop in the single written premium from
bancassurance products, which only partially was compensated by the increase in the single written premium from
other insurance contracts (increase by 39.7 M PLN to the level 87.6 M PLN).
In the area of insurance with the premium paid on a periodical basis, the premium written growth dynamics
was 26.8% which exceeds the average market growth (the regular premium growth dynamics for 3Q 2010 was
ca. 9.9%). A dynamic growth of the premium with the premium paid on a periodical basis was achieved due to the
dynamically growing sales including mainly individual life insurance policies where the investment risk is borne by
the insuring person.
23
In 2010, the largest share in the gross premium written was attributed to the gross premium from life insurance
(gr. 1) 48.7%, followed by the gross premium from the unit-linked life insurance constituting 43.0% of the total
premium. In comparison with the preceding year, an increase in the gross premium written is noted in group 5
by 15.0% which is the primary result of the increased sale of corporate insurance, which are often, in addition
to the basic risks, supplemented with the additional agreements.
The lapse ratio in the policy first year was stable in comparison with the prior year.
Financial performance
In comparison with the preceding year, in 2010, the Company noted an improved technical result by 9.6 M PLN
(in 2010, the technical result was 35.7 M PLN) primarily due to the increase in the premium written paid
on a regular basis and considerable increase of investments at the risk of the insured under management and
thus increased fees. A consequence of the higher technical result is the increased net financial result (29.8 M PLN
in 2010; 25.3 M PLN in 2009).
Security Ratios
The Company continues to maintain the security ratios at a proper level. The technical reserves covered
with assets for insurance other than life insurance where the investment risk is borne by the insuring persons
was 107.73% while the solvency margin coverage with equity was 170.67%.
Expected financial situation
We expect the Company to achieve increasingly better financial results by further developing its portfolio,
increasing the gross premium written and market share accompanied by the simultaneous growth of the positive
financial result of the Company.
3. Expected development
In 2010, the Company achieved good results related to the area of new customer acquisition and growth
of the portfolio.
The primary objectives of Generali in 2011 include:
•
Active expansion of the own sales network (mainly individual insurance)
•
Further development of cooperation with the banks (new products, new partners)
•
In the case of the so-called investment products, further development of the range of available
investment funds
•
Commencement of activities aimed to maintain the quality of the existing portfolio and its build-up through
the expansion of the offer
4. Description of the risks relating to financial instruments
Interest rate risk borne by investments
For the estimation of the existing risk the Company uses the modified duration index. The modified duration
index is variable in the time and shaped based on the expectations about the market situation of the Investment
Department.
24
The modified duration index of the debt portfolio varies in time depending on the expectations of the Investment
Department with respect to the development of the market situation. The rules of the investment policy are laid
down in the Regulations on Investment Policy and Functioning of the Investment Department.
Credit risk borne by investments
In the debt part of the portfolio, the Company invests majority of assets in debt securities issued by the State
Treasury. Investments in the corporate debts securities are limited to a selected list of issuers with high credit
reliability.
Accepted by the Company goals and methods of financial risk management
The purpose of the Company investment policy is the maximisation of the investment return rate with the simultaneous maintenance of the investments security and the Company’s liquidity.
The risks related to investment portfolio are controlled by:
1. Proper adaptation of the modified duration index, depending in the market situation
and the expectations of the Investment Department for the portfolio of debt securities.
2. System of limits, which include the credit and concentration risk, in relation to the single issuer
(or the group of the assets in the investment portfolio).
3. Hedging of the foreign currency position in relation to assets denominated in foreign currency.
4. System of limits in relation to the maturity of the individual classes of corporate debt securities.
5. System of limits for open foreign currency position.
6. System of limits relating to individual transactions.
5. Risks and threats to the Company’s activity
The prevailing uncertainty with regard to the level of the basic macroeconomic indicators (GDP growth level,
increase of unemployment, growth of public debt) may be an underlying reason for the failure to fulfil the sales
plans assumed for the upcoming years and thus may have influence on the failure to achieve the planned financial result.
Another risk is high concentration of major clients in group insurance which, in the event of their resignation
(e.g. due to increasing price competition), may result in considerable reduction of the group insurance portfolio and
thus the amount of the gross premium written.
25
SELECTED ITEMS
OF FINANCIAL STATEMENT
OF GENERALI T.U. S.A.
