Adriatic Slovenica d. d.

Transcription

Annual Report
for 2013
ANNUAL REPORT FOR 2013
Adriatic Slovenica d.d.
Annual Report
for 2013
Annual Report
for 2013
CONTENTS OF THE ANNUAL REPORT FOR 2013
OPERATING HIGHLIGHTS ........................................................................................................ 4
1.
1.1
SIGNIFICANT BUSINESS EVENTS IN 2013 .............................................................................. 4
1.2
SIGNIFICANT BUSINESS EVENTS AT THE BEGINNING OF 2014 ......................................... 9
1.3
STATEMENT BY THE PRESIDENT OF THE MANAGEMENT BOARD .................................. 11
1.4
SUPERVISORY BOARD REPORT - Summary ....................................................................... 13
1.5
REPORT OF THE SUPERVISORY BOARD'S AUDIT COMMITTEE – Summary ................... 15
1.6
FINANCIAL HIGHLIGHTS AND OTHER DATA FOR 2013...................................................... 17
2.
COMPANY PROFILE, ITS VISION AND VALUES ................................................................... 18
2.1 ADRIATIC SLOVENICA D.D. ......................................................................................................... 18
2.2 THE COMPANY'S VISION AND VALUES ..................................................................................... 20
3.
MANAGEMENT AND CORPORATE GOVERNANCE BODIES............................................... 21
3.1
THE SUPERVISORY BOARD................................................................................................... 21
3.2
THE MANAGEMENT BOARD .................................................................................................. 21
3.3
OWNERSHIP STRUCTURE...................................................................................................... 24
3.4
ORGANISATION AND ORGANISATIONAL STRUCTURE ..................................................... 25
3.5
BRAND VISIBILITY, CORPORATE PERCEPTION OF THE COMPANY AND
SATISFACTION OF INSURED WITH CLAIM SETTLEMENT .................................................. 26
4.
BUSINESS OVERVIEW ............................................................................................................ 30
4.1
ECONOMIC LANDSCAPE IN 2013 .......................................................................................... 30
4.2
LONG-TERM BUSINESS PLANS AND OBJECTIVES FOR 2014 ........................................... 31
4.3
BUSINESS PERFORMANCE AND MAIN FEATURES OF INSURANCE CLASSES .............. 32
4.4
ANALYSIS OF OPERATIONS, PRESENTATION OF THE FINANCIAL RESULT AND
FINANCIAL POSITION FOR 2013 OF ADRIATIC SLOVENICA D.D. ...................................... 51
4.5
MARKETING AND SALES NETWORK .................................................................................... 55
4.6
RISK MANAGEMENT ............................................................................................................... 59
4.7
COMMUNICATION WITH STAKEHOLDERS ........................................................................... 61
4.8
INTERNAL AUDIT REPORT ..................................................................................................... 65
5
REPORT ON SUSTAINABLE DEVELOPMENT ....................................................................... 67
5.1
EMPLOYEES ............................................................................................................................ 67
5.2
IMPROVEMENTS, INFORMATION SECURITY AND QUALITY .............................................. 71
5.3
THE COMPANY'S RESPONSIBILITY TO THE LOCAL COMMUNITY AND THE
ENVIRONMENT ........................................................................................................................ 74
6
SELECTED ACCOUNTING AND FINANCIAL PERFORMANCE INDICATORS ..................... 77
7
FINANTIAL STATEMENTS....................................................................................................... 91
Annual Report
for 2013
1.
1.1
OPERATING HIGHLIGHTS
SIGNIFICANT BUSINESS EVENTS IN 2013
January
- On 3 January, the insurance company introduced a new module for paper-free management of personnel
matters provided by Business Connect support system. Consequently, all paper documents referring to the
management of working hours and business travel orders were abolished. In July, the system was upgraded with
a module for paper-free settlement of invoices and e-filing system, and at the end of the year, with a module for
internal regulatory environment and quality management system.
- In January, Maja Benko was named Executive Director of Life Insurance sector at Adriatic Slovenica.
- The accounting and finance division prepared the ground for the acquisition of life insurance portfolio of KD
Življenje. Particular attention was paid to analysing data contained in the accounting records of KD Življenje and
their method of transfer, i.e. recording in the Company's books of account.
February
-Adriatic Slovenica have introduced additional accident insurance against accidental bone fracture, accidental
burns, accidental permanent loss of sight, accidental complete loss of hearing and accidental loss of life in fire. To
simplify and accelerate the payment of insurance indemnity and minimise the number of documents required, an
additional accident insurance option was set up which enables the policyholder to obtain the extra resources
needed to alleviate the financial consequences of an accident more rapidly.
- On 1 February, the Company started the internal reorganisation project focused on business process
redesigning, with the purpose of making team work and flexibility the leading principle for all employees of the
Company, providing for greater flexibility and a better focus on meeting the clients' needs. The reorganisation
was concluded on 1 October.
- In February, Aleš Žižmund was appointed Executive Director of Adriatic Slovenica for sale to SMEs and natural
persons, while Tanja Blatnik was appointed Executive Director of insurance operations.
- In the beginning of February, training and motivational events entitled “Sales Conference” took place in Rogaška
Slatina and Ankaran for in-house and external insurance agents and key account managers, attended by over
600 participants. The main goal of these events was to inform participants in detail about new developments in
the parent company both in terms of new services and organisational changes that are underway in the
framework of the Pinwheel project and are aimed at implementing new values in practice.
March
- On 7 March, the Supervisory Board of Adriatic Slovenica discussed and approved the decisions of the
Management Board in relation to the business policy and financial plan for 2013.
- Through its call centre, Adriatic Slovenica started conducting active marketing for the insurance product Health
AS (Zdravje AS) – serious illnesses and surgical procedures.
- In the beginning of March, Adriatic Slovenica and the insurance company KD Življenje started marketing a new
life insurance product Comprehensive life insurance – assistance for life (Življenjski kasko - Asistenca življenja),
Annual Report
for 2013
with KD Življenje bearing the risk. This insurance product encompasses comprehensive coverage for all types of
unforeseeable life events and can be combined with additional coverage for permanent disability, accident
annuity, bone fracture, redesigned supplemental accident insurance for children and DNK Nutri rider.
- Following the requirements of the international reinsurance market, the Company included the sanctions clause
in all non-life insurance policies. Its purpose is to warn the policyholders that the insurance company has no
liabilities insofar as the payment of loss would expose it to any sanctions, prohibitions or restrictions arising from
the United Nations resolutions, or violations of the EU legislation and regulations.
April
- Due to the amended Decree on co-financing of insurance premiums of agricultural production and changed
market needs, repriced premium tariffs for the insurance of crops were prepared and insurance with a lower, 15
% deductible was introduced. Some minimum sums insured were raised for certain types of cultures.
May
- Before the beginning of the season when marine insurance products are purchased, Adriatic Slovenica revised
the premium tariffs for the insurance of these products, modified certain premium rates and increased the
minimum deductibles.
- In May, Adriatic Slovenica started implementing the project of controlling cover in relation to health insurance
policies. As part of this project, on-line control of payments related to valid health insurance contracts was
established via the Health Insurance Card system.
- At its 51st session on 24 May 2013, the Supervisory Board took note of the resignation of Management Board
member Matej Cergolj. He would remain in office until the expiration of the six-month notice period, i.e. until 24
November 2013. After his resignation, he would focus on the area of risk management in the Company.
- On 25 May, more than 700 employees of all companies of the KD Group in Slovenia and abroad gathered at the
21st traditional social and recreational event organised in Ankaran by the sports and cultural society Pravi Asi
(True AceS), established within the framework of the Company, to compete against each other in several sporting
disciplines. Such socialising among employees fosters a common corporate culture and contributes to better
cooperation between employees in their work.
- On 27 May, Adriatic Slovenia launched one of its most important development projects in 2013. The Company
now offers tailor-made motor insurance designed to suit the specific client which also includes the premium that is
adapted to the risk level of specific client segments and is determined on the basis of a number of factors
including the age and domicile of the driver. The Company now also offers clients new coverage, such as the
urban motor hull insurance for safe and experienced drivers and Totalka AS (AS Total Loss Insurance) insurance
that covers only total loss, but the premium is only a third of that for full motor comprehensive insurance. The
premium for AO+ insurance covering bodily injury resulting from a traffic accident has been reduced by
20%.
June
- On 14 June in Koper, Adriatic Slovenica organised the concluding event of the 4th writing competition entitled
“Write a Poem about the Clear Sea”. The winner of the competition was a 5th grade pupil of the elementary school
in Vače, who was rewarded with a day-trip to the seaside for her and her classmates. Every year, the Company
announces the competition in order to invite elementary schools and their pupils to think about the environment
and be creative. In 2013, 60 schools and as many as 289 pupils took part.
- On 19 June, the Management Board of Adriatic Slovenica endorsed a new supplemental health insurance
covering the risk of cancer called ONA AS ZDRAVJE (AS HEALTH INSURANCE FOR WOMEN) that entails
several levels of settlement depending on the seriousness of the condition. The product is targeted at women
5
Annual Report
for 2013
aged 18 to 55 and encompasses three types of coverage – the diagnosis of a women’s cancer, the diagnosis of
other cancer types and a bereavement grant.
- In June, Adriatic Slovenica and the insurance company KD Življenje started marketing the product Fondpolica
POTENCIAL PLUS, a life insurance for the event of death and maturity in which the insurer bears the investment
risk. This insurance product provides the insurer with favourable access to the Dynamic Commodity Index,
investment security and locked-in return and gives them the possibility to maintain the policy in the event of death
of the policyholder. At the expiry of the insurance policy, the payout amounts to at least 90% of the in-paid
premium. The value of funds is appreciated as if the agreed phased premium was paid as a lump sum at the
beginning of the insurance period. The locked-in return is included as well.
- On 30 June, insurance companies stopped offering insurance against the risk of death for children under 14
years of age as required by the Insurance Supervision Agency (AZN). Consequently, Adriatic Slovenica excluded
this rider for this age group from the range of insurance products.
- Adriatic Slovenica launched a successful campaign for underwriting long-term accident insurance for pupils.
Based on the decision of the Market Inspectorate of the Republic of Slovenia and with a view to ensuring equal
opportunities for everyone, persons suffering from depression, anxiety disorders and mental retardation were also
offered the possibility to purchase accident insurance.
July
- Adriatic Slovenica prepared repriced premium tariffs for machinery breakdown insurance and set up detailed
rules on increasing or decreasing the premiums based on loss ratio (bonus / malus system). The CRS - Central
client register application was upgraded to facilitate the calculation of bonus / malus for each particular client.
- On 1 July, the client loyalty scheme Klub KD Plus that offers advantages to clients of companies in the KD
Group was redesigned and renamed AS Klub ugodnosti (AS Benefits Club), since Adriatic Slovenica as one of its
founders took over the management of the scheme.
- At the end of July, a stormy wind hitting the central Slovenia in particular caused a lot of damage to property,
mainly to house roofs and cars. Adriatic Slovenica paid to policyholders approximately EUR 1 million as
indemnification.
September
- Adriatic Slovenica was the first in Slovenia to offer two new health insurance products within the medical
assistance AS, i.e. short-term care in the case of illness or injury and short-term care in the case of injury.
These two insurance products complement primarily the existing personal insurance (health, life and accident
insurance) and cover home help, transport to medical follow-ups and transport to chemotherapy sessions, to the
extent provided by a particular insurance package which may be of mini, opti or max. size.
- As in previous years, Adriatic Slovenica offered a wide range of accident insurance products for pre-school
children and pupils of elementary and secondary schools, as well as for university students, including various
advantages, additional discounts for policies purchased on-line or via mobile phone and an attractive prize
competition.
- On 6 September, the Company organised its traditional charity golf tournament for business partners at the golf
course in Smlednik. By participating in the tournament, business partners contributed towards the purchase of a
new defibrillator that will be installed at a highly frequented location in Ljubljana in the framework of the iHELP
project.
6
Annual Report
for 2013
- On 17 September, the Insurance Supervision Agency issued a decision allowing the spin-off of the transferring
company KD Življenje followed by the acquisition of the spun-off part by the acquiring company Adriatic
Slovenica. Among other things, the acquisition of the assets of the company KD Življenje will result in the transfer
of all insurance contracts to the acquiring company.
- On 17 September, Adriatic Slovenica was awarded 1st place in the competition “WEBSI online champions 2013”
in the category of mobile applications for its project AS POLICA (AS POLICY) that enables the purchase of three
types of insurance via mobile phone.
- In September, Adriatic Slovenica conducted a large-scale marketing campaign aimed at selling supplemental
health insurance to young adults. The campaign was accompanied by advertising and an attractive prize
competition.
- Adriatic Slovenica completed the project of redesigning the corporate visual identity, which is one of the most
important elements of the Company's visibility. The new visual identity is refreshed and simple, communicating
openness and contemporaneity, while also preserving all the elements of the Company's visibility.
- On 24 September, the Supervisory Board of Adriatic Slovenica appointed Varja Dolenc as member of the
Management Board. She is to assume office once she has acquired the licence of the Insurance Supervision
Agency (AZN) and shall start working in the Company on 1 December 2013, initially as advisor to the
Management Board for the area of finance and accounting and as full Management Board member once her
licence has been granted.
October
- On 1 October, the spin-off of the transferring company KD Življenje zavarovalnica d.d. and the acquisition of the
spun-off part by the acquiring company Adriatic Slovenica Zavarovalna družba d.d. was recorded in the
Companies Register. As of 1 October, Adriatic Slovenica has therefore entered into all legal relationships
resulting from insurance contracts concluded by KD Življenje. All KD Življenje policyholders received a publication
entitled “New Dimensions of Security”, explaining the transfer of life insurance from KD Življenje to Adriatic
Slovenica.
- As a result of the acquisition of the spun-off part of the transferring company KD ŽIvljenje and in order to be able
to provide shareholders of the transferring company with shares, Adriatic Slovenica as the acquiring company
increased its share capital. The initial share capital of EUR 40,338,758.14 was increased by EUR 2,660,771.66 to
EUR 42,999,529.80 via the issue of 637,627 new par value shares. The increase in share capital was recorded in
the Companies Register at the time of the registration of the spin-off by acquisition, i.e. on 1 October 2013. As
required by paragraph 3 of Article 588 of the Companies Act, the increase in share capital was reviewed by an
independent auditor.
- On 1 October, Miloš Milivojevič was appointed Executive Director responsible for insurance claims.
- After registering the acquisition of life insurance portfolio of KD Življenje, consolidated financial statements and
reports were prepared in compliance with the planned activities. The interim external audit was carried out as at
30 September 2013.
- On 14 October, Adriatic Slovenica offered a new investment-linked life insurance product Aktivna renta AS
(AS Active annuity), which provides guaranteed pension to policyholders or scholarship to their children and/or
annuities for a specified period of time. The greatest advantage of this insurance product is that the Company
pays the premium in the event of death, unemployment, long-term incapacity to work or disability of the
policyholder and pay-out of the insured sum in the event of an accident or serious illness.
7
Annual Report
for 2013
- In October, Adriatic Slovenica upgraded the INIS information system in order to provide for easy calculation and
entry of the minimum premium per policy. The rules and procedures for adjusting the minimum premium per
policy in the process of non-life insurance policies preparation were defined.
- In October, Adriatic Slovenica organised an interesting prize competition for the female clients with
supplemental health insurance which would bring them a year of free insurance of intermediate care as well as
attractive gifts. At the same time the clients were informed about the benefit that was to be offered exclusively to
them if they decided to conclude motor vehicle insurance.
November
- The Company honoured the wishes of its clients and offered them the option to conclude additional
comprehensive motor vehicle insurance with no deductible. Insurance of immovable and movable property Dom
AS (AS Home) was enriched with some new combinations of accident coverage.
- On 6 November, the Supervisory Board of Adriatic Slovenica appointed Matija Šenk as member of the
Management Board. He was due to take office at the end of January 2014, after being granted the licence by the
Insurance Supervision Agency (AZN). With over 17 years of experience in the insurance business, he is
responsible for insurance claims, risk management, actuarial activities, strategic reinsurance, and prevention and
elimination of fraud.
- On 11 November, a wind storm in Gorenjska, Štajerska, Notranjska and Primorska regions caused a lot of
damage to property. The damage suffered by the insured of Adriatic Slovenica (mostly inflicted on real property
and cars) amounted to approximately EUR 0.5 million.
- Employees of Adriatic Slovenica joined the charity campaign of KD Foundation to collect warm clothes for
children and adolescents of the Malči Beličeve Youth Centre. Employees in all business units collected a lot of
clothes that were handed to the children at St. Nicolas' celebration in December.
- Adriatic Slovenica redesigned the insurance products ONA AS ZDRAVJE (AS HEALTH INSURANCE FOR
WOMEN) and ON AS ZDRAVJE (AS HEALTH INSURANCE FOR MEN) and tailored them to the clients' needs.
Now they entail several levels of settlement, i. e. the option of several payouts up to the agreed sum insured in
the event of female / male cancer. They also provide for the payout in the event of occurrence of other forms of
cancer, as well as in certain cases of precancerous conditions. At the same time, the policyholders are offered an
additional benefit - a health bonus with a 15% payout on the premiums paid upon the expiry of insurance
period if no claim was submitted during the insurance period.
December
- On 12 December, the representative office of Adriatic Slovenica at Ravne na Koroškem, where insurance
policies are concluded and damage appraisals are performed, began to operate in new and modern premises.
- On 17 December, at the traditional annual meeting organised for Primorska journalists and correspondents of
the national media at the Company's headquarters in Koper, Adriatic Slovenica presented its business operations
in 2013 which consolidated its position in the 2nd place in the Slovene insurance market, as well as plans for
2014. They also presented the partnership with the life-saving iHelp project and acquainted the journalists with
the emergency resuscitation procedures.
- Adriatic Slovenica redesigned medical travel insurance with assistance for travels abroad (ZZTA) and offered, in
cooperation with a foreign partner, a new travel arrangement insurance product called Multirisk. It was the first
insurance company to include the ZZTA insurance in motor vehicle insurance policy, intended primarily for those
who travel abroad a lot for business or personal reasons.
8
Annual Report
for 2013
- In December 2013, Adriatic Slovenica started with the sale of an insurance package called ZASE (FOR ME) via
direct mail. The package comprises life insurance in the event of death with additional coverage for accidental
death, death in a car accident, and permanent disability due to an accident and bone fracture. Moreover, the
coverage may be extended to include intermediate care insurance due to accident or illness.
1.2
SIGNIFICANT BUSINESS EVENTS AT THE BEGINNING OF 2014
January
- On 11 January, Adriatic Slovenica, at the event ONA ali ON (SHE or HE) in Postojna organised by the regional
Radio 94, handed over a donation of EUR 10 thousand for the purchase of a new ultrasound machine to the
Hospital for Gynaecology and Obstetrics in Postojna. Postojna Maternity Hospital records over 1,800 births
annually; its extremely good references and experienced staff also attract many pregnant women from other parts
of Slovenia, in addition to female patients from a wider area covered by municipalities of Sežana, Ilirska Bistrica,
Postojna and Cerknica.
- In compliance with the amended pension legislation, Adriatic Slovenica prepared and submitted for approval to
the Insurance Supervision Agency and the Ministry of Labour, Family and Social Affairs collective and individual
pension schemes of voluntary supplemental pension insurance for the entire saving period, including the
management rules and investment policy statements.
- On 13 January, Varja Dolenc, after being granted the licence to perform the office as member of the
Management Board by the Insurance Supervision Agency, assumed her duties in the Board. She is responsible
for finance, accounting, treasury and controlling.
- Adriatic Slovenica has been the official insurance company of our Olympic team since 1992. Before the
departure of Slovene Olympic athletes to the Olympic Winter Games in Sochi, Russia, all members of the
Slovene Olympic team received a four-month life insurance premium Aktivna renta AS (AS Active annuity) as a
gift.
- On 27 January, Adriatic Slovenica invited its business partners to the concert of the Silence duo and RTV
Slovenia Symphony Orchestra, followed by a socialising event aimed at strengthening the business ties. Adriatic
Slovenica and the companies of the KD Group have been supporters of the RTV Slovenia Symphony Orchestra
for seven years.
- On 31 January, the Company’s Management Board also formally became a four-member board. On 30 January,
Matija Šenk was granted the licence to perform the office as member of Management Board by the Insurance
Supervision Agency (AZN). He is responsible for insurance claims, risk management, actuarial activities, strategic
reinsurance, and prevention and elimination of fraud.
February
- On 30 January and 1 February, the largest training and motivational event called the “Sales Conference” took
place in Portorož. For the first time it was organised for the entire sales network; i.e. both for insurance agents
and key account managers. It was attended by approximately 450 participants who learned about Company's key
guidelines for 2014, as the event was entitled the Compass.
- On 1 February, a wider area of Slovenia including in particular Notranjska and Koroška regions and Savinjska
and Saleška valleys, was hit by glaze ice causing a lot of damage especially in forests, on the power grid,
telecommunications infrastructure, rail and roads. Real properties and cars of the insured were also affected to
some extent. Based on the first claim reports, filed by the policyholders, the damage amounts to approximately
9
Annual Report
for 2013
EUR 800,000. This is preliminary estimate, while the claims are still being filed. The remedy of damage caused
by the glaze ice will be long-term since 40% of Slovene forests have been destroyed, and the remedy of the
power grid will also take a long time. In Notranjska region, the flooding of Planinsko polje caused serious
problems.
- In February, the Management Board paid a visit to all area branch offices in Slovenia, informing the employees
on the Company's strategic goals implemented in the past period as well as presenting the future goals set to be
achieved in the four-year strategy. The board also disclosed the results of an internal survey on the satisfaction of
employees with organisational climate, conducted in November 2013. The results indicate that the cumulative
index of measurements performed in terms of management systems, organisational climate and employee
satisfaction has increased in comparison with 2011, when the organisational climate was last measured.
- Within the framework of a long-standing support to the Road Safety Council of Municipality of Ljubljana,
representatives of day-care centres in Ljubljana received 500 child vests with light-reflecting stripes to make the
children better visible in traffic during their walks in the city and thus enhance their safety.
March
- On 1 March, Viljem Kopše, a long-time chairman of the Works Council of Adriatic Slovenica, became a
professional member of the Works Council.
10
Annual Report
for 2013
1.3
STATEMENT BY THE PRESIDENT OF THE MANAGEMENT BOARD
Dear policyholders and business partners, dear shareholders,
Implementing the strategy
In 2013, Adriatic Slovenica realised the majority of its business plans according to the new strategy of the KD
Group. In the years to come we aspire to become one of the leading insurance groups both in Slovenia and in the
Balkans, while at the same time remaining a solid, safe and financially sound institution with growth potential in
domestic and foreign markets. The main goal of the Company and the Group remains transformation from a
financial into an insurance holding by 2015. Adriatic Slovenica will provide to its clients the widest possible range
of insurance and financial services from a one-stop shop, as well as be the pillar of the Group.
One of the major steps on this path was the merger of the Group’s life insurance portfolios in Adriatic Slovenica
on 1 October 2013, resulting from the spin-off and acquisition of the sister life insurance company KD Življenje.
Through such organisational restructuring the insurance portfolios of both companies were combined under a
single roof. Policyholders now enjoy an integrated range of insurance products throughout Slovenia under even
more favourable conditions, since Adriatic Slovenica is the only insurance company to offer a full range of quality
insurance and financial services under a singe roof. At the end of 2013 our insurance and financial services were
available at no less than 346 points of sale.
Profitable operations and the highest ever market share
Despite long-standing adverse economic conditions, Adriatic Slovenica firmly established its market position.
Although the Slovene insurance industry experienced a decline for the third year in a row (in 2013 alone, written
premium in Slovenia went down by more than 4%), Adriatic Slovenica posted EUR 306 million of gross premium
written, nearly 14% more than in 2012, and increased its market share to 15.5 %. This means that by taking over
the portfolio of KD Življenje, Adriatic Slovenica not only strengthened its position of the second largest insurer, but
also reached the highest market share in its history and in 2013 generated EUR 13.6 million of profit.
In addition, the financial standing of the Company strengthened, since 2013 closed with a surplus of available
capital in both non-life and life insurance segments. By merging the portfolios the Company’s total assets
increased by EUR 269 million to EUR 717.3 million as at the 2013 year-end.
As planned the major part of premium was written in the non-life insurance segment, which together with health
insurance accounted for 81.5% of the Company's portfolio. Also due to the transfer of the life insurance portfolio,
the share of life insurance increased to 18.5% as at the reporting date.
In 2013, Adriatic Slovenica registered no special events in terms of claims, as no major disasters occurred.
However, the takeover of the life insurance portfolio resulted in an increase of total gross claims, which exceeded
the 2012 figure by 16.5% and reached EUR 208.5 million.
Adriatic Slovenica is advancing its reputation in the business public for its performance and was ranked among
above-average trusted companies. We are even more proud of the finding of the national Trusted Brand Survey
that Adriatic Slovenica in comparison with competitors had by far the largest share of satisfied clients and
according to All Finance research an above-average client satisfaction level.
11
Annual Report
for 2013
The present is the seed for the future
By developing the online and mobile insurance segments, Adriatic Slovenica increases the number of sales
channels and provides readily available services to its clients. The Call Centre extended its helpline to any
information and/or explanation a client requires through a toll-free telephone number. In addition, direct selling is
becoming a great success.
Along with a series of new and modern health and life insurance products, Adriatic Slovenica in 2013 offered as
the most significant new product a redesigned car insurance policy with tailored coverage and premium. The
membership in AS Club was made free for more than 90,000 members, offering many redesigned benefits and
discounts.
Target-oriented changes
In 2013, Adriatic Slovenica concluded the process of restructuring and job classification and placed the client in
centre. At the same time, business processes were redesigned to satisfy the needs of both clients and
employees, whilst being sufficiently flexible to enable the Company to achieve its future business goals. After Mr
Matej Cergolj resigned from the three-member Management Board, Ms Varja Dolenc and Mr Matija Šenk were
appointed new Management Board members by the Supervisory Board in December 2013 and took office in
January 2014.
The key objective in 2014 is to adjust to the new pension reform. To this end Adriatic Slovenica will use all the
potential within the Group to implement its investment policy for long-term savings. In the non-life insurance
segment, early this year the Company responded to the current needs of its clients by launching an enhanced
and updated home insurance package DOM AS. In addition, numerous new insurance products and services are
underway in order to boost sales.
Since 2008, non-life insurance products have been marketed in Serbia through the subsidiary insurance company
AS Osiguranje and in 2013 the new web trademark AS Direkt was introduced. Travel and comprehensive
insurance products were launched as well as two new roadside assistance insurance products. Adriatic Slovenica
was the first on the market to offer online health insurance abroad and roadside assistance on mobile devices
and the use of credit cards for insurance payments. The Company also improved the collection process and the
risk management process, together with the subsidiary Prospera which was established in 2011 and has since
then been stable and prosperous . In 2013, the subsidiary VIZ celebrated the first anniversary of selling car
insurance fully online. Furthermore, it was very successful in attracting new clients and recorded a good loss
result.
Discover the new insurance range of Adriatic Slovenica and the Group KD Group, including their many
financial products and state-of-the-art services. The main focus this year will be the long-term financial
safety and stability of our clients and business partners.
We firmly believe that in 2014 we will again prove to be worthy of your trust.
Sincerely,
Gabrijel Škof,
President of the Management Board
12
Annual Report
for 2013
1.4
SUPERVISORY BOARD REPORT - Summary
SUPERVISION OF OPERATIONS OF ADRIATIC SLOVENICA D.D.
The purpose of this report is to preset to the Annual General Meeting of Shareholders an expert assessment
regarding the materials for the meeting at which the Annual Report will be discussed and a resolution regarding
the distribution of the accumulated profits passed. The Supervisory Board is authorised to verify the Annual
Report of Adriatic Slovenica d.d. and the Consolidated Annual Report of the Adriatic Slovenica Group. In the
report, the Supervisory Board has to specify how and to what extent it has examined the operations carried out by
the Company during the financial year; take a position with regard to the independent auditor’s report, the
actuarial report, and other reports stipulated by law.
In 2013, The Supervisory Board of Adriatic Slovenica consisted of eight members, three of whom were
representatives of employees.
The Supervisory Board performed its duties in accordance with the agreed model for carrying out supervision of
the work of the Management Board. At its sessions it regularly reviewed the quarterly reports on the Company’s
operations, periodic reports on plan implementation with regard to premiums, claims and costs; it monitored
investments and their return on a regular basis, as well as the carrying out of measures for improving business
and meeting the set targets. In addition to the quarterly reports, the Supervisory Board examined and approved
the business policy and the financial plan for 2013 as well as approved the Annual Report of Adriatic Slovenica
d.d. for 2012 and the Consolidated Annual Report of the Adriatic Slovenica Group for 2012. The Supervisory
Board paid special attention to the organisational transformation – spin-off by acquisition of the sister insurance
company KD Življenje d.d.; approved the Management Board’s conclusion of the Agreement on Spin-off by
Acquisition and an additional business plan of the Management Board with regard to the spin-off by acquisition.
On the basis of regular reports, the Supervisory Board also took note of business operations of the subsidiary
insurance company AS neživotno osiguranje a.d.o. and of other major issues, such as development strategy of
health insurance, marketing strategy for individuals and small companies, strategy regarding AS neživotno
osiguranje a.d.o. subsidiary, etc.
The Insurance Act inter alia stipulates that the Supervisory Board is responsible for the supervision of the Internal
Audit Department (IAD). In line with its mandate, the Supervisory Board approved the IAD work plan for 2013,
examined the reports on the work done in 2012, and the report on the audit work carried out by the IAD during the
first half of 2013. Having examined all reports on the assignments carried out by the Internal Audit Department,
the Supervisory Board concluded no incompliances in risk management that would threaten the security of the
Company’s business.
In order to make the functioning of the Supervisory Board more efficient in the realisation of the mission and
strategic objective of the Company and the Group, the Supervisory Board on a regular basis examined reports by
the Audit Committee.
The Audit Committee devoted special attention to the following areas:
• risk management and efficient operation of internal controls;
• efficient functioning of the Internal Audit Department;
• financial statements and the external audit;
• risk management and corporate governance of the subsidiary AS neživotno osiguranje, Belgrade;
• debt collection process;
• other operating expenses.
In 2013, the Supervisory Board exercised its powers concerning the composition of the Company's governing
bodies. After Mr Matej Cergolj had resigned as a member of the Management Board, the Supervisory Board
appointed first Ms Varja Dolenc and later Mr Matija Šenk as new members of the Management Board with a 5year term of office.
13
Annual Report
for 2013
From the end of the reporting year until the Annual Report and the Consolidated Annual Report for 2013 were
adopted, the Supervisory Board closely monitored the operations conducted by the Company, as well as
endorsed the business policy and the financial plan (budget) for 2014, and the work plan of the Internal Audit
Department for 2014.
REVIEW AND APPROVAL OF THE ANNUAL REPORT
At its 59th session on 21 May 2014, the Supervisory Board examined the Annual Report of the Company for 2013
together with the Independent Auditor’s Report prepared by the audit firm KPMG Slovenija d.o.o., and the
proposal of the Management Board for the distribution of accumulated profits, together with the proposal to give
discharge to the Management Board. Prior to that, the Supervisory Board had received a report of the Audit
Committee expressing its positive opinion on the Annual Report.
During the examination of the Annual Report, the Supervisory Board looked into the actuarial reports prepared by
the appointed actuaries, Ms Jadranka Maček and Ms Nataša Djukić, stating that total premiums written and total
provisions as at 31 December 2013 were adequate and provided for all liabilities assumed by the Company over
a long term period.
At the session, the Supervisory Board was briefed on the work of the Internal Audit Department during the second
half of 2013 and the report on the work in 2013. The Supervisory Board gave a positive opinion on the Internal
Audit Department’s annual report for 2013.
At the session, the Supervisory Board was also briefed on the report of the Management Board on the relations
with the controlling company in 2013.
The Supervisory Board finds that the content of the Annual Report gives a true picture of the operations
conducted by the Adriatic Slovenica. On the basis of the examination of the Annual Report and of the
Independent Auditor’s Report for the financial year 2013, the Supervisory Board:
•
•
•
approves the Annual Report of the Company for the financial year 2013;
has no objection to the Independent Auditor’s Report on the Company’s operations in 2013;
proposes to the Annual General Meeting of Shareholders the distribution of accumulated profits in
accordance with the proposal of the Management Board that reads as follows:
1. the Company's accumulated profits as at 31 December 2013 amount to EUR 32,986,990.00;
2. the amount of EUR 13,400,000.00 shall be allocated to the dividends to be paid out to the shareholders no
later than by 30 May 2014.
3. the remaining accumulated profits in the amount of EUR 19,586,990.00 shall remain undistributed and are
transferred to the accumulated profits of subsequent years
Koper, 21 May 2014
Matjaž Gantar,
14
Annual Report
for 2013
1.5
REPORT OF THE SUPERVISORY BOARD'S AUDIT COMMITTEE – Summary
Formal Aspect
The aim of the Audit Committee report is to provide the Supervisory Board with a professional evaluation prior to
the discussion of the actuarial opinions and the reports on the work of the Internal Audit Department, the adoption
of the Annual Report and prior to the deliberations on the proposals of the Management Board regarding the
distribution of the accumulated profit.
The Audit Committee provides expert support to the Supervisory Board in exercising supervision over the
company’s operations. In 2013, the Audit Committee held 8 meetings at which its members paid particular
attention to the following matters:
1.
2.
3.
4.
5.
6.
7.
risk management and efficient operation of internal controls;
efficient operation of the Internal Audit Department;
financial statements and the external audit;
risk management and corporate governance of the subsidiary AS Osiguranje, Belgrade;
monitoring the execution of reviews and/or the regulators' decisions issued to the Company;
monitoring of processes (debt collection, preparations for Solvency II);
monitoring of major projects.
In 2014, the Audit Committee held thre more meetings at which its members also discussed material related to
the approval of the 2013 Annual Report.
In 2013, the Audit Committee had five members: Marjaž Gantar ‒ Chairman, Polona Pergar Guzaj ‒ Deputy
Chairman, and Mojca Kek, Milena Georgievski and Matjaž Pavlin ‒ members.
Substantive aspect
Risk management and efficiency of the internal controls system
In the reporting period, the members of the Audit Committee monitored on a continuing basis the adequacy of
insurance risk management through an appropriate investment policy of Adriatic Slovenica and by providing a
sufficient amount of capital and the statutory capital adequacy in accordance with the Solvency II Directive.
The Audit Committee reviewed the actuarial reports for the financial year 2013 and found that Adriatic Slovenica
quarterly calculated the amount of capital and the capital adequacy, the levels of technical provisions and
mathematical reserves, the matching of assets with liabilities and statutory restrictions and provided for regular
reporting to the Insurance Supervision Agency (ISA). As at 31 December 2012, the Company is in the state of
sound capital adequacy having capital surplus. The expert opinion that arises from the report of the certified
actuaries states that the amounts of premiums written in 2013 and the amount of the technical provisions formed
as at 31 December 2013 are adequate to ensure that the Company at all times meets all its liabilities arising from
the insurance contracts. Reinsurance protection is also adequate.
Efficient operation of the Internal Audit Department
The Audit Committee monitors on a regular basis the efficiency and operational performance of the Internal Audit
Department including the compliance of the internal audit function with the International Standards for the
Professional Practice of Internal Auditing. In 2013, the Internal Audit Department performed its function on the
basis of the annual work plan. In 2013, the IAD carried out 11 scheduled audits and three extraordinary audits
and, pursuant to the request of the Management Board prepared two reports on internal control reviews that were
carried out. They also reported on a monthly basis on implemented and non-implemented recommendations
made to the auditees. Altogether, seven reports for Adriatic Slovenica, eight reports for AS Osiguranje and two
reports for KD Življenje were issued to that end. Among other tasks, the IAD also monitored the compliance with
the risk management rules of the Company, provided informal consulting services and carried out other audit
activities if so requested by the Management Board or by the Audit Committee.
15
Annual Report
for 2013
The Internal Audit Department issued 60 recommendations in 2013; the auditees corrected the identified
irregularities and deficiencies as recommended.
In 2013, the Internal Audit Department revised its Rules of Procedure and presented it to the Audit Committee of
the Supervisory Board
Financial statements and the external audit
In accordance with its powers, the Audit Committee has participated in the procedure for the selection of the new
independent external auditor KPMG Slovenija d.o.o., and the determination of the mandatory content of the
contractual relationship with the external auditor.
The Audit Committee first learned about the progress of the external audit. As stated in the Independent Auditor’s
Report, no major difficulties arose during the audit.
With regard to the Annual Report of Adriatic Slovenica and the Independent Auditor’s Report drawn up by KPMG
Slovenija d.o.o. for the financial year 2013, the Audit Committee, among other things, has establishes as follows,
the Annual Report and consolidated Annual Report of Adriatic Slovenica have been prepared within the statutory
time frame and comprises all mandatory elements and KPMG Slovenija d.o.o. has drawn up the independent
auditor's report on the Company's financial statements and expressed an unqualified opinion.
Conclusions
In accordance with the above stated, the Audit Committee proposes to the Supervisory Board:
1. to give a positive opinion on the reports of the certified actuaries:
2. to give a positive opinion on the IAD's report for the second half of 2013, and on the IAD's Annual Report for
the financial year 2013;
3. to give no objection to the Independent Auditor’s Report in the proposed content and to approve as proposed
the Annual Report and consolidated Annual Report of Adriatic Slovenica d.d. for the financial year 2013.
Koper, 19. May 2013
Audit Committee of the Supervisory Board of Adriatic Slovenica
Matjaž Gantar,
Chairman of the Audit Committee
16
Annual Report
for 2013
1.6
FINANCIAL HIGHLIGHTS AND OTHER DATA FOR 2013
Gross written premium (in EUR million)
Gross claims paid (in EUR million)
Profit/loss before tax (in EUR million)
Net profit/loss (in EUR million)
Financial investments and cash equivalents (as at 31 December)
Gross insurance contract liabilities (as at 31 December)
No. of employees (as at 31 December)
Insurance premium per employee (in EUR thousand)
Return on equity (ROE)
Carrying amount of equity (as at 31 December) (in EUR million)
Carrying amount per share v EUR (as at 31 December)
2013
2012
306.4
269.2
217.6
192.8
15.9
17.1
13.6
13.2
532.9
327.4
491.4
287.2
1,050
1,010
291.8
266.5
15.1%
15.8%
93.2
86.6
9.04
8.96
Trends in net premiums, net claims and benefits paid and underwriting result of Adriatic Slovenica d.d.
300
261
259
80
250
215
200
70.2 182
70
69.4 181
67.0
60
144
150
50
100
40
50
0
in mio EUR
2011
2012
Net premiums
2013
Net claims paid
17
Underwriting results
30
in %
Annual Report
for 2013
2. COMPANY PROFILE, ITS VISION AND VALUES
2.1 ADRIATIC SLOVENICA D.D.
Registered company name, head office and address:
ADRIATIC SLOVENICA Zavarovalna družba d. d.
Ljubljanska cesta 3 a
6503 Koper, Slovenia
Telephone: +386 (0) 5 66 43 100
Abbreviated name: ................................................. ADRIATIC SLOVENICA d. d.
E-mail: .................................................................... [email protected]
Web page: ............................................................... http:// www.as.si
Company registration number:: ............................... 5063361
VAT identification number: ...................................... SI 63658011
Share capital: .......................................................... 42,999,529.80 EUR
Date of entry into the Companies Register: ............ 20 November 1990
Adriatic Slovenica Zavarovalna družba d. d. – Slovenia's second biggest insurance company – was established
on 29 December 2005 by combining the strengths of two well-known Slovene insurers.