26
SELECTED ITEMS
OF BALANCE SHEET
Assets (in thousand PLN)
Total assets
As of
31 December 2010
As of
31 December 2009
1,184,954
1,075,788
A. Investments
903,813
813,721
I. Investments in subsidiary entities
188,610
153,685
II. Other financial investments
715,203
660,036
including:
Liabilities (in thousand PLN)
Total liabilities
As of
31 December 2010
As of
31 December 2009
1,184,954
1,075,788
177,453
182,483
1,019,670
869,862
203,286
155,604
including:
A. Equity
B. Technical provisions
C. Share of reinsureres in technical reserves (negative value)
27
SELECTED ITEMS
OF PROFIT AND LOSS ACCOUNT
12 months until
31 December 2010
I. Premium (1-2-3+4)
589,002
532,810
1. Gross written premium
749,978
730,512
2. Share of reinsurers in gross written premium
146,229
169,310
3. Change in provisions for gross premium and unexpired risk
13,330
88,453
4. Share of insurers in change of provisions for premium
-1,417
60,061
II. Indemnities and benefits
491,095
420,886
III. Costs of insurance operations
170,070
157,494
77,120
73,869
1,667
798
VI. Gross profit (loss)
-20,004
-4,608
VII.Net profit (loss)
-20,076
-4,739
IV. Investment revenues
V. Unrealised gain from investments
28
12 months until
31 December 2009
SELECTED ITEMS
OF CASH FLOW STATEMENT
Other
12 months until
31 December 2010
12 months until
31 December 2009
A. Coverage of solvency margin own funds
I. Solvency margin
115,350
115,350
II. Own funds
157,274
168,759
41,924
53,409
I. Technical provisions
1,013,892
865,978
II. Assets used to cover technical provisions
1,111,145
902,699
97,253
36,721
III. Surplus/shortage of own funds to cover solvency margin
B. Coverage of technical reserves assets
III. Surplus/shortage of own funds to cover solvency margin
29
REGISTERED AUDITOR’S
OPINION
30
SELECTED ITEMS
OF FINANCIAL STATEMENT
OF GENERALI ŻYCIE T.U. S.A
31
SELECTED ITEMS
OF BALANCE SHEET
Assets (in thousand PLN)
Total assets
As of
31 December 2010
As of
31 December 2009
2,156,700
2,153,146
300,392
729,795
1,504,388
1,153,819
including:
A. Investments
B. Net assets of life insurance with the investment risk with
the insurer
Liabilities (in thousand PLN)
Total liabilities
As of
31 December 2010
As of
31 December 2009
2,156,700
2,153,146
162,261
131,779
1,816,261
1,897,344
8,313
7,527
including:
A. Equity
B. Technical provisions
C. Share of reinsureres in technical reserves (negative value)
32
SELECTED ITEMS OF PROFIT
AND LOSS ACCOUNT
12 months until
31 December 2010
I. Premium (1-2-3+4)
963,439
1,191,213
1. Gross written premium
990,566
1,209,428
27,036
18,074
98
134
7
-7
129,944
201,957
68,596
86,371
1,091,175
520,802
-74,786
786,425
VI. Costs of insurance operations
83,987
68,290
VII.Gross profit (loss)
37,747
28,594
VIII.Net profit (loss)
29,820
25,258
2. Share of reinsurers in gross written premium
3. Change in provisions for gross premium and unexpired risk
4. Share of insurers in change of provisions for premium
II. Investment revenues
III. Unrealised gain from investments
IV. Indemnities and benefits
V. Change in other technical provisions, net of reinsurance
33
12 months until
31 December 2009
SELECTED ITEMS OF CASH
FLOW STATEMENT
Other
12 months until
31 December 2010
12 months until
31 December 2009
A. Coverage of solvency margin own funds
I. Solvency margin
61,558
72,838
105,058
88,876
43,501
16,138
I. Technical provisions
1,816,261
1,897,344
II. Assets used to cover technical provisions
1,840,354
1,903,999
24,093
6,654
II. Own funds
III. Surplus/shortage of own funds to cover solvency margin
B. Coverage of technical reserves assets
III. Surplus/shortage of own funds to cover solvency margin
34
REGISTERED AUDITOR’S
OPINION
35
SELECTED ITEMS
OF MANAGEMENT REPORT
OF GENERALI POWSZECHNE
TOWARZYSTWO EMERYTALNE S.A.
36
SELECTED ITEMS
OF MANAGEMENT REPORT
OF GENERALI POWSZECHNE
TOWARZYSTWO EMERYTALNE S.A.