The alliance was made back then between Slovenica, zavarovalniška hiša d. d. Ljubljana, and Adriatic
Zavarovalna družba d. d. Koper. Adriatic changed its name and since then it has been operating under the
company name of Adriatic Slovenica Zavarovalna družba d. d. The merger was the first and until then the only
successful merger in Slovenia’s insurance sector, blending two corporate entities each with its sales network, all
employees, assets, resources, strengths and knowledge. The capital capacity and soundness of the new
insurance company has increased, as well as access to insurance products and services across the Slovene
territory. Adriatic Slovenica has become the only insurance provider in Slovenia with a full range of insurance
services in its portfolio: health insurance, non-life, life and pension insurance.
On 1 October 2013, Adriatic Slovenica, in the acquisition of the spun-off part of the transferring company KD
Življenje, took over the employees and the whole portfolio of this insurance company. At the end of 2012, KD
Življenje was ranked in the 4th place on the life-insurance market with its aggregate gross written premium of EUR
51.3 million and 8.85% market share. By merging with KD Življenje, Adriatic Slovenica further expanded its range
of insurance products and services offered and provided the clients with secure and competitive, as well as
comfortable and up-to-date services under one roof. In this manner, Adriatic Slovenica successfully consolidated
its position as the second largest insurance company in the Slovene market, with its market share in terms of
aggregate gross written premium (EUR 306 million) achieving 15.6% at the end of 2013 (in the year before the
merger, its market share was 13.2% and in 2011 it was 12.68%), or 2.5 percentage points more than the year
before. With the acquisition of the life insurance portfolio, the Company’s market share in this area increased to
10.5% of the Slovene market, while the market share of non-life insurance slightly decreased in comparison with
2012 (by 0.1 percentage point), reaching 17.5%. Primarily owing to the acquisition of the KDŽ portfolio, Adriatic
Slovenica concluded 2013 with a 13.7% higher gross written premium from life and non-life insurance, whereas
the aggregate gross written premium in the Slovene market fell by 4.4% (by 2.7% in 2012).
Adriatic Slovenica is proud of its extensive sales network, consisting of nine area branch offices located in all
regional centres of Slovenia (Koper, Postojna, Nova Gorica, Ljubljana, Kranj, Novo mesto, Celje, Maribor and
18
Annual Report
for 2013
Murska Sobota). The Company offers its services in four more branch offices, 42 representative offices, 130
contractual points-of-sale and a network of 161 other outlets of the complementary third-party distribution
channels. The services of Adriatic Slovenica are therefore available to clients at 346 points-of-sale altogether as
at the 2013 year-end.
The Company has also been operating in the market of South-East Europe since 2008. It established a
subsidiary in Belgrade called AS neživotno osiguranje a.d.o. Beograd, authorised to sell non-life and health
insurance in Serbia. On 24 November 2011, Adriatic Slovenica registered a fully owned company specialised for
debt collection Prospera d.o.o., Koper, with the aim to make debt collection more effective in a long term. The
company was entered into the Companies Register on 16 December 2011. On 14 May 2012, Adriatic Slovenica
established Viz d.o.o., the first company in Slovenia to introduce an efficient motor vehicle insurance web portal
www.wiz.si.
Historical milestones
The insurance company Adriatic d. d., Koper was established back in 1990 and it took it just a couple of years to
achieve its goal - to put in place an extensive sales network across Slovenia and Istria. The first branches were
opened in 1991 in Koper, Pula, Ljubljana, Celje and Kranj, followed by the branches established in 1992 in
Postojna, Nova Gorica, Novo mesto and Maribor, and the branch in Murska Sobota established in 1993. Adriatic
transformed the branch office established in Pula into a legal entity Adria Pula in 1992 and had a majority interest
in the new company, only to sell it in 1996 in line with a new business strategy and the situation in the market.
Adriatic acquired the controlling stake in SLOVENICA d. d. in 1999 (51.2 %). It is regulated by the Insurance
Supervision Agency (AZN) and is fully licensed for all classes of the insurance business. The market share of
Adriatic d. d. in 2004 in terms of aggregate gross written premium was 9% and positioned it in the 4th place
among all insurance companies in Slovenia, and in the 2nd place in the supplemental health insurance business
having an 18% market share.
The insurance company registered as Zavarovalniška hiša SLOVENICA d. d., Ljubljana, was incorporated at the
end of 1992. KD Holding d. d. Ljubljana became in 1996 its majority shareholder and in 1999 KD Holding d.d.
acquired the majority stake also in the insurance company Adriatic d. d. In 2004, life insurance business was
carved out and spun off to a new life insurer SLOVENICA ŽIVLJENJE d. d. The new life insurer started to operate
on 3 January 2005. Before the merger, SLOVENICA d. d. had the authorisation to provide all other classes of
insurance except life. The market share measured by gross premium written by Zavarovalniška hiša Slovenica d.
d. Ljubljana, excluding the insurance business spun off to the life insurer Slovenica Življenje, was 4% in 2004 and
it earned Slovenica the 5th place among all insurance companies in Slovenia. On 22 August 2007, the life
insurance company Slovenica Življenje d. d. changed its name to KD Življenje, zavarovalnica d. d.
On 20 November 2010, Adriatic Slovenica celebrated its 20th anniversary in the insurance business marked by
continuous growth. The merger of Adriatic and Slovenica back in 2005 has resulted in a strong insurance
company capable of delivering a higher level of safety to the persons insured. The Company is in a position to
provide better services and it continues to develop modern insurance operations in marketing and sales, human
resources and informatics. Growth is demonstrated also through product innovation and on more than one
occasion Adriatic Slovenica has been the leader in the Slovene insurance market with its insurance products,
advanced insurance services and affordability of its insurance products.
19
Annual Report
for 2013
2.2 THE COMPANY'S VISION AND VALUES
Adriatic Slovenica is part of the KD Group which has adopted a new development strategy in 2012. The
circumstances demanded a consideration of future guidelines to optimise the Group’s financial structure and
strengthen its financial soundness. An insurance based strategy, underpinned by a range of high-quality asset
management and investment products, as key accompanying activities laid a solid foundation for cost-efficiency,
growth and development. The final goal of the new strategy is to establish a group which would become one of
the leading insurance groups in Slovenia and the Balkans within three to five years. The parent company of the
Group will be Adriatic Slovenica. Its aim of further increasing the sales growth in Slovenia and on foreign markets
will be reached by organisational restructuring, simultaneously with product portfolio optimisation. As the parent
company of the KD Group, Adriatic Slovenica harmonised its vision with the new strategy of the Group.
Vision
Adriatic Slovenica aims to become one of the leading insurance and finance groups with its main market in
Slovenia and subsidiaries on the Balkans. The Company will sell life, non-life and health insurance, accompanied
with high-quality asset management and investment products. At Adriatic Slovenica, the clients are placed at the
core of its activities, while developing quality and competitive solutions for their needs – products, services and
sales channels.
Corporate, management and employee values
In order to adapt to the market and pursue the business goals even more effectively, AS thoroughly revised its
values in 2012. The five core values are observed by all employees, including the management, who live
according to these values and transfer them to the employees with their actions. These values are the basis of
relationships within the Company, and they are reflected in the relationships with clients and all other
stakeholders in the environment.
Responsibility
Adriatic Slovenica’s activities convey the message that it is a reliable company. All stakeholders can rely on the
Company as it acts with due care and diligence as well as keeps its promises. It fulfils the expectations of clients,
the environment and employees.
Trust
Trust is built on high ethical standards that are based on open relationships and ensure coordinated operations.
Through trust, an environment of growth is created and obstacles are overcome with respect and mutual help.
The Company’s attitude and actions are reliable because it complies with joint agreements.
Proaction
Adriatic Slovenica constantly considers its next steps because it has enough courage and experience required to
make changes. It is a future-oriented company, whose proactive activities are aimed at achieving business results
and satisfying the needs of clients, owners and employees.
Passion and pleasure
The Company takes great pleasure in being part of the insurance industry, radiating passion and joy. It accepts
challenges with optimism as it believes it can make changes for the better. Passion and pleasure give the
Company the drive to continue and not stop halfway through, but to follow and pursue its goals until they are
achieved.
Winners' attitude
The Company’s work and results prove it is a winner. Its success is the result of team work, cooperation and
enthusiasm of the winning team of over a thousand employees. Adriatic Slovenia believes in its success because
it is led by high moral standards and respect for the integrity of every individual.
20
Annual Report
for 2013
3. MANAGEMENT AND CORPORATE GOVERNANCE BODIES
3.1
THE SUPERVISORY BOARD
The Supervisory Board
Chairman:
Matjaž Gantar
Members:
Sergej Racman
Aljoša Tomaž
Tomaž Butina
Aleksander Sekavčnik
Members – Employee representatives
Viljem Kopše
Matjaž Pavlin
Ljuba Miljušević
3.2
THE MANAGEMENT BOARD
Predsident: Gabrijel Škof
Member: Matej Cergolj (until 24 November 2013)
Member: Willem Jacob Westerlaken
Member: Varja Dolenc (from 13 January 2014)
Member: Matija Šenk (from 31 January 2014)
3.2.1
Meet the members of the Management Board
Gabrijel Škof, President of the Management Board
Born in 1960 in Ljubljana.
Education and professional training:
- Graduated from the Faculty of Law, Boris Kidrič University in Ljubljana 1986 (LL.B
21
Annual Report
for 2013
-
Passed the bar exam on 25 October 1989 before the Republic Secretariat for Justice and Administration of
the Republic of Slovenia, having completed one year law internship at the Higher Court of Ljubljana.
Professional experience record:
1986 – to date in the insurance business, Non-life insurance Executive Director, member of the Management
Board, adviser to the Management Board, Director of the Ljubljana Branch (Zavarovalnica Triglav d. d.).
-
Since 9 November 2006 to 30 September 2007 – member of the Management Board.
Since 1 October 2007 to date – President of the Management Board.
Membership of and functions in professional organisations and associations and bodies of enterprises and
institutions:
- member of the Management Board of KD Group d.d.;
- Executive Director of KD Group d.d.;
- Member of the Council of the Slovenian Insurance Association
-
Member of the Supervisory Board of the Nuclear Insurance and Reinsurance Pool, GIZ;
Member of the Organising Committee for the preparation and performance of the Insurance Days since
1999 to date and President of the Organising Committee for 2014;
Member of the Board of Directors of the Chamber of Commerce and Industry of Primorska.
Willem Jacob Westerlaken, Member of the Management Board
Born in 1967 in Delft, the Netherlands.
-
Mathematical Engineering, TU Delft, the Netherlands, Engineer of Mathematics, 1991.
Actuarial Science, Amsterdam, the Netherlands, specialisation in actuarial science, 1995.
INSEAD, training "Finance for Executives", 2004.
-
January 1994 to May 1995 – Brans&Co, May 1995 to September 1996 Reaal, September 1995 to
December 1998 Stichting Performance, January 1999 to March 2000 Amev / Fortis;
March 2000 to May 2005 – Senior Vice president in ABN / Amro;
May 2005 to December 2007 – CEO for Europe of Fortis Insurance International;
December 2007 to February 2009 – CEO of Rosgosstrakh insurance company;
October 2009 to August 2011 – Partner in Financial Access Consulting Services.
-
Since 1 October 2011 – adviser to the Management Board.
Since 25 November 2011 – member of the Management Board.
institutions:
-
Executive Director of KD Group d.d.
Chairman of the Supervisory Board of KD Skladi;
22
Annual Report
for 2013
-
Member (Non-Executive Director) of the Board of Directors of AS neživotno osiguranje Beograd;
Member of the Dutch Actuarial Association.
Varja Dolenc, Member of the Management Board
Faculty of Economics at the University of Ljubljana, BSc in economics; money and finance, 1995.
- Master's degree studies at the University of Reading, Great Britain; MSc in International Securities, Investments
and Banking, 1999
From 1996 to 2013 in banking. Executive Assistant to the Management Board, in charge of an asset
management centralisation project in the NLB Group in Slovenia. Executive Director of Marketing, Clients'
Segments and Development, Back-Office Services Director for transactions of treasury and investment banking
(in NLB d.d. Ljubljana). Chairman of the Supervisory Board of NLB Skladi, upravljanje premoženja. Member of
the Supervisory Board of Skupna pokojninska družba.
-
Since 1 December 2013 adviser to the Management Board.
Since 13 January 2014 – member of the Management Board.
institutions:
-
KD IT Director;
Member of the Slovenian Supervisory’s Board Association;
Member of the Association of Female Managers (FAM).
Matija Šenk, Member of the Management Board
-
Faculty of Mathematics and Physics at the University of Ljubljana, BSc. Engineer of Mathematics,
1992.
Faculty of Economics at the University of Ljubljana in cooperation with the Faculty of Actuaries,
Great Britain, authorised actuary, 2000.
-
1990 to 1996 – professor of mathematics at the Šubičeva Grammar School in Ljubljana;
1996 to 2002 – active cooperation in the setting up of Generali zavarovalnica d.d. company in Slovenia;
2002 to 2005 – member and President of the Management Board of Slovenica, zavarovalniška hiša
d.d.;
2005 to 2006 – President of the Management Board of Slovenica Življenje d.d.;
23
Annual Report
for 2013
-
19 February 2007 to 1 October 2013 – President of the Management Board of KD Življenje d.d.;
3 February 2009 to 16 November 2009 – member of the Management Board of KD Group d.d.;
1 October 2013 to 30 January 2014 – Director of KD IT.
-
From 2006 to 2007 – member of the Management Board and Deputy President.
Since 31 January 2014 – member of the Management Board.
institutions:
-
3.3
Executive Director of KD Group d.d.;
Deputy President of the Supervisory Board of KD Skladi;
President of the Supervisory Board of KD životno osiguranje Croatia;
President of the Advisory Board of the European Actuarial Academy;
regular lecturer at annual meetings of the Chief Risk Officer Assembly witnih the framework of Geneva
Association.
OWNERSHIP STRUCTURE
Shareholder structure as at 31 December 2013
Shareholder
No. of shares
Stake
KD Group d. d.
10,304,407
100%
Total
10,304,407
100%
The share capital of Adriatic Slovenica insurance company was additionally increased by the merger of the KDŽ
company in 2013, and as at 31 December 2013 it amounted to EUR 42,999,529.80
24
Annual Report
for 2013
3.4
ORGANISATION AND ORGANISATIONAL STRUCTURE
Organisational scheme of the company
25
Annual Report
for 2013
3.5
BRAND VISIBILITY, CORPORATE PERCEPTION OF THE COMPANY AND SATISFACTION OF
INSURED WITH CLAIM SETTLEMENT
For a number of years, Adriatic Slovenica has been systematically monitoring the satisfaction of policyholders
and potential policyholders, and visibility and reputation of the Company through internal systems of monitoring
and analysis and through annual research performed by independent external research institutions. Keeping track
of client satisfaction and the perception our clients have of Adriatic Slovenica and its reputation, are important
elements for identification, research and development of insurance products, services and business processes,
aimed at making the clients satisfied and the performance of the insurance company successful.
In 2013, the Company again participated in three high-profile surveys, carried out by external research
institutions. The first named Ugled (Company Reputation) survey (Kline & Partner, 2013), polling 800
representatives of the professional community, screened 60 of the best-known and largest companies in
Slovenia. The survey has revealed that the visibility of Adriatic Slovenica among the members of professional
community, compared to other companies included in the survey, ranked 29th. The visibility of Adriatic Slovenica
among the companies in the same line of industry ranked 2nd, which corresponds to its market share. Compared
to other companies in Slovenia included in the survey, the professional community ranked Adriatic Slovenica in
the 33rd place and among the companies with above-average reputation. In comparison with 2012, Adriatic
Slovenica made the most progress among the insurance companies screened, overtaking two major market
competitors and moving up 7 places on the scale of the most reputable companies.
The Zavarovalniški monitor (Insurance monitor) survey (2013) is a continuous insurance market survey
polling individual insured (conducted in Slovenia since 2001). Adriatic Slovenica comes to minds of the
respondents in the 2nd place when asked to enumerate insurance companies, and is in the 3rd place among the
insurance companies with which the respondents took out new insurance. It is also important how the Company
was assessed by its policyholders– as the second most attractive insurance company in Slovenia and as a
financially sound and secure insurer they feel they can rely on. The insured are satisfied with the competent and
professional personnel, i.e. agents and brokers, and appreciate the innovativeness and introduction of novelties
(new insurance products). This year, additional research was carried out as part of the survey, focusing on the
satisfaction of the Company's clients compared to that of the competitors' clients. The respondents ranked us in
the 2nd place with an average score of 4.2 (on the scale from 1 to 5), and with the highest share of completely
satisfied clients recorded in any of the surveyed companies, i.e. 57% (score 4 on the scale from 1 to 5), and only
1% of dissatisfied clients (score 2) and none very dissatisfied client (score 1).
In 2013, Adriatic Slovenica participated in the All Finance research (Valicon), which offers comprehensive insight
into the brand in the context of users of financial services. In terms of brand strength, the respondents ranked
Adriatic Slovenica in the 2nd place. In the client satisfaction survey (respondents who rated the Company as their
principal insurer), Adriatic Slovenia was ranked as an insurer with above-average client satisfaction, compared to
the satisfaction of clients committed to competitors. It recorded the highest share of completely satisfied clients,
i.e. 16% (12% or less in the rest of insurers). (Graph 1)
26
Annual Report
for 2013
Graph 1: Share of completely satisfied clients (AS as the principal insurer)
16%
12%
10%
6%
5%
4%
Adriatic Slovenica Insurance company Insurance company Insurance company Insurance company Insurance company
A
B
C
D
E
Source: All Finance research, Valicon 2013
Results of the Internal Client Satisfaction Survey
The Internal survey on satisfaction of clients in the process of claim resolution was conducted for the
seventh time in 2013. Among its active and potential policyholders, a representative sample of 1,120 individuals
was chosen who have received compensation for their insured accident or loss in October and November (natural
persons). The results are favourable again for Adriatic Slovenica because they show on average over 91% of
satisfied policyholders (Graph 2). According to 87% of policyholders the AS insurance product range is high
quality, up-to-date and client tailored (Graph 3).
Graph 2: The results of the internal client satisfaction survey in response to the statement: I am satisfied with the
Adriatic Slovenica insurance company.
84%
2007
87%
87%
88%
91%
2008
2009
2010
2011
91%
85%
2012
2013
Source: The Internal survey on the satisfaction of clients in the process of claim resolution 2013
Graph 3: The results of the internal client satisfaction survey in response to the statement: The insurance
products are of high quality, up-to-date and well suited to my needs.
86%
85%
2008
2009
80%
2007
87%
82%
2010
2011
85%
2012
87%
2013
The results of this survey show the satisfaction of respondents and the fulfilment of their expectations in the case
they suffered a loss or accident. More than 86% of the respondents agreed with the statement that the notified
27
Annual Report
for 2013
loss or accident claim was resolved quickly (scores 4 and 5), and as much as 65% of the respondents awarded
the top score (5) to this statement (Graph 4).
Graph 4: The results of the internal client satisfaction survey in response to the statement: The notified loss or
accident was resolved quickly
Score 5
65%
Score 4
Score 3
21%
8%
Score 2
3%
Score 1
2%
When conducting the internal client satisfaction survey, the level of client satisfaction with the work in the area of
claim handling and settlement was assessed. As many as 86% of the respondents agreed with the statement: ”As
regards handling and settlement of a claim filed after a loss or accident, my expectations have been fulfilled” and
64% of the respondents who received a compensation or a benefit awarded the top score to this segment (Graph
5).
Graph 5: The results of the internal survey in response to the statement: As regards handling and settlement of a
claim filed after a loss or accident, my expectations have been fulfilled.
Score 5
64%
Score 4
Score 3
23%
9%
Score 2
2%
Score 1
2%
In 2013, the Survey on the satisfaction of policyholders with the process of taking out insurance was
conducted for the second time in row. A representative sample of 456 (natural) persons who recently took out
insurance with Adriatic Slovenica for the first time was chosen. The results of this survey, too, were excellent
because they showed that on average more than 96% of respondents were satisfied with the process of taking
out insurance (Graph 6). Almost 86% of the policyholders assessed that the insurance products were of high
quality, up-to-date and well suited to their needs (Graph 7).
28
Annual Report
for 2013
Graph 6: The results of the internal client satisfaction survey in response to the question: Were your expectations
in the process of taking out insurance fulfilled?
4% 1%
96%
Yes.
Partly.
No.
Source: The Internal Survey on the satisfaction of clients with the process of taking out insurance 2013
Graph 7: The results of the internal client satisfaction survey in response to the question: Do you think that the
insurance products are of high quality, up-to-date and well suited to your needs?
13%
1%
86%
Yes.
In most cases.
No.
Source: The Internal Survey on the satisfaction of clients with the process of taking out insurance 2013
29
Annual Report
for 2013
4. BUSINESS OVERVIEW
4.1
ECONOMIC LANDSCAPE IN 2013
Macroeconomic conditions in Slovenia further deteriorated in 2013. Annual declines in final household
consumption and government spending deepened. Structural changes are needed to revitalise the economy and
stop the downturn in social welfare, including among other things further consolidation of public finances,
restructuring of the banking system, modification of health care and long-term care systems, increase in added
value, creation of an encouraging business environment, improvement of labour market efficiency, reduced
environmental pressures, and a better institutional framework.
In 2013, the economic activity was down by 1.1%. A decline in capital project (in particular those financed by the
state) was the main reason for a relatively major downturn in the economic activity. Decline in household
consumption by 2.7% was a consequence of deteriorated condition on the labour market and more prudent
purchasing. A 2.0% fall in government spending was connected with further consolidation of public finances.
In the second half of 2013, Slovenia experienced continued growth of exports. In terms of value, the 2013 exports
exceeded the level of 2008. Despite of tax changes, the average annual inflation rate of 2013 was lower by 1.8%
over the previous year. Lower inflation rate resulted from weak economic activity in both domestic and
international environment.
Several years of poor economic conditions have aggravated the labour market situation and additionally
deepened the shrinking of available income and of population welfare. The registered unemployment rate rose to
13.1% in 2013. The household income continued to decrease and, consequently, households deliberated and
reduced their bank deposits. The mass of total net wages and salaries was lower by 3.3% in real terms (2012:
3.2%) and the social transfers also decreased in real terms in 2013.
At the end of 2013, the Slovene banking system was marked by the initiated restructuring of the most exposed
banks. In 2013, the volume of credits granted to the domestic non-banking sector decreased by EUR 5.3 billion
which is four times the volume of 2012. The volume of household deposits fell to its all time low and government
deposits were lower, too. At the 2013 year-end, banks were reducing their foreign liabilities. Additional provisions
and impairments increased by EUR 3.7 billion in 2013, that is by 1.5 times the volume of 2012. SBI TOP was up
by only 3.17% in 2013.
The volume of insurance premiums on the Slovene market has been decreasing for the third concurrent year in
2013, denoting a fall of 4.4%. Compared to the year before, the non-life insurance premiums dropped by 2.0%,
while the life insurance premiums decreased by 10.2%.
The financial crisis has likewise affected the decline in life insurance premiums. The decline in the economic
activity and fierce competition in the car insurance market exerted an additional impact in 2013 on further
decrease in non-life insurance premiums
30
Annual Report
for 2013
4.2
LONG-TERM BUSINESS PLANS AND OBJECTIVES FOR 2014
In the finance and accounting area, the Company will pay utmost attention to the provision of technological and
organisational solutions to ensure reliable accounting in conditions after Adriatic Slovenica has assumed the
leading role in the Group. Consequently, shorter terms will be provided for the preparation of financial statements
and all other accounting reports. In the payments segment, the Company strives to achieve a larger portion of
less risky payment instruments.
In the collection segment, the Company plans together with the Prospera subsidiary to initiate enforced collection
also with regard to other (external) market participants.
In the non-life segment, Adriatic Slovenica will focus on innovative products and upgrade the existing products
with additional covers in order to meet the needs of various client segments. The Company will proceed with the
client segmentation process and simplify the claims resolution control, especially in the car insurance segment.
Much attention will be devoted to insurance packages for entrepreneurs and small companies, and to
restructuring of insurance of movable and immovable property. In addition, the Company will analyse data on
flood and earthquake areas for even better control of risks. The sales network will be actively trained in all
novelties and extensions of insurance services offered.
In the health insurance segment, Adriatic Slovenica will continue its orientation towards higher social and financial
security of the insured upon occurrence of illness, during longer medical treatment and in case of more severe
accidents in 2014 as well. Regarding supplemental health insurance, the Company will continue to control health
services providers and be actively involved in public discussion concerning the health care and insurance system
reform. Its upgraded offer of assistance services will provide a market advantage.
In 2014, Adriatic Slovenica will strengthen its activities in life insurance provision and sales. In compliance with
the new strategy, Adriatic Slovenica places great emphasis on life insurance development and especially on
product adjustments that would meet market requirements and could be combined with other insurance groups,
including health and non-life insurance products.
The Company's key objective is the adjustment to the new pension reform and marketing of products for the
second and the third pension pillars. To achieve that, Adriatic Slovenica will use the potentials within the Group to
implement its investment policy for long-term savings. With the pension reform, the second pillar becomes more
interesting for wider public. Long-term savings provide opportunity for better investment policy and introduces a
more strict definition of the second pillar as an "extension" of the mandatory pension insurance, more clearly
defining the saving for the time after retirement (withdrawal of funds is not possible, intended purchase of pension
annuity).
All that opens the possibilities for Adriatic Slovenica and the KD Group to profile themselves on the market of
additional pension insurance as providers of an integrated solution to fill the pension gap faced due to the
decrease in rights arising from the first pension pillar. For that reason, Adriatic Slovenica plans to widen its offer
of annuity insurance at various life stages in 2014. At the same time, greater emphasis will be on life insurance
products intended to satisfy the needs of population at various stages of life, and on the extension of additional
insurance provision and innovative services. Special attention will be paid to the adjustment of insurance for sale
through complementary sales channels, such as banks, direct mailing and e-sales (online underwriting). Life
insurance contracting will be optimised by online application and simplified underwriting procedure.
In 2013, great emphasis was laid on internal business processes and via the DigitAS project paperless operation
was introduced to be maintained also in the years to come. In 2014, greater emphasis will be on processes
related to clients and business partners, as well as on optimisation of processes for operating costs reduction.
The AS-Portal project will bring insurance services of Adriatic Slovenica closer to clients, whilst business partners
will be able to contact the Company via its service-oriented architecture which follows the trend of state-of-the-art
31
Annual Report
for 2013
communication channels for business contacts with clients and partners. In 2014, the Company will continue the
integration of solutions within the CRM conceptual framework and complete the intranet restructuring project
By implementing a monitoring system, Adriatic Slovenica will update the existing assurance of uninterrupted
operations of the information system. Special attention will be devoted to operating and security risk controls. The
Company will also follow the requirements of the Solvency II standard which, among other things, requires
support to regulatory reporting.
The consolidation and integration of information systems for the life insurance portfolio transferred from KD
Življenje to Adriatic Slovenica started in 2013 will continue. The key issue is the consolidation of clients in the
Central Register of Clients (CRS) and the transfer of the acquired portfolio into the data warehouse (ASBI) of the
Company.
Annual training programmes will be prepared and executed in the AS Academy. E-material prepared in
cooperation with the Human Resources Department will contribute to greater satisfaction of users of IT solutions
since a well educated and satisfied user is one of the main objectives of Adriatic Slovenica.
In the insurance claims resolution segment, Adriatic Slovenica will remain and be even more focused on their
clients' satisfaction. The Company's prime rule is to bring an unpleasant damage or injury event to a conclusion
which will turn into a positive experience of the insured.
Fast and efficient work in the resolution of claims will be improved by a chain of selected suppliers engaged in a
strategic partnership for the provision of comprehensive and professional solutions for speedy recovery.
Communication with clients and professional progress will also be intensified. In 2014, Adriatic Slovenica will
improve their information systems with advanced solutions, boost the efficiency of paperless operation, and offer
their employees all needed professional support in resolution of more complex or complicated claims. More
significant stages of the claims resolution process will be supported by target-oriented management and
measurable indicators.
4.3
BUSINESS PERFORMANCE AND MAIN FEATURES OF INSURANCE CLASSES
As at the 2013 year-end, the market share of Adriatic Slovenica d.d. equalled 15.5 % (Source: Slovenian
Insurance Association, all data on market shares), having increased by 2.5 percentage points over 2012. The
increased market share mainly resulted from the acquisition of the sister insurance company KD Življenje (KDŽ)
in October 2013. Insurance premiums gathered in 2013 were by 13.7% above the previous year, and the majority
of the increase was in life insurance business due to the acquired portfolio of the KDŽ life insurance. Otherwise,
the market insurance premium was down by 4.4% in 2013. In terms of written premiums, the top performer in
2013 was again non-life insurance business, followed by health insurance and life insurance operations.
32
Annual Report
for 2013
The structure of premiums by class of insurance business
Life insurance
18%
Non-life insurance
45%
Health insurance
37%
4.3.1
Health insurance
The structure of premiums written in health insurance
Paralell and
complementary
health insurance
2%
Supplemental health
insurance
98%
Operating performance in 2013
Adriatic Slovenica remains the leading provider of additional health insurance products. In 2013, the market share
in this segment reached 23.2% (2012: 22.9%) which means that the insurance company gathered by 4.8% more
premiums than in the year before. The health insurance market also grew by 3.5%. However, in terms of
premiums written, Adriatic Slovenica was by 1.3 percentage points above the market growth.
33
Annual Report
for 2013
Net premiums, claims and benefits paid, and underwriting result of the health insurance segment in 2013
120,000
113,656
89
106,451
100,055
100,000
95,727
89,839
87
83,161
80,000
85
84.4
60,000
84.2
83
83.1
81
40,000
79
20,000
77
0
75
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims paid
Additional health insurance
By rationalising the costs and implementing standardisation, Adriatic Slovenica improved the management and
operational execution of key additional health insurance processes. A guarantee procedure was introduced,
renewal and extension procedures simplified, and insurance interruption, suspension and reactivation made
possible. The process of claims resolution was aligned to the Claims Rules, contract administration was regulated
for insurance contracts of major contractors and service providers (such as Craft and Small Business Fund).
Claims resolution procedures in the parallel and additional health insurance segment have been standardised
and coordinated with the claims resolution team in the personal insurance segment.
Intensive training was carried out to assist the marketing of additional life insurance and several marketing
activities have been designed and implemented for various sales channels and target groups. Adriatic Slovenica
wishes to promote additional life insurance especially with the insurance product that covers serious illnesses and
surgical procedures where the plan has been exceeded by 500%, a welcome package for new life and non-life
insurance clients, and a new assistance insurance for transitional care in case of an accident in 2014 as well.
Parallel health insurance
The main objective in 2013 was to extend the range of additional health insurance products and to provide a
distinctive offer promoting the sales of additional health insurance that continues to be the driving vehicle of the
Company.
Within the assistance services project, two new products were developed in 2013: short-term care in the case of
injury and short-term care in the case of illness or injury. The rider comprises assistance at home, transport to
medical control and transport to chemotherapy.
Two additional health insurance products have been developed for the target group of active clients in the age
bracket of 18 to 55, covering the risk of critical diseases of the so-called second generation: ONA AS HEALTH for
women and ON AS HEALTH for men. Both products include rider in case of female and male reproductive
34
Annual Report
for 2013
cancers, other forms of cancer, and rider in case of death (death allowance). An additional benefit to the product
is the so-called health bonus since the insurance company pays the policyholder an amount of 15% premium
payments if no insured event occurs until the expiry of the contract.
Development
Additional health insurance is the driving vehicle of the health insurance segment and for that reason Adriatic
Slovenica will continue to introduce competitive components of distinction and develop this segment as the basis
for other health, accident and life insurance products. This will also apply in case of any possible systemic
changes that might require modifications in additional health insurance. The management of additional health
insurance will further comprise standardized operating processes and supervision over health care providers. The
key element for an efficient fraud prevention system in the health insurance segment will be the implementation of
an appropriate IT package.
Social and financial security of individuals after a serious illness, surgery or heavy accident is long lasting
unstable since the completed medical treatment (the cost of which are still appropriately covered) is followed by a
lengthy period of time in which individuals having increased needs lack adequately high and stable income (low
disability pensions and compensations, necessary housing adjustments, adequate nourishment alternative health
treatments). Employers, too, are affected by sick leaves. The proportional additional health insurance has been
designed to fill this gap. In 2014, Adriatic Slovenica will further develop their competitive and innovative range of
products to cover both the insured and their employers. A new significant collective health insurance product
(occupational disability due to illness or accident) will be launched and the assistance insurance range of
products extended.
Main features
Supplemental health insurance
Supplemental health insurance covers additional costs for health-related services that are not entirely covered by
compulsory health insurance. The amount of these additional costs, covered by supplemental health insurance, is
defined in Article 23 of the Health Care and Health Insurance Act (ZZVZZ).
Parallel health insurance
Parallel health insurance covers health care expenses and related services and the supply of drugs and medical
technical aids for medical treatment to which a policyholder is entitled under compulsory health insurance, but in
line with alternative procedures and under different conditions. The Company offers insurance coverage for selffunding services in specialist clinics which enables quick access to specialists who can make the right diagnosis
and provide quality treatment without undue waiting time, typical of the public healthcare system.
Additional health insurance
Additional health insurance serves to fund payments for health services and medicines not treated as
entitlements under compulsory health insurance, as well as additional funds indispensable in case of illness or
accident. Additional health insurance comprises insurance for serious illnesses, surgical procedures, drugs and
superior accommodation in health spas and additional assistance insurance products: short-term care insurance
in case of an accident and short-term care insurance in case of illness or injury. The latter comprise assistance at
home, transport to medical controls and transport to chemotherapy. The "assistance at home" covers an agreed
amount of hours of help with basic daily activities, supporting daily activities and child care for the insured.
"Transport to medical controls" provides for the agreed number of accompanied transportations of the insured to
medical controls and the transportation of the insured back home after dismissal from hospital. The coverage of
"transport to chemotherapies" provides for the agreed number of accompanied transportations of the insured to
chemotherapies and radiation therapy.
Two additional health insurance products have been developed for the target group of active clients in the age
bracket of 18 to 55, covering the risk of critical diseases of the so-called second generation: ONA AS HEALTH for
35
Annual Report
for 2013
women and ON AS HEALTH for men. Both products include the following coverage: "coverage in case of female
or male reproductive cancers" which refers to forms of cancer specific for women or men, whilst "coverage for
other forms of cancer" refers to other forms of diagnosed cancer (e.g. lung cancer, bowel cancer, etc.), and
"coverage in case of death" (death allowance) refers to death of any reason. The amount of monthly premium
depends on the age on entry and the selected sum insured for the case of female or male reproductive cancer.
Insurance can be applied for and underwritten on the basis of just four questions about the health status. A key
novelty of these insurance products in comparison to the previous ONA AS and ON AS products, and to the
competition, are the pro rata payments upon the occurrence of the female or male cancer that poses no threat to
the life of the insured yet. An additional benefit to the product is the so-called health bonus (Adriatic Slovenica
pays the policyholder an amount of 15% premium payments if no insured event has occurred until the expiry of
the contract).
4.3.2
Life insurance
The structure of premiums written of the life insurance segment
Supplemental voluntary
pension insurance
1%
Endowment and term life
insurance
34%
Unit-linked insurance
65%
Life insurance premiums written grew in 2013 thanks to the acquisition of the life insurance portfolio of KD
Življenje. In this sector, the market share of Adriatic Slovenica increased by 10.5% in 2013, whilst the Slovene
insurance market in 2013 again registered a decrease in life insurance premiums, similar as in 2012 and 2011.
The four biggest insurance companies controlled 71.1% of the life insurance market which still show a high level
of concentration in the Slovene insurance market.
An essential move in 2013 was the transfer of insurance business from the sister insurance company KD
Življenje, together with integration and extension of sales channels, laying greater emphasis on life insurance
business and product development adjusted to current market conditions. Longer life expectancy, indebtedness
and relative smallness of households in Slovenia along with lower social, health and pension security, open new
opportunities and a higher demand for life insurance. On the other hand, however, the overall economic situation,
higher unemployment rates and expected decrease in personal income do not stimulate the demand in spite of
the growing need for basic insurance protection. Therefore, Adriatic Slovenica put emphasis on life insurance
products in the desire to satisfy the needs of the population of a specific age group, and boosted its offer of
36
Annual Report
for 2013
additional insurance possibilities with innovative solutions. Of key importance was the adjustment to the new
pension reform with products developed for the second and third pension pillar.
Net premiums, claims and benefits paid, and underwriting result of the life insurance segment in 2013
60,000
55,931
80
81.4
50,000
70
73.8
40,000
33,207
60
59.4
30,000
50
20,000
40
12,331
12,053
9,102
10,000
0
in 000 EUR
2011
9,806
2012
Net premiums
Net claims paid
30
2013
20
in %
Development
In 2014, development of life insurance products will continue in the light of their adjustment to current market
conditions. The needs of individuals in a specific period of life will be satisfied with new services and/or additional
insurance products and possible combinations with other insurance groups within a comprehensive insurance
package including health and non-life insurance. Of key importance will be the adjustment to the new pension
reform and marketing of products for the second and third pension pillar. In realising this concept, Adriatic
Slovenica will use the potentials within the Group to implement its investment policy for long-term savings. 2014
will be a year of an extended offer of annuity insurance at various life stages, a revised life insurance for elderly
population, up-to-dated collective life insurance and endowment life insurance, and of newly developed
investment-linked life insurance with either single or instalment premium. Special attention will be paid to the
adjustment of insurance for sale through complementary sales channels, such as the banks, Post of Slovenia,
direct mailing and e-sales (online underwriting).
Main features
Actively marketed life insurance is divided into the following groups: life insurance with death benefit, unit-linked
life insurance, mixed life insurance and pension insurance. Additional insurance products taken out together with
life insurance only increase insurance protection of any individual.
37
Annual Report
for 2013
Life insurance with death benefit
Comprehensive life insurance – life assistance is a life insurance with death benefit providing high insurance
protection and opportunity for additional insurance services for the enhanced security of the insured, their children
and family members in case of unforeseen events, and additional coverage in case of illness. Additional accident
insurance comprises enhanced coverage for permanent disability, accident annuity, sum insured for broken
bones, daily accident allowance and accident insurance of children. Additional insurance can be agreed to cover
critical diseases and add an additional DNA Nutri rider, or to be exempt from premium payments in case of
disability due to illness or injury.
Decreasing comprehensive life insurance is a life insurance with death benefit designed for borrowers. The
insurance covers repayment obligations of the borrower up to the agreed sum insured and, in addition, offers
security for the borrower's family members in the worst case.
Life insurance product TOP ŽIVLJENJE (TOP LIFE) covers the payment of the agreed sum insured in case of
death in the five-year term of insurance. The product includes coverage for serious permanent disability and
occurrence of a critical disease such as: cancer, heart attack, stroke, and coma. This insurance product provides
the insured and their family with basic social and financial security for just EUR 0.30 per day and is appropriate to
be marketed through complementary sales channels.
Life insurance products with affordable premiums are suitable for direct mailing sale. The insurance package
ZASE (FOR ONESELF) has been adjusted for such sale. It comprises life insurance with death benefit and
additional coverage for accidental death, traffic accident death, permanent disability due to accident and broken
bones; short-term care in case of illness or injury may be added. The insurance package FOR ONESELF
provides the insured and their family with basic social and financial security. The same is true of the Vita AS 50+
life insurance product, available to persons between 50 and 60 years of age. The product has been designed for
persons who remain active into their mature years and offers a broad range of additional accident covers.
The Vita AS 60+ product covers the needs of the senior target group as a whole life insurance with death benefit
intended to cover funeral costs and hospitalisation due to an accident. The product is available to persons up to
80 years of age.