1. Major events
The 2010 year, was the following year after 2009, when the fund recorded a positive return rate of 9.30%.
The positive rate of return for period 2008-2010 amounted to 9.41%, what places the Fund on 6th rank on the
market among the open pension funds.
The year 2010 was still another year with and attractive rate of return for pension funds participants, which,
contrary to the arguments widely disseminated currently, proves the Second Pillar of the Pension System to have
a real, positive bearing upon the amount of our old-age pension benefits in the future. The average rate of return
yielded by the pension funds in the preceding year amounted to 10.79% which, in the light of the current economic
standing of Poland and the current economic situation worldwide must be considered a very good result.
The Fund also acquired more than 26 thousands members as a result of lotteries made in January and July 2010
The good result was possible primarily thanks to strong investment performance.
2. Fund Members
In terms of number of members, the Fund, with the number of 788,002 members, classifies as eighth in the
market of all pension funds.
Number of members registered in ZUS at 31 December 2010
Open Pension Fund (OFE)
Number of members
% share
AEGON OFE
834,366
5.59
Allianz Polska OFE
448,525
3.00
Amplico OFE
1,135,730
7.61
Aviva OFE Aviva BZ WBK
2,786,190
18.66
AXA OFE
983,889
6.59
Generali OFE
788,002
5.28
2,929,848
19.62
Nordea OFE
868,505
5.82
Pekao OFE
349,499
2.34
PKO BP Bankowy OFE
468,322
3.14
OFE Pocztylion
518,081
3.47
OFE Polsat
311,113
2.08
2,193,502
14.69
315,419
2.11
14,930,991
100%
ING OFE
OFE PZU „Złota Jesień”
OFE WARTA
Total
Source: www.knf.gov.pl, percentage share
37
3. Investing Activities of the Fund
Net asset Funds at 31 December 2010
Open Pension Fund (OFE)
Net assets (PLN million)
% share
9,088.56
4.11%
16,905.53
7.64%
6,511.39
2.94%
12,833.32
5.80%
6,565.20
2.97%
AVIVA OFE
52,889.13
23.90%
Generali OFE
10,425.97
4.71%
ING OFE
53,202.05
24.05%
Nordea OFE
9,337.59
4.22%
Pekao OFE
3,411.39
1.54%
OFE Pocztylion
4,263.71
1.93%
OFE Polsat
2,050.41
0.93%
30,659.57
13.86%
3,107.19
1.40%
221,251.01
100.00%
AEGON OFE*)
AIG OFE
Allianz Polska OFE
AXA OFE
Bankowy OFE
OFE PZU „Złota Jesień”
OFE WARTA
Total
* The liquidation of OFE Skarbiec – Emerytura and transferring OFE Skarbiec – Emerytura’ s assets to AEGON OFE was completed on 7.11.2008.
Source: www.knf.gov.pl, percentage share: own calculation
At the end of 2010, net assets of the Generali OFE amounted to 10,425.97 M PLN, which classifies the fund as
the sixth in the market.
Investing activities
In the year 2010 the global economic system bounced back showing signs of recovery from the crisis of 2009.
The reconstruction of the main economic systems was possible due to the huge amounts of money pumped
into them under the 2009 anti-crisis programs continued in the year 2010, and also as a result of the emerging
economies, mainly China and India, maintaining their high growth rates.
The Polish economy was developing at a good pace, with a 3.8% GDP growth rate in 2010. Despite the huge
fluctuations in the Euro Zone related to the budgetary deficit problems of Greece, Ireland, Portugal and Spain,
Poland remained a reliable partner and earned the trust of foreign investors, which manifested itself in an increase
in their purchasing our bonds, and ensured financing in the tough times. Despite a considerable budgetary deficit,
the public sector debt was maintained under the prudent level of 55% of the GDP. The National Bank of Poland
managed to keep the interest rates stable at the level of 3.50% throughout the year 2010.
The year 2010, from the point of view of investors purchasing Treasury bonds, proved to be highly profitable.
The Bond Index of the Bank Handlowy w Warszawie S.A. joint stock company, reflecting the status of the Polish
market in fixed-rate Treasury bonds, increased by 6.83% in 2010.
38
Our investment policies in 2010 consisted in the proper bond sector selection which may result in earning
comparatively high rates of return while keeping the risk exposure at a reduced level. Anticipating maintenance
of the interest rates by the Polish Monetary Policy Fund at the level of 3.50%, we decided to concentrate our
investments in medium- and long-term Treasury bonds, and in corporate bonds.
The year 2011 has been very difficult for the bond market due to a still too high budgetary deficit forecasted for
this year. Again, the fear of exceeding the prudent level of debt equal to 55% of the GDP shall be a crucial risk
factor. It seems that in view of the nearing election to the Polish Parliament, Sejm of the Republic of Poland
(no political volition to effect budgetary cuts), decreasing the amounts of contributions transferred to pension funds
is still another risk factor which, in our opinion, shall affect the Treasury bonds market in Poland. Also, the growing
inflation has made itself felt in our economic system, which persuaded the Monetary Policy Council into raising
the interest rates to the level of 3.75% as early as this January, which, in our opinion, is opening a new period
of toughening monetary policies in Poland as linked to the inflation cycle. In connection with the above
mentioned risk exposures we anticipate a significant degree of bonds market changeability.
In our letter addressed to you in the preceding year we assumed a low degree of stock market changeability
and the rates of return ranging from -10% to +10% as the basic scenario. The real rates of return exceeded
our expectations, however, and the most important indexes of the Warsaw Stock Exchange: WIG20, WIG and
MWIG, changed by +14%, +18.8% and +19.6%, respectively. The recovery from the downturn in the global
economy and the higher corporate profitability levels were not the only causes of the increases. Low interest rates
globally, as well as the expansive policies followed by central banks, resulted in considerable inflows of funds
into stock markets which, in our opinion, had, to a certain degree, a speculative nature. Moreover, what had to be
taken into consideration in the investment processes in the preceding year was the risk exposure related to the
excessive indebtedness incurred by some Euro Zone Member Countries (in particular, by Greece, Ireland,
or Portugal). Having the above in mind, we maintained a slightly lower level of investment in stocks compared
with the remaining funds, which, given the high index increases, affected our rates of return making them slightly
lower than those of the competing funds.
As for the year 2011, we can see a high degree of consistency among market analysts relating the anticipated
rates of return on stocks. Generally, we can see quite a considerable degree of optimism, and the projected rates
of return are on the level of 10-15%. We are of an opinion that a moderately optimistic scenario does seem real
at the moment although risk factors (the exposures related to the indebtedness of some Euro Zone Member
Countries, or the Chinese economy cool-down) must not be forgotten, either. Although investors are aware of their
existence, potential new manifestations of their troubling presence may lead to deeper than prior corrections
which would occasion an opportunity for stock hoarding.
39
Planned directions of investment activity
In the coming year we intend to continue the current investment strategy, which assumes the risk minimization
and the selection of instruments based in the reliable and deep fundamental analysis.
In the long term model structure of the fund assets is as follows:
Type of investments
% share
Debt securities
50%
Commercial debt papers
10%
Securities with right to capital (stocks)
30%
Bank deposits
5%
Other assets
5%
In the year 2010, due to banks limiting their corporate credit facilities and local governments seeking funds
for EU co-financed investments, the number of municipal bond issues made by the above said issuers increased.
Consequently, we also increased the share of corporate bonds in our investment portfolio, making it equal 6.50%
of the Fund assets. It was the high credibility of the issuers and their good financial standing that was the basis
for our bond selection process. Our plans for the current year are still related to targeting attractive market offers
in this segment of debt securities market.
As for the share of bonds in our investment portfolio, we shall persist in using medium-term market trends
to maximize the rates of return in view of the changeability of the debt market as forecasted by us.
We are of an opinion that a moderately positive scenario for stock markets in the year 2011 is quite probable.
It is our intention to continue our policies from the preceding years consisting in managing the most liquid assets
in our portfolio, which should be accompanied by targeting small and medium-sized companies expected by us
to exhibit levels of profit higher than average. What shall also have to be taken into consideration in our investment
policy are the recent changes to the pension funds system which allow for a gradual increase in the share of stocks
in the open pension funds portfolios up to the maximum level permitted.
Risk
In order to reduce the risk, each investment made by Generali OFE is carefully considered in terms of market
risk and the issuer. Investments in the debt part of the portfolio are concentrated in the safest securities, such
as Treasury bonds. Investments in debt securities of other entities are preceded by a thorough analysis of their financial
situation. In the equity part of the portfolio, the Fund manager, maintains an appropriate diversification of the industry
sectors and quantitative portfolio, basing the investment decisions on a thorough fundamental analysis.