Unit-linked life insurance
Aktivna renta AS (Variable AS annuity) is a unit-linked life insurance product that, after expiry of the saving
term, provides the agreed guaranteed annuities for a defined period of time as an additional retirement income or
scholarship. The product is composed of a guaranteed and variable portion and the greatest advantage of the
variable AS annuity is the opportunity offered to the insured to generate their annuity according to their wishes
since the product allows for saving in shorter periods or payment of lifetime annuities.
The insured can actively decide on investment policy. In addition to the part of premium invested into Zajamčeni
paket AS (the AS Guaranteed package), the rest of the premium may be invested into one of the investment
packages (active, balanced and conservative) or into maximum 4 investment funds from among the current offer
of Adriatic Slovenica. The insured may even change the ratio between the guaranteed part and other investments
under the variable AS annuity, which depends on their wishes and financial capacity.
The annuity always remains safe regardless of unpredictable life events. In case of sudden life events, such as
death, unemployment or temporary disability the insurance company takes care of premium payments and
guarantees that the insured will receive the agreed annuity after the expiry of the insurance. In addition, the
insurance even covers monthly compensation in case of unemployment or disability and guarantees the payment
of the sum insured in case of serious disease or accident.
38
Annual Report
for 2013
Unit-linked life insurance policy Fondpolica can provide life long comprehensive insurance protection and offer
diverse investment opportunities. Fondpolica in adjusted to the needs of people in various stages of life as
indicated in the names of product varieties: Fondpolica DRUŽINA (FAMILY), Fondpolica OTROK (CHILD),
Fondpolica POKOJNINA (PENSION BENEFIT), Fondpolica ZLATA LETA (GOLDEN YEARS) (for persons above
60 years of age), Fondpolica KLASIKA (CLASSICS) which is a flexible form and/or up-grade of mixed life
insurance, and Fondpolica PERSPEKTIVNE VREDNOSTI (PROSPECTIVE VALUES) with possibility to invest in
precious metals.
By taking out a Fondpolica, the policy holder achieves high level of financial and social security for himself and for
his family since the policy provides a guaranteed death benefit and possible addition of a broad range of
additional insurance coverage, such as: additional life insurance with death benefit, additional accident insurance,
additional critical illness insurance, premium exemption insurance, additional accident insurance for up to three
children on one policy, and additional life insurance product called Boljše življenje (Better Life). The latter
increases the sum insured under the life insurance with death benefit by 10% and at the same time clients may
chose between different preventive DNA services depending on their wishes and needs (DNA analysis for
selected diseases, DNA analysis; child, manager and general DNA analysis).
In the course of insurance period, investment policy, premium, accumulation period, the sum insured and
additional covers may be adjusted with regard to the changed needs. The insured may change and adjust their
investment policy at any time throughout the insurance period and once a year such change can be made free of
charge. In this way the insured can provide for higher return on assets and mitigate investment risk which is much
lower in case of investment into money market investment funds and bonds investment funds. The same applies
to the selection of the Guaranted package, an investment for which Adriatic Slovenica guarantees a minimum
2.75% annual rate of return. In case that the achieved return on investments exceeds the guaranteed rate, these
life insurance policies also participate in the annual surplus.
Mixed life insurance
Vita AS Royal and Vita AS Royal Plus are an endowment life insurance products providing death and survival
benefit, plus accident and health insurance throughout the active life of the insured until 65 years of age. The
death benefit insurance can be upgraded with a higher death cover. The revised accident insurance product
enables the insured persons to choose from seven different covers. Furthermore, they can include the insurance
for their children on the same policy for a favourable premium. This insurance product is highly flexible since the
insured can change the amount of the premium during the life of the contract, modify the scope and content of the
covers and the amount of the sums insured, get an advance, convert insurance into a death benefit insurance,
cover the premium from the automatically approved advance during the period in which they are unable to pay
premiums, etc. Both insurance products can be extended and combined with insurance cover while travelling
abroad (Tujina AS), and with CORIS assistance and TBO (with health insurance for serious illnesses and surgical
procedures from the additional health insurance offer).
Pension insurance
Pension insurance of the second pillar is intended as saving for additional retirement income. With tax reliefs, the
system of voluntary additional insurance provides an incentive for collective and individual additional insurance
with the aim to become eligible for early additional retirement income in the form of pension annuity. For the time
being, three insurance companies are selling voluntary additional pension insurance under a group pension
scheme. Adjusted to the revised pension legislation, Adriatic Slovenica will offer both individual and individual
voluntary additional pension insurance.
39
Annual Report
for 2013
4.3.3
Non-life insurance
The structure of premiums written of the non-life insurance segment
General liability
insurance
5%
Other insurance
7%
Motor vehicle
liability insurance
31%
Other damage to
property insurance
8%
Fire and natural
disasters
insurance
11%
Accident insurance
12%
Land motor vehicle
insurance
26%
Operations in 2013
In 2013, the non-life insurance market was down by 4.6% in Slovenia, mainly due to several years of continuing
tight economic conditions. Accordingly, the premium written of Adriatic Slovenica in non-life segment (i.e. in other
insurance) also decreased by 8.3%. At the 2013 year-end, the Company's market share in this segment was
14.5% (2012: 15.1%).
Net premiums, claims and benefits paid, and underwriting result of the non-life segment in 2013
160,000
146,842
75
140,000
70
120,000
100,000
80,000
89,668
65
96,743
91,181
60
61.1
57.1
60,000
44,650
52,100
55
50
40,000
20,000
45
46.2
0
40
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims paid
40
Annual Report
for 2013
4.3.4
Accident insurance
Accident insurance accounts for 12% of the non-life insurance portfolio. Collective accident insurance contracts
account for close to 50% of this class of insurance and 29% falls to driver accident insurance under MTPL+. The
majority share is taken by accident insurance for persons in vehicles and accident insurance of pre-school and
school children. In 2013, Adriatic Slovenica launched some new covers in accident insurance (bone fracture,
burns, loss of hearing, etc.) and revised long-term accident insurance of pre-school and school children. Through
the revised insurance, the Company registered a 5% premium increase above 2012.
In accident insurance, Adriatic Slovenica recorded a fall in total premiums written compared to 2012, mainly
arising from group accident insurance and the negative trends from previous years continue; the pressure of
economic crisis and unemployment growth is noticed. Companies are cutting down their costs and expenses and
group insurance of employees suffers, too. The mandatory insurance of passengers increased with an index of
127, also thanks to stricter control at the registration of vehicles and, consequently, growing demand for such
insurance.
In segmenting car insurance, Adriatic Slovenica lowered the additional premium for motor third party liability
insurance with additional coverage (MTPL+), but the share of persons who, in addition to MTPL also decide to
take out a MTPL+ has not yet sufficiently increased to cover the premium discount.
Accident insurance: net premiums, claims and benefits paid, and underwriting result in 2013
20,000
50
18,661
18,000
48
16,000
46
46.3
13,817
14,000
13,277
44
12,000
42
10,000
40
8,639
39.3
8,000
38
5,425
6,000
4,742
35.7
4,000
2,000
34
32
0
30
2011
in 000 EUR
36
2012
Net premiums
Net claims
2013
Net underwritting result
in %
Despite of economic crisis, net premium was down only by 4% compared to 2012. Net claims and benefits paid
fell by 13%. The net underwriting result thus improved by 4 percentage points.
41
Annual Report
for 2013
Development
In 2014, Adriatic Slovenica will first analyse and then standardise and simplify business process in accident
insurance in order to achieve better cost efficiency and separation of responsibility.
The product mix will be enriched with innovative products for various target groups and different sales channels.
Early in 2014 a new additional accident insurance product with premium exemption in case of permanent
disability will be launched. The insurance company will assume the premium payment responsibility up to the 75th
year of age of the insured in case of their 50 plus or 100% permanent disability. Adriatic Slovenica will develop
additional range of covers for additional accident insurance policy holders in the above 60 age bracket and offer,
in addition, a revised group accident insurance product for companies. Traditional marketing campaigns, such as
prepared for school-children accident insurance, will also be complemented with new cover opportunities.
Main features
Accident insurance comprises several sub-categories, such as accident insurance of persons during their
occupational activity and outside it, accident insurance for persons in vehicles, accident insurance of passengers,
accident insurance of pre-school and school children. … In case of an accident, the insurance alleviates its
financial consequences and provides for financial safety of both the insured and of the members of their
household. In addition to the basic risks insured, such as disability and death, policyholders often opt for
additional coverage such as daily accident benefits, daily benefits for the time spent in hospital while undergoing
medical treatment, and daily benefits for the time spent in a health spa undergoing medical treatment after an
accident.
4.3.5
Motor vehicle liability insurance (MTPL)
Premiums under the motor vehicle liability insurance account for 30% of all non-life premiums written. Due to
severe price competition average premium is down year after year. At the 2013year-end , the premium was by
11% below the premiums written in 2012.
In May 2013, Adriatic Slovenica published new car insurance segmented rates with the aim to direct the
underwriting into more profitable segments. Premium is calculated on the basis of several criteria, such as the
age of the insured, the year of the car, residence area of the insured, and a combination thereof. Premium rates
were set lower in those segments which were proved less problematic according to the claims analysis
performed. The purpose was to provide various segments with a premium that would most reflect their risk, and
to direct insurance agents to search for those segments and to acquire new, profitable policyholders offering them
a broad range of possible covers.
42
Annual Report
for 2013
Motor vehicle liability insurance: net premiums, claims and benefits paid, and underwriting result in 2013
60,000
80
51,242
70
50,000
40,000
60
61.5
50
31,528
30,000
40
25,969
23,811
36.6
30
20,000
20
8,712
10,000
10
9.7 2,515
0
0
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims
The drop of net premium in 2012 resulted from the implemented quota reinsurance contract for car insurance. In
2012, a considerable drop in net claims resulted from the impact of the quota contract on provisions, and from a
modified methodology applied in the calculation of provisions. In 2013, however, the drop in net premiums reflects
sever competition and premium allowances, as well as a drop in average premiums. In comparison to 2011,
premiums were lower due to the experienced drop in the number of insurance contracts and, consequently, the
claims and benefits paid, but also do to the effect of the reinsurance contract.
Development
In 2014, Adriatic Slovenica will continue with segmentation of clients. However, this is a process that requires
continuous monitoring and adjusting. The first half of the year will be focused on segmentation of other categories
of vehicles (lorries, buses, trailers). In cooperation with the sales teams, Adriatic Slovenica will develop covers to
be offered as addition to the motor vehicle third party liability insurance (MTPL) policy (such as premium
payments in case of unemployment). The cooperation and connecting with external databases RAZ, RSK and
MRVL will continue; this will enable the Company to easy control the claims status of the insured coming from
other insurance companies and to collect vehicle data. The next step will be to simplify the collection of vehicle
and policyholder data in order to ensure fast and correct entry into claims files.
Main features
Motor third-party liability insurance falls under the category of compulsory insurance in road traffic. This means
that every vehicle owners must purchase this insurance before hitting the road, provided that registration is
required for that vehicle. The policyholder and the authorised user of the vehicle are insured against payment of
damages accidentally caused to third parties while using the insured vehicle in the amount of the sum insured.
Insurance policies are concluded for the sum insured that has been statutory set and currently amounts to EUR
5,000,000 for personal injuries and EUR 1,000,000 for damage to property.
43
Annual Report
for 2013
4.3.6
Land motor vehicle insurance
The premiums written in land motor vehicle insurance account for 26% of non-life insurance premiums. Premiums
written for comprehensive insurance is falling year after year and was by 12% lower than in 2012. Economic crisis
has affected motor vehicle insurance since fewer clients decide to take out insurance for their second car. The
market of new vehicles has remained at the last year level, but car dealers believe such statistical data to be the
result of one-day registration of re-exported vehicles. On the contrary, some car dealers talk about a sales drop of
20 to 30% which is heavily reflected in the insurance business. The sales shortfall in comprehensive insurance is
the result of fierce competition and decline in the number of insurance contracts.
Land motor vehicle insurance: net premiums, claims and benefits paid, and underwriting result in 2013
45,000
90
40,538
40,000
85
35,000
30,269
80
30,000
78.8
75
25,000
74.7
19,817
20,000
17,332
70
13,655
11,741
15,000
65
10,000
60
5,000
59.2
55
0
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims
The drop of net premium in 2012 resulted from the implemented quota reinsurance contract. In 2013, the drop
resulted from a lower number of insurance policies and the lower average premium. As a consequence of
premium decrease and increase of net claims, the net underwriting result is lower, too.
Development
Adriatic Slovenica will continue the segmentation process. The sales team incentives have brought about some
new covers to distinguish the Company from their competitors. Further segmentation will be focused on lorries
and trailers. The scales of premiums will be modified, so that new factors having impact on premium calculation
will be taken into account.
Main feature
Comprehensive and collision insurance covers the perils of road traffic and natural disasters, theft and fire,
malicious and other acts that could result in partial or complete loss of value of motor vehicles.
The insurance product is of modular structure and the policyholder may select between the following covers:
traffic events, collision, severe damage; fire, theft and special events, additional insurance covers (D covers),
insurance of extras, additional machine breakage insurance and insurance of vehicles in repair shops.
44
Annual Report
for 2013
4.3.7
Fire and natural forces insurance
Premiums written in this category are constantly increasing and in spite of the economic crisis it remained at the
previous year level also in 2013. In the non-life premium structure, this class of insurance accounts for 11%. An
85% share of that premium falls under subcategory of fire insurance apart from trade and industry which includes
premiums of the home insurance Dom AS product (Home AS). Premium increase was predominantly achieved in
the part of fire insurance related to insurance in trade and industry and housing units insurance under the Dom
AS product.
Fire and natural forces insurance: net premiums, claims and benefits paid, and underwriting result in
2013
14,000
12,000
95
11,668
10,966
10,707
10,000
83.6
85
9,170
75
8,000
6,449
65
6,000
4,477
55
4,000
55.3
45
2,000
0
41.8
35
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims
Due to the lower reinsurance premium, net premium grew by 6.8%, whilst net claims paid decreased by 30%
since no major mass disaster events were registered in 2013. Consequently, the net underwriting result improved
by 28 percentage points.
Development
Fire insurance will be included in the new package for small enterprises and sole proprietors. In housing units
insurance the now offered home insurance product will be revised and premium rates corrected for floods since
they haven’t been set to low in light of more frequent events of storms and weather damages. Adriatic Slovenica
will cooperate with external institutions in the transfer of buildings data into the Company's information system
and in the provision of information on floods, earthquakes and storms available in various data bases with the aim
to establish better control over the insurance portfolio and to direct sales activities.
45
Annual Report
for 2013
Main features
The fire and natural forces insurance covers damage or loss on real estate and movable property. It includes
coverage due to fire, explosion, storm, hail, and a hit by a motor vehicle or movable working machine, fall of an
aircraft, demonstrations and riots. By special arrangement, fire insurance can also cover additional hazards of
flooding, accidental discharge or overflow of water, avalanche and landslide, snow mass, fluid leakage, discharge
of glowing mass, self-ignition of inventories, inflow of meteoric water, indirect lighting strike, vandalism and
earthquake. The housing part of real estate and movable property are covered within the Domas home insurance
product.
4.3.8
Other damage to property insurance
The class of insurance called other damage to property is composed of several insurance subcategories and
accounts for 9% of the premium structure in non-life insurance. The majority of premiums written, i. e. 55%
premium from this class of insurance and generated by home contents and machinery breakdown insurance. This
class of insurance also comprises crops and livestock insurance, construction and erection insurance, burglary
insurance, glass breakage insurance, etc.
In 2013, home insurance premium continued its constant growth of 3%. Premiums in machinery breakdown
insurance, however, were by 6% below the past year figure, which in part resulted from a decline in this type of
insurance in companies, and in part from the portfolio cleaning and orientation of Adriatic Slovenica towards more
profitable clients. More strict rules were applied with regard to bonus and malus calculations in machinery
breakdown insurance with the purpose to increase premium for policyholders with many claims and provide
discounts for policyholders with no claim bonus.
Other damage to property insurance: net premiums, claims and benefits paid, and underwriting result in
2013
12,000
10,000
100
10,972
9,577
9,727
10,416
95
8,318
8,000
90
7,355
87.3
6,000
85
4,000
80
79.9
2,000
75
75.6
0
70
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims
46
Annual Report
for 2013
Despite of unfavourable economic situation, net premium was down by 5%, but net claims paid fell by 13%. The
net underwriting result thus improved by 7 percentage points compared to 2012.
Development
In 2014, Adriatic Slovenica will continue activities for the development of Podjetnik (the Small Business) package
designed to comprise various insurance covers. Similar to the home insurance Dom AS package one single
policy will contain insurance covers needed by a small business or sole proprietor: fire, liability, accident, burglary,
glass breakage, etc. The accordingly designed information support will provide for fast and simple premium
calculation and application drafts. In the first half of the year, a package will be prepared for hospitality providers
and, in continuation, packages for other groups of craftsmen and small business owners will follow.
After four years since first implementation, the home insurance Dom AS package needs to be revised, the covers
provided refreshed and the insurer's obligations in certain covers restricted; to cut it short, the package shall be
updated in line with market expectations and the desired underwriting result.
Main features
In terms of premiums written, housing units insurance is the largest insurance subcategory under the other
damage to property class of insurance. Adriatic Slovenica provides this type of insurance as the home insurance
Dom AS package in which both home and its contents can be insured against a number of different hazards
threatening the assets of the insured. In addition, the same policy can also provide accident cover for family
members, cover farm risks and home pats; provide liability insurance, and many more. The second largest
insurance subcategory constitutes the machinery breakdown insurance that covers damages in case of
malfunction or breakdown of equipment, machinery and installations. This subcategory also comprises
construction and erection insurance, burglary and robbery insurance, glass breakage insurance, livestock and
crops insurance and others.
4.3.9
General liability insurance
Liability insurance accounts for 5% in the non-life insurance structure. This class of insurance comprises a rather
diverse range of liability insurance covers: general civil liability, manufacturer liability, and various mandatory and
non-mandatory professional liabilities and forwarders liability. In 2013, the premium invoiced was by 0.7% above
the 2012 figure. The highest increase has been recorded in manufacturer liability insurance.
47
Annual Report
for 2013
General liability insurance: net premiums, claims and benefits paid, and underwriting result in 2013
7,000
6,000
100
6,070
5,890
5,926
90
5,000
4,365
80
3,829
4,000
3,138
74.1
70
3,000
64.6
60
2,000
1,000
50
51.7
0
40
2011
2012
2013
in 000 EUR
in %
Net premiums
Net claims
In 2013, net premium was down by 2%, and net claims were up by 22%. For that reason, the underwriting result
deteriorated by 13 percentage points.
Development
General liability insurance will be revised in 2014. In addition, Adriatic Slovenica will focus on education and
training of the sales network since the liability insurance segment is expected to offer great opportunities for sales
growth.
Main features
Liability insurance covers losses due to third-party civil claims against a policyholder due to a sudden and
unexpected damage event (accident) arising from the hazard source stated on the policy that has resulted in
bodily injury or damage to property. The hazard source may be an activity, profession, product, etc., and that
source of hazard characterises the type of insurance. Of major importance are the needs to insure the
manufacturer's liability of companies that sell their products abroad, especially if they export them to the USA.
Professional liability insurance is compulsory for many professionals, such as notaries, lawyers, designers,
physicians, insurance brokers etc.
4.3.10 Other non-life insurance
Operations in 2013
Other non-life insurance accounts for 8% of total non-life insurance premium. This segment contains insurance of
goods in transit, insurance of financial losses, credit and suretyship insurance, legal expenses insurance and
assistance insurance. In 2013, suretyship insurance and car assistance insurance registered the highest
increase, whilst the highest decrease index was recorded in the credit insurance Kredit AS product
48
Annual Report
for 2013
Development
In 2014, Adriatic Slovenica will revise its strategy of assistance insurance which could in an extended form also
be offered through banks, post offices and other sales channels. In the beginning of the year Adriatic Slovenica
launched a new travel insurance product named Multirisk with assistance which will be even further upgraded. A
new unemployment compensation cover that could be included in any non-life insurance policy is also in the
pipelines. Insurance coverage that provides for loss of income due to injury or illness is underway; this will be
especially welcomed by small business owners or sole proprietors where illness or injury of a key employee may
result in substantial loss of income or inability to cover fixed costs.
Main features
Transportation insurance segment comprises aircraft and vessel third-party liability insurance, forwarder and
carrier third party liability insurance, comprehensive goods in transit insurance, as well as aircraft hull insurance
and vessel hull insurance. Assistance insurance is included in three classes of insurance: car assistance, medical
assistance abroad and other assistance insurance. Financial loss insurance comprises event insurance, loss of
income due to fire or machinery breakdown, travel cancellation insurance, and others. Suretyship insurance
consists of various bonds, such as tender bond, performance bond, warranty bond, etc.
49
Annual Report
for 2013
The number of persons insured and the number of insurance contracts issued by class of insurance in
2013
Adriatic Slovenica
Insurance class
Accident insurance
The number of
insured persons
The number of
insurance
contracts issued
2,853,203
346,299
Health insurance
382,965
382,965
141,656
141,656
3
3
17
17
1,950
1,950
Railway rolling stock insurance
Aircraft insurance
Marine loss insurance
Transportation (goods in transit) insurance
3,468
3,468
Fire and natural disaster insurance
78,481
78,481
81,716
81,716
271,805
271,805
36
36
Ship/boat liability insurance
6,111
6,111
11,421
11,421
Credit insurance
650
650
Suretyship insurance
342
342
Miscelaneous financial loss insurance
1,849
1,849
Legal expenses insurance
6,790
6,790
Insurance of assistance
181,719
181,719
Life insurance
154,565
149,864
102,106
99,003
2,401
2,401
Aircraft liability insurance
Insurance with capitalised payments
Note: The number of concluded insurance contracts has been in line with the Insurance Statistical Standard since 1 January
2009.
The number of concluded insurance contracts at the insurance subclass level is taken into
account.
The insurance contracts are counted in the way as it was reported in ST forms. A long-term insurance policy is counted each
year of its validity.
50
Annual Report
for 2013
4.4
ANALYSIS OF OPERATIONS, PRESENTATION OF THE FINANCIAL RESULT AND FINANCIAL
POSITION FOR 2013 OF ADRIATIC SLOVENICA D.D.
In the 2013 financial year, Adriatic Slovenica reported a strong operating performance despite a deteriorated
macroeconomic environment. Written premiums amounted to EUR 306 million or 13.8% more than the year
before. The bulk of the increase in life insurance premiums in 2013 was a result of the life insurance portfolio
takeover from the sister company KD Življenje. If combined life insurance premiums of both Adriatic Slovenica
and KD Življenje were taken into account for 2012, the insurance premium of Adriatic Slovenica for 2013 would
be lower by 4.5% compared to the preceding year. In 2013 the Slovene insurance market recorded a 4.4% drop
over the previous year. Further decline in economic activity, stagnating disposable income and falling purchasing
power of households significantly contribute to decreased premiums on the Slovene insurance market. The
competitiveness of insurance companies has remained at a high level, and the possibility of growth of individual
insurers is limited. The Company had a 15.5 % market share in 2013, ranking it as the second largest insurer in
terms of total written premiums.
FINANCIAL RESULT
Adriatic Slovenica performed well and ended 2013 with profit before tax amounting to EUR 15.9 million and net
profit totalling EUR 13.6 million. The achieved net profit increased by 3.1% over the same period in 2012.
In 2013, non-life, health and life insurance segments recorded a positive operating result. Net underwriting result
of non-life insurance excluding health insurance deteriorated in 2013, mainly on account of a drop in premiums.
Profit and loss for life insurance in 2013 was higher compared to 2012 due to the life insurance portfolio takeover
from the sister company KD Življenje. The underwritting result of health insurance in 2013 increased by 1.6
percentage points compared to the preceding year. The final profit for 2013 was primarily lower due to investment
impairments.
Summary of profit or loss
In 000 EUR
Gross written premiums
Life
insurance
Non-life
insurance
Health
insurance
2013
Life
insurance
Non-life
insurance
Health
insurance
2013
Index
13/12
56,836
136,960
112,603
306,399
12,348
149,353
107,452
269,153
-984
-50,388
0
-51,372
-292
-55,321
0
-55,613
92.4
78
4,609
1,053
5,741
-2
2,711
-1,001
1,707
336.2
55,931
91,181
113,656
260,768
12,053
96,743
106,451
215,247
121.1
Gross claims and benefits paid
-33,865
-87,559
-96,169
-217,593
-10,160
-92,644
-89,952 -192,756
112.9
Reinsurers'/coinsurers' share
292
24,970
0
25,261
63
20,815
0
20,878
Change in outstanding claims provisions
367
10,490
443
11,299
-49
22,557
-1,396
21,112
53.5
-33,207
-52,100
-95,727
-181,033
-10,146
-49,273
-91,348 -150,767
120.1
3,286
298
6
3,590
-4,861
-352
Written premium ceeded to reinsurers/coinsurers
Change in provision for unearned premiums
Net earned premiums
Net claims and benefits paid
Change in other technical provisions and change in
liabilities from investment contracts
Change in other technical provisions for the benefit of
life policyholders who bear investment risk
72
113.8
121.0
-5,140
-69.8
-10,604
-
-
-10,604
-2,369
-
-
-2,369
447.6
-5,858
-16,208
-1,791
-23,857
-806
-17,394
-1,658
-19,858
120.1
-11,419
-24,853
-10,278
-46,550
-1,970
-27,196
-11,413
-40,578
114.7
Net financial profit/(loss) from investing activities
4,122
-4,478
1,262
906
6,436
1,926
1,148
9,511
9.5
Other revenues / expenses
Profit/(loss) before taxes
1,025
12,415
-740
12,700
52
11,516
-482
11,086
114.6
3,276
6,256
6,389
15,921
-1,610
15,971
2,769
17,130
92.9
-498
-850
-989
-2,338
257
-3,553
-656
-3,952
59.1
2,777
5,406
5,400
13,583
-1,353
12,417
2,114
13,178
103.1
Acquisition costs
Other operating costs
Taxes
Net profit/(loss) for the reporting period
Written premiums of Adriatic Slovenica in 2013 amounted to EUR 306.4 million, which is 13.8% more than in
2012. The largest share of premium growth was recorded in life insurance due to taking over the life insurance
portfolio of the sister company KD Življenje. By taking into account the premiums ceded to reinsurers and/or coinsurers and unearned premiums, the Company collected EUR 260.8 million in net insurance premiums,
surpassing the 2012 figure.
51
Annual Report
for 2013
The bulk of total gross written premiums is accounted for by non-life insurance with 44.7% share. Together with
health insurance, they represented 81.5% of total gross written premiums in 2013. Adriatic Slovenica is a
composite insurance company, also providing life insurance. In 2013, life insurance accounted for 18.5% of total
written premiums, significantly increasing compared to 2012 as a result of taking over the life insurance portfolio
of the sister company KD Življenje.
In 2013, the Company was not marked by significant catastrophic claims. The life insurance portfolio takeover
from the sister company KD Življenje in 2013 was also reflected in increased volume of claims. Total gross claims
for 2013 stood at EUR 208.5 million or 16.5% more than in 2012. Compared to the previous year, reinsurance
protection slightly increased in 2013. Net underwritting result for 2013 totalled 69.4%, slightly less compared to
the 70.1% in 2012.
In claims from motor vehicle insurance, impact due to improved traffic safety was recorded, especially increased
use of motorways with respect to the number of purchased vignettes and a lower number of serious road
accidents. However, the number of damaged vehicles due to traffic density (car parks) and deer-vehicle collisions
are on the rise. In 2013, almost no claims related to hail were recorded, while loss events due to storms were rare
and limited to small geographic areas. In contrast, the number of roadside assistance insurance claims has been
significantly increasing as did the number of claims settled for contractual partners abroad.
In 2013, several large claims were reported, the largest being the fire in the Stara Cerkev elementary school. In
addition to several large claims caused by the policyholders abroad, even larger claims due to professional
liability, guarantees, loan collateral and cash robbery were recorded in 2013. Moreover, the number of claims
related to solar power station insurance increased.
Non-life insurance
In 2013, gross written premiums from non-life insurance contracts totalled EUR 137 million or 8.3% less than
compared to 2012. Continued declining economic activity, lower purchasing power of households and maintaining
competition between the insurance companies did not enable premium growth in 2013. Net premiums earned
from non-life insurance amounted to EUR 91.2 million, decreasing by 5.8% compared to the preceding year.
In 2013, net claims incurred equalled EUR 52.1 million, which is 5.7% more than in 2012. The net undewritting
result of non-life insurance in 2013 increased by 6.2 percentage points compared to 2012, totalling 57.1%.
Health insurance
Gross written premiums from health insurance amounted to EUR 112.6 million in 2013, which is 4.8% more than
in 2012. The prices of supplemental health insurance were not increased in 2013 (the last increase in prices was
on 1 July 2012 based on the Fiscal Balance Act (ZUJF)).
Net claims incurred from health insurance rose by 4.8% in 2013 compared to the preceding year, amounting to
EUR 95.7 million. The net loss ratio of health insurance stood at 84.2% and was by 1.6 percentage points better
than in 2012.
Life insurance
Gross written premiums in life insurance totalled EUR 56.8 million in 2013, increasing significantly as a result of
the life insurance portfolio takeover from the sister company KD Življenje. A reduced volume of written premiums
for life insurance in 2013 was again affected by deteriorating macroeconomic conditions and further decline in the
purchasing power of households.
52
Annual Report
for 2013
Operating costs
In 2013, operating costs amounted to EUR 70.4 million, having increased by 16.5% compared to 2012. By taking
over the life insurance portfolio of the sister company KD Življenje, a proportional part of operating costs was
transferred. In 2013, acquisition costs totalled EUR 23.9 million or 20.1% more over the preceding year.
Compared to 2012, the share of operating costs in gross written premiums went down by 0.7 percentage point
and stood at 27.6%.
Income and expenses for the financial year by insurance class
in EUR thousand
2013
Insurance class
Accident insurance
Income
Expenses
18,750
-15,580
Health insurance
115,714
-110,437
58,345
-62,620
Railway insurance
0
0
Aircraft insurance
21
-23
Marine insurance
893
-608
1,629
-1,294
17,677
-18,794
12,949
-16,605
Motor vehicle liability insurance
65,121
-56,551
24
-22
Marine liability insurance
652
-292
7,051
-7,738
Credit insurance
3,784
-1,413
256
-191
Miscellaneous financial loss insurance
804
-574
Legal expense insurance
186
-155
6,522
-6,214
40,611
-28,159
117,800
-127,057
1,188
-1,328
Land motor vehicles insurance
Goods in transit insurance
Assistance insurance
Life insurance
Income protection insurance due to accident or illness
Net cash flow from investing activities
Net cash flow from investing activities amounted to EUR 906 thousand, representing a 9.6% share of the net
cash flow recorded in 2012. This drop is mostly a result of impairments of equity shares and subordinated bonds.
53
Annual Report
for 2013
FINANCIAL POSITION
Risk management is increasingly more important for Adriatic Slovenica. Special attention is paid to the financial
position of the Company and to achieving long-term financial stability, as proved by appropriate balance sheet
structure as at 31 December 2012 and capital adequacy of the Company with a surplus of available capital in
non-life and life insurance segments.
The balance sheet total of Adriatic Slovenica as at 31 December 2013 amounted to EUR 706.9 million or EUR
258.7 million more as at the 2012 year-end. The growth was primarily the result of the life insurance portfolio
takeover from KD Življenje. On the assets side, the largest increase was recorded in assets and provisions for
unit-linked insurance policyholders. A rise in balance sheet total was also a result of a reinsurance contract
concluded in 2012 in a different form and under changed terms of reinsurance protection, increasing the
reinsurer's share in insurance technical provisions, reinsurance receivables and reinsurance liabilities.
The structure of assets
At 75.4% the bulk of total assets was accounted for by assets from financial investments, which include financial
investments, investment properties, investments in subsidiaries and associates, unit-linked investments of
policyholders and cash. As of 2013, assets from financial contracts are recorded within financial investments.
Together with reinsurance assets, the share of assets ensuring coverage of liabilities from insurance contracts
(technical provisions and insurance technical provisions for unit-linked insurance contracts) increased to 79.1%.
Receivables accounted for 15,0% share of total assets. As at 31 December 2013, they grew by EUR 47.1 million
compared to the 2012 year-end.
With a share of 5.9 %, other assets consisted mainly of intangible assets, property, plant and equipment, and
other assets.
Balance sheet – the structure of assets
31 Dec Structure
2013
in %
4,597
0.7%
27,153
3.8%
0
0.0%
3,816
0.5%
28,357
4.0%
21,973
3.1%
258,536
36.6%
213,926
30.3%
26,252
3.7%
0
0.0%
105,904
15.0%
6,291
0.9%
10,099
1.4%
706,903
100%
in EUR thousand
Intangible assets
Property, plant and equipment
Non-current available-for-sale assets
Deferred tax receivables
Investment properties
Financial investments in subsidiaries and associates
Financial assets
Unit-linked insurance assets
Reinsurers' share of insurance technical provisions
Assets from investment contracts
Receivables
Other assets
Cash and cash equivalents
Total assets
31 Dec Structure
2012
in %
3,614
0.8%
24,907
5.6%
0
0.0%
3,777
0.8%
30,430
6.8%
21,428
4.8%
239,412
53.4%
24,606
5.5%
23,714
5.3%
0
0.0%
58,838
13.1%
5,928
1.3%
11,520
2.6%
448,173
100%
The structure of liabilities
As at 31 December 2013, equity accounted for 13.2 % or EUR 93.2 million of total liabilities, having increased
mainly as a result of higher share capital and share premium upon taking over the portfolio of the sister company
KD Življenje. Compared to the 2012 year-end, the negative revaluation surplus as at the 2013 year-end rose and
negatively impacted the final equity balance.
54
Annual Report
for 2013
In total liabilities, liabilities from insurance contracts (insurance technical provisions and insurance technical
provisions for unit-linked insurance) accounted for a 69.5% share. As of 2013, liabilities from investment contracts
are recorded within insurance technical provisions. Liabilities from insurance technical provisions amounted to
EUR 279.5 million as at 31 December 2013. Together with insurance technical provisions for unit-linked
insurance contracts, liabilities totalled EUR 491.4 million. Compared to the 2012 year-end, liabilities from
insurance contracts (technical provisions and insurance technical provisions for unit-linked insurance) were
higher by EUR 204.2 million as at 31 December 2013, primarily on account of the portfolio takeover from the
sister company KD Življenje.
Other liabilities, comprising 17.3 % of total liabilities, include provisions for retirement benefits, deferred tax
liabilities, operating liabilities and other liabilities. As at the 2013 year-end, operating liabilities and other liabilities
significantly increased, mostly as a result of higher liabilities from reinsurance not yet due, arising from the new
reinsurance contract.
Balance sheet – the structure of liabilities
in EUR thousand
Equity
Subordinated liabilities
Insurance technical provisions
Insurance technical provisions for unit-linked insurance
policyholders
Other provisions
Deferred tax liabilities
Liabilities from investment contracts
Other financial liabilities
Operating liabilities
Other liabilities
Total equity and liabilities
4.5
4.5.1
31 Dec Structure
2013
in %
93,188
13.2%
0
0.0%
279,545
39.5%
31 Dec Structure
2012
in %
86,573
19.3%
0
0.0%
263,207
58.7%
211,833
2,767
27
0
1,093
92,887
25,563
706,903
24,009
2,831
48
0
3,987
51,203
16,316
448,173
30.0%
0.4%
0.0%
0.0%
0.2%
13.1%
3.6%
100%
5.4%
0.6%
0.0%
0.0%
0.9%
11.4%
3.6%
100%
MARKETING AND SALES NETWORK
Marketing strategy
The main focus of sales in 2013 was on satisfying client needs in terms of security. Sales activities were aimed at
creating a partnership between Adriatic Slovenica and a client as a win-win situation. The mission of the
Company was implemented through key sales channels represented by a network of agents, administrators and
advisors, direct sales via the client service centre and online sales via the Internet portal. The foundation of
successful performance is quality advising in the acquisition of insurance products and quality after-sales service
provided by claim centres.
The key sales strategy elements in 2013 were as follows:
- sale of simple products understandable for clients and package solutions;
- strengthening of partnerships with clients through ongoing communication and cooperation;
- provision of comprehensive non-life, life and health insurance protection;
- continual training of the sales network in order to improve advising to clients;
- of sales processes and linking of sales networks;
55
Annual Report
for 2013
-
sales expansion to new sales channels.
The key sales opportunity proved to be merger with KD Življenje, through which a network of agents specialised
in life insurance was recruited, thus increasing the competitiveness of the Company.
Marketing activities in 2013
By maintaining quality in a turbulent year 2013, marked by the continued economic crisis, Adriatic Slovenica
strived to provide maximum possible security for the policyholders, their families and for the Company. The aim of
special offers and especially information on optimal choice of coverage was to point out the importance of
selecting client-tailored insurance products.
In January, the “Life Stories” drive (Zgodbe, ki jih piše življenje) was supported, providing assistance to 15
families who have difficulties in repaying their loans due to various life circumstances, making their harsh living
conditions slightly better, while four persons received free Comprehensive life insurance (Življenjski kasko).
In February, marked by winter holidays, a 10% discount was offered on Tujina AS insurance (insurance for
travelling abroad) for all Spar Plus discount cardholders, who buy insurance via their mobile phone or online.
With the business partner Hervis Slovenija, a marketing campaign was designed in March, offering everyone who
bought a bicycle free comprehensive bicycle insurance and a EUR 30 discount for taking out motor vehicle
insurance or home insurance.
In April, a new website AS Pomlad (AS Spring) was launched, where interesting blogs provided additional
information on and explanation of individual coverage of a wide range of motor vehicle insurance products. The
website visitors could also participate in a prize competition, which included prizes like EUR 300 vouchers for the
purchase of new or renewal of existing insurance, while the main winner received EUR 2,000 for gas. By
upgrading the contents and organising a new prize competition, 12 young drivers were able to participate in a
safe driving course for free during the summer months.
At the end of the school year, policyholders received a new offer for accident insurance of pre-school children,
elementary and secondary school pupils, with an additional bonus – free health insurance for travelling abroad
with CORIS assistance during the summer holidays for the insured child and a 25% discount on the family
insurance package if purchased for the whole year.
In cooperation with the business partner Merkur, the Obnovi si stanovanje in mi ti podarimo zavarovanje
(Renovate Your Apartment and Get Free Insurance) drive was launched. Clients could participate in the prize
competition to win gift vouchers for purchases in Merkur by filling out a competition entry form.
September was marked by accident insurance for children, pupils and students, for whom an extensive range of
insurance products was prepared at competitive prices.
In October, the focus was again on young people who are no longer students and have to take out supplemental
health insurance. An attractive offer was introduced that included not only health insurance but also free accident
insurance and a EUR 40 discount for purchasing motor vehicle insurance. In cooperation with Simobil, everyone
who bought insurance via their mobile phone also received a EUR 40 discount for purchasing a new mobile
phone or paying the monthly subscription.
Loyal female policyholders were presented a very special gift in October – free health insurance for short-term
care in case of an injury, a CD by Slovene singer Darja Švajger and a discount coupon for wellness packages in
Thermana Laško.
In October, a new insurance product Aktivna renta (Active Annuity) was launched, supported by an extensive
advertising campaign on all media channels.
56
Annual Report
for 2013
In collaboration with SPAR retail chain, in December 2013 and January 2014, policyholders who own a SPAR
Plus discount card were offered a EUR 40 discount for the purchase of an annual motorway vignette.
4.5.2
Sales network
As at the 2013 year-end, the Company provided insurance services in nine business units located in all regional
centres of Slovenia, four branch offices, 42 representative offices and through an external sales network of
insurance agencies with as many as 130 points-of-sale and a network of 161 points-of-sale using
complementary sales channels, or a total of 346 outlets selling insurance products and services of Adriatic
Slovenica. In 2012, the range of products offered at all nine business units was expanded to include KD Skladi.