40
The value of the fund unit and the rate of return
Open Pension Fund (OFE)
31 December 2010
31 December 2009
Return rate
(in PLN)
(in PLN)
AEGON OFE
30.02
27.31
9.92%
AIG OFE
29.59
26.60
11.24%
Allianz Polska OFE
28.96
26.06
11.13%
AXA OFE
30.32
27.49
10.29%
Bankowy OFE
29.69
26.69
11.24%
AVIVA OFE
30.34
27.26
11.30%
Generali OFE
31.86
29.15
9.30%
ING OFE
32.86
29.37
11.88%
Nordea OFE
31.22
27.99
11.54%
Pekao OFE
29.24
26.45
10.55%
OFE Pocztylion
28.63
25.78
11.06%
OFE Polsat
33.22
30.38
9.35%
OFE PZU „Złota Jesień”
31.04
27.90
11.25%
OFE WARTA
31.06
27.97
11.05%
Weighted average
31.01
27.88
11.23%
Source: www.knf.gov.pl. return rate – own calculation
4. Financial situation
The company ended the year 2010 with:
•
Profit on sales of PLN 29,491 k PLN
•
Operating profit of PLN 29,480 k PLN
•
Gross profit of PLN 46,520 k PLN
•
Net profit of PLN 40,702 k PLN
Revenues
In the overall amount of revenue the largest share had:
•
distribution fee revenues collected from members contributions to the Fund (nearly 36% of total revenues),
as a result of high transfers from ZUS
•
and the management fee (42.5%)
The rate of distribution in the reporting period was 3.5%. In the first quarter of 2010, the monthly management
fee from the Fund’s net assets amounted to 0.045% of net asset value per month (0.54% per year). As a result
of exceeding on 1 April 2010, the limit value of 8 B PLN monthly net asset management fee was calculated
by the formula: 3.6 M PLN + 0.04% of the excess over 8 B PLN of the net asset value per month.
41
Structure of income
in thousand PLN
in %
94,801.21
84.46%
Distribution fee
39,916.26
35.56%
Management fee
47,669.48
42.47%
5,027.14
4.48%
340.50
0.3%
17,100.00
15.24%
112,241.71
100.0%
Sales and sales equivalents
including:
Net return of funds from bonus and reserve accounts
Other operating income
Financial income
Total
Costs
For the costs incurred the greatest impact had:
•
active acquisition of the members, which generates almost 26% of the costs
•
transfer agent services (over 14% of all costs)
•
And salaries and benefits for employees (a total of 13% of costs)
Structure of expenses
in thousand PLN
in %
Operating expenses
65,310.40
99.4%
17,075.12
26.0%
Transfer agent costs
9,606.11
14.6%
Salaries and employee benefits
8,617.62
13.1%
ZUS fees
9,030.07
13.7%
351.19
0.5%
59.52
0.1%
65,721.11
100.0%
including:
Acquisition costs
Other operating expenses
Financial expenses
Total
Description of risks relating to financial instruments
Each investment made by the Generali open pension fund is scrutinized not only in respect of its prospective
rate of return, but also from the point of view of the associated risk exposure. The most significant risk categories
pertaining to the most substantial - in terms of the asset value – part of our investment portfolio include: credit
exposure, interest rate exposure and investment exposure.
The credit exposure related to debt securities issuers’ incapacity to meet their financial obligations is, to a considerable degree, mitigated by the our portfolio structure. Our investments in debt securities are concentrated in the
safest of securities, i.e. in Treasury bonds where the credit exposure is practically non-existent.
Our investments in debt securities issued by other entities are preceded by thorough analyses of their financial
standing, and still another instrument used by us to reduce this exposure are investment limits for this category
of assets.
The interest rate exposure consisting in changes in the value of the debt securities share in the portfolio as
a result of fluctuations in the interest rates is controlled by the appropriate diversification of the portfolio making
42
it obligatory to invest in bonds with various maturity horizons. What is used to measure the interest rate exposure
of a portfolio is the MDuration indicator limited by the internal Fund limitations which is aimed at strengthening
controls over this category of risk exposure.
What is behind the investment risk is the fact that, should there be a drop in the interest rates, the capital may
only be reinvested at levels of profitability lower than the historical ones. Similarly to the interest rate exposure, the
investment exposure is mitigated by the proper diversification of the portfolio.
The risk attributed to the stock part of our investment portfolio is company-specific and market-related (i.e. related
to the market performance as such).