A lot is invested in training of employees who directly or indirectly communicate with clients, while long-term client
relationships are built through agents. By revising business processes, improving after-sales services and
extending the sales network every year, policyholders are provided more accessible and high quality insurance
services.
By introducing online insurance sales and insurance purchase via mobile phones, the range of sales channels
was broadened, enabling the clients to have a wide range of services always at hand.
Information on business units as at 31 December 2013
Celje Business Unit, Director Srečko Dobelšek
Lava 7, 3000 Celje, Slovenia
Telephone: +386 (0)3 425 35 15, fax: +386 (0)3 545 17
72
Nova Gorica Business Unit, Director Rok Filipič
Erjavčeva 19, 5000 Nova Gorica, Slovenia
Telephone: +386 (0)5 330 95 12, fax: +386 (0)5 302 91
56
Koper Business Unit, Director Borut Širca
Ljubljanska cesta 3a, 6503 Koper, Slovenia
Telephone: +386 (0)5 664 30 10, fax: +386 (0)5 664 30
99
Novo mesto Business Unit, Directrice Jasminka
Kovačič
Novi trg 1, 8000 Novo mesto, Slovenia
Telephone: 07 373 06 20, fax: +386 (0)7 332 27 62
Kranj Branch Office, Director Franci Strniša
Kidričeva cesta 2, 4000 Kranj, Slovenia
Telephone: +386 (0)4 281 70 11, faks: +386 (0)4 281
70 10
Murska Sobota Business Unit, Directrice Milena
Grah
Arhitekta Novaka 13, 9000 Murska Sobota, Slovenia
Telephone: +386 (0)2 539 10 11, fax: +386 (0)2 539 10
40
Postojna Business Unit, Director Anton Marušič
Novi trg 6, 6230 Postojna, Slovenia
Telephone: +386 (0)5 700 30 10, fax: +386 (0)5 700 30
15
Ljubljana Business Unit, Director Borut Završan
Celovška 206, 1000 Ljubljana, Slovenia
Telephone: +386 (0)1 582 48 01, fax: +386 (0)1 582 49
45
Maribor Business Unit, Director Vinko Prislan
Ulica Eve Lovše 15, 2000 Maribor, Slovenia
Telephone: +386 (0)2 320 81 12, fax: +386 (0)2 332 18
90
Sales network map of Adriatic Slovenica
57
Annual Report
for 2013
58
Annual Report
for 2013
4.6
RISK MANAGEMENT
Strategic risk
Due to the nature of their business, insurance companies are daily faced with various risks that may jeopardise
their long-term financial soundness, i.e. solvency. As Adriatic Slovenica is aware of these risks, it strives to
manage and minimise them to the maximum extent. By constantly optimising and expanding the risk
management function, the insurance company makes its risk management more effective, while remaining ready
for future business risks. The forthcoming Solvency II Directive is another factor requiring these improvements.
The new directive not only focuses on risk management but imposes stricter risk-weighted capital requirements
and the need to establish a centralised process for risk identification, monitoring and management. Adriatic
Slovenica has been preparing for the new requirements for several years. A centralised risk management
function and an integrated comprehensive risk management strategy were set up. The strategy includes all
necessary operating limits and organisational measures to ensure an effective risk management process. An
exhaustive list of all present risks and an evaluation of potential future risks were made and a tool was introduced
to constantly monitoring the effects of implemented measures.
The Company's efforts in this area will continue to focus on introducing final IT support for Solvency II, which will
enable automatic calculation of capital requirements and filling in of external reporting forms. Above all, it will
enable central storage of all data required for regulatory calculations and reports, as well as execution of own
simulations and calculations within the framework of risk management. The following paragaphs outline the main
risk groups and risk management methodologies applied by the Company. They are described and analysed in
greater detail in Notes to the financial statements.
Underwriting risks
Underwriting risks are all risks faced by an insurance company in its core business, i.e. acceptance of risk from a
policyholder. Given the nature of insurance contracts, underwriting risks are random and unpredictable. They can
be realised in any phase of the core business, be it during the design of an insurance product (the risk that the
product is improperly designed), pricing (the risk that the amount of premium is insufficient to cover the
contractual obligations and claims) or at the assumption of underwriting risks (wrong decisions on risk
assumption, non-compliance with insurance tariffs, terms and conditions, insurance underwriting based on
incorrect data, inadequate reinsurance for particular risks, improper valuation of potential maximum loss,
insurance for concentrated risks (e.g. geographic concentration), insufficient risk assessment qualifications of
employees).
After accepting underwriting risks, the following risks can occur as well: the risk of insufficient insurance technical
provisions, the risk of claims (the risk that the reported number and/or amount of claims will exceed the expected
values and that the Company's retention will be too high due to improper reinsurance protection, especially in the
case of catastrophic events), the risk of change in policyholder behaviour (mostly reflected in the number of
insurance fraud attempts) and the risk of changes in the economic environment, which can lead to a lower
number of policies taken out due to a decreased purchasing power and a higher number of cancelled contracts
and paid out claims.
The Company manages the described underwriting risks primarily through effective internal control of consistent
compliance with internal rules, internal auditing, through forming adequate insurance technical provisions to cover
future liabilities from taken out insurance contracts and appropriate reinsurance. Much attention is devoted to the
development of new insurance products, where already in the of product development process the relevant
statistics is carefully verified and obtained, confirming the appropriateness of considered assumptions. After filing
a claim, loss ratio by insurance class is carefully monitored and any deterioration thereof is analysed, correcting
premium rates or insurance terms and conditions if necessary. The other critical point for the realisation of
underwriting risks is the assumption of such risks. The Company manages these risks through risk assumption
rules, stricter risk assumption criteria and procedures, particularly for larger sums insured and coverage.
59
Annual Report
for 2013
Departments in charge of high risks (in non-life insurance) monitor loss ratio trends by individual insurance
contracts and may refuse renewal of an insurance contract or re-assess the accepted risk. Reinsurance
protection is a very important tool for underwriting risk management.
Financial (market) risks
An insurance company is exposed to market risks through its financial assets and liabilities, reinsurance assets
and obligations from insurance contracts. Market risks are reflected primarily in the threat of future changes in
market terms that could negatively affect the value of the Company's financial assets, or the threat that the
financial liabilities of opposite parties towards the Company would not be fulfilled (credit risk). This could lead to
cash inflows not being sufficient for coverage of outflows related to insurance and financial contracts.
The main components of market risk are:
liquidity risk, credit risk, debt securities price risk, interest rate risk, currency risk and the risk of changes in other
prices.
Within the framework of its investment policy, Adriatic Slovenica actively manages and controls all risks to which
its assets and liabilities are exposed. These activities include regular monitoring of cash flows, ensuring sufficient
liquid assets to settle its obligations at all times, investing in such a manner that the assets reach a long-term
profitability higher than the profitability of insurance liabilities, duration reconciliation of financial assets with
financial liabilities and ensuring adequacy of financial assets.
Operational, strategic and other risks
In recent years, but even more so since the introduction of the Solvency II Directive, operational risk has become
one of the most important risks. It mostly includes the risk of loss as a result of ineffectiveness, failure or errors in
the business process implementation, malfunction or non-existence of internal controls, unprofessional,
inappropriate or harmful employee behaviour, system or infrastructure malfunction or any other external factors,
including amendments to legislation, business interruptions due to natural catastrophes or epidemics,
competition, etc.
The key moment for operational risk management is identification and assessment of such risks, followed by the
execution of measures for risk mitigation and constant monitoring of remaining risks. Adriatic Slovenica made an
exhaustive list of and identified the existing operational risks and set up a system of indicators for early detection
of new risks. For the most critical operational risks, the necessary precautions for their mitigation or elimination
were carried out. Other operational risks are actively monitored and appropriate internal controls as well as the
internal environment are being established so as to minimise the remaining risks and prevent the occurrence of
new ones.
Strategic risks can also be considered a special form of operational risks. They can occur in the early stages of
strategy planning, its implementation, management and strategic decision making and supervision of the
Company. Their realisation can crucially affect the ability of the Company to achieve its strategic objectives. In
order to prevent these risks, it is of utmost importance that competences and responsibilities are clearly specified,
an effective communication and reporting system set up and constant monitoring of achieved set goals
established.
In its operations, Adriatic Slovenica is also exposed to the risks arising from the business relationship with the
subsidiary AS neživotno osiguranje a.d.o., headquartered in Belgrade, where risks are managed by management
and supervisory bodies. Adriatic Slovenica will continue to focus on underwriting and market (financial) risk
management, as these risks, in addition to operational risks, significantly affect the Company's solvency and
account for the largest portion of capital requirements. One of the Company's most important tasks, which is also
required by law, is ensuring an adequate amount of capital (capital adequacy) with respect to the volume and
types of insurance operations as well as the risks to which it is exposed. Based on its equity management policy,
60
Annual Report
for 2013
the Company keeps a certain surplus of available capital surplus above the required level (in accordance with the
existing legislation), which provides protection against unpredictable loss events as well as ensures business
continuity and coverage of potential operating loss.
4.7
4.7.1
COMMUNICATION WITH STAKEHOLDERS
Communication with clients
Client Service Centre
The fundamental task of the client service team is to ensure comprehensive client satisfaction in all insurance
segments. The aim is to reply to all questions posed by clients at the first call. If that is not possible, their question
is submitted to the back office and, after receiving an answer, the client is contacted. Furthermore, the Client
Service Centre strives to provide a comprehensive reply to all questions raised by clients. Increasingly more
frequent are calls by well-informed policyholders, which represent an even greater challenge. The knowledge
base is enriched with policyholders' experience, professional knowledge, new products, recognising opportunities
and new tasks. Clients can call the toll-free number from 8:00 a.m. to 6:00 p.m. every business day. At the
merger of Adriatic Slovenica and KD Življenje, the toll-free numbers available to all clients were also merged in
October. Thus, clients can contact the Company by calling the toll-free number 080 11 10 or sending an e-mail to
[email protected]. Since October, clients can also visit the Company in person at six business units, where professional
overview of the existing life insurance policies is provided. Telephone sales activities (output contacts) are
performed with the chosen client segments.
Call Centre
The main activities of the Call Centre are two: direct sales promotion, offering additional life insurance to the
existing and potential clients so as to increase their financial security in the case of an unpleasant event, and
making appointments. The latter means that the operator arranges the exact time and place for the visit and
describes to the client, what the consultant will present to them during their visit. The aim of acquiring
appointment dates is to inform clients in person of new products and benefits and to maintain personal contact.
The Call Centre is also engaged in conducting surveys, checking client satisfaction, etc. In 2013, the Call Centre
made 1,013,290 phone calls, concluded 8,882 insurance contracts and arranged 11,840 appointments.
Client Care Unit
In 2013, the number of callers to the toll-free continued to increase, i.e. calls from existing and potential clients.
By calling the toll-free number, callers can receive comprehensive information about insurance, assistance,
special and regular offer, advertising, claims, etc. In 2013, as many as 228,820 phone calls were received or 26%
more than in 2012. Data confirm that electronic communication is becoming a more frequent communication
channel. In the reporting year, a total of 36,419 e-mails were sent to [email protected], representing an 86.2% increase
over 2012. An increase in electronic communication with the elderly was also detected. Furthermore, the
Company was very successful in recovery of debt over the phone, mail notifications to clients and acquiring of
real addresses.
61
Annual Report
for 2013
4.7.2
Communication with the employees
Two-way internal communication with the employees is the key building block of organisational culture. Since
2004, the internal communication systems ASnet intranet and in-house electronic newsletter AS novice (AS
News) have played a key role in keeping the employees of Adriatic Slovenica informed, as they represent a
knowledge base and an archive of all major events. In the SiOK survey, employees gave a high score (3.73) to
in-house communication, meaning that the in-house communication tools (ASnet, e-mail, AS News, meetings
with the management, etc.) are comprehensible and up-to-date.
Employees of the Public Relations Department prepare the weekly in-house electronic newsletter AS News.
Since 2009, they have also been general administrators of ASnet, which began to be upgraded in 2013. Early
2014, a trial intranet will be launched and by mid-year a redesigned intranet under a new name – Kompas
(Compass). The name symbolises intranet’s content, serving as an improved compass for employees in their
work, showing the Company’s position and the right direction of its activities. Simultaneously with intranet
redevelopment, e-newsletter is also being redesigned. These two channels inform the employees of the latest
major activities of the Company, marketing and promotion campaigns, sales network news, and the development
of insurance products and services. In 2013, as a member of the KD Group, Adriatic Slovenica was actively
involved in the KD Group's intranet by providing information on special offers. Moreover, it participated in
preparing the news for KD Club, which it took over in July 2013, enriched it with new content and renamed it AS
Club of Benefits (AS Klub ugodnosti).
At the beginning of 2012, a new e-mail address [email protected] was set up so as to improve
vertical communication among the company management and employees. Its purpose is to simplify
communication and resolving of issues related to marketing and insurance development. The suggestions are
delivered directly to the member of the Management Board in charge of marketing, sales and development. The
new communication channel proved to be an effective means of communication as it enables the management to
understand market developments. However, in 2013, the use of this channel slightly declined due to other more
direct forms of communication. Thus, only 4 suggestions were sent to the e-mail address (26 suggestions in
2012).
In autumn 2012, major organisational changes within the Pinwheel Project (project Vetrnica) began to be
implemented in internal communication. On the basis of this project, the Management Board and the project team
introduced to the employees a new strategy and changes in the Company’s organisational structure by
consolidating new corporate values. In its messages, the Management Board explained the changes and the time
schedule for their implementation. The project team informed the employees of concrete changes at the
organisational level of the Company. The first phase ended with the first amendment to the Rules on Internal
Organisation, while the second phase was finalised in October 2013 by the second amendment to these Rules.
For communication purposes, a new symbol was introduced – the pinwheel, which represents the Company's
values and is well accepted and recognised among the employees. In December, a survey was conducted
among employees on the changed organisational structure. They were informed of five project goals: adaptable
and flexible organisational structure, efficient teams in a flat and lean structure, awareness that the client is the
focus of all activities, managers being aware of the responsibility of creating integrated, client-focused processes
and, last but not least, the entire organisation and teams carry out their activities in accordance with the
Company’s values.
AS News (AS novice), launched in January 2004 as an electronic newsletter, serves to provide fast and direct
information for the employees. At the end of 2005, the newsletter was redesigned into e-news for the employees
of both companies (Adriatic and Slovenica), and in early 2006 it was merged into a joint e-newsletter for all
employees. In 2010, AS News was upgraded to a weekly bulletin, regularly published on Mondays. At major
events, it is published as a special edition. In 2013, 42 issues of AS News were published (the same as in 2012).
Since 1 October it is also available to employees from the sister company. The employees are informed about
corporate goals and operating results, significant loss events, sales activities and events organised by the
Company for its employees and clients.
62
Annual Report
for 2013
The ASnet intranet portal is available for all employees and has served as a valuable in-house communication
tool for a whole decade. It provides efficient and quick information to all employees on current developments in
the Company as well as access to the latest documentation and internal acts. ASnet is adapted to in-house
communication needs. In 2012, it was expanded to include new content, while in June 2013 a full upgrade project
was launched to be finalised in spring 2014. Successful maintenance of the portal, which has become a real
encyclopaedia of useful information for the employees, is ensured by up-to-date content administration divided
among business segments.
ASnet provides professional support to the sales network, efficiently delivers information about changes in work
processes and has an educational role. The employees of Adriatic Slovenica enjoy the benefits of having fast
access to all information and documents used in the course of their work and the fastest access to business
applications, serving as their basic tool. From the business point of view, it is most important to maintain a
transparent and permanent access to the entire collection of internal documents and the archive of older
documents. The greatest advantage of ASnet is its up-to-date information as the entire content is constantly
updated.
In 2013, ASnet recorded 1,243 visitors a month on average (1,012 users in 2012 and 632 users in 2011), who
visited the portal 63,540 times (71,800 times in 2012 and 69,274 times in 2011) and viewed 163,609 pages
(162,694 pages in 2012 and 163,656 pages in 2011).
No. of users a month on average
1243
1400
1012
1200
1000
800
632
572
600
400
200
0
2010
2011
2012
2013
No. of visits a month on average
71.800
74.000
72.000
69.274
70.000
68.000
66.000
64.763
63.540
64.000
62.000
60.000
58.000
2010
2011
2012
63
2013
Annual Report
for 2013
No. of web pages viewed a month on average
163.656
165.000
162.694
163.609
160.000
155.000
149.739
150.000
145.000
140.000
2010
2011
2012
2013
Corporate events for employees significantly enhance working relationships, while fostering interpersonal
relationships between more than thousand geographically dispersed employees. They continually strengthen
corporate identity and values as well as increase employee motivation and loyalty in the long-term, which is why
they are an important form of communication.
Every year, Adriatic Slovenica organises sports games for all employees and partner agencies (the event was
cancelled only in 2007 when the September catastrophic flooding in Železniki kept all people in the insurance
business fully tied-up and there was a day of mourning for the victims). On 25 May 2013, the 21st Adriatic
Slovenica Sports Games were held in Ankaran, which for the first time grew into a KD Group-wide event,
including teams from subsidiaries in Zagreb and Serbia and employees from Slovene subsidiaries Viz and
Prospera. At an annual level, many more events were held for employees organised by business units or teams
for their co-workers, significantly contributing to team building (various training courses, motivational workshops,
excursions, and Christmas and New Year parties).
4.7.3
Communication with business partners, the broader social environment and the media
Meetings with business partners are an established form of communication with major business partners and
policyholders.
They are held independently, in cooperation with other KD Group companies, while individual business units
occasionally organise professional and other meetings for smaller business partners in their regions.
On 18 June 2013, business partners of all KD Group’s companies were invited to an exceptional acoustic
spectacle by the RTV Slovenia Symphony Orchestra and the music band Siddharta in the Cankar Cultural and
Congress Centre in Ljubljana. The performers completely enthralled the audience at the concert in the Gallus
Hall, which was sold-out several weeks in advance. Since Adriatic Slovenica has been a sponsor of the
Symphony Orchestra for many years, the Company’s business partners have the benefit to attend their concerts.
On 6 September 2013, the Company organised the traditional charity golf tournament for business partners at
the Smlednik golf course. All tournament participants donated their fee for the purchase of a new defibrillator,
which will be installed at a much frequented location in Ljubljana within the framework of the iHELP project.
Communication and co-operation with the wider social environment, where the business policy and strategic
goals of Adriatic Slovenica are reflected, are carried out on an ongoing basis. The Company supports panSlovene projects and organisations, while at the business unit level it provides support to small-scale regional and
local events, associations and other institutions. With sponsorships and donations, Adriatic Slovenica supported
64
Annual Report
for 2013
numerous initiatives in healthcare, sports, culture and education as well as safety in all areas, while support for
the environment is presented in greater detail in Section 6.2.
Communication with journalists and the media is in compliance with the strategy and centralised and
coordinated with other companies of the KD Group. Communication with journalists is proactive, responding to all
the questions posed by the media. The public, the media and journalists are regularly informed of any news
related to the Company, its operating results and major business decisions. Policyholders are advised on how to
respond in the case of loss events and catastrophic natural disasters.
In 2013, regular press conferences were held for the journalists. At the conference in Ljubljana on 10 June 2013,
business results and the restructuring strategy of the KD Group were presented. The aim of the strategy is to
restructure the Group in an insurance holding company by 2015, Adriatic Slovenica being the parent company.
At the traditional annual press conference, held on 17 December 2013 in the headquarters in Koper and
organised for journalists from the Primorje region and national media correspondents, performance results of
Adriatic Slovenica in 2013 and plans for 2014 were presented. At this occasion, the Company's cooperation with
the iHelp Project was presented, which is why Andraž Ogorevc, project manager, and Borut Lončarevič,
medical technician, demonstrated the use of the GSM application for saving lives and resuscitation using a
defribrillator in the case of cardiac arrest.
Media coverage of Adriatic Slovenica is monitored through the Press Clipping company, which specialises in
media monitoring and analysis. In 2013, the Company was mentioned in the media 912 times (1,407 times in
2012 and 877 times in 2011). The number of commentaries favourable to Adriatic Slovenica prevailed – 675
commentaries or 74% (2012: 66.0%), almost all other commentaries, i.e. 894 or 24%, were neutral, while only 18
or 2% of media commentaries were negative (2012: 5.6%).
In December at the Adriatic Slovenica headquarters in Koper, around 20 PR experts were received by the PR
Department and the traditional annual meeting of PR representatives from the companies and institutions of the
Primorje region was hosted.
4.8
INTERNAL AUDIT REPORT
The Internal Audit Department (hereinafter: IAD) is organised as an independent organisational unit, directly
accountable to the Management Board of the Company. The head of IAD directly reports to the Management
Board about its work and operations. Such an organisation ensures organisational and functional independence
of the IAD. The core task entrusted to the IAD as set out in the Insurance Act (ZZavar) is to carry out ongoing and
comprehensive supervision of the Company's operations in all business segments and to verify whether specific
work processes are in compliance with the applicable legislation, implementing regulations and the Company’s
internal rules.
In 2013, internal audits were conducted in accordance with the International Standards for the Professional
Practice of Internal Auditing, the Charter and Rules of Operation of the Internal Audit Department in Adriatic
Slovenica, the Insurance Act, and other laws and implementing regulations.
In 2013, KPMG conducted an external quality assessment of IAD and expressed an opinion that in all material
aspects the IAD operated in accordance with all International Standards for the Professional Practice of Internal
Auditing, the Code of International Auditing Principles and the Code of Ethics of Internal Auditors. KPMG also
stated that the IAD operations in the reviewed period significantly contributed to the added value of the Company.
The IAD carried out auditing activities on the basis of the annual audit plan for 2013 adopted by the Management
Board, subject to a prior approval by the Supervisory Board. A significant amount of auditing time was devoted to
65
Annual Report
for 2013
the following activities: performance of 14 audits, monitoring of recommendation implementation, continual
auditing, ongoing supervision as laid down in the ZZavar, business consulting, development tasks and training,
and other audit activities.
In addition to the compliance with the regulatory requirements, the IAD strategy was largely focused on the
following:
- an internal audit approach with an aim to generate added value and, above all, to continue to reduce
operating costs (expenses);
- an internal audit approach focused on reviews of potential high risk areas, consequently resulting in
potentially greater damage (loss) or more significant opportunities missed;
- an internal audit approach with an emphasis on identifying major risks and determining whether they are
effectively managed and whether the Company's operations are carried out with due care and diligence
and in conformity with the internal rules and external regulations;
- internal control system assessment;
- professional advice to the top management of Adriatic Slovenica;
- transfer of best practices from individual organisational units.
After the audits were completed, the IAD issued draft audit reports, which were coordinated with the auditees.
The final internal audit reports were considered at Management Board meetings. The decisions adopted by the
Management Board included the deadlines for the auditees to prepare their response reports, specifying how the
identified irregularities were corrected and how the recommendations received were implemented. Based on the
findings of the follow-up reviews, the IAD regularly issued special reports on the elimination of identified
irregularities and submitted them to the Management Board for consideration. Since the IAD and the
Management Board actively monitored the correction measures taken by the auditees, the share of
recommendations implemented by the auditees was high also in 2013.
All reports were also submitted to the Audit Committee after they were examined by the Management Board.
Pursuant to the ZZavar and the internal rules on the IAD operation, two interim internal audit reports and one
annual internal audit report were drawn up, submitted and presented to the management and supervisory bodies
of the Company.
66
Annual Report
for 2013
5
REPORT ON SUSTAINABLE DEVELOPMENT
5.1 EMPLOYEES
5.1.1
Headcount and educational structure of employees
At the end of 2013, Adriatic Slovenica had 1,050 employees. In comparison with the end of 2011, their number
increased by 3.8%, mostly as a result of the transfer of staff from KD Življenje to Adriatic Slovenica. From among
the Adriatic Slovenica staff, women account for 68% and men for 32%. The average age of the Company's
employees at the end of 2013 was 43 years. At the end of 2013, the fixed-term employees accounted for more
than 6%, their number having decreased by 4% in comparison with the preceding year.
Number of employees 2005–2013
2011
2012
1050
2009
1010
2008
998
2007
951
1090
2006
1006
1106
2005
800
1033
1123
1,200
400
0
2010
2013
The insurance company boasts a well-branched distribution network in all Slovene regions. As at 31 December
2013, the workforce was composed of 265 insurance agents employed with Adriatic Slovenica, 599 agents selling
its insurance products through authorised agencies and 51 contracted agents.
Number of agents in the distribution network in 2013
260
240
220
200
180
160
140
120
100
80
60
40
20
0
Contracted agents
Agency representatives
Business unit agents
Other employees
KP
CE
LJ
NM
MB
KR
NG
PO
MS
business business business business business business business business business
67
Annual Report
for 2013
The biggest share (as much as 41%) of AS employees has completed level VII or higher education. Due to the
nature of the insurance business, employees with level V technical education account for an important share of
AS staff – as much as 40%, since the statutory requirement for insurance agents is completed secondary
education.
5.1.2
Education, training and HR development
Education and training receives much of the Company's attention. It sees it as an identifiable social value, a
significant competitive advantage and most profitable investment. Education and training is planned in accord
with the Company's objectives, shared also by the management and not least the employees, as it is an
important non-pecuniary method of employee motivation. The Annual Education and Training Plan seeks to
upgrade and develop employee competences to the level allowing them to successfully manage both work and
personal challenges.
In order to make education, training and HR development more efficient, the in-house training system was
improved already in 2012 with Akademija AS (AS Academy) and the drafting of first product materials. In 2013,
the system was further upgraded and developed.
With respect to education, the in-house seminars and workshops organised by Akademija AS in 2013 focused
primarily on professional training of the marketing staff and on enhancing their social sales skills needed to boost
sales. Special attention was also placed on those employee groups who are in direct client contact, and on
senior, managerial and professional staff.
In 2013, the Company finalized the general competence model of Adriatic Slovenica, which will permit targeted
training and key competence development among its staff, enhancing their efficiency and the quality of products.
Education and training is offered in various professional fields, with priority assigned to those of sales and sales
skills, personal development, communication, leadership, foreign-language courses, in-depth knowledge of the
Company’s insurance products and the use of internal information systems.
Moreover, the Company consistently carries out specialised training required by law, primarily in the occupational
health and safety segment, but also in security policy and security notifications. Akademija AS is certainly the
right route to becoming a successful sales or commercial officer, leader, in-house coach or a insurance clerk,
accounts receivable collection clerk and loss adjuster.
68
Annual Report
for 2013
Akademija AS (AS Academy)
Akademija AS was established for the benefit of all who wish to build their careers in sales, development or
insurance contract processing, become top financial advisers or loss adjusters in non-life insurance, personal
insurance, banking services and securities trading (funds).
All Akademija AS training programmes have been designed to help participants acquire knowledge and transfer it
into sales results, as well as learn about the practical use of insurance services. They guarantee continuous
knowledge building and allow participants the free choice of seminars they wish to attend in accordance with their
needs. Following the completion of a selected module, participants are awarded an Akademija AS certificate.
Licensed employees are recognised level AS2 certificate, which they can build on further by taking higher-level
modules.
eAkademija AS (AS eAcademy)
E-training is based on the eAkademija AS web portal which facilitates higher-quality and active learning, tailored
to the needs of an individual. The purpose of eAkademija is to grant access to knowledge everywhere and at all
times, and employees can use it to refresh their knowledge, verify information, solve exercises and test their
learning. The web portal contributes to a more flexible and adaptable learning process in terms of time, space
and content, and assists in a more efficient and transparent organisation of the educational process.
The eAkademija AS already offers e-materials on insurance products available under health insurance, on Office
Tools and the Business Connect system, while further materials are planned on insurance law, internal
information systems (INIS, CRS, ES) and other classes of insurance. In 2013, the drafting of technical and
product materials was in full swing. Due account was taken of the marketing orientations, meaning that primary
attention was given to those classes of insurance which the strategy of the Small Businesses and Individuals
team identified as a priority. Presently, the training portal includes materials on the following topics: Aktivna renta
(Active Annuity), Asistenca življenja (Life Assistance), car insurance (motor third-party liability (AO), AO+, avto
nezgoda (car accident), avtoasistenca (roadside assistance) and avtokasko (comprehensive motor vehicle
insurance), non-life insurance (home insurance Dom AS) and health insurance (supplemental and additional
health insurance products). The first technical material was made available to all employees at the end of 2013
on the new product “short-term care in the case of illness or injury“ and followed by materials on new Business
Connect modules related to the Interim/short-term care due to illness or injury; and, in addition, materials were
produced for the new Business Connect modules.
The Company again organised numerous in-house technical meetings. These included the already traditional
Sales conference, the AS legal experts meeting, the Client Care team meeting, the OIZ team meeting, the sales
network organisers meeting, as well as the first conference of key account managers who could also attend a
special workshop on developing personal potentials to boost work efficiency. Colleagues working on debt
collection were offered training on stress and climate management techniques. Being aware of the importance of
maintaining good communication and relationship with clients, colleagues from the Claim settlement team were
offered refresher courses on communication skills, character recognition, conflict prevention and, not least,
personal growth. Furthermore, public speaking and knowledge transfer classes were offered to those technical
staff who will in the future actively participate as lecturers at trainings and internal meetings. For the purposes of
the marketing staff, two training seminars were designed to introduce the new Aktivna renta AS (AS Active
Annuity) product and new dimensions of selling motor vehicle insurance products. Additionally, some employees
could benefit from motivational workshops conducted by external coaches. Where appropriate, product sales
workshops were organised at business units and carried out by an in-house coach. The company has again
organised preparatory courses for those who wished to take the exam required to engage in the business of
insurance.
Also in 2013, intensive training was launched to raise the awareness about safety and the security policy. The
latter was provided in conjunction with regular training on occupational health and safety.
69
Annual Report
for 2013
The Company's external partners, too, were regularly involved in all education and training activities related to the
changes to insurance products, and special product sales workshops carried out by external providers were
organised on their behalf.
The Company has earmarked almost EUR 400,000 for education and training, EUR 236,670 of which for direct
costs: EUR 222,516 on functional education and training in Slovenia and abroad, and EUR 14,154 on off-the-job
training to obtain a formal professional degree and scholarships. Other indirect costs (e.g. for rentals of lecture
rooms, equipment, etc.) amounted to a total of EUR 160,310.
In 2013, 97% of employees participated in education and training for an average of 37 hours. The majority of
education and training activities, i.e. 73%, were conducted in-house with company coaches, while numerous
workshops intended for particular employee target groups were organised in cooperation with external providers.
Most education and training hours were devoted to the marketing staff – insurance agents, who, on average,
followed 39 hours of training. Education and training also resulted in 15 employees obtaining the authorisation
issued by the Insurance Supervision Agency to engage independently in the business of insurance agency, and
two employees obtaining the authorisation issued by the Securities Market Agency to sell units in investment
funds. The co-financing provided by Adriatic Slovenica enabled 30 employees to study in 2013 and six
employees got a degree this year.
Akademija AS is in full swing and will continue to pursue its mission also in 2014. It will respond to all educational
and training needs, as enhancement of knowledge about insurance products, intensive training courses and
seminars on selling new insurance lines and using information systems and tools belong to the regular
educational and training activities. According to the needs, the company will continue to support employees who
wish to upgrade their professional knowledge, be it in Slovene or foreign external education institutions.
5.1.3
Care for employees
Adriatic Slovenica is committed to ensuring a safe and healthy work environment, good interpersonal relations
and a positive atmosphere to its employees. This endeavour is supported by the activities of the Sports and
Culture Club, annual gatherings, sports events, preventive medical check-ups for employees as well as collective
accident insurance and voluntary supplementary pension insurance that are co-financed by Adriatic Slovenica for
the company staff.
The Sports and Culture Club with the name “Pravi ASi” (True AceS) was established in May 2010 to promote
employee involvement in sports and cultural activities, thus encouraging them to spend active time together also
outside work. One of the primary goals of the Club's members is to foster a positive climate among company
employees.
Membership of the club – presently counting 305 members — is open to all Adriatic Slovenica employees as well
as to the workforce of its exclusive agencies and pensioners formerly working in the Company. In 2013,
recreational activities (gym, basketball, volleyball, table tennis, nine-pins, futsal, badminton, fitness, swimming,
spa), were offered to club members at all branches. In addition, the club organised theatre visits (provided season
tickets), 7 cycling trips and 5 mountain hikes, encouraged participation of members in winter and summer sports
games for the employees of financial institutions (ŠIFO), assisted in the organisation of the KD Group sports
games in Ankaran, attended the June Olympic run in Koper where Adriatic Slovenica was the main sponsor, and
carried out a cultural and educational trip to Istria.
In addition, employees with families and pensioners of Adriatic Slovenica can benefit from the quality and
affordable accommodation facilities the company has in Slovenia and Croatia. In 2013, 144 employees with
families took advantage of this possibility.
In the desire to foster good interpersonal relations and the team-building spirit, employees get together for a
Christmas and New Year's celebration, and the company maintains the tradition of handing out holiday presents
to the children of employees. Once a year (usually late May), a sporting and social event is organised for all
70
Annual Report
for 2013
company employees. These may also compete in summer and winter sports games for the employees of
financial institutions (ŠIFO), in which case their participation is co-financed by Adriatic Slovenica.
The health screening programme and prevention are of immense importance for both the employees and the
Company. In 2013, 31% (i.e. 320) of employees were referred to preliminary, periodic or targeted check-ups. As
every year, vaccination against seasonal influenza was organised for company employees.
All Adriatic Slovenica employees are included in group accident insurance coverage and they can also join the
group voluntary pension insurance scheme co-financed by the employer. At the end of 2013, the supplemental
pension insurance scheme co-financed by the employer covered 86% of all employees. The average monthly
premium under this pension scheme amounted to EUR 40.33 per employee and it is partly sponsored (co-funded)
by the employer. The employees of Adriatic Slovenica can take out accident insurance policies also for their preschool children as well as their children of school age. The Company provides to all its employees a special
bonus if they decide to purchase the higher-than-standard health insurance coverage Zdravje AS - Težke bolezni
in operacije (AS Health - Serious illnesses and surgical procedures), and favourable insurance terms for their
family members. The coverage provided under this product has been purchased by 985 employees and 334
members of their families.
All employees entitled to the use of personal protective equipment according to the Risk Assessment and Safety
Statement are provided outdoor jackets with detachable fleece lining and waterproof trekking footwear.
5.2 IMPROVEMENTS, INFORMATION SECURITY AND QUALITY
5.2.1
Improvements
The 2013 work programme of the IT Department (ITO) followed the guidelines defined in the IT Strategy (adopted
in 2011), which, in turn, is based on the company strategy, the business environment, information technology
trends, experts' demands and good IT management practices. The ITO has also provided assistance to the
subsidiaries AS Neživotno Osiguranje and Prospera.
The conversion of all insurance classes – with the exception of life insurance -- into the target INIS back-office
information system was completed (previous back-office information systems now only serve the access to
historic data). The entire health and non-life insurance portfolio and a part of the life insurance portfolio were
already managed by a single transaction system.
Furthermore, the Company has commenced integration and consolidation of the information systems
supporting life insurance contracts which were transferred to AS upon the spin-off of KD Življenje followed by
the acquisition by AS, and are managed in the Amarta information system.
To provide IT support for the new insurance products, the point-of-sale and the back-office information systems
were adapted so as to allow for the segmentation of motor vehicle insurance. A portal solution for health
assistance services offered under the Zdravstvena asistenca AS (AS Health insurance assistance) was
developed and will be handed over to production in the beginning of 2014. Furthermore, the design of the new
human resources information system was completed.
In the framework of the DigitAS project, the transfer to paperless business operation was continued. The emailroom and settlement of invoices are two of the processes that received IT support.
In line with the strategy, a modern technological platform was selected for the setting-up of the insurance
company portal, which will be used in the coming years to build new websites and update the existing ones.
71
Annual Report
for 2013
The data warehouse was upgraded with additional contents and new applications were developed, which permit
specialised departments and management of the company to monitor business operations more closely and
prepare various analyses.
In the CRM area, 2013 marked the beginning of preparations for the migration and merger of clients of the
transferred KDŽ life insurance portfolio from Amarta to CRS.
Another project launched was the update of the standard workstation configuration, i.e. transition to Windows 7
and Office 2010, as well as the project of introducing a control system that will not only cover critical information
systems but rather the majority of the segments of the company's information environment. The control system
project includes the establishment of control mechanisms to oversee the functioning of key information system
components, the setting up of a limited SIEM system and a CMDB system, as well as the renewal of the back-up
system.
In cooperation with the HR Department, the ITO has started to take advantage of the opportunities offered by elearning and in this manner upgraded the support provided to IT solution users.
As part of the Company's reorganisation, ad hoc teams were established under the standing IT team to track
applications in the process of introducing and managing IT solutions.
Following successful implementation of the human resources module for web-based approvals of absence from
work and management of the travel order issuing process in the Business Connect (BC) document system early
2013, the DigitAS project of paperless operations and introduction of new BC modules gained new momentum.
As a consequence, "the e-mailroom", one of the most extensive modules of the system, was launched without
major complications already mid July 2013, whereby the processing of the incoming mail has become fully
electronic. Even before it enters the company, all incoming mail is now centrally captured, converted into an
electronic form and imported into the BC document system. This makes it possible to automatically or "manually"
forward and allocate an e-mail directly to whom it is addressed, to electronic files or to a group of recipients at a
particular organisational unit. In parallel with the "e-mailroom" module, the "invoice settlement" module also
started to be used in operations, which permits certification of invoices in electronic form. The fourth module
introduced in the BC document system is the "internal regulatory framework and quality management system"
module. Early 2014, a further module of "procurement" is being launched, while the "contracts" module is planned
for the end of the first quarter of 2014. This way, the Company is gradually switching over to a predominantly
paperless environment.
In the autumn of 2013, the project of revising the organisational structure and job classification was also
completed. The changed Company's organisation places the client – the policyholder in the centre of its
operations, whereas business processes have been remodelled and adapted so as to primarily satisfy the needs
of the clients but also of employees, and to be flexible enough to warrant the achievement of the set business
goals.
5.2.2 Information security
In the frame of activities seeking to improve the quality, security and reliability of information technology, the
Company continued to update the documents related to the information security management system. Based on
penetration testing, security adjustments were made to the information systems in order to enhance the
Company's and client safety. Lectures on occupational safety given in individual branches were augmented with
a block of lectures aimed at enhancing the awareness and education of employees with respect to information
security. In 2014, employee training will be further complemented with e-learning provided by Akademija AS.
72
Annual Report
for 2013
Attention was devoted to the Solvency II standard and the development of solutions for computerisation of the
standard's requirements.
5.2.3 Quality management system
Adriatic Slovenica is aware that quality makes all the difference, therefore the company introduced as well as
certified the Quality management system in line with the international standard ISO 9001 already in June 2004.
The objective of the quality management system is to achieve the overall quality of operations. This objective is
being met through constant improvements to business processes and dissemination of best practices among all
organisational units.
Continuous improvements to business processes and to the quality management system (QMS) are guided
primarily by the system of internal and external audits, management reviews and reviews by the college of area
branches related to QMS, by the system of useful suggestions and several other approaches (projects,
improvements to IT solutions, supplements to the internal regulatory framework, etc.). Based on these and other
project activities, the Company introduces measures and improvements at all levels of its operations, information
technology support and organisation.
Within the framework of the Organisational Change project which is driven by a process approach, the division of
processes in the company has been modified. The fundamental guiding principles to the reorganisation were the
process approach, team work and work flexibility.
The company operates in agreement with the accepted values and by placing clients at the centre of all activities.
Thus the Company achieves development orientations, meet the demands of all stakeholders and enhance their
satisfaction and trust.