The company-specific risk related to a potential drop in the prices of their shares is mitigated by a profound and
fundamental analysis of separate investments. Also, the diversification of our portfolio in terms of the investment
property sectors and in terms of volumes can be perceived as still another factor reducing the company-specific risk exposure. The market-related exposure (i.e. the risk inherent in the performance of the market as such)
is limited by allocating the assets of the Fund to different asset categories. What constitutes an exposure
common to both the debt securities and the stock shares in the investment portfolio is the liquidity risk that a given
security or asset cannot be traded quickly enough in the market without affecting its price. In the case of Generali
the diversification of its assets makes the share of investments lacking in liquidity relatively low, which mitigates
the liquidity exposure.
With regard to credit risk, the Company up to it is limited only by investing in instruments issued by the Treasury.
Given the current state of the securities portfolio and the anticipated positive cash flow from operations
the Company is not exposed to the loss of liquidity in the foreseeable period.
The aims and methods of financial risk management adopted by the Company
The aim of the company’s investment policy is to maximize return on investment while maintaining an appropriate
level of security of investments and the liquidity of the Company.
Portfolio risk is controlled by:
1. Proper adaptation of modified duration index, depending on the market conditions and the expectations
of the Investment Department in relation to the debt securities portfolio.
2. System of limits relating to individual transactions.
5. Expected developments
The main goals and objectives for 2011 include:
•
Maintaining growth fund, which is determined by number of active clients and the value of net assets
•
Increasing acquisition activity in the sales network
•
Maintaining funding at the forefront in terms of achieved rate of return on the value of units
•
Continue to improve the service that is provided to fund members
6. Significant business risks include
43
•
Cessation of cooperation with external partners in the distribution may result in lower than expected
sales volume and a higher ratio of members leaving the fund
•
Currently in 2011, the government intends to amend the law on pension funds and to reduce
the contributions paid to OFE, and possibly further reduce the fees charged by the PTE
If the new law will be introduced, it will have a significant impact on the financial results of the Company
SELECTED ITEMS OF FINANCIAL
STATEMENT OF GENERALI
POWSZECHNE TOWARZYSTWO
EMERYTALNE S.A.
44
SELECTED ITEMS
OF BALANCE SHEET
Assets (in thousand PLN)
Total assets
As of
31 December 2010
As of
31 December 2009
263,550
232,957
A. Long-term investments
106,050
106,050
B. Short-term investments
20,685
14,658
including:
Liabilities (in thousand PLN)
Total liabilities
As of
31 December 2010
As of
31 December 2009
263,550
232,957
219,567
200,553
including:
A. Equity
45
SELECTED ITEMS OF PROFIT
AND LOSS ACCOUNT
(in thousand PLN)
46
12 months until
31 December 2010
12 months until
31 December 2009
A. Sales and sales equivalents
94,801
81,245
B. Operating expenses
65,310
52,212
C. Gross profit
46,520
30,248
D. Net profit
40,702
24,427
REGISTERED AUDITOR’S
OPINION
47
GENERALI ENERGY
48
GENERALI ENERGY
The idea of Generali Energy has its origins in the fact that half of the corporation
name consists of pure energy. This inner energy of Generali is one of the
essential elements of building competitive advantage.
That is all as far as the idea is concerned. In a real sphere, energy is first and
foremost in people that form the Generali Group in Poland, in their striving for
perfection, but also in the code of ethics they follow at work. It is hidden in the
corporation standards or the company’s history dating back to the nineteenth
century.
In an artistic sphere, energy can be reduced to elementary particles, energetic
flows and flares usually untraceable by the human eye, unchanged in their
simplicity, but – de facto – comprising the richness of the surrounding world.
Thus, the leading motive of Generali Energy refers to the energy of the body,
spirit and mind.
The energy of the body
The energy of the body is produced by the people employed at Generali. The inner energy flows out of particular
people that need one another. The corporation is a living organism consisting of individuals, their dreams
and ambitions that together make up an integral whole.
Strengthening the body, we strengthen its spirit. Therefore, training for perfection is extremely important.
•
Generali employees have been successfully trying their hand at numerous sports competitions.
We should mention here e.g. their participation in marathons, semi-marathons or relay races. Thereby,
Generali supports the campaign of the Warsaw Marathon Foundation as “Firma przyjazna bieganiu”
(“Run-Friendly Company”) in which, apart from improving the body and testing its possibilities
– an extremely important aspect is employee integration.