The system of useful suggestions has been in place since 2003, i.e. for an entire decade, and the usefulness and
feasibility of suggestions has constantly been increasing. Till the end of 2013, the useful suggestions evaluation
committee received a total of 333 proposals, 49 of assessed as exceptionally useful and their authors have been
rewarded. Every year in November, the Useful Suggestions Month campaign is conducted, which additionally
spurs the employees to propose innovations (in November, 18 were suggested out of 35 submitted this year).
Investments in equipment and office space
Investments in equipment and office space were made in compliance with the new strategy of KD Group focusing
on growth, development and cost-efficient business operations.
By merging KDŽ in October, new office premises were obtained and in order to increase the cost efficiency of
business operations, lease agreements for most of the rented office space in Maribor, Novo mesto, Nova Gorica
and Ljubljana were terminated. The employees who previously worked in these locations were transferred to the
office premises held by AS, which were partly refurbished to ensure proper working conditions (e.g. installation of
an air condition system). This investment amounted to over EUR 30,000. By terminating the lease agreements,
the costs of the rent were reduced by almost EUR 28,000 per year. In accordance with the new organisational
structure of Adriatic Slovenica, the employees of the Client Care Centre from both companies are now located in
the premises on Celovška 91 road.
The Murska Sobota branch invested EUR 32,500 in the construction of an overhanging roof in order to provide
better working conditions for adjusters of non-life loss and clients during the car damage inspection. The
Maribor branch repaired the damaged district heating system, thus restoring normal heating of the premises. The
value of the repair works amounted to EUR 5,760.
73
Annual Report
for 2013
Adriatic Slovenica is still interested in two real properties; the aquisition of both locations could make the branch a
meaningful whole, and reduce the costs of renting.
The vehicle fleet is regularly renewed. Last year, an amount in excess of EUR 191,000 was allocated to this
purpose and in 2014 this amount is planned at EUR 162,000. In order to reduce the carbon footprint, environment
friendly vehicles, such as hybrid cars, will be gradually purchased. Almost one quarter (EUR 40,000) of the assets
to be spent on the renewal of the existing car fleet have been earmarked for the purchase of such vehicles in
2014.
For a number of years, the Company has been paying much attention to environmental protection and ecology.
At the end of 2013, both buildings at the Company’s headquarters in Koper underwent extended energy audits.
The results are expected to arrive at the end of February 2014. Nevertheless, the investments for 2014 include an
amount of EUR 145,000 to increase the energy efficiency of the buildings.
In 2014, a total of EUR 146,000 was budgeted for investments to upgrade the equipment and means of work and
replace the obsolete office equipment and small tools.
5.3 THE COMPANY'S RESPONSIBILITY TO THE LOCAL COMMUNITY AND THE ENVIRONMENT
Since its establishment in 1990, Adriatic Slovenia has been involved in a plethora of projects, initiatives and
campaigns of national importance as well as less extensive regional and local celebrations and events,
contributing to a better quality of life in smaller towns and peripheral regions. In 2013, the Company supported
over 520 such activities and events (2012: 470).
For more than two decades, Adriatic Slovenica has been promoting projects related to its strategic development
orientation, primarily in the fields of healthcare, education, culture, sports and traffic safety.
In the area of cultural and natural heritage protection, the Company has traditionally supported the Škocjan
Caves, where it donated for the renovation of fences along the park educational trail to enhance visitor safety. In
culture, AS has continuously supported the work of the Portorož Auditorium and the Koper Theatre (since
2002).
Since 2009, Adriatic Slovenica has been a partner of the Podjetna Primorska Best Business Plan Contest held
by the University Incubator of Primorska to stimulate new, modern and knowledge-based enterprises in the
Primorska region and contribute to the transfer of knowledge from the university to the real sector. In 2013, 25
business plans were submitted in the contest, and awards were presented to those exhibiting innovativeness,
potential for growth and international orientation. The winning projects included the Comments, Complaints and
Compliments Mobile Application, the Contour Point, and the Gravity-Fed Wood Pellet Burner.
In the area of culture and education, Adriatic Slovenica has from 2010 onwards been inviting fifth grade pupils
from all Slovene primary schools to participate in the Write a Poem about Clean Sea Waters Contest,
encouraging them to creatively engage in nature preservation. In 2013, almost 60 schools with 298 pupils (2012:
342 pupils) responded to the invitation. The evaluation committee awarded the prize to a fifth grade pupil from the
primary school in Gradec, residing in Vače. The winning poem The Deep was written in a very rare Indonesian
poetic form. Consequently, Vanja and her entire class spent 14 June in an outing along the Slovene coast. For a
series of years now, the insurance company has been carrying out prevention campaigns in cooperation with the
Road Safety Council of the City Municipality of Ljubljana. This year, too, they presented reflective vests to 500
children from kindergartens in Ljubljana, thus contributing to greater safety of our youngest road users. The vests
were handed out on 12 February 2014 in the Trnovo kindergarten.
74
Annual Report
for 2013
In 2013, Adriatic Slovenica continued to advance sports at various levels. Top-level national teams, including
Team Slovenia participating in the Olympic Games and the national football team could rely on its support as the
official insurance company. Ever since 1993, Adriatic Slovenica has sponsored the Olympic Committee of
Slovenia, and on 21 December 2012, it signed a sponsorship contract for the next four-year period until the 2016
Olympic Games in Rio de Janeiro. In 2013, the Olympic Committee of Slovenia organised the third Slovenia-wide
Olympic run to celebrate the International Olympic Day and the anniversary of the International Olympic
Committee. It has organised as many as 6 runs in various regional centres, and on 14 May opened an exhibition
of photographs along the Jakopič Promenade in Tivoli Park in Ljubljana with the title Slovene Olympic Heroes
2013 marked the 13th year of the Company’s collaboration with the Football Association of Slovenia, and on 22
January 2013, the two parties signed a sponsorship contract for the period until 2015. The Company furthermore
joined the ranks (as Gold Sponsor) of staunch supporters of the Soške Elektrarne Kayak Club, which organised
the Wildwater Canoeing Sprint World Championship between 11 and 16 June, as well as of Slovene national
swimming teams and of the Judo Federation of Slovenia, which in October organised the World Junior Judo
Championship taking place in Ljubljana. In June 2013, the Company signed up as a Silver Sponsor of the Sailing
Federation of Slovenia, and in January extended sponsorship of Vasilij Žbogar, successful Slovenian sailor in
his fourth consecutive Olympic cycle. Other significant sports sponsorships include the four-year-long gold
sponsorship of the men’s senior national handball team (until the end of the 2013/2014 competition season)
and cooperation with the Slovenian Cycling Federation and the Rog Cycling Club.
Since 2010, Adriatic Slovenica has been handing out prizes to children aged 5 to 12 years as part of the annual
accident insurance marketing campaign, while young football players were taken to the June Real Madrid
Football School.
In health insurance management, Adriatic Slovenica cooperates with approximately 1,700 medical services
providers and supports education and initiatives raising the profile of medical professionals. For the twelfth time in
a row, the Company has acted as the main sponsor of the Moj zdravnik (My Doctor) campaign singling out the
best and most reputable Slovene doctors.
In April, the Company concluded important partnership with the iHELP project. In order to assist the highest
possible number of people, save lives and reduce the number of cardiac arrest victims and victims of other
sudden incidents, young innovators have developed the iHELP mobile application which is simple to use and
sends an SOS alert to lay people and paramedics who can provide prompt assistance to the victim. With just one
touch on the mobile phone, this free-of-charge application can thus save your life and the lives of your family
members, friends or strangers. The SOS notification activates the safety net consisting of people entered as
emergency contacts (family and friends), paramedics and all iHELP users in the vicinity. The safety net is
activated in not more than 20 seconds, which reduces the time of rescue by six- to tenfold, increasing the chance
of survival.
In June, the Company made a donation to the Elvira Vatovec Training Centre in Strunjan to help it procure a van
for the transport of children in care, and in January 2014 it donated funds to the community health centre in Piran
for the purchase of a defibrillator. By participating in Unicef's Safe Spots project, all Adriatic Slovenica branches
contribute to greater safety of children and teenagers in larger city centres.
In 2013, Adriatic Slovenica became a corporate partner of the Ypsilon Institute, which organises professional
lectures and workshops for the young under the age of 30. At the end of September, the Company also
supported the organisation of the Management Congress in Portorož, which discussed the topical issue of trust
placed in Slovene managers.
Together with other KD Group companies, the insurance company assists in the work of KD Fundacija (KD
Fundation) (known earlier as Ajda Fundacija), which was founded on 4 November 1995 and has since offered
scholarships to exceptionally talented students. At first it focused on those from socially disadvantaged rural
families, but later expanded its reach to all promising young talents. KD Fundacija helps them complete their
75
Annual Report
for 2013
education. Since its establishment — with shorter spells of reduced activity due to the shortage of funding —, the
foundation has provided financial assistance to 19 individuals, mostly for the entire four- to five-year duration of
higher education or academic programmes. Since 2008, all KD Group employees and clients have been actively
informed of the possibility to donate part of their income tax to KD Fundacija, which in 2013 managed to collect
EUR 3,990.86.
In 2013, KD Fundacija selected music and literature as its primary focus. It continued to support Žiga Pirnat who
in the spring semester of 2014 is completing his studies of film scoring, contemporary writing and production at
the renowned Berklee College of Music in Boston, US. He was one of the best students of the college. KD
Fundacija also supports Eva Nina Kozmus, a young Slovene virtuoso on flute who continues her 2nd cycle
Bologna studies (Master) at the French music conservatory Conservatoire national supérieur de musique et de
danse de Lyon.
In the 2013/2014 academic year, KD Fundacija selected two further protégés, both musicians. It sponsors Rok
Zalokar, a jazz piano student who is in the first of the five years of studies at the Rotterdam Codarts Academy of
Music in the Netherlands, and Petra Koprivec, a piano student following a three-year postgraduate course at the
Royal Conservatory of Brussels in Belgium.
With respect to literature, KD Fundacija remains the main and only sponsor of the Taras Kermauner Institution.
In 2013, one-time financial assistance was granted to Igor Žunkovič, a young analyst and interpreter of the
contemporary Slovene drama, to facilitate his scientific work. His scientific research covers Slovene dramas
created between 2003 and 2013 receiving the Grum Award, with a particular focus on morals and ethics in the
contemporary Slovene drama.
On St. Nicholas eve of 2013, KD Fundacija, following its long-standing tradition, brought presents to the children
of the Malči Belič Youth Care Centre. With assistance of the KD Group and Adriatic Slovenica employees and
contractual partners, it collected a large quantity of warm winter clothing and sweets, thus creating a festive
atmosphere.
The total amount of the financial assistance provided in 2013 stood at EUR 22,961.20. In 2014, KD Fundacija is
expected to change its name to AS Fundacija.
In 2012, the Company acquired a rich art collection, which it started to exhibit in 2013 in the AS Galerija gallery at
KD Group headquarters at Dunajska 63 street in Ljubljana. There, four thematic exhibitions of the works of art
owned by the company are staged every year (e.g. works of the OHO Group, a retrospective exhibition of
paintings by Bard Iucundus, etc.) In addition, the gallery cooperates with other visual art institutions. In the
autumn, it lent 13 works of art from its collection to the International Biennial of Graphic Art. It also provided some
pieces for the retrospective exhibition of Gabrijel Stupica hosted by the Gallery of Modern Arts, and some for the
1:1 Stopover exhibition displayed in the Museum of Contemporary Art Metelkova at Metelkova 22 in Ljubljana.
Via Gea College, Adriatic Slovenica has supported the international research project GUESSS (Global University
Entrepreneurial Spirit Students' Survey), which analyses students' career choices and investigates their intention
and activities related to career path planning. The research is conducted in 34 countries of all continents and at
more than 500 universities. The project lead is in the hands of the University of St. Gallen in Switzerland.
The business of the Company does not result in direct environmental burden. Furthermore, ecological behaviour,
electricity saving and separation of waste are high on the Company's agenda. Last year, the Company
employees took part in the collection of plastic bottle caps campaign carried out by students in the area of Koper,
who used the charity funds thus collected to buy a means of transport for a disabled girl. Furthermore, the
Company consistently separates hazardous waste (toners and ink cartridges) and all branches collect waste
paper in separate containers. Early 2014, the Company signed up for the third consecutive Waste Paper for
Fresh Hope campaign. Since 2012 onwards, the AS Novice e-magazine has informed employees of ecological
issues and solutions in the Eko AS weekly column, offering advice on ecological behaviour in all spheres of life.
76
Annual Report
for 2013
6
SELECTED ACCOUNTING AND FINANCIAL PERFORMANCE INDICATORS
All figures are in euros. The selected accounting indicators were calculated on the basis of the data from the
financial statements prepared in compliance with the Decision amending the Decision on Annual Reports and
Quarterly Financial Statements of Insurance Companies – SKL 2009 included in Appendix 1.
Growth of gross written premium
1
Results by class of insurance:
1 Accident insurance
2 Health insurance
3 Land motor vehicles insurance
4 Railway rolling stock insurance
5 Aircraft insurance
6 Marine loss insurance
7 Goods in transportation insurance
8 Fire and natural forces insurance
9 Other damage to property insurance
10 Motor v ehicle liability insurance
11 Aircraft liability insurance
12 Liability for ship/boat insurance
13 General liability insurance
14 Credit insurance
15 Suretyship insurance
16 Miscellaneous financial loss insurance
17 Legal ex penses insurance
18 Assistance insurance
Gross written
Gross written
premium in
premium in
current y ear
previous y ear
2013
Gross written
Gross written
premium in
premium in
current y ear
previous y ear
2012
in euros
in euros
in %
in euros
in euros
in %
2
3
4=2/3*100
5
6
7=5/6*100
16,650,947
112,602,959
35,342,445
11
18,329
635,629
1,410,663
15,290,285
11,605,632
41,820,425
20,912
587,623
6,572,791
61,838
164,167
724,835
137,385
5,677,910
18,068,815
107,452,224
40,069,487
30
20,555
675,023
1,506,709
15,303,947
12,400,637
46,828,894
21,521
622,735
6,527,768
116,331
151,881
754,086
167,331
5,837,241
92
105
88
36
89
94
94
100
94
89
97
94
101
53
108
96
82
97
18,068,815
107,452,224
40,069,487
30
20,555
675,023
1,506,709
15,303,947
12,400,637
46,828,894
21,521
622,735
6,527,768
116,331
151,881
754,086
167,331
5,837,241
18,449,784
100,254,920
41,503,769
14,250
707,515
1,120,912
14,831,614
10,908,900
50,501,853
14,556
599,413
6,264,187
728,680
135,337
785,441
171,071
5,681,158
98
107
97
144
95
134
103
114
93
148
104
104
16
112
96
98
103
19 Life insurance
19,171,334
7,817,382
245
7,817,382
7,078,613
110
21 Unit-linked life insurance products
37,012,119
3,844,683
963
3,844,683
4,808,834
80
652,933
685,770
95
685,770
740,488
93
-
0%
-
0%
23 Insurance with capitalised payments
-
-
Non-life insurance contracts, excluding health insurance
136,721,827
149,072,991
92
149,072,991
152,418,440
98
Life insurance contracts
Health insurance contracts
56,836,385
112,602,959
12,347,835
107,452,224
460
105
12,347,835
107,452,224
12,627,935
100,254,920
98
107
306,161,171 268,873,050
114
268,873,050
265,301,296
101
Total
77
Annual Report
for 2013
Net written premiums as % of gross written
premiums
1
2 Health insurance
10 Motor vehicle liability insurance
14 Credit insurance
17 Legal expenses insurance
19 Life insurance
Total
Net written
Gross written
premiums
premiums
in euros
in euros
2
3
Net written
Gross written
premiums
premiums
in %
in euros
in euros
in %
4=2/3*100
5
6
7=5/6*100
2013
2012
12,915,296
112,602,959
15,599,959
11
17,667
565,618
1,187,088
11,756,544
10,344,072
22,154,530
4,716
523,025
6,033,655
61,838
119,631
627,835
65,079
4,595,262
18,187,538
37,012,119
652,933
16,650,947
112,602,959
35,342,445
11
18,329
635,629
1,410,663
15,290,285
11,605,632
41,820,425
20,912
587,623
6,572,791
61,838
164,167
724,835
137,385
5,677,910
19,171,334
37,012,119
652,933
78
100
44
0
96
89
84
77
89
53
23
89
92
100
73
87
47
81
95
100
100
13,950,096
107,452,224
18,718,290
30
19,894
596,095
1,339,777
11,140,549
11,016,016
24,708,519
7,174
555,095
6,239,589
116,331
91,576
683,483
77,940
4,771,970
7,524,896
3,844,683
685,770
18,068,815
107,452,224
40,069,487
30
20,555
675,023
1,506,709
15,303,947
12,400,637
46,828,894
21,521
622,735
6,527,768
116,331
151,881
754,086
167,331
5,837,241
7,817,382
3,844,683
685,770
77
100
47
0
97
88
89
73
89
53
33
89
96
100
60
91
47
82
96
100
100
86,571,825
55,852,590
136,721,827
56,836,385
63
98
94,032,422
12,055,349
149,072,991
12,347,835
63
98
112,602,959
112,602,959
100
107,452,224
107,452,224
100
255,027,374 306,161,171
83
213,539,995
268,873,050
79
78
Annual Report
for 2013
Movement in gross claims and benefits paid
1
Gross claims
Gross claims
Gross claims
Gross claims
and benefits
and benefits
and benefits
and benefits
paid in current paid in previous
y ear
year
2013
paid in current paid in prev ious
year
y ear
2012
in euros
in euros
in %
in euros
in euros
in %
2
3
4=2/3*100
5
6
7=5/6*100
2 Health insurance
14 Credit insurance
15 Surety ship insurance
17 Legal ex penses insurance
19 Life insurance
6,781,589
90,466,507
28,722,892
15,751
497,182
215,271
7,846,035
8,464,761
26,870,585
53,398
3,477,292
1,042,025
72,324
353,178
1,898,814
11,712,565
20,810,053
693,008
86,311,098
93,132,052
93
93,132,052
91,076,031
102
33,215,626
90,466,507
9,819,896
85,169,214
338
106
9,819,896
85,169,214
9,235,542
81,984,296
106
104
209,993,231
188,121,162
112
188,121,162
182,295,869
103
-
Total
79
7,480,695
85,169,214
30,520,828
726,511
993,676
8,195,563
9,667,225
27,575,308
126,691
3,632,891
1,690,943
16,204
538,018
1,967,500
5,948,062
2,987,896
883,938
-
91
106
94
68
22
96
88
97
42
96
62
446
66
97
197
696
78
-
7,480,695
85,169,214
30,520,828
726,511
993,676
8,195,563
9,667,225
27,575,308
126,691
3,632,891
1,690,943
16,204
538,018
1,967,500
5,948,062
2,987,896
883,938
-
8,015,021
81,984,296
30,890,252
463,136
681,657
5,504,611
7,631,000
30,314,766
62,102
3,776,590
1,596,360
5,044
537,570
39
1,597,882
5,009,163
3,179,366
1,047,013
-
93
104
99
157
146
149
127
91
204
96
106
321
100
123
119
94
84
-
Annual Report
for 2013
Average claim/benefit paid
Gross claims Number of
and benefits claims/los
paid
s events
2013
in euros
1
2
2012
in euros
3
4=2/3
2 Health insurance
3 Land motor v ehicles insurance
10 Motor v ehicle liability insurance
14 Credit insurance
15 Surety ship insurance
19 Life insurance
23 Insurance with capitalised pay ments
6,781,589
90,466,507
28,722,892
497,182
215,271
7,846,035
8,464,761
26,870,585
53,398
3,477,292
1,042,025
72,324
353,178
1,898,814
11,712,565
20,810,053
693,008
11,003
50,698
41,989
194
1,327
6,659
17,078
9,722
115
1,519
243
7
709
10
9,925
9,352
9,521
208
616
1,784
684
2,563
162
1,178
496
2,764
464
2,289
4,288
10,332
498
86,311,098
33,215,626
90,466,507
Total
Gross claims Number of
and benefits claims/loss
paid
ev ents
5
6
7=5/6
11,814
74,582
44,909
228
1,423
7,368
17,213
10,100
21
1,636
311
2
978
20
9,333
4,589
1,836
203
633
1,142
680
3,186
698
1,112
562
2,730
6,033
2,221
5,437
8,102
550
191
1,252
2,186
3,332
7,480,695
85,169,214
30,520,828
726,511
993,676
8,195,563
9,667,225
27,575,308
126,691
3,632,891
1,690,943
16,204
538,018
1,967,500
5,948,062
2,987,896
883,938
100,501
859
93,132,052
105,356
884
19,081
50,698
1,741
1,784
9,819,896
85,169,214
6,628
74,582
1,482
1,142
209,993,231 170,280
1,233
188,121,162
186,566
1,008
80
211
1,296
1,627
4,354
Annual Report
for 2013
Claims ratio
Gross claims
and benefits paid
Gross written
premiums
in euros
in euros
2
3
1
2013
4=2/3
Gross claims Gross written
and benefits paid
premiums
in euros
in euros
5
6
2012
7=5/6
2 Health insurance
14 Credit insurance
19 Life insurance
6,781,589
90,466,507
28,722,892
15,751
497,182
215,271
7,846,035
8,464,761
26,870,585
53,398
3,477,292
1,042,025
72,324
353,178
1,898,814
11,712,565
20,810,053
693,008
16,650,947
112,602,959
35,342,445
11
18,329
635,629
1,410,663
15,290,285
11,605,632
41,820,425
20,912
587,623
6,572,791
61,838
164,167
724,835
137,385
5,677,910
19,171,334
37,012,119
652,933
0.41
0.80
0.81
0.00
0.86
0.78
0.15
0.51
0.73
0.64
0.00
0.09
0.53
16.85
0.44
0.49
0.00
0.33
0.61
0.56
1.06
7,480,695
85,169,214
30,520,828
726,511
993,676
8,195,563
9,667,225
27,575,308
126,691
3,632,891
1,690,943
16,204
538,018
1,967,500
5,948,062
2,987,896
883,938
18,068,815
107,452,224
40,069,487
30
20,555
675,023
1,506,709
15,303,947
12,400,637
46,828,894
21,521
622,735
6,527,768
116,331
151,881
754,086
167,331
5,837,241
7,817,382
3,844,683
685,770
0.41
0.79
0.76
0.00
0.00
1.08
0.66
0.54
0.78
0.59
0.00
0.20
0.56
14.54
0.11
0.71
0.00
0.34
0.76
0.78
1.29
86,311,098
33,215,626
136,721,827
56,836,385
0.63
0.58
93,132,052
9,819,896
149,072,991
12,347,835
0.62
0.80
90,466,507
112,602,959
0.80
85,169,214
107,452,224
0.79
209,993,231
306,161,171
0.69
Total
81
188,121,162 268,873,050
0.70
Annual Report
for 2013
Operating expenses as % of gross written premiums
Operating
Gross written
expenses
premiums
in euros
in euros
2
3
1
Operating
Gross written
expenses
premiums
in %
in euros
in euros
in %
4=2/3*100
5
6
7=5/6*100
2013
2012
1
2
3
4
5
6
Accident insurance
Health insurance
Aircraft insurance
4,551,748
12,285,076
10,029,727
4,881
193,589
16,650,947
112,602,959
35,342,445
11
18,329
635,629
27
11
28
0
27
30
5,336,394
15,015,440
12,516,541
5,666
239,889
18,068,815
107,452,224
40,069,487
30
20,555
675,023
30
14
31
0
28
36
313,053
6,307,784
4,954,277
10,381,423
4,459
184,988
1,410,663
15,290,285
11,605,632
41,820,425
20,912
587,623
22
41
43
25
21
31
381,148
7,056,852
5,749,135
12,263,514
4,353
199,026
1,506,709
15,303,947
12,400,637
46,828,894
21,521
622,735
25
46
46
26
20
32
1,913,485
80,801
13,088
207,340
42,966
2,723,696
6,572,791
61,838
164,167
724,835
137,385
5,677,910
29
131
8
29
31
48
2,082,029
119,756
17,377
239,012
47,182
3,780,320
6,527,768
116,331
151,881
754,086
167,331
5,837,241
32
103
11
32
28
65
19 Life insurance
8,755,135
8,507,477
121,604
19,171,334
37,012,119
652,933
46
23
19
2,477,732
570,212
106,008
7,817,382
3,844,683
685,770
32
15
15
41,907,305
17,384,217
12,285,076
136,721,827
56,836,385
112,602,959
31
31
11
50,038,193
3,153,952
15,015,440
149,072,991
12,347,835
107,452,224
34
26
14
71,576,598 306,161,171
23
68,207,585 268,873,050
25
13
14
15
16
17
18
Credit insurance
Assistance insurance
Total
82
Annual Report
for 2013
Insurance
Acquisition costs as % of gross written premiums
Gross written
premiums
acquisition
costs
Insurance
2013
Gross written
premiums
acquisition
costs
2013
in euros
in euros
in %
in euros
in euros
in %
2
3
4=2/3*100
5
6
7=5/6*100
1
2 Health insurance
1,510,163
1,782,953
16,650,947
112,602,959
9
2
1,600,903
1,683,205
18,068,815
107,452,224
9
2
3,192,036
35,342,445
9
3,699,675
40,069,487
9
-
11
0
-
30
0
1,311
88,125
18,329
635,629
7
14
2,240
96,081
20,555
675,023
11
14
92,650
1,410,663
7
94,728
1,506,709
6
3,508,915
15,290,285
23
3,483,248
15,303,947
23
2,340,080
3,224,086
11,605,632
41,820,425
20
8
2,346,031
3,668,299
12,400,637
46,828,894
19
8
14 Credit insurance
1,604
20,912
8
1,739
21,521
8
86,459
587,623
15
93,475
622,735
15
883,624
13,833
6,572,791
61,838
13
22
934,705
23,229
6,527,768
116,331
14
20
1,068
164,167
1
1,916
151,881
1
64,392
724,835
9
73,076
754,086
10
17,183
982,027
137,385
5,677,910
13
17
17,870
1,044,324
167,331
5,837,241
11
18
19 Life insurance
4,098,571
19,171,334
21
776,954
7,817,382
10
1,378,634
37,012,119
4
28,020
3,844,683
1
743
652,933
0
724
685,770
0
16,007,556
5,477,949
1,782,953
136,721,827
56,836,385
112,602,959
12
10
2
17,181,539
805,698
1,683,205
149,072,991
12,347,835
107,452,224
12
7
2
23,268,457
306,161,171
8
19,670,442
268,873,050
7
Total
83
Annual Report
for 2013
(Balance of
investments at
Return on beginning of year
Investment return as % of average investments
investments
+ balance of
(Balance of
2013
Return on
investments at
beginning of
investments
year + balance
of investments at
investments at
1
Investments of fund covering mathematical provisions for life insurance
2012
in euros
year-end)/2
in euros
in %
in euros
year-end)/2
in euros
in %
2
3
4=2/3*100
5
6
7=5/6*100
2,131,726
101,645,642
2.1
4,098,800
66,397,373
6.2
1,280,157
25,413,352
5.0
2,024,401
23,105,219
8.8
633,079
148,467,781
0.4
-
-
-
(26,387)
10,623,654
-0.2
-
-
-
(57,942)
8,451,310
-0.7
-
-
-
(104,480)
11,249,141
-0.9
-
-
-
157,566
5,700,345
2.8
248,044
5,785,166
4.3
26,705
424,875
6.3
32,906
408,191
8.1
(4,706,318)
152,289,821
-3.1
5,276,695
172,453,688
3.1
557,604
9,132,377
6.1
988,752
9,677,849
10.2
4,419
464,555
1.0
27,991
578,339
4.8
Investments of own sources of funding
956,694
49,128,583
1.9
(2,518,597)
34,336,016
-7.3
Total
852,823
522,991,437
0.2 10,178,990 312,741,839
3.3
Investments of fund covering mathematical provisions for life insurance where
policyholder bears investment risk
policyholder bears investment risk - Fond Polica
policyholder bears investment risk - FP Dirigent
policyholder bears investment risk - FP Aktivni paket
policyholder bears investment risk - KD Vrhunski
Investments of fund covering mathematical provisions for pension insurance
during saving period
Investments of fund covering pension insurance provisions during pay out
Investments of fund covering mathematical provisions without the fund
Investments of fund covering provisions for supplementary health insurance
products
Investments of fund covering other health insurance products
84
Annual Report
for 2013
Net provisions for claims outstanding as % of
net income from insurance premiums
1
Net provisions
for claims
outstanding
Net earned
premiums
Net provisions
2013
for claims
outstanding
Net earned
premiums
2012
in euros
in euros
in %
in euros
in euros
in %
2
3
4=2/3*100
5
6
7=5/6*100
2 Health insurance
14 Credit insurance
19 Life insurance
11,208,168
6,091,059
4,725,352
485,749
803,096
3,657,085
4,465,606
47,277,097
334,337
18,803,085
158,583
79,873
56,892
24,073
239,432
6,218,524
244,820
-
13,277,269
113,656,286
17,331,668
11
19,801
556,799
1,206,645
11,668,081
10,415,974
23,811,377
5,661
533,451
5,926,235
1,066,843
101,018
620,448
72,668
4,567,066
18,219,143
37,012,119
652,933
84
5
27
0
0
87
67
31
43
199
0
63
317
15
79
9
33
5
34
1
0
12,782,501
6,533,655
5,390,905
1,037
724,983
457,962
3,943,187
4,069,181
56,062,881
456,221
18,152,817
231,361
51,000
213,967
12,256
257,842
911,736
1,121
-
13,816,876
106,450,787
19,816,719
30
19,323
612,623
1,319,598
10,965,568
10,971,555
25,968,672
5,466
546,290
6,070,421
1,064,160
87,946
653,112
89,834
4,735,145
7,522,719
3,844,683
685,770
93
6
27
0
5
118
35
36
37
216
0
84
299
22
58
33
14
5
12
0
0
92,318,429
91,181,016
101
102,808,102
96,743,338
106
6,463,345
6,091,059
55,884,195
113,656,286
12
5
912,857
6,533,655
12,053,172
106,450,787
8
6
104,872,832
260,721,497
40
110,254,614
215,247,298
51
Total
85
Annual Report
for 2013
Gross profit, i.e. loss, of the
current year as % of net written
premiums
1
Gross profit, i.e.
loss, of the
Net written
current year
in euros
premiums
in euros
2
3
Gross profit, i.e.
loss, of the
Net written
2013
in %
current year
in euros
premiums
in euros
2012
in %
4=2/3*100
2
3
4=2/3*100
Non-life insurance contracts,
excluding health insurance
Total
current year as % of average
capital
1
Non-life insurance contracts
Total
6,255,776 86,571,825
3,275,811 55,852,590
6,389,016 112,602,959
7
6
6
15,970,947 94,032,422
(1,609,602) 12,055,349
2,769,420 107,452,224
17
-13
3
15,920,603 255,027,374
6
17,130,766 213,539,995
8
(Capital at
Gross profit, i.e. beginning of
year + capital at
loss, of the
current year
in euros
2
12,644,792
3,275,811
15,920,603
(Capital at
Gross profit, i.e.
beginning of
year + capital at
loss, of the
year-end)/2
in euros
2013
in %
3
4=2/3*100
80,740,480
9,140,214
89,880,694
current year
in euros
2
16
36
18
18,740,367
(1,609,602)
17,130,766
(Assets at
current year as % of average
assets
1
Total
1
Total
3
4=2/3*100
78,170,623
5,411,357
83,581,980
24
-30
20
Gross profit, i.e.
loss, of the
beginning of
year + assets
current year
in euros
at year-end)/2
in euros
2013
in %
current year
in euros
at year-end)/2
in euros
2012
in %
2
3
4=2/3*100
2
3
4=2/3*100
12,644,792 359,185,054
3,275,811 232,214,655
15,920,603 577,538,108
Gross profit
shares
4
1
3
18,740,367 327,484,096
(1,609,602) 100,666,895
17,130,766 421,052,355
Gross profit
in euros
2
12,644,792
3,275,811
15,920,603
shares
2
3
4=2/3
in euros
3
4=2/3
10,304,407
10,304,407
10,304,407
Gross profit, i.e. loss, as % of
average capital
Net profit
in euros
1
2
3
13,583,099
6
-2
4
Number of
2013
(Capital at
beginning of
year + capital at
year-end)/2
in euros
Aggregate insurance
business - total
2012
in %
(Assets at
Gross profit, i.e. beginning of
loss, of the
year + assets
Number of
current year per share
year-end)/2
in euros
89,880,694
86
2
1.2
0.3
1.5
2013
in %
4=2/3*100
15
18,740,367
(1,609,602)
17,130,766
9,666,780
9,666,780
9,666,780
1.9
-0.2
1.8
Net profit
in euros
(Capital at
beginning of
year + capital at
year-end)/2
in euros
2012
in %
2
3
4=2/3*100
13,178,514
83,581,980
16
Annual Report
for 2013
The insurer's eligible capital as
% of the insurer's net earned
premiums
1
Total
% of the insurer's minimum
capital
1
The insurer's
Net earned
eligible capital
in euros
premiums
in euros
2013
in %
2
3
4=2/3*100
55,230,639 199,174,784
12,479,003 55,852,590
67,709,643 255,027,374
28
22
27
The insurer's
The insurer's
eligible capital
in euros
minimum capital
in euros
2013
in %
3
4=2/3*100
2
The insurer's
Net earned
eligible capital
in euros
premiums
in euros
2012
in %
2
3
4=2/3*100
53,783,915 201,484,647
5,201,159 12,055,349
58,985,074 213,539,995
27
43
28
The insurer's
The insurer's
eligible capital
in euros
minimum capital
in euros
2012
in %
3
4=2/3*100
2
55,230,639
12,479,003
28,158,098
10,516,263
196
119
53,783,915
5,201,159
30,771,919
3,916,053
175
133
Total
58,985,074
34,687,971
170
58,985,074
34,687,971
170
% of the insurer's technical
provisions
1
Total
% of receivables from
reinsurance and technical
provisions attributable to
reinsurers
1
The insurer's
eligible capital
in euros
Technical
provisions
in euros
2013
in %
2
3
4=2/3*100
55,230,639 176,981,690
12,479,003 314,396,320
67,709,643 491,378,011
31
4
14
The insurer's
eligible capital
in euros
Technical
provisions
in euros
2012
in %
2
3
4=2/3*100
53,783,915 191,484,684
5,201,159 76,434,719
58,985,074 267,919,403
Receivables
Receivables
from
from
reinsurance and
technical
reinsurance and
technical
The insurer's
prov isions
attributable to
eligible capital
reinsurers
in euros
2
28
7
22
The insurer's
provisions
attributable to
2013
eligible capital
reinsurers
in euros
in %
in euros
in euros
in %
3
4=2/3*100
2
3
4=2/3*100
2012
55,230,639
12,479,003
67,071,021
465,914
82
2678
53,783,915
5,201,159
42,334,818
118,586
127
4386
Total
67,709,643
67,536,935
100
58,985,074
42,453,404
139
87
Annual Report
for 2013
Net expenses
for claims and
Net earned
Incurred loss ratio
benefits paid
in euros
premiums
in euros
1
2
3
Non-life insurance contracts,
excluding health insurance
Total
Net written premiums as %
of average capital and
technical provisions
1
T otal
Net written premiums as %
of average capital
1
T otal
Capital as % of net
unearned premiums
1
T otal
benefits paid
in euros
premiums
in euros
2012
4=2/3
2
3
4=2/3
0.57
0.59
0.84
49,760,485 96,743,338
9,773,490 12,053,172
90,034,664 106,450,787
0.51
0.81
0.85
181,032,840 260,768,138
0.69
149,568,639 215,247,297
0.69
Net written
premiums
Av erage capital +
av erage balance of
technical prov isions
in euros
2
199,174,784
55,852,590
255,027,374
Net written
premiums
2013
Net written
premiums
Av erage capital +
av erage balance of
technical prov isions
in euros
in %
in euros
in euros
in %
3
4=2/3*100
2
3
4=2/3*100
264,973,667
214,204,037
479,177,704
Av erage capital
75
26
53
2013
201,484,647
12,055,349
213,539,995
Net written
premiums
2012
274,043,027
78,394,579
352,437,606
Av erage capital
74
15
61
2012
in euros
in euros
in %
in euros
in euros
in %
2
3
4=2/3*100
2
3
4=2/3*100
199,174,784
55,852,590
255,027,374
in euros
1
Net earned
2013
52,099,557 91,181,016
33,206,728 55,930,837
95,726,554 113,656,286
80,740,480
9,140,214
89,880,694
Av erage balance of
Average balance of net
Net rev enues from
net technical
technical provisions as % of
insurance premiums
net revenues from insurance
provisions
premiums
T otal
Net expenses for
claims and
2
159,388,816
204,924,794
364,313,609
247
611
284
2013
in euros
in %
3
4=2/3*100
204,837,301
55,884,195
260,721,496
201,484,647
12,055,349
213,539,995
Av erage balance of
Net rev enues from
net technical
insurance premiums
prov isions
in euros
78
367
140
78,170,623
5,411,357
83,581,980
2
179,133,893
72,902,910
252,036,803
258
223
255
2012
in euros
in %
3
4=2/3*100
203,194,125
12,053,172
215,247,297
88
605
117
Capital
Net unearned
premiums
2013
Capital
Net unearned
premiums
2012
in euros
in euros
in %
in euros
in euros
in %
3
4=2/3*100
3
4=2/3*100
2
80,144,316
13,043,731
93,188,047
50,075,622
534,060
50,609,682
88
160
2,442
184
2
81,336,644
5,236,698
86,573,342
55,738,139
501,460
56,239,599
146
1,044
154
Annual Report
for 2013
Capital as % of liabilities to
sources of funding
1
T otal
Net technical provisions as
% of liabilities to sources of
funding
1
T otal
Net provisions (mathematical
reserves) as % of net
technical provisions
1
Capital
Liabilities to sources
of funding
in euros
2
80,144,316
13,043,731
93,188,047
2013
Capital
of funding
in euros
in %
in euros
in euros
in %
3
4=2/3*100
2
3
4=2/3*100
367,462,677
362,827,917
717,251,086
Net technical
prov isions
of funding
in euros
2
150,939,189
314,186,501
465,125,690
Net prov isions
(mathematical
reserv es)
22
4
13
81,336,644
5,236,698
86,573,342
2012
351,265,098
102,374,290
448,173,446
23
5
19
2013
Net technical
prov isions
of funding
in euros
in %
in euros
in euros
in %
3
4=2/3*100
2
3
4=2/3*100
367,462,677
362,827,917
717,251,086
Net technical
prov isions
41
87
65
167,838,442
76,366,480
244,204,922
Net provisions
(mathematical
2013
reserv es)
2012
351,265,098
102,374,290
448,173,446
Net technical
prov isions
48
75
54
2012
in euros
in euros
in %
in euros
in euros
in %
2
3
4=2/3*100
2
3
4=2/3*100
Aggregate insurance
business - total
Underwritten gross
insurance premium as % of
number of full-time
employees
1
306,807,834
Gross written
premiums
66
465,125,690
Number of full-time
employ ees
2013
3
4=2/3
in euros
2
74,791,626
Gross written
premiums
31
244,204,922
Number of full-time
employ ees
2012
3
4=2/3
in euros
2
Aggregate insurance
business - total
306,161,171
1,050
89
291,582
268,873,050
1,010
266,211
Annual Report
for 2013
90
Annual Report
for 2013
FINANCIAL STATEMENTS
FOR 2013
Annual Report
for 2013
CONTENT:
1.
FINANCIAL STATEMENTS ...................................................................................................... 95
1.1
BALANCE SHEET .................................................................................................................... 95
1.2
INCOME STATEMENT.............................................................................................................. 96
1.3
STATEMENT OF COMPREHENSIVE INCOME ....................................................................... 97
1.4
STATEMENT OF CHANGES IN EQUITY ................................................................................. 98
1.5
CASH FLOW STATEMENT .................................................................................................... 100
1.6
OVERVIEW OF BALANCE-SHEET PROFIT OR BALANCE-SHEET LOSS ......................... 101
1.7
BALANCE SHEET BY SEGMENT .......................................................................................... 102
1.8
INCOME STATEMENT BY SEGMENT ................................................................................... 104
1.9
COMPREHENSIVE INCOME STATEMENT BY SEGMENT .................................................. 106
2.
GENERAL PROFILE............................................................................................................... 107
3.
NOTES TO THE FINANCIAL STATEMENTS ......................................................................... 109
3.1
BASIS OF PREPARATION ..................................................................................................... 109
3.2
TRANSLATION FROM FOREIGN CURRENCIES.................................................................. 112
3.3
CHANGES IN ACCOUNTING POLICIES AND ADJUSTMENTS ........................................... 112
3.4
REPORTING BY SEGMENT ................................................................................................... 114
3.5
INSURANCE CONTRACTS .................................................................................................... 115
4.
CHANGES IN THE SYSTEM OF OPERATIONS OF THE ADRIATIC SLOVENICA GROUP 118
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ..................................................... 122
5.1
INTANGIBLE ASSETS............................................................................................................ 122
5.2
PROPERTY, PLANT AND EQUIPMENT ................................................................................ 122
5.3
INVESTMENT PROPERTIES.................................................................................................. 123
5.4
FINANCIAL INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES ................................... 124
5.5
FINANCIAL INVESTMENTS ................................................................................................... 124
5.6
ASSETS IN THE UNIT-LINKED FUND ................................................................................... 127
5.7
REINSURERS' SHARE OF INSURANCE TECHNICAL PROVISIONS .................................. 127
5.8
RECEIVABLES ....................................................................................................................... 127
5.9
OTHER ASSETS ..................................................................................................................... 129
5.10 CASH AND CASH EQUIVALENTS ........................................................................................ 129
5.11 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES .................................... 129
5.12 EQUITY ................................................................................................................................... 129
5.13 INSURANCE TECHNICAL PROVISIONS .............................................................................. 131
5.14 OTHER PROVISIONS ............................................................................................................. 133
5.15 OPERATING LIABILITIES ...................................................................................................... 134
5.16 OTHER LIABILITIES ............................................................................................................... 134
92
Annual Report
for 2013
5.17 REVENUES AND EXPENSES ................................................................................................ 135
5.18 TAXES AND DEFERRED TAXES .......................................................................................... 137
6.
SIGNIFICANT ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS ............ 138
6.1
IMPAIRMENTS OF AVAILABLE-FOR-SALE FINANCIAL ASSETS ..................................... 138
6.2
IMPAIRMENT LOSSES ON RECEIVABLES .......................................................................... 138
6.3
OUTSTANDING CLAIMS PROVISIONS................................................................................. 138
6.4
ESTIMATES OF FUTURE PAYMENTS UNDER LIFE INSURANCE CONTRACTS .............. 140
6.5
EMPLOYEE BENEFITS .......................................................................................................... 140
7.
RISK MANGEMENT ................................................................................................................ 142
7.1
CAPITAL ADEQUACY REQUIREMENTS AND CAPITAL MANAGEMENT.......................... 142
7.2
TYPES OF RISKS ................................................................................................................... 143
8.
NOTES TO INDVIDUAL ITEMS OF FINANCIAL STATEMENTS .......................................... 165
8.1
INTANGIBLE ASSETS............................................................................................................ 165
8.2
PROPERTY, PLANT AND EQUIPMENT ................................................................................ 166
8.3
INVESTMENT PROPERTIES.................................................................................................. 167
8.4
FINANCIAL INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES ................................... 168
8.5
FINANCIAL INVESTMENTS ................................................................................................... 170
8.6
UNIT-LINKED LIFE INSURANCE ASSETS............................................................................ 174
8.7
AMOUNT OF INSURANCE TECHNICAL PROVISIONS TRANSFERRED TO
REINSURERS ......................................................................................................................... 175
8.8
RECEIVABLES ....................................................................................................................... 175
8.9
OTHER ASSETS ..................................................................................................................... 176
8.10 CASH AND CASH EQUIVALENTS ........................................................................................ 177
8.11 EQUITY ................................................................................................................................... 178
8.12 INSURANCE TECHNICAL PROVISIONS .............................................................................. 181
8.13 INSURANCE TECHNICAL PROVISIONS FOR UNIT-LINKED LIFE INSURANCE
POLICYHOLDERS .................................................................................................................. 183
8.14 OTHER PROVISIONS ............................................................................................................. 183
8.15 OTHER FINANCIAL LIABILITIES .......................................................................................... 184
8.16 OPERATING LIABILITIES ...................................................................................................... 184
8.17 OTHER LIABILITIES ............................................................................................................... 185
8.18 INCOME .................................................................................................................................. 186
8.19 NET CLAIMS INCURRED ....................................................................................................... 191
8.20 COSTS .................................................................................................................................... 192
8.21 OTHER INSURANCE EXPENSES.......................................................................................... 193
8.22 OTHER EXPENSES ................................................................................................................ 194
8.23 REINSURANCE RESULT ....................................................................................................... 195
93
Annual Report
for 2013
8.24 CORPORATE INCOME TAX .................................................................................................. 196
8.25 DEFERRED TAXES ................................................................................................................ 197
8.26 NET EARNINGS (LOSS) PER SHARE ................................................................................... 199
8.27 ISSUES, REDEMPTIONS AND PAYOUTS OF SECURITIES AND DIVIDENDS................... 199
9.
RELATED PARTY TRANSACTIONS ..................................................................................... 200
9.1
RELATED PARTIES ............................................................................................................... 200
9.2
SUBSIDIARIES AND ASSOCIATES ...................................................................................... 204
9.3
SHAREHOLDERS ................................................................................................................... 205
9.4
MANAGEMENT ....................................................................................................................... 205
10.
ADDITIONAL NOTES TO THE CASH FLOW STATEMENT.................................................. 208
11.
CONTINGENT RECEIVABLES AND LIABILITIES ................................................................ 208
12.
AFTER BALANCE SHEET EVENTS ...................................................................................... 209
13.
STATEMENT OF MANAGEMENT RESPONSIBILITY ........................................................... 210
14.
STATEMENT OF ACTUARIAL OPINION ............................................................................... 211
15.
INDEPENDENT AVDITOR’S REPORT................................................................................... 213
94
Annual Report
for 2013
Financial Statements for 2013
1. FINANCIAL STATEMENTS
1.1
BALANCE SHEET
Balance sheet as at 31 December 2013
in EUR
Assets
A. Intangible assets
B. Property, plant and equipment
C. Non-current assets held for sale
D. Deferred tax assets
E. Investment properties
F. Financial investments in subsidiaries and associates
G. Financial investments
1.In loans and deposits
2. In held-to-maturity financial assets
3. In available-for-sale financial assets
4. In financial assets measured at fair value
H. Unit-linked investments of policyholders
I. Amounts of technical provisions ceded to reinsurers
J. Assets from investment contracts
K. Receivables
1. Receivables from direct insurance business
2. Receivables from reinsurance and coinsurance
3. Income tax receivables
4. Other receivables
L. Other assets
M. Cash and cash equivalents
Equity and liabilities
A. Equity
1. Share capital
2. Capital reserves
3. Reserve from profit
4. Revaluation surplus
5. Retained net earnings
6. Net profit or loss for the financial year
B. Subordinated liabilities
C. Technical provisions
1. Unearned premiums
2. Mathematical provisions
3. Outstanding claims provisions
4. Other technical provisions
D. Insurance technical provisions for unit-linked insurance
E. Other provisions
F. Liabilities related to non current assets held for sale
G. Deferred tax liabilities
H. Liabilities from investment contracts
I. Other financial liabilities
J. Operating liabilities
1. Liabilities from direct insurance contracts
2. Liabilities from reinsurance and coinsurance contracts
3. Income tax liabilities
K. Other liabilities
Note
8.1
8.2
8.25
8.3
8.4
8.5
8.6
8.7
3.3
8.8
8.9
8.10
8.11
8.12
8.13
8.14
8.25
3.3
8.15
8.16
8.17
31 Dec 2013
706,902,770
4,596,902
27,152,680
3,816,023
28,356,692
21,973,193
258,535,548
57,846,472
38,096,356
126,219,317
36,373,403
213,925,868
26,252,320
105,903,851
23,243,104
41,423,147
2,259,833
38,977,767
6,291,066
10,098,627
706,902,770
93,188,047
42,999,530
4,211,782
15,333,563
(2,343,818)
22,576,176
10,410,814
279,545,399
51,316,179
94,975,222
130,337,291
2,916,708
211,832,611
2,766,811
27,011
1,092,790
92,887,490
6,037,334
84,425,515
2,424,641
25,562,610
31 Dec 2012
adjusted
448,173,446
3,614,329
24,907,189
3,776,953
30,430,337
21,427,797
239,411,591
63,107,111
33,246,781
107,712,157
35,345,542
24,605,609
23,714,481
58,837,537
22,754,791
18,871,302
1,713,383
15,498,061
5,927,939
11,519,684
448,173,446
86,573,342
40,338,758
2,514,276
14,920,976
(664,988)
17,499,645
11,964,675
263,206,513
56,887,017
70,011,390
133,304,515
3,003,590
24,009,497
2,830,643
48,129
3,987,253
51,202,556
5,447,091
44,927,684
827,782
16,315,514
The accounting policies and notes set out on pages from 109 to 209 are an integral part of the financial statements.
95
Annual Report
for 2013
1.2
INCOME STATEMENT
Income statement for the period from 1 January 2013 to 31 December 2013
in EUR
I. NET PREMIUM INCOME
Premiums ceded to reinsurers and coinsurers
Change in unearned premiums
III. INCOME FROM INVESTMENTS
Note
8.18
IV. OTHER INCOME FROM INSURANCE OPERATIONS, of which
- fee and commission income
V. OTHER INCOME
VI. NET EXPENSES FOR CLAIMS AND BENEFITS PAID
Gross amounts of claims and benefits paid
Reinsurers’/coinsurers’ shares
Change in claims provisions
VII. CHANGE IN OTHER TECHNICAL PROVISIONS
VIII. CHANGE IN TECHNICAL PROVISIONS FOR THE BENEFIT
OF UNIT-LINKED INSURANCE POLICYHOLDERS
IX. CHANGES IN LIABILITIES ARISING FROM INVESTMENT
CONTRACTS
X. EXPENSES FOR BONUSES AND DISCOUNTS
XI. OPERATING EXPENSES, of which
- acquisition costs
XII. EXPENSES FROM INVESTMENTS IN ASSOCIATES, of
which
- impairment losses of financial assets not measured at fair value
through profit or loss
XIII. EXPENSES INVESTMENTS, of which
- impairment losses of financial assets not measured at fair value
XIV. OTHER INSURANCE EXPENSES
XV. OTHER EXPENSES
- of which expenses from financial liabilities
XVI. PROFIT/(LOSS) BEFORE TAX
XVII. CORPORATE INCOME TAX
XVIII. NET PROFIT FOR THE REPORTING PERIOD
8.18
8.18
Basic net earnings/loss per share
Diluted net earnings/loss per share
2013
2012 adjusted
260,768,138
215,247,295
306,399,078
269,153,301
(51,371,704)
(55,613,307)
5,740,764
1,707,301
20,218,978
17,118,633
24,079,378
21,584,161
19,991,636
(181,032,840)
(217,593,248)
25,261,473
11,298,935
3,374,417
13,019,718
12,555,036
5,540,959
(150,787,543)
(192,777,371)
20,877,539
21,112,289
(4,843,455)
(10,604,186)
(2,368,928)
215,687
(70,406,765)
(23,856,776)
(296,940)
(60,436,843)
(19,858,347)
(643,978)
(2,367,878)
-
(643,978)
(18,668,986)
(2,367,878)
(5,344,171)
-
(12,745,084)
(26,369,081)
(5,001,796)
(1,641,804)
15,920,603
(2,337,504)
13,583,099
(131,194)
(4,785,903)
(2,564,180)
(296,045)
17,130,766
(3,952,252)
13,178,514
8.18
8.19
8.12
8.13
3.3
8.20
8.18
8.18
8.21
8.22
8.24
8.26
-
1.38
1.38
1.36
1.36
96
Annual Report
for 2013
1.3
STATEMENT OF COMPREHENSIVE INCOME
Statement of comprehensive income for the period from 1 January 2013 to 31 December 2013
in EUR
I. NET PROFIT/(LOSS) FOR THE YEAR, NET OF TAX
II. OTHER COMPREHENSIVE INCOME, NET OF TAX (1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9)
4. Net gain/(loss) from the re-measurement of available-for-sale financial assets
4.1. Gain/(loss) recognised in fair value reserve
4.2. Transfer of gain/loss from fair value reserve to the income statement
9. Tax on other comprehensive income
III. TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX (I + II)
Note
8.11
8.11
2013
13,583,099
(1,185,915)
(1,445,504)
8,280,176
(9,725,681)
259,589
12,397,184
2012
13,178,514
2,804,209
3,544,852
3,805,656
(260,804)
(740,643)
15,982,723
97
Annual Report
for 2013
1.4
STATEMENT OF CHANGES IN EQUITY
Statement of changes in equity for the period from 1 January 2013 to 31 December 2013
VII. Own
shares
III. Reserves from profit
Other reserves for
priority covering loss
in EUR
1. CLOSING BALANCE AS AT 31 Dec 2012
CHANGES 1 Jan 2013
OPENING BALANCE IN THE FINANCIAL PERIOD
2. Comprehensive income net of tax
2.a. Net profit/loss for the year
2.b Other comprehensive income
3. Subscription (or payment) of new capital
4. Repayment of capital
5. Allocation of net profit/loss for the preceeding year to retained profit/loss
6. Net acquisition/disposal of treasury shares
7. Payment (accounting) of dividends/bonuses in the form of shares
8. Payment (accounting) of dividends
9. Allocation of net profit to reserves from profit
10. Settlement of loss incurred in preceding years
11. Setting up and using reserves for credit risk and for catastrophic losses
12. Other
13. CLOSING BALANCE AS AT 31 DECEMBER
Note
8.11
8.11
8.11
8.27
8.11
8.11
I. Share
capital
1.
40,338,758
2,660,772
42,999,530
42,999,530
II. Capital Leveling
reserve
reserve
2.
3.
2,514,276
3,049,664
5,563,940
(1,352,158)
4,211,782
-
Legal abd Treasur
Catastrophic of supplemental
statutory y shares Credit risk loss reserves health insurance
4.
5.
6.
7.
8.
1,519,600
1,004,578 2,958,631
5,798,769
1,519,600
1,004,578 2,958,631
5,798,769
7,421
405,166
1,519,600
1,011,998 3,363,797
5,798,769
Other
IV. Revaluation
reserves
surplus
9.
10.
3,639,398
(664,988)
(492,914)
3,639,398
(1,157,902)
(1,185,915)
(1,185,915)
3,639,398
(2,343,817)
98
(deducted
V. Retained
VI. Net
item)
earnings
profit/loss
TOTAL EQUITY
11.
12.
13.
14.
17,499,646
11,964,675
86,573,342
5,217,522
17,499,646
11,964,675
91,790,864
13,583,099
12,397,184
13,583,099
13,583,099
(1,185,915)
11,964,675 (11,964,675)
(11,000,000)
(11,000,000)
4,111,855
(2,759,698)
(0)
(412,587)
22,576,175
10,410,814
93,188,047
Annual Report
for 2013
Statement of changes in equity for the period from 1 January 2012 to 31 December 2012
III. Reserves from profit
VII. Own shares
from profit/loss of
in EUR
OPENING BALANCE IN THE FINANCIAL PERIOD
2. Comprehensive income net of tax
2.a. Net profit/loss for the year
2.b Other comprehensive income
3. Subscription (or payment) of new capital
4. Repayment of capital
5. Allocation of net profit/loss for the preceeding year to retained profit/loss
6. Net acquisition/disposal of treasury shares
7. Payment (accounting) of dividends/bonuses in the form of shares
8. Payment (accounting) of dividends
9. Allocation of net profit to reserves from profit
10. Settlement of loss incurred in preceding years
11. Setting up and using reserves for credit risk and for catastrophic losses
12. Other
13. CLOSING BALANCE AS AT 31 DECEMBER
Note
8.11
8.11
8.11
8.27
8.11
8.11
I. Share capital
1.
40,338,758
40,338,758
II. Capital
reserve Leveling reserve
2.
3.
2,514,276
2,514,276
-
Legal abd
statutory
4.
1,519,600
1,519,600
Treasury
shares
5.
-
Credit risk
6.
990,618
13,959
1,004,578
Catastrophic loss supplemental
reserves
health insurance
7.
8.
2,537,446
5,017,641
781,128
421,185
2,958,631
5,798,769
IV.
Revaluation V. Retained
Other reserves surplus
earnings
9.
10.
11.
3,639,398 (3,469,198)
11,267,524
2,804,209
2,804,209
16,234,556
(10,000,000)
(2,434)
3,639,398
(664,988)
17,499,646
VI. Net
(deducted item) TOTAL EQUITY
profit/loss
12.
13.
14.
16,234,556
80,590,618
13,178,514
15,982,724
13,178,514
13,178,514
2,804,209
(16,234,556)
0
(10,000,000)
(781,129)
(0)
2,434
(435,145)
11,964,675
86,573,342
The insurance company records separately net profit or loss carried forward and net profit or loss for its life, non-life and health insurance business. In accordance with the
provisions laid down in the Slovenian Companies Act, the insurance company uses the current profit to cover attributable loss carried forward separately for its life, non-life and
health insurance business. As at the 2012 year-end, the insurance company covered the life insurance loss carried forward from the current profit on its life insurance
operations.
.
99
Annual Report
for 2013
1.5
CASH FLOW STATEMENT
Cash flow statement for the period from 1 January 2013 to 31 December 2013
in EUR
Note
2013
2012
A. Cash flows from operating activities
30,256,486
33,193,243
a) Items from the income statement
24,098,718
9,171,082
1. Net premiums written in the reporting period
255,027,374
213,539,994
2. Income from investments (other than financial income), financed from:
24,321,478
16,259,865
- insurance technical provisions
21,918,310
15,055,332
- other investments
2,403,168
1,204,533
3. Other income from ordinary activities (other than income arising from revaluation and decrease in provisions) and financial
26,067,911
income from operating
16,956,557
receivables
4. Net claims and benefits paid in the reporting period
(186,169,475)
(165,407,162)
6. Net operating costs, other than depreciation costs and change in deferred acquisition costs
(73,804,243)
(64,310,417)
7. Investment charges (excluding depreciation and financial expenses), financed from:
(8,976,974)
(2,548,323)
(8,295,656)
(2,410,065)
- other investments
(681,318)
(138,258)
8. Other operating costs excluding depreciation (other than for revaluation and without increase in provisions)
(10,595,537)
(3,463,610)
9. Corporate income tax and other taxes not included in operating costs
(1,771,818)
(1,855,823)
b) Changes in net current assets (receivables for insurance, other receivables, other assets
24,022,161
6,157,768
1. Opening less closing balance of operating receivables from direct insurance business
(730,369)
(997,948)
2. Opening less closing balance of receivables from reinsurance
(22,324,875)
(16,096,874)
3. Opening less closing balance of other receivables from (re)insurance contracts
(15,284,795)
(13,422,628)
4. Opening less closing balance of other receivables and assets
4,824,160
4,224,001
5. Opening less closing balance of deferred tax assets
659,575
2,096,428
6. Opening less closing balance of inventories
7,238
(1,735)
7. Closing less opening balance of debts/liabilities from direct insurance business
4,782,091
1,135,137
8. Closing less opening balance of debts/liabilities from reinsurance
39,109,675
43,945,148
9. Closing less opening balance of other operating debts/liabilities
(3,662,943)
(1,572,230)
10. Closing less opening liabilities (other than unearned premiums)
(570,709)
4,703,496
11. Closing less opening deferred tax liabilities
(651,280)
9,366
c) Net cash from operating activities (a + b)
30,256,486
33,193,243
B. Cash flows from investing activities
(22,606,948)
(20,416,174)
a) Cash receipts from investing activities
134,771,918
84,746,721
1. Cash receipts from interest received from investing activities and from:
11,818,037
10,014,206
- investments financed from insurance technical provisions
10,332,127
9,256,429
- other investments
1,485,910
757,776
2. Cash receipts from dividends and participations in profit of others relating to
1,008,425
442,795
- investments financed from insurance technical provisions
428,245
119,483
- other investments
580,179
323,312
5. Cash receipts from disposal of long-term financial investments, financed from:
88,286,122
48,362,600
78,364,027
42,515,073
- other investments
9,922,095
5,847,527
6. Cash receipts from disposal of short-term financial investments, financed from:
33,659,335
25,927,120
37,058,958
25,254,089
- other investments
(3,399,623)
673,031
b) Cash disbursements from investing activities
(157,378,866)
(105,162,895)
1. Cash disbursements to acquire intangible assets
(1,413,261)
(1,569,448)
2. Cash disbursements to acquire property, plant and equipment, financed from:
(2,887,168)
(13,757,152)
- other investments
(2,887,168)
(13,757,152)
3. Cash disbursements to acquire long-term financial investments, financed from:
(106,974,329)
(58,628,715)
(88,708,467)
(43,129,562)
- other investments
(18,265,862)
(15,499,152)
4. Cash disbursements to acquire short-term financial investments, financed from:
(46,104,107)
(31,207,580)
(27,994,075)
(27,647,943)
- other investments
(18,110,032)
(3,559,638)
c) Net cash from investing activities (a + b)
(22,606,948)
(20,416,174)
C. Cash receipts from financing activities
(11,002,658)
(10,002,232)
b) Cash disbursements from financing activities
(11,002,658)
(10,002,232)
1. Cash disbursements for interest paid
(2,658)
(2,232)
5. Cash disbursements to pay out dividends and other participations in profit
(11,000,000)
(10,000,000)
c) Net cash from financing activities (a + b)
(11,002,658)
(10,002,232)
Č. Closing balance of cash and cash equivalents
8.10
10,098,627
11,519,684
x) ) Cash flow for the reporting period (sum of net cash flows Ac, Bc and Cc)
(3,353,120)
2,774,837
y) Opening balance of cash and cash equivalents
8.10
13,451,747
8,744,847
100
Annual Report
for 2013
1.6
OVERVIEW OF BALANCE-SHEET PROFIT OR BALANCE-SHEET LOSS
Overview of balance-sheet profit or balance-sheet loss for 2013
in EUR
a) Net profit/(loss) for the financial year
b) Net profit carried forward (+) / net loss carried forward (-)
- result for the current year under effective standards
- reconciliation to new accounting standards
c) Decrease in reserves
č) Increase in reserves from profit under the Management Board’s
decision
- Increase in long-term business reserves
- Increase in legal reserves
- Increase in reserves for treasury shares and for own business stakes
- Increase in statutory reserves
d) Increase in other reserves under the decision of the Management
Board and of the Supervisory Board
e) Balance-sheet profit (a + b + c − č − d) allocated by the Annual
General Meeting as follows:
− to the shareholder
− to other reserves
− to be carried forward to the next year, and
− for other purposes
or
Balance-sheet loss
Note
8.11
8.11
8.11
Total
2013
13,583,099
18,464,320
18,464,320
1,352,158
Total
2012
13,178,514
17,502,079
17,502,079
-
-
-
412,587
1,216,273
32,986,990
-
29,464,320
11,000,000
-
By the time the audit of the Annual Report was completed, the Management Board did not pass any decision in relation to
the distribution of the balance-sheet profit for 2013.
101
Annual Report
for 2013
1.7
BALANCE SHEET BY SEGMENT
Balance sheet as at 31 December 2013 by segment in accordance with the Decision on the Annual Reports of
Insurance Undertakings
in EUR
Assets
F. Financial investments in subsidiaries and
associates
I. Amounts of technical provisions ceded to
reinsurers
K. Receivables
L. Other assets
A. Equity
1. Share capital
2. Capital reserves
D. Insurance technical provisions for unit-linked
insurance policyholders
E. Other provisions
F. Liabilities related to non current assets held
for sale
2. Liabilities from reinsurance and coinsurance
contracts
Life insurance
Non-life insurance
Supplemental
health
Other health
insurance
insurance
Total
362,055,019
1,145,404
606,142
1,514,510
330,337,055
3,451,498
27,152,680
2,752,991
26,809,477
35,224,086
420,126
-
1,543,869
36,765
32,705
706,902,770
4,596,902
27,152,680
3,816,023
28,356,692
110,380,627
17,629,191
25,212,089
61,315,244
6,224,102
213,925,868
21,543,080
127,878,239
30,600,616
10,759,727
58,502,533
28,015,363
-
430,114
20,856,398
10,583,675
2,010,090
6,132,040
2,130,593
-
398,454
11,159
114,450
269,501
3,345
-
21,973,193
258,535,548
57,846,472
38,096,356
126,219,317
36,373,403
213,925,868
209,820
29,497,278
6,070,490
26,042,501
86,527,550
11,317,525
10,064,093
9,322,985
918,379
688,564
26,252,320
105,903,851
23,243,104
256,095
652,824
22,517,869
1,062,962
3,712,409
362,055,019
13,043,731
11,973,787
1,697,506
(645,277)
(1)
17,715
102,563,709
534,060
94,975,222
6,591,800
462,628
41,167,053
1,607,010
32,435,963
3,828,595
4,350,446
330,337,055
67,980,397
31,025,743
2,514,276
8,723,851
(1,599,101)
22,322,684
4,992,944
161,670,370
41,562,648
117,654,432
2,453,290
741,107
1,539,544
1,913,812
35,224,086
11,480,894
6,516,274
(106,822)
5,071,442
14,876,498
8,869,098
6,006,639
760
229,815
35,606
121,959
1,543,869
683,025
93,438
7,382
253,492
328,713
434,823
350,373
0
84,419
30
41,423,147
2,259,833
38,977,767
6,291,066
10,098,627
706,902,770
93,188,047
42,999,530
4,211,782
15,333,563
(2,343,818)
22,576,176
10,410,814
279,545,399
51,316,179
94,975,222
130,337,291
2,916,708
211,832,611
200,781
2,566,030
-
-
211,832,611
2,766,811
25,499
77,182
7,106,744
5,334,173
1,064,267
85,196,657
1,181,399
929,509
4,345,461
3,341,273
1,512
395,089
336,950
27,011
1,092,790
92,887,490
6,037,334
531,629
1,240,942
27,204,763
83,893,886
121,372
11,859,334
1,004,188
3,591,725
58,140
29,419
84,425,515
2,424,641
25,562,610
*Total assets and liabilities do not equal the sum of individual funds because of the final netting of assets and liabilities
carried out at the level of total balance, i.e. in the categories of financial receivables and receivables as well as other
financial liabilities and other liabilities.
102
Annual Report
for 2013
Balance sheet as at 31 December 2012 by segment in accordance with the Decision on Annual Reports of
Insurance Undertakings – adjusted
in EUR
Assets
A. I ntangible assets
E. I nvestment properties
F. Financial investments in subsidiaries and
associates
I. Amounts of technical provisions ceded to
reinsurers
K. Receivables
2. Receivables from reinsurance and
coinsurance
L. Other assets
A. Equity
1. Share capital
2. Capital reserves
D. Insurance technical provisions for unitlinked insurance policyholders
E. Other provisions
F. Liabilities related to non current assets held
for sale
2. Liabilities from reinsurance and coinsurance
Supplemental
health
Other health
insurance
insurance
36,713,078
1,868,912
348,476
13,074
163,693
Life insurance
102,374,290
86,360
1,533,818
Non-life
insurance
312,683,108
3,614,329
24,907,189
3,329,043
28,732,826
72,869,459
18,380,620
20,668,619
28,471,320
5,348,900
24,605,609
20,995,227
146,548,774
35,271,541
10,436,589
71,471,596
29,369,048
-
432,570
21,637,595
11,597,573
2,023,395
7,392,324
624,302
-
777,975
279,588
118,177
376,917
3,293
-
21,427,797
239,411,591
63,107,111
33,246,781
107,712,157
35,345,542
24,605,609
68,239
1,250,153
607,675
23,646,242
48,721,573
11,587,330
10,478,252
9,794,456
835,174
765,330
23,714,481
58,837,537
22,754,791
18,820,955
1,482,465
16,830,823
4,023,380
8,164,526
312,683,108
73,801,267
31,025,743
2,514,276
8,311,265
(917,224)
20,103,761
12,763,447
174,671,030
46,078,029
125,841,655
2,751,346
683,796
1,898,548
1,917,637
36,713,078
6,733,412
6,516,274
217,138
16,299,718
9,855,896
6,443,330
493
69,844
36,673
42,323
1,868,912
801,965
93,438
(442)
157,644
551,324
513,936
416,902
6,688
90,325
21
18,871,302
1,713,383
15,498,061
5,927,939
11,519,684
448,173,446
86,573,342
40,338,758
2,514,276
14,920,976
(664,988)
17,499,645
11,964,675
263,206,513
56,887,017
70,011,390
133,304,515
3,003,590
50,347
230,918
361,212
565,456
1,395,198
102,374,290
5,236,698
9,313,015
35,539
(2,761,760)
(1,350,097)
71,721,828
536,191
70,004,702
929,206
251,730
-
-
Total
448,173,446
3,614,329
24,907,189
3,776,953
30,430,337
24,009,497
-
2,830,643
24,009,497
2,830,643
6,769
458,318
339,605
148,760
129,560
794,389
46,333,333
1,535,209
44,798,124
41,360
5,156,427
4,018,220
3,431,180
-
330
511,398
331,941
-
48,129
3,987,253
51,202,556
5,447,091
44,927,684
61,285
601,575
14,252,447
587,039
4,463,940
179,458
41,283
827,782
16,315,514
*Total assets and liabilities do not equal the sum of individual funds because of the final netting of assets and liabilities
carried out at the level of total balance, i.e. in the categories of financial receivables and receivables as well as other
financial liabilities and other liabilities.
103
Annual Report
for 2013
1.8
INCOME STATEMENT BY SEGMENT
Income statement for the period from 1 January 2013 to 31 December 2013 in accordance with the Decision on
Annual Reports of Insurance Undertakings
in EUR
Life insurance
55,930,837
56,836,385
(983,796)
78,247
9,854,468
IV. OTHER INCOME FROM INSURANCE
OPERATIONS, of which
9,611,253
7,116,036
V. OTHER INCOME
10,358,800
VI. NET EXPENSES FOR CLAIMS AND BENEFITS
PAID
(33,206,728)
(33,864,915)
291,520
366,667
VII. CHANGE IN OTHER TECHNICAL
PROVISIONS
3,285,636
VIII. CHANGE IN TECHNICAL PROVISIONS FOR
THE BENEFIT OF UNIT-LINKED INSURANCE
(10,604,186)
IX. CHANGES IN LIABILITIES ARISING FROM
INVESTMENT CONTRACTS
- acquisition costs
XII. EXPENSES FROM INVESTMENTS IN
ASSOCIATES, of which
- impairment losses of financial assets not measured at
fair value through profit or loss
- impairment losses of financial assets not measured at
fair value through profit or loss
XV. OTHER EXPENSES
XVIII. NET PROFIT FOR THE REPORTING
PERIOD
(17,276,723)
(5,858,153)
Supplementa
Non-life
l health
Other health
insurance
insurance
insurance
91,181,016 111,602,398
2,053,888
136,959,734 110,615,600
1,987,359
(50,387,909)
4,609,190
986,798
66,529
8,430,549
1,916,374
17,587
Total
260,768,138
306,399,078
(51,371,704)
5,740,764
20,218,978
14,468,125
14,468,125
9,191,485
420,290
21,061
24,079,378
21,584,161
19,991,636
(52,099,557)
(87,559,182)
24,969,953
10,489,672
(94,346,513)
(94,783,203)
436,691
(1,380,041)
(1,385,947)
5,905
(181,032,840)
(217,593,248)
25,261,473
11,298,935
82,092
-
6,688
3,374,417
-
-
-
(10,604,186)
-
-
-
215,964
(41,060,797)
(16,207,862)
(267)
(11,741,013)
(1,683,194)
(641,521)
(2,456)
(5,732,123)
(641,521)
(12,267,414)
(2,456)
(658,824)
(10,625)
(643,978)
(18,668,986)
(1,467,608)
(16,993,845)
(1,951,579)
(1,446,747)
3,275,811
(498,398)
(10,965,772)
(8,600,345)
(2,643,819)
(153,722)
6,255,776
(850,245)
(311,703)
(762,842)
(401,208)
(40,968)
6,025,938
(954,496)
(12,049)
(5,190)
(366)
363,078
(34,365)
(12,745,084)
(26,369,081)
(5,001,796)
(1,641,804)
15,920,603
(2,337,504)
2,777,413
5,405,531
5,071,442
328,713
13,583,099
-
(9)
(328,232)
(107,568)
-
-
215,687
(70,406,765)
(23,856,776)
(643,978)
104
Annual Report
for 2013
Income statement for the period from 1 January 2012 to 31 December 2012 in accordance with the Decision on
Annual Reports of Insurance Undertakings - adjusted
Supplemental
in EUR
Life insurance
Non-life
insurance
health
insurance
Other health
insurance
Total
12,053,172
96,743,336
104,476,794
1,973,993
215,247,295
12,347,835
149,353,242
105,431,274
2,020,950
269,153,301
(292,486)
(2,177)
(55,320,821)
2,710,915
(954,481)
(46,957)
(55,613,307)
1,707,301
7,120,364
8,889,001
1,170,924
42,374
17,222,662
565,232
100,549
12,454,487
12,454,487
-
-
13,019,718
12,555,036
IV. OTHER INCOME FROM INSURANCE OPERATIONS, of
which
V. OTHER INCOME
1,052,224
12,886,066
3,890,052
72,365
17,900,707
VI. NET EXPENSES FOR CLAIMS AND BENEFITS PAID
(10,146,183)
(49,272,507)
(90,244,592)
(1,103,364)
(150,766,647)
(10,159,974)
62,764
(92,644,074)
20,814,774
(88,837,405)
-
(1,115,021)
-
(192,756,474)
20,877,539
(48,974)
22,556,793
(1,407,187)
11,657
21,112,289
VII. CHANGE IN OTHER TECHNICAL PROVISIONS
(4,860,556)
(54,586)
-
71,688
(4,843,455)
VIII. CHANGE IN TECHNICAL PROVISIONS FOR THE
BENEFIT OF UNIT-LINKED INSURANCE POLICYHOLDERS
(2,368,928)
-
-
(2,368,928)
-
IX. CHANGES IN LIABILITIES ARISING FROM INVESTMENT
CONTRACTS
-
-
- acquisition costs
-
-
(296,952)
12
0
(2,775,799)
(44,589,949)
(12,792,575)
(278,520)
(60,436,843)
(805,698)
(17,394,192)
(1,644,199)
(14,259)
(19,858,347)
XII. EXPENSES FROM INVESTMENTS IN ASSOCIATES, of
which
Losses from capital investments in associates and joint v entures,
-
calculated using the cost method
-
Impairment losses of financial assets not measured at fair value
-
-
(2,362,519)
(2,362,519)
-
-
-
-
-
-
(296,940)
(2,362,519)
(2,362,519)
(683,902)
(4,600,628)
(63,328)
(1,670)
(5,349,529)
(131,194)
(1,316,011)
(11,892,406)
(3,881,115)
(59,685)
(131,194)
(17,149,217)
XV. OTHER EXPENSES
(249,213)
(1,932,395)
(455,986)
(47,945)
(2,685,540)
(155,414)
(218,320)
(12,753)
(10,021)
(396,507)
(1,609,602)
257,071
15,970,947
(3,553,484)
2,100,185
(537,928)
669,235
(117,911)
17,130,766
(3,952,252)
XVIII. NET PROFIT FOR THE REPORTING PERIOD
(1,352,530)
12,417,464
1,562,257
551,324
13,178,514
- impairment losses of financial assets not measured at fair v alue
.
105
Annual Report
for 2013
1.9
COMPREHENSIVE INCOME STATEMENT BY SEGMENT
The comprehensive financial statement for the period from 1 January 2013 to 31 December 2013 by segment in accordance with the Decision on Annual Reports of
Insurance Undertakings
in EUR
4. Net gain/(loss) from the re-measurement of available- for- sale financial assets
Note
8.11
8.11
Life
insurance
2,777,413
(187,902)
(232,948)
(105,685)
(127,263)
45,046
2,589,511
Non-life
insurance
5,405,531
(681,877)
(834,698)
9,400,633
(10,235,331)
152,821
4,723,654
Supplemental
health
Other health
insurance
insurance
5,071,442
328,713
(323,961)
7,824
(387,279)
9,420
(1,030,989)
16,217
643,710
(6,797)
63,318
(1,596)
4,747,482
336,538
Total
13,583,099
(1,185,915)
(1,445,504)
8,280,176
(9,725,681)
259,589
12,397,184
The comprehensive financial statements for the period from 1 January 2012 to 31 December 2012 by segment in accordance with the Decision on Annual Reports
of Insurance Undertakings
Non-life
insurance
12,417,464
Supplement
al health
insurance
1,562,257
Other
health
insurance
551,324
Total
13,178,514
in EUR
Note
Life
insurance
(1,352,530)
8.11
1,003,212
1,587,545
192,711
20,740
2,804,209
4. Net gain/(loss) from the re-measurement of available-for-sale financial assets
8.11
1,251,900
96,988
2,039,037
3,450,922
227,964
231,795
25,951
25,951
3,544,852
3,805,656
1,154,912
(1,411,885)
(3,831)
0
(260,804)
(248,688)
(349,318)
(451,491)
14,005,009
(35,253)
1,754,968
106
(5,211)
(740,643)
572,064 15,982,723
Annual Report
for 2013
Notes to the financial Statements for 2013
2. GENERAL PROFILE
The insurance company Adriatic Slovenica d.d. is a public limited company with registered office in Koper, Ljubljanska
cesta 3a, Slovenia. The Company is entered in the Companies Register kept by the Court Register of the Koper District
Court, entry number 1/015555/00.
The insurance company Adriatic Slovenica d.d. (parent) together with the subsidiaries AS neživotno osiguranje a.d.o.,
PROSPERA družba za izterjavo d.o.o. (hereinafter: PROSPERA d.o.o.) and VIZ zavarovalno zastopništvo d.o.o.
(hereinafter: VIZ d.o.o.) forms the Adriatic Slovenica Group for which the parent, in addition to separate financial
statements and the annual report, also prepares the consolidated financial statements and explanatory notes to the
consolidated financial statements for the year ended 31 December 2013. The separate financial statements and notes,
which refer only to the insurance company Adriatic Slovenica d. d., are set forth below. The consolidated financial
statements can be obtained at the head office of the insurance company Adriatic Slovenica and can be accessed at the
company website.
The insurance company Adriatic Slovenica zavarovalna družba d. d. is not listed on a stock exchange and its shares are
not traded in a regulated capital market.
The Adriatic Slovenica Group is included in the consolidated financial statements of the controlling company KD Group
d.d.and those consolidated financial statements are available for inspection at the registered office of KD Group d. d. at
Dunajska cesta 63, 1000 Ljubljana, Slovenija. The controlling company which prepares the consolidated annual report for
the broadest group of the related companies is KD d.d. at Dunajska cesta 63, 1000 Ljubljana, Slovenija, The consolidated
financial statements of the KD Group d.d. have been drawn up in line with the International Financial Reporting Standards
(hereinafter: the IFRS). Consolidated annual reports are available at the registered seat of the companies.