•
The best competitors also took part in a marathon organized in Trieste, where there is a historical head
office of the Generali Group. It can safely be said that sport is an inseparable part of Generali. Apart from
active participation, a very important issue connected with sport promotion must also be mentioned.
The most important and spectacular person is Adam Małysz, whose insurance partner is the Generali Group.
Recent cooperation between this most prominent Polish sportsman and the company is based both
on advertising and insurance level (a ski jumper actively uses the Generali offer within pension, property
and life insurances). We have supported Adam both in the periods of his most spectacular victories
and also in his weaker moments.
49
The image of Adam Małysz is used in advertising campaigns and promotional activities of the company. The logo of the insurer appears on the sportsman’s outer clothing and ski jumping suits (during competitions and trainings).
Generali has also Adam Małysz’s helmet, auctioned for a charity. The helmet,
with the master’s autograph, is in the showcase at the reception floor of the
Warsaw Head Office.
On 8 March 2010, we launched an image advertising campaign in the media,
referring to the latest Adam Małysz’s successes at the Olympic Games
in Vancouver and to many years of cooperation between this outstanding
ski jumper with the Generali Group. It was our way to thank and congratulate him on his successes. The campaign had an interactive character: for the
whole week, Onet.pl showed an advertising banner that encouraged people
to congratulate Adam Małysz online at the website specially prepared by
the portal.
• Generali does not concentrate exclusively on ski jumping. The company
is also one of the sponsors of a golf course “Lisia Polana” and the resulting
tournaments. Golf is a prestigious sport, perfectly integrating with the
company’s character and still remaining in the orbit of a healthy lifestyle
promoted by the company for many years.
• Generali also sponsors other, often much smaller, sports events.
One should mention here, first and foremost, the night street run
(semi-marathon) in Rybnik and football games of the Student Sports
Club – Legia. The logo of the insurer has also the colours of the football
and volleyball teams.
The energy of the spirit
The energy of the spirit is created by the ideas that are the corporation code of ethics. Not only
do Generali’s energy and power lie in individuals and their actions, but also in the norms they follow at work
and in everyday life. Ethics in companies’ activities is the basis of customers’ trust. Therefore, following
it is extremely important and essential to function in the market.
•
Generali’s emanation of the energy of the spirit is supporting art. The group sponsored a photographic
exhibition “W 28 klatek dookoła świata” (“Around the World in 28 Frames”). For two weeks of September, the inhabitants of Warsaw could admire the exhibition that revealed unique landscapes, perpetuated
by means of a camera. The photos were taken during Kacper Godycki’s expedition, insured by Generali.
The exhibition was also shown in other Polish cities.
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•
Not only does Generali insure journeys around the world – the company also sponsors and insures the Wilanów
Palace Museum. Thus, it wants to contribute to the support of cultural and national heritage of the Polish
people.
•
The company also pays a lot of attention to supporting science – we sponsored the science conference
concerning the insurance market that took place in October 2010 at the Warsaw University of Life Sciences
(SGGW).
The energy of the mind
The energy of the mind means trainings and permanent striving for perfection, but also a coherent
and complementary hierarchy. The company consists of individuals who develop their own skills and then
influence the development of the whole company.
•
It is extremely important to constantly raise qualifications. Therefore, the company gives “young talents”
the possibilities of development. They can draw knowledge from older and more experienced insurance
experts within the High Professionals program.
•
The next important and innovative development program is the Generali University that for a few years has
been the basis of improving skills within management, managerial competences and personal
effectiveness. An annual development program, in the form of the Generali Academy, is dedicated to the best
graduates.
•
The company also puts a great emphasis on practical knowledge: in 2010, it organized monthly meetings
of Klub Praktyka (the Experienced People Club) – a group of managers met to talk about practical
aspects of leadership, creating strategies and using innovative strategies.
The world is changing extremely dynamically in social and economic terms. Therefore, in order not to fall behind
and keep up with the changes, for many years the company has been emphasizing the importance of training and
personal development. Generali focuses on training their employees who, in turn, express their willingness and
determination in the way to self-improvement. How significant in this case is Brian Tracy’s statement that
“The best way to predict the future is to create it”.
The emanation of the energy of the mind are awards and top positions that the company takes in various
rankings. The ones taken in 2010 need to be mentioned here.
• The award given by “Home & Market:
The editorial staff of an economic monthly “Home & Market” honoured
the Generali Group with the prize “Srebrny Parasol” (“Silver Umbrella”),
thus gaining the name of the best insurance operators in the sector
of small and medium enterprises.
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•
The award for Generali OFE in the ranking made by “Home & Market”:
Generali OFE again won the ranking of open pension funds. The list was prepared by the oldest economic
monthly in Poland – “Home & Market” – in January 2010 issue. It honours a long-term stability that is a key
criterion for customers when choosing and assessing the open pension fund. Generali investment results
have been the best since the beginning of its activity what confirms a stable investment strategy of the fund.
•
The award for Generali Życie in the ranking made by the monthly “Home & Market”:
In May 2010 issue, the monthly “Home & Market” published the Ranking of Insurance Companies.
The survey was carried out on the basis of the results in particular business lines, including the slump
period. Generali Życie won the category of the Most Dynamic Insurance Company with the premium of over
1 billion PLN. In the category of the Most Dynamic Insurance Company with the premium of over 500 million
PLN, Generali Życie won the second place.
• Generali as a winner of the competition Studencki Produkt Roku
(the Student Product of the Year):
The editorial staff of the largest Polish student monthly “Dlaczego”
honoured Generali OFE in the category of Studencka Emerytura
(Student Pension) within the tenth jubilee edition of the prestigious plebiscite Studencki Produkt Roku. Generali PTE, on the basis of the readers’ votes, won in the category of Studencka Emerytura, beating four
strong competitors. Young people appreciated the quality of services
and pension products offered by Generali.
• Generali PTE wins in the ranking of the Best Financial Institutions
prepared by “Rzeczpospolita”:
Generali PTE won the annual ranking of the Best Financial Institutions prepared by the editorial staff of “Rzeczpospolita”. The company won in the category of Powszechne Towarzystwa Emerytalne
(Common Pension Companies) present in Poland.
•
Generali OFE again the best according to a 3-year rate of return:
On 6 October 2010 the Financial Supervision Authority published the next Announcement concerning
a 3-year rate of return of Open Pension Funds. For the second time this year, the Open Pension Fund
Generali won the first place (5,22%), beating such competitors as: Axa, Amplico and Allianz. Generali OFE,
again the leader of the latest ranking of the Financial Supervision Authority, has proved that it is still among
the most effective funds in Poland.
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•
Generali OFE the best in the ranking of Rzeczpospolita”:
In October 2010, for the next time “Rzeczpospolita” prepared the ranking of the best Open Pension Funds.
Generali OFE occupied the first place on this prestigious list, thus consolidating its strong position
in the market of Open Pension Funds. Generali won with such competitors as: Polsat OFE and Allianz OFE.
The Generali pension fund was the best as far as profits in a three-, five- and ten-year periods are concerned.
The list of the best Open Pension Funds prepared by “Rzeczpospolita” honours a long-term stability
that is a key criterion for customers when they choose and assess the open pension fund.
• Apart from awards, technological innovations are also the emanation of the
energy of the mind. An example is the implementation of a scanner in July
2010 – an innovative tool that supports the purchase of travel policies
in Generali. The Generali Group, within the strategy of the sales force
automation, began the process of equipping the Sales Chains with this
innovative tool to serve customers who use travel insurances. This new
tool is a so-called scanner i.e. a reader of 2D AZTEC codes that are
in all new vehicle registration cards issued in Poland. It allows for more
efficient, faster and correct implementation of data necessary to take
out insurance. Implementing the scanners of codes included in vehicle
registration cards, Generali is the first Insurance Company in the Polish
market that will use the scanner in the sales process. This action is one of the
elements of the company’s strategy aiming at the elimination of paper documentation in the internal sales
processes within the next years. Thanks to the implementation of a new functionality, Generali confirmed its
position of one of the most innovative insurance operators in the Polish market within the service and sale
of travel insurances.
Thus, the Generali Group is an organism consisted of the energy of the spirit,
body and mind. At the same time, each element exists separately in this
organism, constantly building its strength, intermingling with other elements
and complementing one another. It is impossible to reduce the elements,
they make a perfect whole. Without any of these elements, a maximum
influence of this energy, essential in everyday functioning of Generali, would
be impossible.
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Generali T.U. S.A.
Generali Życie T.U. S.A.
Generali Powszechne Towarzystwo Emerytalne S.A.
ul. Postępu 15 B, 02-676 Warsaw
tel. (22) 543 05 00, fax: (22) 543 08 99
infoline: 801 343 343
e-mail: [email protected]
www.generali.pl