Management and supervisory bodies
Management Board of Adriatic Slovenica d.d. in 2013:
Gabrijel Škof, President of the Management Board
Willem Jacob Westerlaken, Member of the Management Board
Matej Cergolj, Member of the Management Board until 30 November 2013
From 1 December to 31 December 2013. Adriatic Slovenica was led by the two-member Management Board. In 2013, the
Supervisory Body appointed new Management Borad members, Varja Dolenc and Matija Šenk, commencing their term of
office once they have acquired the licence of the Insurance Supervision Agency. Varja Dolenc took office on 13 January
2014 and Matija Šenk on 30 January 2014
The Supervisory Board in 2013
Matjaž Gantar, Chairman
Aljoša Tomaž, Member
Sergej Racman, Member
Tomaž Butina, Member
Aleksander Sekavčnik, Member
Viljem Kopše, Member – employee representative
Matjaž Pavlin, Member – employee representative
Ljuba Miljušević, Member – employee representative
The Audit Committee in 2013
Matjaž Gantar, Chairman
Polona Pergar Guzej, Member (independent expert)
Milena Georgievski, Member (independent expert)
Mojca Kek, Member (independent expert)
Matjaž Pavlin, Member
107
Annual Report
for 2013
The shareholders of the Company as at 31 December 2013
Shareholder structure
KD Group d. d.
Total
Number of shares Share
100.00%
100.00%
The insurance company Adriatic Slovenica d.d. provides services in two main insurance business segments, that is in nonlife and life insurance. The non-life insurance comprises non-life insurance products excluding health, and health insurance.
These insurance groups are further divided as follows:
Non-life insurance products, excluding health insurance
⋅ motor liability insurance,
⋅ land motor vehicle insurance,
⋅ accident insurance,
⋅ fire and natural disaster insurance,
⋅ other damage to property insurance,
⋅ general liability insurance,
⋅ credit and suretyship insurance,
⋅ international travel medical insurance with emergency assistance,
- other non-life insurance.
Life insurance products
⋅
⋅
⋅
mixed and risk life insurance,
life insurance contracts with discretionary participation features (DPF),
voluntary supplemental pension insurance.
Health insurance:
⋅
⋅
supplemental health insurance,
parallel and additional insurance.
The insurance company is also registered for the following activities:
⋅
pension funds.
As at the end of the reporting period, Adriatic Slovenica provided insurance services in nine business units (area branches)
located in all regional centres od Slovenia, four branches, 42 representative offices and the contracted distribution network
of its insurance agencies with as many as 121 points-of-sale and the network of 164 points-of-sale (outlets) within the
framework of its complementary distribution channels – a total of 340 points-of-sale.
As at 31 December 2013, the Company had 1,050 employees.
Data on the number of employees by the level of professional qualification in 2013
Number of employees as
at
1 January 2013
31 December 2013
Average for 2013
I.- IV.
39
31
34
V.
432
418
413
Qualification level
VI.
VII.
VIII.-IX.
165
362
19
171
401
29
169
369
22
Total
1,017
1,050
1,007
The number of employees at the end of the year under review and the number of employees as at the first day of the next
year are not equal since some employees were employed in the company until 31 December and some are employed
starting on 1 January.
108
Annual Report
for 2013
3. NOTES TO THE FINANCIAL STATEMENTS
3.1
BASIS OF PREPARATION
The annual report and accounts (management overview and financial review) prepared by Adriatic Slovenica zavarovalna
družba d. d. for the financial year 2013 have been prepared in accordance with the International Financial Reporting
Standards (IFRS), as adopted by the European Union’s regulation, in accordance with the Council Directive on the annual
accounts and consolidated accounts of insurance undertakings (91/674/EEC) and in accordance with the provisions of the
national legislation, the Slovene Companies Act (ZGD-1) and its amendments. Furthermore, the annual report and
accounts have been prepared using the national secondary legislation, the Decision on Annual Reports and Quarterly
Financial Statements of Insurance Undertakings -SKL 2009, issued by the Insurance Supervision Agency (Official Gazette
of the Republic of Slovenia Nos. 119/2007, 47/2009, 99/2010 and 47/2011). The annual accounts have been prepared
under the going concern assumption. Secondary legislation issued on the basis of the Insurance Act (hereinafter: the
ZZavar) significant for the drawing up of accounting information includes also the Decision on the Detailed Method of
Valuing Accounting Items and the Drawing up of Financial Statements (Official Gazette of the Republic of Slovenia Nos.
95/2002, 30/2003 and 128/2006).
The reporting period of the Company is equal to the calendar year.
3.1.1
Statement of Compliance
In the current financial year, the Company has observed all new and revised standards and interpretations issued by the
International Accounting Standards Board -IASB and its competent committee (International Financial Reporting
Interpretations Committee - IFRIC of the IASB) effective for the periods commencing 1 January 2013 as adopted by the
European Union.
The abbreviations used in the text have the following meaning:
IFRS – International Financial Reporting Standards,
IAS – International Accounting Standards,
IFRIC –Interpretations to the International Financial Reporting Standards issued by the competent committee of the Board
for IFRS, and
SIC - standards interpretations issued by the Standards Interpretations Committee.
Adoption of the new and amendments to the published IFRSs
The standards shown below, as well as the amendments and interpretations to the standards already published, are
binding for the Company’s accounting period starting on 1 January 2014 or also for subsequent periods.
The insurance company Adriatic Slovenica d.d. has not implemented any standard or interpretation still not effective and
designated to enter into force in the future. .
In accordance with the requirements laid down in International Financial Reporting Standards and by the EU,
companies will have to observe for the future periods the following amended and modified standards and
interpretations:
⋅
IFRS 11 Joint Arrangements. This standard replaces IAS 31 Interests in Joint Ventures. IFRS 11 does not
introduce any major changes to the overall definition of a joint arrangement which is subject to joint control, but the
definition of control and, indirectly, joint control is changed due to IFRS 10. .
⋅
⋅
The new standard determines two forms of joint arrangements, each with its own accounting
model:
a joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the
arrangement.
109
Annual Report
for 2013
⋅
a joint venture is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.
IFRS 11 carves out, from IAS 31 Jointly controlled entities, those cases in which, although there is a separate
vehicle, that separation is ineffective in certain ways. These arrangements are treated similarly to jointly controlled
assets/operations under IAS 31 and are now called joint operation. Furthermore, the remainder of IAS 31 jointly
controlled entities, now called joint ventures, are stripped of the free choice of using the equity method or
proportionate consolidation; joint venturers must now always use the equity method in consolidated financial
statements. The standard is applicable to annual reporting periods beginning on or after 1 January 2014;
retrospective application is required and transitional provisions apply. The Company assesses that IFRS 11 will
not significantly affect financial statements as the Company is not a party in any joint arrangements.
⋅
IFRS 12 Disclosure of Interests in Other Entities. This standard requires additional disclosures about significant
judgments and assumptions associated with an entity's interests in another entity or arrangement, interests in
subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is applicable to
annual reporting periods beginning on 1 or after January 2014; retrospective application is required and
transitional provisions apply. Early application is permitted. .
⋅
IAS 27 (2011) Separate Financial Statements; the existing disclosure requirements for separate financial
statements were transferred from IAS 27 (2008) to IAS 27 (2011) with minor instructions for application. The
amended IAS 27 (2011) includes also the existing requirements for separate financial statements from IAS 28
(2008) and IAS 31. The standard no longer defines the principle of control and the requirement for the preparation
of consolidated financial statements, included in IFRS 10 Consolidated Financial Statements. The Company
assesses that IAS 27 (2011) will not significantly affect financial statements because accounting policies remain
unchanged. The standard is applicable to annual reporting periods beginning on or after 1 January 2014; early
application is permitted only if IFRS 10, IFRS 11, IFRS 12 and IAS 28 (2011) are applied early.
⋅
IAS 28 (2011) Investments in Associates and Joint Ventures Amendments to the IAS 28 (2008) include:
Associates and Joint Ventures held for sale. IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations outlines how to account for an investment, or portion of investment, in
an associate or joint venture, which meets the criteria to be classified as held for sale. Any
remaining portion which is retained and not classified as available for sale, is accounted for using
the equity method until the time of disposal, at which time the retained investment is accounted
for using the equity method, provided the retained interest continues to be an associate or joint
venture.
⋅ Changes in ownership interests in an associate or joint venture. Until now, IAS 28 (2008) and
IAS 31 have determined that in the event of a disposal of significant influence or joint control, a
new measurement of retained interests is required in all cases even if the significant interest was
transferred to the joint venture. The amended IAS 28 (2011) determines that in such cases new
measurements of retained investment interests are not required.
The amendments are applicable to annual reporting periods beginning on or after 1 January 2014; retrospective
application is required. Early application is permitted only if IFRS 10, IFRS 11, IFRS 12 and IAS 27 (2011) are
applied early.
⋅
⋅
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities. These amendments do not
introduce any new requirements for offsetting financial assets and financial liabilities, but clarify the offsetting
criteria and address the resulting inconsistencies. They specify that an entity has a legally enforceable right to
offset a financial asset and a financial liability when:
⋅ the right is not subject to the occurrence of a future event, and
⋅ the right is legally enforceable only in the normal context of operation or in the case of nonpayment or in the case of insolvency or bankruptcy of one or all counterparties.
The standard is applicable to annual reporting periods beginning on or after 1 January 2014; retrospective
application is required. Early application is permitted but is subject to disclosures in accordance with the amended
110
Annual Report
for 2013
ISFR 7 Disclosures – Offsetting Financial Assets and Financial Liabilities. The Company assesses that these
amendments will not significantly affect financial statements because it does not engage in offseting financial
assets and financial liabilities or conclude framework offset agreements.
⋅
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities; these amendments provide an exception to
the consolidation requirements in IFRS 10 and require investment entities to measure their investments in
controlling entities – and investments in associates and jointly-controlled entities – at fair value through profit or
loss, rather than consolidate them. The exception to consolidation is mandatory (i.e. not optional), whereby
subsidiaries which are treated as part of the investment entity’s investment activities are still required to be
included in consolidation. An entity qualifies as an investment entity when it meets all the main criteria. In
accordance with these criteria, an investment entity is the entity which:
obtains funds from one or more investors for the purpose of providing investment management
services to this investor or investors;
⋅ commits to its investor(s) that its business purpose is investing funds solely for returns from longterm investment appreciation, investment income, or both, and
⋅ measures and evaluates the performance of substantially all of its investments on a fair basis
value.
The amendments require certain disclosures to be made by investment entities and are applicable to annual
reporting periods beginning on or after 1 January 2014; early application is permitted but is subject to transitional
provisions.
Amendments to IAS 36 – Recoverable Amount Disclosures for Non-Financial Assets; these amendments
require an entity to disclose the recoverable amount of an individual asset (including goodwill) or a cashgenerating unit for which the entity has recognised or reversed an impairment loss during the reporting period. The
entity must disclose the following information about the fair value less costs of disposal of an individual asset
(including goodwill) or a cash-generating unit for which the entity has recognised or reversed an impairment loss
during the reporting period:
⋅ the level of the fair value hierarchy (IFRS 13) within which the fair value measurement of the
asset (cash-generating unit) is categorised in its entirety;
⋅ fair value measurements that are categorised within Levels 2 and 3 of the fair value hierarchy,
the valuation technique(s) used for measuring; if here has been a change in the valuation
technique, the entity must reveal the change and the reason(s) for making it;
⋅ fair value measurements that are categorised within Levels 2 and 3 of the fair value hierarchy,
description of all the key assumptions used in the measurement (i.e. those assumptions to which
the recoverable amount is most sensitive) on which determination of fair value less costs of
disposal is based. An entity shall also disclose the discount rate(s) used in the present and
previous measurements if fair value less costs of disposal is measured using a present value
technique.
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014; retrospective
application is required. Early application is permitted. An entity shall not apply those amendments in periods
(including comparative periods) in which it does not also apply IFRS 13. The Company assesses that the initial
application of the amendments may affect the disclosures in financial statements.
⋅
⋅
⋅
Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting; the amendments
permit the continuation of hedge accounting in situations where derivatives designated in hedging relationships
are novated from a counterparty to a central counterparty in compliance with the law or regulations when the
following conditions are met:
⋅ if the novation is a consequence of laws or regulations;
⋅ where the clearing counterparty replaces the original counterparty to become the new
counterparty of the derivative;
⋅ if the changes to the original derivative are limited to the changes directly attributable to the
change in the counterparty.
111
Annual Report
for 2013
The amendments are applicable to annual reporting periods beginning on or after 1 January 2014; retrospective
application is required. Early application is permitted. An entity shall not apply those amendments in periods
(including comparative periods) in which it does not also apply IFRS 13. The Company assesses that the
amendments will not significantly affect financial statements as it does not account for hedge accounting.
Before the application date of amendments, the Company cannot prepare the analysis of their impact on financial
statements and operation.
3.2
3.2.1
TRANSLATION FROM FOREIGN CURRENCIES
Functional and presentation currency
The consolidated financial statements are presented in euros, which is the Company's functional and presentation
currency. All financial statement disclosures are also presented in euros. Due to rounding of amounts, differences may be
present in sums of certain items.
3.2.2
Foreign currency transactions and accounts of foreign entities
Foreign currency transactions and balances are translated into the functional currency using the reference rate of the
European Central Bank (ECB) applicable at the date of financial statements. Translation results are recognised in the
income statement as net gains or losses arising from foreign exchange differences
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies into the
functional currency are recognised in the income statement .
If the transaction is recognised in equity, exchange differences from the conversion to the functional currency are
recognised in other comprehensive income Exchange differences arising in respect of investments of the parent company
in the capital of subsidiaries abroad are recognised directly in equity and are recognised in the income statement only on
disposal of the investments.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate applicable at the date of transaction, while non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rate applicable at the date when the fair value was determined.
In the context of changes in the fair value of monetary securities denominated in foreign currency classified as available for
sale, translation differences resulting from changes in the amortised cost of the security and other changes in the carrying
amount of the security are accounted for separately. Translation differences related to changes in the amortised cost are
recognised in profit or loss.
Translation differences on non-monetary financial assets and liabilities, measured at fair value through profit or loss, are
reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets, classified as
available for sale, are included in the revaluation surplus, together with the effect of fair value measurement in other
comprehensive income.
3.3
CHANGES IN ACCOUNTING POLICIES AND ADJUSTMENTS
In 2013, the Company changed the accounting policies regarding the treatment of net expenses for claims and treatment of
liabilities arising from financial contracts. The changes in accounting policies had not impact in terms of reduced or
increased income statement. Changes in both the profit and loss account and the balance sheet are reflected in changes of
individual categories due to reclassification of accounting items. A detailed description and effects of changes on financial
statements are given below.
112
Annual Report
for 2013
Net expenses for claims and benefits paid
In 2013, the Company started to recognise "income from gross subrogated receivables" in the net expenses for claims and
benefits paid, because these revenues do not represent actual revenues arising from the Company’s business, but
represent the Company’s right to payment under the title of subrogation and arise when the insurer establishes a
subrogated receivable against the insuree or the debtor in the amount of the already paid benefit. In terms of contents
these are expenses for claims which are initially charged to the Company which, after obtaining subrogation, transfers them
to a third party, recognising them in statements as income from gross subrogated receivables which reduces expenses for
claims. Since 2013, this kind of revenues have been recognised within net expenses for claims. The change did not affect
the final profit and loss account of the Company. Reclassification of items affected the amount of reported net claims.
In the preparation of financial statements, part of the operating expenses, which according to the functional division include
the cost of liquidation, are transferred to net expenses for claims. At the end of 2013, the cumulative effect of transferred
expenses which also include part of other operating expenses amounted to EUR 6,162,300. In the disclosures under
Chapter 8.20, the Company discloses expenses by natural types and by functional groups as a whole. The change did not
affect the Company’s final profit and loss. Reclassification of items affected the amount of reported net expenses for claims.
Other changes
The Company eliminated the offset for 2012 in other income and other insurance expenses in the amount of EUR
12,363,315. The income from the reversal of impairment of receivables and other net insurance expenses, which the
Company increased in 2013 by eliminating the offset for 2012, incurred in 2012 from the sale of receivables to the
subsidiary Prospera. The correction of error did not affect the final profit or loss.
Impact of changes in accounting policies on the income statement items
in EUR
I . NET PREMI UM INCOME
I II . I NCOME FROM INVESTMENTS
2012
215,247,295
17,222,662
I V. OTHER I NCOME FROM INSURANCE OPERATI ONS, of which
V. OTHER INCOME
VI. NET EXPENSES FOR CLAIMS AND BENEFI TS PAID
VII . CHANGE IN OTHER TECHNI CAL PROVI SIONS
VII I. CHANGE IN TECHNI CAL PROVISIONS FOR THE BENEFI T OF
UNIT-LI NKED I NSURANCE POLICYHOLDERS
I X. CHANGES IN LI ABI LI TIES ARI SING FROM INVESTMENT
CONTRACTS
X. EXPENSES FOR BONUSES AND DI SCOUNTS
XI. OPERATING EXPENSES
XII . EXPENSES FROM INVESTMENTS IN ASSOCIATES
XII I. EXPENSES I NVESTMENTS
XV. OTHER EXPENSES
XVII . CORPORATE INCOME TAX
XVII I. NET PROFI T FOR THE REPORTI NG PERI OD
13,019,718
10,843,774
(149,568,639)
(191,591,082)
20,877,539
21,144,904
(4,518,168)
(2,368,928)
(357,901)
(296,940)
(66,908,616)
(2,362,519)
(5,349,529)
(4,785,903)
(2,685,540)
17,130,766
(3,952,252)
13,178,514
Reclassification
of items
2012 adjusted
215,247,295
(104,029)
17,118,633
(5,302,815)
(1,218,904)
(1,186,289)
(32,615)
(325,286)
357,901
6,471,774
(5,359)
5,359
121,359
(0)
(0)
13,019,718
5,540,959
(150,787,543)
(192,777,371)
20,877,539
21,112,289
(4,843,455)
(2,368,928)
(296,940)
(60,436,843)
(2,367,878)
(5,344,171)
(4,785,903)
(2,564,180)
17,130,766
(3,952,252)
13,178,514
Changes in liabilities arising from insurance contracts
Until 2013, the Company's balance sheet showed assets and liabilities arising from financial contracts separately from
insurance contracts, while in the income statement the premiums, claims, income and expenses arising from financial
contracts were calculated and recognised in the same manner as in life insurance contracts, because all the Company's
financial contracts are long-term and contain the option of discretionary participation, which means that the policyholders
have the right to participate in the positive result or to participate in the generated surplus over the guaranteed yield in the
management of funds relating to financial contracts. In 2013, the Company changed its accounting policy regarding the
recognition of assets and liabilities arising from financial contracts with DPF by transferring them among the liabilites from
insurance contracts, since these are financial contracts with DPF which the insurer, in accordance with international
accounting standards, may classify within insurance contracts and account for in the same manner as insurance contracts.
113
Annual Report
for 2013
Voluntary supplemental pension insurance under the PN-A01 pension plan and annuity contracts with determined periods
for premium and benefit payments were classified in this group. The change did not affect the Company’s profit or loss
brought forward. Reclassification of items affected the amounts of reported assets and liabilities arising from insurance
contracts.
Impact of changes in accounting policies on the balance sheet items
in EUR
Assets
F. Financial investments in subsidiaries and associates
K. Receivables
L. Other assets
A. Equity
D. Insurance technical provisions for unit-linked insurance policyholders
E. Other provisions
F. Liabilities related to non current assets held for sale
31 Dec 2012
448,173,446
3,614,329
24,907,189
3,776,953
30,430,337
21,427,797
220,127,114
24,605,609
23,714,481
19,284,477
58,837,537
5,927,939
11,519,684
448,173,446
86,573,342
243,908,785
Reclassification
of items
19,284,477
(19,284,477)
19,297,728
31 Dec 2012
adjusted
448,173,446
3,614,329
24,907,189
3,776,953
30,430,337
21,427,797
239,411,591
24,605,609
23,714,481
58,837,537
5,927,939
11,519,684
448,173,446
86,573,342
263,206,513
24,010,618
2,830,643
48,129
19,296,607
3,987,253
51,202,556
16,315,514
(1,121)
(19,296,607)
-
24,009,497
2,830,643
48,129
3,987,253
51,202,556
16,315,514
In addition to these changes, changes in determining corporate income tax also had an impact on financial statements:
-
3.4
The calculations of income tax expense in Slovenia for 2013 took into account the Act Amending the Corporate
Income Tax Act (hereinafter: the ZDDPO-2J), which came into effect in 2014 and determines the corporate income
tax at the (fixed) 17% rate. In Slovenia, the tax rate was calculated at 17% of the tax base for 2013. Based on the
amended act, the Company applied the 17% rate to the calculation of deferred taxes in Slovenia and accounted
for the effects of the change in the rate from 16% to 17%.
REPORTING BY SEGMENT
The business areas of the Company are individual segments, integral parts of the insurance company, dealing with groups
of related products or services, and are subject to risk and yield that differ from the risk and yield in other business
segments. The Company operates in three main areas, monitored by the management: non-life insurance, health insurance
and life insurance business.
Nevertheless, the Company presents the financial statements segmented into the following lines of business: life insurance,
non-life insurance, supplementary health insurance and other health insurance in conformity with the regulatory
requirement the Insurance Supervision Agency has laid down in the Decision on Annual Reports and Quarterly Financial
Statements of Insurance Undertakings - SKL 2009, and separately presents long schemes of financial statements which
114
Annual Report
for 2013
form enclosure to the financial section of the annual report in conformity with the same decision of the Insurance
Supervision Agency.
3.5
INSURANCE CONTRACTS
In compliance with IFRS 4, the Company classified all its products under insurance contracts. An insurance contract is a
contract with significant insurance risk.
A significant insurance risk is defined as the possibility of having to pay significant additional benefits on the occurrence of
an insured event. A significant additional benefit is defined as the difference between the benefits payable on the
occurrence of an insured event and the benefits payable if the insured event did not occur. The significance of additional
benefits is assessed by comparing the maximum difference between the economic value of the payment in the event of the
occurrence of an insured event and the payment in the remaining cases. As a general guideline, the Company defines 10%
as the limit value for the existence of a significant insurance risk.
Part of insurance contracts held by the Company as of 31 December 2013 in its portfolio includes the option of
discretionary participation in the positive result (hereinafter: DPF). Participation in the positive result is defined in the
general terms and conditions for life insurance and in the specific Rules. Obligations arising from DPF are fully recognised
within mathematical provisions.
According to IFRS 4, the discretionary participation is a contractual right to additional benefits supplementary to guaranteed
benefits, namely:
- benefits which are likely to represent a significant share of the total contract benefits;
- benefits whose amount or time frame is specified by the insurer; and
- benefits which are contractually based on:
⋅
⋅
⋅
3.5.1
- the success of a given category of contracts or certain types of contracts;
realised and/or unrealised investment returns on a specified pool of assets held by the issuer, or
the profit of the company, long-term business fund or other entity that issues the contract.
Insurance contracts
The insurance contracts issued by the Company can be classified according to their characteristics into four main groups:
⋅ non-life insurance contracts
⋅ health insurance contracts
⋅ life insurance contracts and
⋅ unit-linked life insurance contracts where investment risk is assumed by the insured.
This class includes accident (casualty) insurance, insurance of land motor vehicles, fire and other damage or loss
insurance, liability insurance, financial loss insurance, goods in transit (transport) insurance, credit insurance and suretyship
insurance and insurance of assistance, as well as insurance of legal expenses and litigations costs. This mainly involves
short-term insurance contracts, with the exception of credit insurance.
In all of the above contracts premiums are written when they become payable by the policyholder. Premiums contain all
costs in addition to premiums, including the agency fee, except taxes. The part of the premiums from valid insurance
contracts which refers to unexpired insurance coverage on the balance sheet date, is presented as unearned premium
reserve and represents a liability of the insurance company. Accrued premiums less changes in unearned premium
reserves are recognised as income.
The amounts of claims (expenses) are recognised when claims as the assessed obligations are incurred. Claims that have
not been finally settled, i.e. paid by the balance-sheet date, are recognised as provision for outstanding claims. The benefits
paid, increased by the amount of change in provision for outstanding claims, are recognised as costs/expenses.
115
Annual Report
for 2013
The Company provides three out of four types of voluntary health insurance in accordance with the provisions laid down in
the Health Care and Health Insurance Act (hereinafter: the ZZVZZ), specifically supplementary health insurance, additional
health insurance and parallel health insurance.
The Company issues long-term insurance contracts based on monthly or annual premiums.
Premiums, benefits paid, revenues and expenses are calculated and recognised in accounting records in the same manner
as for non-life insurance contracts.
The insurance companies offering supplementary health insurance are included in equalisation schemes under the Health
Care and Health Insurance Act (the ZZVZZ), which offset the differences in the medical costs between different structures
of the insured with individual insurance companies with regard to age and gender. The insurance company is a payer under
the equalisation scheme and recognises these expenses as expenses for claims and benefits paid.
Long-duration life insurance contracts include in particular: mixed life insurance which offers coverage in the event of
maturity and the event of death during the term of the insurance, mixed life insurance with extended coverage for critical
illnesses, life insurance for the event of death (either lifelong or for a specified period of time or decreasing term), life
insurance in the event of death by cancer disease and lifelong annuity insurance. Some types of life insurance can be
bundled with extra accident insurance, extra critical illness insurance and other extra insurance. The Company also carries
in this group voluntary supplementary pension insurance under the PN-A01 pension plan and annuity contracts with
determined periods for premium and benefit payments. Premiums, benefits paid, revenues and expenses are calculated
and recognised in accounting records in the same manner as for non-life insurance contracts.
A mathematical provision is calculated in these contracts by the Company. It is recognised in the amount of the present
value of estimated future liabilities based on active insurance contracts, decreased by the present value of the estimated
future premiums payments. These liabilities are determined on the basis of assumptions on mortality, reversal of payments,
costs and revenues from investments as they are recognised in the products' premium calculations, or safer assumptions
are used to provide for the possibility of unfavourable deviation from expectations (safety margin). Changes in
mathematical provisions are recognised as an expense of the Company.
Unit-linked life insurance contracts where policyholders bear the investment risk
Long-term unit-linked life insurance where policyholders bear the investment risk combine savings in mutual funds,
investment funds or internal long-term business funds selected by the insured, and life insurance in case of the insured
person's death with the guaranteed payment of the insurance sum.
Premiums are recognised as revenue when paid. Initiation (front-end) and administrative expenses are deducted from the
paid-in premiums. Depending on the insurance product, the insured is charged a monthly management fee, risk premiums
for the event of death and in some products also the premium for extra accident insurance. In some products, the risk
premium is charged on the premium paid.
Liabilities arising from such contracts are recognised at a fair value. Liabilities arising from long-term insurance contracts
where policyholders bear the investment risk include liabilities incurred by the insurer towards its policyholders in
accordance with individual insurance contracts and products.
Liabilities are increased by premiums and reduced by costs. In addition, the amount of liabilities takes into account the
changes in asset unit value and are reduced by management fees and risk premiums. In the case of redemption, the
liabilities are reduced and the redemption value equals the Company's liabilities, reduced by redemption charges in the
event of redemption or upon termination of insurance.
In individual life insurance contracts in which the policyholders bear the investment risk, total liabilities as at the balance
sheet date equal the sum of unit values as at the balance sheet date and not evaluated net premiums paid. Depending on
the insurance product, the liabilities are increased for any advances paid.
116
Annual Report
for 2013
It is assumed that in each time period risk premiums charged in relation to the expected population mortality are sufficient
to cover the claims of entitlements in the event of death in excess of the unit values on individual personal accounts of
insurees. Additional liabilities are therefore not recognised in terms of these claims, except for individual products in which
the risk premium is calculated in a different way.
An insurance contract in which the policyholder bears the investment risk is a contract with the built-in link between the
contractual payments and the units of internal or external investment fund chosen by the insured. This built-in link is
consistent with the definition of an insurance contract and therefore not stated separately from the main insurance contract.
3.5.2
Reinsurance contracts
The contracts concluded between the Company and the reinsurers that entitle the Company to reimbursement of damages
arising under one or more insurance contracts issued by the Company, and meeting the criteria set out in the insurance
contracts, are classified as reinsurance contracts.
117
Annual Report
for 2013
4.
CHANGES IN THE SYSTEM OF OPERATIONS OF THE ADRIATIC SLOVENICA GROUP
For the Group, the year 2013 was marked by the merger of insurance activities of two subsidiaries within the KD Group
under a single insurance company. This represents the first step towards implementing the goal of an insurance holding
that would be very responsive to the demanding market situation. Insurance is on its way to become the core activity of the
KD Group, supplemented by high quality asset management, and the insurance company Adriatic Slovenica being the key
company of the Group.
The first step towards achieving this goal was the strategic decision that Adriatic Slovenica d.d. as a composite insurance
company would take over the life insurance business from KD Življenje d.d. in order to lay a solid foundation for effective
operations and growth as well as to raise the quality and modernise products, services and sales channels. The merger of
the two insurance companies was carried out in the form of spin-off by acquisition – a procedure which changed the legal
status of both companies, whereby the acquiring company (Adriatic Slovenica) acquired the spun-off assets of the
transferring company (KD Življenje).
Before the spin-off by acquisition, KD Življenje, zavarovalnica d.d. was a public limited company, registered at Celovška
cesta 206 in Ljubljana, Slovenia.
The shareholders of the company were as follows:
⋅
KD Group d.d. holding 90.1% of share capital or 1,563,010 shares and
Adriatic Slovenica d.d. holding 9.9% of share capital or 171,740 shares.
Prior to the spin-off, the insurance company KD Življenje was approved for carrying out the following insurance activities:
-
life insurance pursuant to Article 2(2)(19) of the Insurance Act,
life insurance linked to units of investment funds or to units of funds covering mathematical provisions pursuant to
Article 2(2)(21) of the Insurance Act and
additional insurance based on Article 14(13) of the Insurance Act.
By taking over the life insurance business, the insurance company Adriatic Slovenica d.d. took over the spun-off assets of
the insurance company KD Življenje d.d., i.e. the life insurance portfolio (all valid insurance contracts) as well as all assets
and liabilities, including the legal relations directly linked to the insurance portfolio or the life insurance business of KD
Življenje. When this procedure was concluded, the remaining part of the transferring company started performing other
activities as a new legal entity under the name of KD IT d.o.o. The company ceased performing insurance activities for
which the Insurance Supervision Agency originally issued the licence to KD Življenje d.d.
The landmark date in this procedure of spin-off by acquisition was 18 March 2013 when the Management Boards of the two
insurance companies concluded a Contract on Spin-off by Acquisition. This triggered the merger procedure. Once the
contract was concluded, the intended spin-off by acquisition was examined by the Supervisory Boards of the two insurance
companies on 20 March 2013 and at the General Meetings of the two insurance companies on 21 March 2013 the
shareholders approved the concluded Contract on Spin-off by Acquisition and simultaneously adopted the changed
Memorandum and Articles of Association of the two insurance companies. On 17 September 2013, the Insurance
Supervision Agency issued a decision approving the spin-off procedure. Formally, the procedure was completed with the
entry of the spin-off by acquisition into the Court Register on 1 October 2013.
The acquiring company neither paid for the assets and liabilities of the transferring company nor disclosed any liabilities in
that respect.
Integration of the spun-off assets and adjustment of accounting policies
Upon acquiring assets and business, the acquiring company (Adriatic Slovenica) integrated the acquired business in its
financial statements on 1 January 2013 and, consequently, adjusted the accounting policies applied to the acquired
business with the accounting policies applied by the acquiring company.
118
Annual Report
for 2013
The table below shows the financial position of Adriatic Slovenica prior to the performed procedure of spin-off by
acquisition, the spun-off assets of KD Življenje, all changes in capital, and the adjustments of accounting policies upon the
integration of the spun-off assets, as well as the final new financial position of Adriatic Slovenica as at 1 January 2013.
Opening balance sheet of the Adriatic Slovenica Group following the acquisition of the spun-off assest as at 1
January 2013
in EUR
Assets
A.Intangible assets
B.Property, plant and equipment
C.Non-current assets held for sale
D.Deferred tax assets
E.Investment properties
F.Financial investments in subsidiaries and associates
G.Financial investments
1. In loans and deposits
H.Unit-linked investments of policyholders
K.Receivables
L. Other assets
M.Cash and cash equivalents
A. Equity
I Equity
1. Share capital
2. Capital reserves
4. Translation differences
II. Minority interest
B.Subordinated liabilities
C.Technical provisions
D.Technical provisions for the benefit of unit-linked insurance
policyholders
E.Other
provisions
F.Liabilities related to non-current assets held for trading
G.Deferred tax liabilities
H.Liabilities from investment contracts
2. Liabilities from reinsurance and coinsurance contracts
K.Other liabilities
Opening
balance of
KDŽ as at 1
Jan 2013 after Total balance
Final
adjustment of after spin-off by Adjustment of
opening
the capital
acquisition as
accounting balance as at
transfer
at 1 Jan 2013
policies
1 Jan 2013
222,694,272
670,867,718
800,706 671,668,424
1,681,509
5,295,839
5,295,839
366,499
25,273,688
25,273,688
391,785
4,168,737
4,168,737
30,430,337
30,430,337
21,427,797
21,427,797
33,665,179
253,792,294
253,792,294
6,348,644
65,089,659
65,089,659
6,127,774
32,769,890
32,769,890
18,462,909
119,303,721
119,303,721
2,725,852
36,629,023
36,629,023
176,806,098
201,411,707
201,411,707
168,287
23,882,767
23,882,767
19,284,477
19,284,477
3,102,880
61,940,418
800,706
62,741,124
650,554
23,405,345
800,706
24,206,051
155,101
19,026,403
19,026,403
1,713,383
1,713,383
2,297,225
17,795,287
17,795,287
1,480,723
7,408,662
7,408,662
5,031,312
16,550,996
16,550,996
222,694,272
670,867,718
800,706 671,668,424
5,217,522
91,790,863
91,790,863
40,338,758
40,338,758
2,660,772
5,175,047
5,175,047
3,049,664
17,970,640
17,970,640
(664,988)
(664,988)
17,499,645
17,499,645
(492,914)
11,471,760
11,471,760
243,908,785
243,908,785
56,852,287
56,852,287
Opening
balance of AS
as at 1 Jan
2013
448,173,446
3,614,329
24,907,189
3,776,953
30,430,337
21,427,797
220,127,114
58,741,015
26,642,116
100,840,813
33,903,171
24,605,609
23,714,481
19,284,477
58,837,537
22,754,791
18,871,302
1,713,383
15,498,061
5,927,939
11,519,684
448,173,446
86,573,342
40,338,758
2,514,276
14,920,976
(664,988)
17,499,645
11,964,675
243,908,785
56,852,287
Opening
balance of
KDŽ as at 1
Jan 2013
221,262,516
249,754
366,499
391,785
35,724,384
6,348,644
6,127,774
20,522,114
2,725,852
176,806,098
168,287
1,043,675
650,554
155,101
238,020
1,480,723
5,031,312
221,262,516
5,844,971
50,782,129
133,270,779
3,003,590
34,574,311
46,642
34,574,311
46,642
50,782,129
167,845,090
3,050,231
24,010,618
27,980,496
27,980,496
2,830,643
6,085,441
6,085,441
-
461,733
48,129
19,296,607
6,337,886
(492,914)
-
-
50,782,129
167,845,090
3,050,231
51,991,114
-
51,991,114
8,916,083
-
8,916,083
461,733
461,733
-
177,730,463
204,044
177,730,463
204,044
177,778,592
19,500,651
3,987,253
-
-
3,987,253
-
3,987,253
51,202,556
0
0
51,202,556
-
51,202,556
(511,534)
-
461,733
177,267,058
19,500,651
5,447,091
-
-
5,447,091
-
5,447,091
44,927,684
827,782
16,315,514
45,036,107
827,782
15,926,575
23,060
1,586,243
1,152,510
388,155
45,578
1,299,425
23,060
1,586,243
1,152,510
388,155
45,578
3,358,630
44,950,744
2,414,025
17,468,024
45,424,262
873,360
19,285,205
1,312,240
44,950,744
2,414,025
17,468,024
45,424,262
873,360
20,597,445
Significant adjustment differences arise from the changed method of accounting for unit-linked life insurance premium
income. KD Življenje accounted for such income on the basis of written premium, whereas the acquiring company, Adriatic
Slovenica, does so on the basis of premium income. The impact of accounting policies adjustment on income recognition is
disclosed in the balance sheet, where deferred income increased by a portion of the amount of decrease in life insurance
119
Annual Report
for 2013
premium income (i.e. EUR 1,312,240). Total value adjustments of receivables (i.e. EUR 800,706) arising from acquired
unit-linked life insurance policies were on the other hand reversed by the acquiring company (Adriatic Slovenica). As a
result of a decrease in mathematical provisions due to the transfer of outstanding premium to deferred income, and an
adjustment of mathematical provisions due to the reversal of the adjustments of receivables, the total mathematical
provisions decreased by EUR 511,534. The reversal of value adjustments, in accordance with the adjustment of accounting
policies following the acquisition of the spun-off assets of KD Življenje d.d., had no impact on the change in profit/loss in the
consolidated financial statements of the Adriatic Slovenica Group for 2012. The adjustment of accounting policies is
disclosed in the opening balance sheet.
Adjustment of accounting policies
In the integration procedure of the spun-off assets of KD Življenje, no significant changes were made in the accounting
estimates of the amounts that had been reported in the preceding financial year, with the exception of a decrease in
mathematical provisions for life insurance. As at 31 December 2012, Adriatic Slovenica namely formed additional
provisions of EUR 4,162,964 under insurance class 19 due to the adequacy test of technical provisions which is normally
carried out at the level of individual classes of insurance. After the integration of the life insurance portfolio of KD Življenje in
2013, however, the spun-off products fell under insurance class 19. Consequently, the adequacy test for the cumulative
portfolio of life insurance no longer showed a deficit in liability reserves, since the positive adequacy test results of the KD
Življenje portfolio were weighed against the negative adequacy test results of the Adriatic Slovenica. For that reason, the
provision of EUR 4,162,964 additionally formed at 31 December 2012 could be reversed at 31 December 2013.
Fair value of the acquired assets and liabilities
In the process of acquiring the spun-off assets, Adriatic Slovenica acquired assets and assumed liabilities from the
transferring company at carrying amounts. The acquiring company discloses the total acquired assets in the life insurance
segment.
Changes in equity
Before the acquisition, the registered share capital of the acquiring company amounted to EUR 40,338,758 and was divided
into 9,666,780 ordinary registered shares with a nominal value of EUR 4.17 each.
As a result of the spin-off by acquisition, the equity and share capital of the acquiring company increased by EUR
5,217,522. Excluding the effect of revaluation surplus, the capital increased by EUR 5,710,436, of which the amount of
EUR 2,660,772 was allocated to the share capital of the acquiring company whilst the remaining amount of the share
premium in the amount of EUR 3,049,664 was allocated to capital reserves in the life insurance segment.
In the transfer of share capital to the acquiring company, the capital of the acquiring company decreased for its investment
share of EUR 627,450, that is from EUR 6,337,886 to EUR 5,710, 436.
The share capital of the Company after the acquisition totals EUR 42,999,530 and is divided into 10,304,407 ordinary
registered shares, all of the same class, with a nominal value of EUR 4.17 each. All shares are fully subscribed and paid in.
On 1 October 2013, the spin-off by acquisition was entered into the Companies Register and on that basis Adriatic
Slovenica d.d. entered into all legal relationships arising from the concluded insurance contracts of KD Življenje, The
transfer of equity took place on 1 January 2013.
The initial set of activities related to the spin-off by acquisition was concluded with the entry into the Companies Register.
The Group expects to fully recover all acquired receivables and undertakes to pay the total of assumed liabilities.
The cost of activities related to the spin-off by acquisition procedure reached EUR 12,480 by 30 September 2013. Adriatic
Slovenica d.d incurred no expenses in the acquisition of new shares and capital increase. The capital was fully paid in.
120
Annual Report
for 2013
Impact of acquisition on operating performance in 2013
Income statement for the period from 1 January 2013 to 31 December 2013
KD Življenje transferred after the
spin-off
in thousands EUR
Gross written premium
Premiums ceded to reinsurers and co-insurers
Net premium income
Gross claims settled
Reinsurers’/co-insurers’ shares
Net claims incurred
Change in other insurance technical provisions and changes in liabilities from
Change in other insurance technical provisions for unit-linked insurance
Acquisition costs
Other operating expenses
Net profit from investments
Drugi prihodki /odhodki
Profit/loss before tax
Taxes
Net profit for the reporting period
Adriatic Slovenica
44,912,612
(678,966)
62
44,233,708
306,399,078
(51,371,704)
5,740,764
260,768,138
(23,945,249)
243,735
460,263
(23,241,252)
(217,593,248)
25,261,473
11,298,935
(181,032,840)
412,405
(8,745,283)
(4,670,059)
(7,402,746)
837,134
972,725
2,396,630
(375,171)
2,021,459
3,590,104
(10,604,186)
(23,856,776)
(46,549,988)
906,014
12,700,137
15,920,603
(2,337,504)
13,583,099
After having acquired a part of the assets of KD Življenje d.d., Adriatic Slovenica successfully concluded its 2013 business
operation with EUR 13,583,099 net profit and EUR 15,920,603 profit before tax. Due to the acquisition of the spun-off
assets of the sister insurance company KD Življenje, the result of the insurance company before tax was higher by EUR
2,396,630 and the net profit for the reporting period by EUR 2,021,459 . Gross written premiums amounted to EUR
306.399.078 of which EUR 44.912.612 resulted from the assets acquired from the insurance company KD Življenje.
121
Annual Report
for 2013
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used for the preparation of the annual financial statements are presented below. These
accounting policies were consistently applied to the financial statements for 2013.
5.1
INTANGIBLE ASSETS
The Company measures intangible assets after initial recognition using the cost model, i.e. at cost less any accumulated
depreciation and accumulated impairment losses.
The annual depreciation rates are determined according to the useful life of an individual intangible asset. Depreciation is
calculated on a straight-line basis. The depreciation of intangible assets is calculated individually at following depreciation
rates:
Depreciation rates and useful lives of intangible assets:
Name of intangible asset by amortisation groups
Annual rate of
amortisation 2013
Investments in third party intangible assets
Other material rights
Computer software
Other intangible assets
20%
10%
20%
10%
Useful life in 2013
in years
5
10
5
10
The expected useful lives of all intangible assets are finally determined by the Company. The designated useful lives for all
these intangible assets are reviewed once a year. If the expected useful life of the assets differs from the previous
estimates, the depreciation period (depreciation rate) is changed. The change is treated as a change in accounting
estimates.
The revaluation of all significant intangible assets is carried out provided that their carrying amount exceeds their
recoverable amount. An assessment is performed for all assets whose individual purchase price exceeds EUR 50,000. The
determined impairment amount (the asset's carrying amount that exceeds its recoverable amount) is recognised in the
income statement as loss due to impairment if the impairment amount exceeds the asset's carrying amount by more than
20%.
The Company derecognises intangible assets when it does not expect to gain any future economic benefits from their use
or disposal. Gains or losses arising from derecognition of an intangible asset are recognised as a difference between the
net disposal proceeds and the carrying amount of the assets and are recognised in the income statement as revaluation
income or revaluation expense.
5.2
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are classified according to their nature as property (owner-occupied buildings and land
serving insurance activities) and equipment, which are further divided in subcategories on the basis of their purpose. An
item of property, plant and equipment is recognised at the time of its acquisition. At initial recognition, an item of property,
plant and equipment that qualifies for recognition as an asset is stated at cost, which means at purchase price less
accumulated depreciation and accumulated impairment losses. The cost of an item includes its purchase price and all costs
directly attributable to bringing the asset to condition necessary for it to be capable of operating. As part of property, plant
and equipment, after the asset is capable for operating, the costs incurred to replace parts of property, plant and equipment
that help prolong the useful life of the asset are accounted for as well as the costs which increase future economic benefits
from its use compared to previously anticipated benefits (modernisation costs, enhancement costs, costs increasing the
capability of the fixed asset).
In the event of changed circumstances, which affect the estimated useful life of an item of property, plant and equipment,
the effects of such changes in the useful life are recognised in the income statement.
122
Annual Report
for 2013
The annual depreciation rates are determined according to the useful life of an individual item of property, plant and
equipment. The applied useful life is the management's best estimate based on the expected physical usage and technical
and economical ageing of an individual asset. Depreciation is calculated and charged on a straight-line basis over an
asset’s estimated useful life. Calculating and charging depreciation starts when assets are available for use, i.e. on the first
day of the next month.
Depreciation rates and useful lives of property, plant and equipment:
Property, plant and equipment by depreciation groups
Annual rate of
amortisation 2013
Buildings
Motor vehicles
Computer equipment
Office equipment
Other equipment (furniture, fittings & fixtures)
1,3 -1,8 %
12,5-15,5 %
33,3 %-50%
10 -25 %
10 -25 %
Useful life in 2013
in years
56-77
06-Aug
03-Feb
04-Oct
04-Oct
Real property is valued every two years, when the circumstances in which the Company operates significantly change or
when real property prices significantly fall in the area where they are located. If the Company determines that the fair value
(recoverable or replacement value) of the real property is more than 20% below its carrying amount, the real property is
impaired to recoverable value. The written-down carrying amount is a decrease or a loss due to revaluation and it is treated
as operating expenditure.
The carrying amount of an item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use annually as at the balance sheet date. The gain or loss arising from the
derecognition of an item of property, plant and equipment is determined as the difference between the net disposal
proceeds, if any, and the carrying amount of the item, whilst disposal costs are recognised in profit or loss as revaluation
surplus or revaluation expenditure.
5.3
INVESTMENT PROPERTIES
Investment properties (land and buildings) are assets held by the Company with the purpose to earn long-term rental
income or to generate long-term returns on long-term business funds and/or assets backing liabilities. If real property is
classified as investment properties, the management takes into account the purpose of that real property.
Investment properties (land and buildings) are measured initially at their cost, including transaction costs and any directly
attributable expenditure. Subsequently, they are measured at cost less any accumulated depreciation and any accumulated
impairment losses. The straight-line method is used to calculate depreciation.
Depreciation rates and useful lives of investment properties:
Annual rate of
amortisation 2013
Buildings
1,3 -1,8 %
Useful life in 2013
in years
56-77
Due to potential impairments, the fair value of investment properties is checked by accredited independent appraisers
qualified to perform valuation of real property. For new real property, its purchase price is considered its fair value.
Impairment of investment properties to their recoverable value is recognised if it is determined that their fair value
(replacement cost) is below their carrying amount, under the same conditions as they are applied to real property classified
as property, plant and equipment. Fair values of the Company’s investment properties are evaluated by an accredited,
independent appraiser duly qualified to perform valuation of real property by applying an adequate model for the valuation
of real property.
Land and buildings, which the Company intends to sell in near future and whose carrying amount will be settled mainly
through sale rather than further use, are classified under non-current assets held for sale.
123
Annual Report
for 2013
Gains or losses arising from derecognition or disposal of an item of investment property are recognised in the income
statement through financial income or expenses.
Rental/lease income from investment property is charged on the basis of issued contracts. Rental income, which refers to
the investment property, is stated in the financial statements among other revenues.
5.4
5.4.1
FINANCIAL INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
Subsidiaries
Subsidiaries are the companies in which the Company as the controlling entity directly or indirectly holds more than 50% of
voting rights. Regardless of the nature of its participation in a company, the Company particularly assesses whether it
controls that company and determines whether the company is a controlling company or a subsidiary.
The Company’s investment in its subsidiary is accounted for in separate financial statements using the cost method of
accounting which means that the investment is stated at cost less impairment losses. Any needs for impairment are
determined at the end of the financial year based on assessed value of subsidiaries or year-on-year if there are any
indications of impairment.
Dividends earned in subsidiaries are recognised in the income statement when their payment is approved.
5.4.2
Associates
The Company accounts for its investment in an associated company provided that it has significant influence, but not
control over it. Generally that is when the Company directly or indirectly holds between 20% and 50% of equity in that
company.
After initial recognition, the Company measures its investment in an associate at the cost of acquisition and if there is an
indication that an investment in an associate may be impaired, annually tests the market value of the investment for
impairment.
5.5
FINANCIAL INVESTMENTS
Financial investments are an integral part of the financial instruments of the Company, and they are financial assets held by
the Company for the purpose of using them to cover future liabilities arising from insurance and investment contracts and
any losses associated with risk arising from insurance contracts. Financial investments are recognised by transaction date
and upon sale by derecognition date.
Types of financial assets
After initial recognition depending on the purpose for which the investment was acquired, financial assets as classified as:
⋅ loans, deposits and receivables,
⋅ held-to-maturity financial assets,
⋅ available-for-sale financial assets,
⋅ financial assets measured at fair value through profit or loss.
5.5.1
Loans, deposits and receivables
Loans, deposits and receivables are financial assets with fixed or determinable payment amounts and dates that are not
quoted in an active market other than those that the Company intends to sell immediately or in the near term and those that
the Company upon initial recognition designates as financial assets measured at fair value through profit or loss and
available-for-sale financial assets. Loans and receivables are carried at amortised cost using the effective interest method.
Interest calculated using the effective interest method is recognised in the income statement.
124
Annual Report
for 2013
5.5.2
Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed
maturities, which the Company has the positive intention and ability to hold until maturity.
These investments are initially recognised at cost and after initial measurement, held-to-maturity financial assets are
measured at amortised cost, using the effective interest method.
The fair value of the long-term securities from this group of financial assets may be lower than their carrying amount for a
period of time without resulting in an impairment loss on the investment, except in the case of default risk.
Interest calculated using the effective interest method is recognised in the income statement.
5.5.3
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either classified as available-for-sale (AFS)
and are not classified in any of the other categories.
Financial assets are initially recognised at fair value or at transaction cost, assessing the need for impairment (if a security
is not quoted in an active market), including all transaction costs. The interest on debt securities related to the available-forsale financial assets is calculated using the effective interest rate method and recognised through profit or loss. Financial
assets designated as available-for-sale are recognised on the transaction date.
Changes in the fair value of securities classified as available-for-sale are recognised in relation to the contents of the
occurrence of changes in fair value. The exchange differences on debt securities are recognized in the income statement,
and other changes (e.g. change in market price) are recognized directly in other comprehensive income. For equity
securities, all changes in fair value are recognized in other comprehensive income. In the sale or impairment of availablefor-sale securities, the cumulative adjustment in other comprehensive income is removed and the effects are reported in the
income statement.
5.5.4
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss are further divided into two subcategories:
⋅
financial assets held for trading where financial assets have been acquired by the Company for the purpose of
selling them in the near future (within less than 12 months), or if these assets form part of a portfolio, of which
purchases and sales have the intention to generate short-term gain, or if they were so classified by the
management, and
⋅
financial assets designated at fair value through profit or loss at initial recognition when such designation would
significantly reduce measurement inconsistencies, which would arise if derivatives were held for trading and the
basic financial instruments were measured at amortised cost for loans and advances to banks and other entities,
or issued debt securities. This subcategory also includes investments such as capital investments, managed and
measured at fair value in accordance with the endorsed risk management or investment strategy and reporting to
key management on this basis, recognised at fair value through profit or loss.
Financial assets classified as assets measured at fair value through profit or loss are recognised initially at fair value, and
costs of acquisition are recognised in the income statement. Gains or losses arising from changes in the fair value of these
financial assets are included in the income statement during the period in which they incur.
5.5.5
Fair value
Financial assets at initial recognition and available-for-sale financial assets are carried at fair value. Loans, deposits,
receivables and held-to-maturity financial assets are stated at amortised cost using the effective interest method, reduced
by impairments.
Fair value is reported if it is reliably measurable. For listed financial asset instruments which have a price in an active
market, fair value is determined as the product of the units of financial assets and the quoted market price.
125
Annual Report
for 2013
In case there is no active market for the relevant financial instruments, various methods of assessing fair value of a
financial instrument may be used. The valuation methods involve using the last transaction between knowledgeable, willing
parties, if available; comparison with the current fair value of another instrument bearing significantly similar characteristics;
and studying discounted cash flows. In case there is no valuation model, the financial assets, for which there is no active
market and whose fair value cannot be reliably measured, are measured at cost and the need for impairment is assessed.
5.5.6
Impairment of financial assets
Assets carried at amortised cost
At each balance sheet date it is assessed whether there is any objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are recognised only if
there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of
financial assets, and that loss event (events) has an impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated. Objective evidence that a financial asset or group of financial
assets is impaired includes observable data that comes to the attention of the holder of the asset about the following
events:
⋅
⋅
⋅
⋅
⋅
⋅
significant financial difficulty of the issuer or borrower;
a breach of contract, such as a default or delayed payment of interest or principal amount;
when it is becoming probable that the borrower will enter bankruptcy or other form of financial reorganization;
when the data indicates that there is a measurable decrease in the future cash flows from a group of financial
assets since the initial recognition of those assets, although the decrease cannot yet be identified with individual
financial assets of the Company, including:
adverse changes in the payment status of the Company's borrowers, or
national or local economic conditions that correlate with defaults on the Company’s assets.
The Company first assesses whether objective evidence of impairment exists for financial assets that are individually or
collectively significant for financial assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, the assets are included in a group of financial assets with
similar credit risk characteristics and collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.
If there is objective evidence that an impairment loss has been incurred on loans and receivables or held-to-maturity
financial assets carried at amortised cost, the amount of the loss incurred due to impairment is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred), discounted at the financial asset’s original effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income
statement as revaluatory financial expense. If a loan or held-to-maturity investment has a variable interest rate, the current
effective interest rate determined in the contract is used for discounting cash flows and measuring any impairment loss.
Impairment may also be measured on the basis of an instrument’s fair value using an observable market price.
To the extent that a loan is uncollectible, it is written off against the related provisions for loan impairment. Loans are
considered uncollectible once all necessary collection procedures have been carried out and the amount of the loss has
been determined. Subsequent recoveries of amounts previously written off decrease the expenses for loan impairment,
recognised in the income statement.
Where at later periods impairment losses for debt securities are decreased and the decrease can be related objectively to
an event occurring after the impairment was recognised in the income statement (e.g. improved credit rating of the
borrower), such impairment losses are reversed by adjusting the adequate income statement items where the amount of
the reversal is recognised.
126
Annual Report
for 2013
Assets measured at fair value
The Company checks at each balance sheet date for any objective evidence of impairment of financial investments or
groups of financial investments classified as available-for-sale, for which it is assessed whether the decline in fair value is
significant or prolonged and, consequently, whether the assets are overvalued. In the assessment of a long-lasting
decrease in fair value below the original cost of equity securities, the period taken into account is no more than 9 months
from the day when the fair value of capital instruments fell below the original cost for the first time and remained below it for
the entire period of 9 months, whereas for the assessment of a significant decrease in fair value the Company’s
management considers at least a 40% decrease in fair value compared to the acquisition cost.
If there are signs of impairment in held-for-sale financial assets, the cumulative loss measured on the basis of the
difference between the estimated costs and the current fair value, less impairment losses of the asset previously
recognised in the income statement, are recognised, and the impairment is also recognised in the income statement.
Reversal of impairment
If in a subsequent period, the amount of an impairment loss decreases and provided that the decrease can be related
objectively to an event occurring after the impairment was recognised, the entity reverses the previously recognised
impairment loss by stating a new amount in the value adjustment account. The reversal does not result in a carrying
amount of the financial asset exceeding what the amortised cost would have been. The amount of the reversal of
impairment for losses is recognised in the income statement, provided it refers to debt securities. For equity securities
carried as available-for-sale financial assets, the reversal of impairment through the income statement is not allowed.
5.6
ASSETS IN THE UNIT-LINKED FUND
Due to their nature, unit-linked assets are disclosed separately, measured at fair value and classified as financial assets at
fair value through profit or loss upon initial recognition. Financial assets at fair value through profit or loss also include
policy-based loans from unit-linked insurance, which represent financial instruments. These are disclosed as fund units and
carried at the value of the fund units of the unit-linked assets on the basis of which the respective loans were given.
The value of the units of assets of the unit-linked long-term business fund is calculated on the balance sheet date by
multiplying the number of units of assets held in the individual investment or mutual fund by the redemption net asset value
per unit of the fund on that day. Financial investments for unit-linked insurance contracts are revalued on a monthly basis.
5.7
REINSURERS' SHARE OF INSURANCE TECHNICAL PROVISIONS
The benefits to which the Company is entitled under its reinsurance contracts are recognised as reinsurance assets. These
assets consist of short-term balances due from reinsurers, as well as long-term receivables that are dependent on the
expected claims and benefits arising under the related reinsurance contracts.
The amounts of these reinsurance assets are determined based on estimated losses or reinsurance loss reserves under
the reinsurance contracts, taking into account the shares in unearned premiums.
Reinsurance asset recognition is derecognised when the rights from reinsurance contracts expire or are transferred to a
third party.
5.8
5.8.1
RECEIVABLES
Recognition of receivables
At initial recognition, receivables are recognised at historical cost on the basis of the issued insurance policy, invoice or
other authentic document and later on reduced for impairment due to adjustments of receivables.
Receivables are classified by insurance class and by their nature, i.e. the basis, to receivables arising from direct insurance
contracts, receivables arising from reinsurance/coinsurance contracts, subrogated receivables, tax receivables and other
receivables.
127
Annual Report
for 2013
Subrogated receivables
The Company asserts a subrogated claim against a policyholder or a debtor in the amount of the indemnity payment in
accordance with the provisions of the insurance contract, when the indemnification, i.e. benefit, is calculated, for which it
obtained adequate legal basis (subrogated receivables). Paid subrogated claims are recognised as insurance income and
reduce expenses for claims.
Subrogated receivables are carried separately, as exercised and unexercised, whereas the unexercised subrogated claims
are kept as off-balance sheet items and no impairment is formed. The only exception is subrogated claims under credit
insurance that become exercised immediately after inception.
Impairment of receivables
At each reporting date (at least on a quarterly basis), the Company reviews whether the estimate of a receivable’s fair value
or recoverable value is adequate, or it prepares an estimate of the recoverable amount on the basis of the actual realised
cash flows over the last observed time period for an individual class of receivables. Where it is not to be expected that
claims will be fully settled, the Company has set up indicators for impairment (uncollectability) of receivables, which trigger
the calculation of the impairment charge against the Company's current financial result.
Based on the estimated fair value, i.e. recoverable (collectible) amount of a receivable, adequate adjustments of
receivables are made on an individual or collective basis, even though every receivable is assessed separately.
Adjustments of receivables are made on the basis of the approved methodology.
The fair value, i.e. the recoverable (collectible) amount of receivables is assessed and adequate impairment of an individual
receivable is formed if the aggregate carrying amount of all past-due premium payments of a particular insured person, i.e.
policyholder, on the valuation date amounts to EUR 50,000 or more.
Any other receivable may be impaired on indivudal baisis that would otherwise be subject to revaluation in the framework of
collective value adjustment.
Receivables for which impairment is not assessed individually are classified in groups having similar characteristics of
credit risk. For each group, adjustment of an individual receivable is determined in relation to maturities (duration) and
actually (un)realised percentage of payments made during the previous period for a particular group.
In the case of receivables due from policyholders in the life insurance segment, the Company abides by the provisions laid
down in the Code of Obligations and general terms and conditions of life insurance contracts. When a policyholder defaults
under the contractually determined payment schedule for three instalments, the need to write-down the past-due
instalments is recognised. The past-due amounts are impaired in the whole amount (100%), since the probability that
payments will never be made or that such insurance coverage will be capitalised is high. Accordingly, adjustments of
receivables are reversed.
As regards receivables for unit-linked life insurance contracts, no impairment is recognised since revenues are
recognised when premiums are paid.
Impairment losses on subrogation receivables are recognised on collective basis, whereby collective impairment is formed
separately for the secured (mortgage-based) and unsecured receivables. The impairment is made at the percentage
equalling the percenatege of receivables failed to be recovered in the previous accounting period. For all subrogated claims
above EUR 10,000, due to the increased default risks, the impairment for a loss is made individually. The percentage of the
impairment for an individual subrogated receivable is determined again at the beginning of a following financial year only if
the average level of their collectability is changed significantly. Accrued and unpaid interest charged on subrogation
transactions accounted for as accounts receivable are impaired at the same percentage as subrogation receivables.
Receivables arising from subrogation costs that are past due by 30 days are impaired at the same percentage as
subrogation receivables. For the purpose of assessment and impairment formation, forfaited receivables are treated as
subrogation receivables.
128
Annual Report
for 2013
5.9
OTHER ASSETS
Among other assets are classified inventories, deferred acquisition costs and short-term deferred costs (expenses) and
accrued revenues for the cases where the payment of the rendered services refers to a later period.
Inventories
As inventories are recognised office supplies and consumables, salvaged parts of insured assets, insured items recovered
after a successful investigation of a theft and tangible assets acquired in subrogated procedures against defaulting
policyholders. The Company carries the inventory of materials and consumables at hand and the goods in transit. At initial
recognition, inventories are measured at cost, which is composed of the purchase price and direct acquisition costs. In the
valuation of inventory of materials, the insurance company uses the weighted average cost method. The value of the
inventory of items taken over under the subrogation proceedings is equal to the subrogated claim to which the items under
consideration refer.
The recoverable value of inventory is assessed on an annual basis – if the carrying amount of inventory is higher than its
recoverable amount, the inventory is written off to recoverable amount through profit and loss.
Deferred acquisition costs
Unearned premiums in the entire amount are recognised, in amounts as they arise from the maturity structure of the
amounts under insurance contracts as at the balance sheet date. The portion of already realised expenses under
acquisition costs in relation to the calculated amounts that relate to reporting periods after the balance sheet date are
recognised in the full amount as a special item of deferred expenses under the asset items in the balance sheet. Deferred
acquisition costs are presented on the basis of the calculated share of gross costs for underwriting fees and commissions in
gross insurance premiums and gross unearned insurance premiums for every individual insurance class.
5.10
CASH AND CASH EQUIVALENTS
Cash and balances held on the accounts with banks and other financial institutions are treated separately for monetary
assets denominated in local currency and separately for monetary assets denominated in foreign currencies, which have to
be broken down into monetary assets available immediately and those placed as deposits redeemable at notice (demand
deposits). Cash of the Company only consists of cash, while cash equivalents include demand deposits serving to ensure
short-term liquidity and short-term deposits placed with maturity up to 3 months.
Revaluation of monetary assets is performed only for the monetary assets denominated in foreign currencies, if after initial
recognition the exchange rate of the foreign currency against the euro is changed. The foreign exchange difference is
recognised as an ordinary financial expense or financial revenue.
5.11
OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Assets and liabilities are offset in the balance sheet when there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle on a net basis, namely to realise the asset and settle the liability simultaneously.
At the beginning of the period, receivables and payables arising from internal relationships (between individual long-term
business funds or general ledgers) are separately presented in financial statements. At the end of the reporting period, the
long-term business fund or own funds are offset in the general ledger, and the balance is presented as receivables or
payables, which are offset, i.e. balanced, in the cumulative balance sheet.
5.12
EQUITY
The Company as a composite insurance undertaking presents the share capital and other components of capital separately
by insurance class. The starting point for the share split has been determined so as to ensure capital adequacy separately
in non-life insurance and life insurance operations.
129
Annual Report
for 2013
Share capital
Share capital is defined with the amounts invested by the owners and with amounts that have been generated through
operations and that belong to the owners. The share capital of Adriatic Slovenica is the nominal value of the called-up and
fully paid ordinary no-par value shares denominated in euros.
Capital reserves
Capital reserves (capital surplus) carry the share premium – paid up surplus capital and the amount generated by the
elimination of the general capital revaluation adjustment. Capital reserves can be used in accordance with the Companies
Act which strictly defines the terms of use of capital reserves for covering net loss of the period, net loss carried forward or
increase of equity using the Company's assets.
Reserves from profit
Reserves from profit are divided to contingency reserves, legal and statutory reserves, treasury share reserve and other
reserves from profit. Reserves from profit are formed pursuant to the Companies Act (ZGD-1), legislation governing
insurance for establishing legal reserves and on the basis of the decision adopted by the Management Board and endorsed
by the Supervisory Board according to the needs for achieving and preserving an appropriate level of capital adequacy
(other reserves from retained earnings).
Within the framework of other reserves from profit, reserves for catastrophic losses and equalisation provisions are formed
in accordance with the Insurance Act (ZZavar). Equalisation provisions are created through net profit in accordance with a
decision passed by the Management Board, i.e. by means of a direct increase of a net loss for the financial year. These
provisions are presented in the statement of changes in shareholder equity. The Company complies with the provisions of
IFRS and recognises equalisation provisions and carries them as a segregated component of the Company’s equity, as
also set out in the Decision on Annual Reports and Quarterly Financial Statements of Insurance Undertakings – SKL 2009
(including the amendment published in the Official Gazette of the Republic of Slovenia No. 99/2010) This component of
equity is accounted for under the assets backing liabilities, which have to be covered by investments.
Furthermore, within the framework of equity capital, half of the profits generated by supplementary health insurance,
determined in accordance with the Health Care and Health Insurance Act (ZZVZZ-H) and the decision passed by the
Insurance Supervision Agency (Decision on detailed instructions for accounting and disclosure of accounting events
relating to the implementation of equalisation scheme for supplementary health insurance) is recognised as an indivisible
statutory reserve from profit.
In the event of regulatory changes, the reserves from profit established until then are adequately reallocated within the
framework of the balance sheet items.
Revaluation surplus
Revaluation surplus is recognised on the basis of revaluation of assets performed in the course of the year in a particular
reporting period. Under the revaluation surplus, the revaluation adjustment in relation to movement in and valuation of
available-for-sale financial assets at fair value are recognised. The revaluation surplus amount in the income statement is
adjusted by the deferred tax amount.
Retained earnings and net profit or loss for the financial year
Retained earnings are composed of the net profit brought forward from previous years, net profit or loss for the financial
year and net profit for the current year. Net profit for the financial year is recognised as net profit brought forward once the
decision to distribute profit for the financial year is adopted and the amounts for the settlement of previous losses, the
amounts for reserves and the appropriations of shareholders are allocated.
130
Annual Report
for 2013
5.13
INSURANCE TECHNICAL PROVISIONS
The Company must establish appropriate insurance technical provisions for liabilities arising from its business. The purpose
of insurance technical provisions is to cover future liabilities arising from insurance and any losses due to risks arising from
insurance contracts. Insurance technical provisions are established in accordance with the Insurance Act (ZZavar), the
Decision on detailed rules and minimum standards to be applied in the calculation of technical provisions, and the Rules on
the formation of technical provisions.
Gross insurance technical provisions and insurance technical provisions for received co-insurance are recognised as
liabilities. The reinsured and co-insured liabilities are reported under the Company’s assets.
Unearned premiums
Unearned premiums are formed in the amount of the portion of written premiums, which refers to the insurance coverage
for the insurance period after the end of the reporting period, for which the provision is calculated.
Unearned premium provisions are calculated for each individual insurance policy, which had valid coverage on the final
date of the reporting period. They are also calculated for policies, which become valid after the date of the transfer if a
premium was charged before the date of the transfer. In the deferral of charged premium, three different procedures are
followed depending on whether the insured sum is equally distributed across the term of the policy or if it is increasing or
decreasing:
⋅
⋅
⋅
equally distributed insured sum – for the majority of insurance classes,
increasing insured sum – for building and construction insurance (other damage to property insurance),
decreasing insured sum – for credit insurance.
Mathematical provisions for life insurance contracts
Mathematical provisions are established in the amount of the present value of estimated future obligations of the Company
arising from issued insurance contracts, less the estimated present value of future premiums to be paid on the basis of
those insurance contracts. The Zillmer amount for an individual contract does not exceed 3.5% of the sum insured.
Liabilities for every contract are greater than or equal to zero.
For mixed life insurance contracts and life insurance contracts against the risk of death, the future liabilities reflect the
payout of agreed insured sums with allocated surpluses in the event of maturity or payout of agreed insured sums with
added surpluses in the event of death.
Mathematical provisions for annuity contracts for a limited time are calculated using a prospective net Zillmer method. They
are recognised in the amount of the current value of estimated future payments of agreed annuities (with allocated
surpluses), including expenses for annuity payment less the estimated present value of future premiums to be paid on the
basis of those insurance contracts.
Mathematical provisions for pension insurance are calculated as a product of the value per unit of the long-term business
fund and the number of units held as at the day of calculation. The calculation is made for each policy separately, thus
covering the guaranteed liability to policyholders. An additional provision is formed for surplus returns over the guaranteed
return (for the allocation of regular and final bonuses). Revaluation reserve of available-for-sale financial assets of longterm business fund of additional pension insurance is also recognised in mathematical provisions. Provisions arising from
guaranteed premium factors for the calculation of additional old-age pension are formed in the amount of current value of
future benefits, which the policyholders can decide to accept upon exercising the right to receive additional old-age
pension. These provisions are recognised within the framework of mathematical provision for life insurance long-term
business fund.
In annuity insurance, future liabilities of the Company (whole life annuity, whole life annuity with guaranteed payouts until
the insured person is 78 years old, or guaranteed payout for the period of 10 years) are payments of the agreed annuities,
including attributed surpluses and annuity payment costs.
131
Annual Report
for 2013
Future liabilities of the insurer are future premiums agreed in the contract.
Once a year (at the end of the year), the amount of profit attributable to the holders of participating policies (the DPF
portion) is determined. Mathematical provisions are increased by the amount attributed to eligible policyholders.
The surplus attributed to an individual mixed life insurance policy is considered to represent a one-off premium for the
remaining insurance period and it is calculated in an additional insured sum (additional annuity in annuity insurance), which
is guaranteed. An additional insured sum is paid out in the event death or endowment. For some insurance products,
prompt payment of allocated surplus is possible, while for some insurance products the surplus is allocated to the policy as
additional assets in the policyholder’s account.
Unit-linked life insurance contracts
Mathematical provision for unit-linked life insurance represents the value of assets held on the insured person’s policy. The
total value of liabilities arising from insurance contracts is the sum of units of an individual fund multiplied by the net asset
value per unit of the fund. The aggregate provision for liability is further increased by the amount of the portion of the paid
premium, which is allocated to the purchase of units of the fund (there is a time delay between the payment of the premium
and purchase order and the actual transfer of the purchased units to the insured's personal account). Depending on the
insurance product, provisions are increased by any paid out advances.
Mathematical provisions for health insurance contracts (additional and parallel health insurance)
A mathematical provision is formed for long-term products, for which similar probability tables and calculations are applied
as for life insurance products. Mathematical provisions are allocated in the present amount of estimated future liabilities
based on concluded insurance contracts, less the present value of future policyholder’s premiums arising from those
contracts. A prospective net Zillmer method is applied. Liabilities for every contract are greater than or equal to zero.
Claims provisions
Claims provisions are established in the amount of the estimated liabilities which the Company is obliged to pay on the
basis of insurance contracts, where an insurance event occurs before the end of the reporting period, and specifically
regardless whether the insurance event has already been reported, including all costs charged to the insurer on the basis of
these contracts are.
No method of discounting the claims provisions is applied, except for claims and benefits paid from liability insurance, which
are paid out as annuities.
The calculation of claims provisions is divided into two parts based on the nature of the loss file:
- for claims reported but not settled by the end of the accounting period, an individual account of all relevant loss
files is taken and the value of expected payouts is estimated;
-
for claims incurred but not reported by the end of the accounting period (hereinafter IBNR claims – claims incurred
but not reported), the estimated ultimate cost of payouts is calculated on the basis of statistical information on
similar cases in the past.
The calculation of IBNR claims was carried out on the basis of insurance classes using different methods: the modified
statistical method, the triangle method (the Chain Ladder Method based on recognised damages or based on accrued
claims. When the method is selected, the characteristics of the insurance class are considered in terms of whether the
insurance cases are settled quickly or slowly.
The statistical method is based on the monitoring of reported claims in the past. The number of IBNR claims is calculated
on the level of individual insurance class as a product of the estimated number of IBNR claims and the estimated value of
IBNR claims. The estimated number of IBNR claims is calculated by multiplying the number of reported claims in preceding
year and the average coefficient of incurred and reported claims according to all incurred and reported claims in the last
three years. The estimated value of IBNR claims is calculated as the average value of IBNR claims in the preceding year or
as the average value of claims paid in the preceding year, if the number of claims was relatively small.
132
Annual Report
for 2013
The Chain Ladder Method is based on recognised or calculated claims with monthly or annual development factors,
depending on the characteristics of the incidence of loss and claim settlement procedures. The claims are arranged in a
triangle where the rows represent the year the claims incurred, and the columns represent the number of years from the
time the claims were incurred to recognising or accrual of the claims. It is assumed that the pattern of claims in the future
will be similar to the pattern from the past years. The prediction of final claims is based on the calculation of average annual
development factors arranged on a falling scale.
The claim provision is decreased by estimated expected subrogations.
The provisions for appraisal costs and claim settlement costs are included in the gross provisions for claims provisions.
Provisions for bonuses, discounts and cancellations
Provisions for bonuses are formed in the amount of the estimated amount of the expected bonus for those policies, where
the policyholder is entitled to bonus reimbursements. Liabilities are calculated on the basis of the bonus reimbursement
rule, which is specified in the insurance contract.
The provision for cancellation is formed in the amount of estimated reimbursement to policyholders in the event of
premature cancellation of a contract/policy, taking into account the reserved amount in unearned premiums under individual
contracts.
Other insurance technical provisions
Provisions for unexpired risk, additional provisions for credit risk and concentration risk are recognised among other
insurance technical provisions.
Provisions for unexpired risk are established to cover losses and expenses associated with active insurance contracts to be
incurred after the accounting period and are not covered under unearned premium provision. Provisions for unexpired risks
are calculated at the level of insurance classes. The criterion for their formation is the negative result (loss) of insurance
class in the current period and the opinion that the negative result of insurance class is a result of the premium set too low.
Provisions for credit risk and concentration risk are established for unit-linked life insurance products, where insurance is
tied to compound securities with guaranteed payment upon maturity. The provisions are created for the products for which
the Company bears the credit risk to the issuer of the security and the concentration risk. They are formed for the risk of
separation of compound securities or illiquidity of the issuer of the security to which the warranty is bound.
5.14
OTHER PROVISIONS
Other provisions are formed for present obligations arising from past events to be settled for the period that has not been
determined with certainty and whose scale cannot be reliably assessed.
Under accrued and deferred items are carried accrued expenses and deferred revenues that are generated on the basis of
straight-line charges to operations or profit and loss as well as inventories with expected costs that still have not been
incurred. Costs are accrued and included in annual financial statements in estimated amounts; in interim financial
statements, they are spread over shorter accounting periods based on the time factor.
5.14.1 Employee benefits
Employee benefits include provisions for the unused portion of annual leave, provisions for jubilee benefits and provisions
for termination benefits at retirement and are presented as a separate item under other provisions and accruals (the longterm portion as long-term provisions and the short-term portion within the framework of accrued expenses).
Post-employment and other long-term employee benefits
The item referring to post-employment and other long-term employee benefits include:
-
termination benefits at retirement and
133
Annual Report
for 2013
-
jubilee benefits,
for which provisions for jubilee benefits and termination benefits at retirement are formed. Provisions are recognised in
accordance with the Projected Unit Credit Method (PUCM) in accordance with the IAS 19 (the method for calculating
benefits in proportion to the work performed), and the calculation takes into account mortality, employee retention, future
increase in salaries, expected inflation rate and expected return on investments. In the balance sheet, these liabilities are
recognised as net present value of all post-employment liabilities. The discount rate assumption is based on the ECB curve
(including all EU countries), by taking into account the average rate according to the expected duration of liabilities arising
from termination benefits at retirement and jubilee benefits. The future cash flows are discounted by applying the market
rate for investment-grade bonds on the balance-sheet date. The adequacy of the applied actuarial assumptions is reviewed
periodically.
For the purpose of forming provisions for jubilee (long-service) benefits, the amount of two average gross salaries in the
Company is taken into account. Jubilee benefit liability upon reaching the threshold of 10, 20 or 30 years of service of an
employee is recognised pro rata with the years of service with the employer.
As a basis for establishing termination benefits at retirement, the amount of three or two gross salaries (set out in an
individual employment contract/collective agreement) is taken into account (of the employee or the average salary in the
Republic of Slovenia in case it is higher). The liability for termination benefit at retirement is recognised through the entire
period of service of the employee.
The liabilities for provisions for termination benefits and jubilee benefits are recognised on the basis of obligations, which
arise from the concluded employment contracts and effective labour legislation, also include taxes and contributions of the
employer.
5.15
OPERATING LIABILITIES
Operating liabilities are carried at inception at historical cost that arises from appropriate documents. Later on, they are
increased in accordance with the documents and decreased on the same basis or based on the payments made.
Amongst operating liabilities, liabilities arising from direct insurance contracts, reinsurance and coinsurance coverage
liabilities, and current tax liabilities are recognised. The liabilities for the payment of premiums on the basis of reinsurance
contracts are recognised as reinsurance liabilities and accounted for as expenses at maturity.
5.16
OTHER LIABILITIES
Other liabilities include the determined short-term accrued and deferred items that comprise short-term employee benefits,
short-term accrued expenses and short-term deferred revenues, liabilities for the payment of dividends and other operating
liabilities, such as current liabilities to employees, bonds/securities, liabilities for consumer loans, received advances and
other similar items.
Short-term employee benefits
Liabilities for short-term employee benefits are accounted for in nominal value and presented as labour costs in the income
statement. Short-term employee benefits represent salaries, holiday pay, etc.
Short-term accrued expenses
Short-term accrued expenses are set up with the intention to spread disbursements over the income statement, even
though these expenses have not been incurred. Considering past developments in the Company’s operations, the
management can estimate the expenses that will incur for the period concerned, even though they did not yet receive
appropriate documents. Based on this estimate, the amount is taken into account in the financial statement. When the
business event occurs, accrued expenses are decreased and the difference between accrued and actual expenses is
recognised through profit or loss. Apart from that, expenses for unused annual leave are carried under short-term accrued
expenses.
134
Annual Report
for 2013
Social security and health insurance contributions
During the year the Company is obliged to pay social, pension and health insurance contributions (for cases of illness,
accident at work, unemployment, etc.), and the rate at which such contributions are paid is stipulated by law as a
percentage of gross salary of its employees. The contributions paid during the year were paid at the rate of 16.10% (2012:
16.10%) of gross salary. Consequently, expenses for these contributions are directly connected with labour costs posted in
the income statement.
5.17
REVENUES AND EXPENSES
Revenues include fair value of received fees or receivables for the sale of services under the normal operating conditions of
the Company. All categories of revenues and expenses for non-life and life insurance are presented separately. Revenues
from insurance services (gross written premiums) are carried at invoiced amounts excluding tax on insurance contracts
(DPZP), refunds, discounts and rebates. An exception to this are revenues from unit-linked insurance services that are
disclosed as paid realisation. Other revenues are accounted for at net value excluding value-added tax.
5.17.1 Revenues from insurance premiums
Net revenues from insurance premiums are calculated as gross written premium increased by the premium received under
co-insurance and decreased by the premium for ceded co-insurance and reinsurance and decreased by the change in net
unearned premiums. The basis for recognising gross insurance premiums are invoiced premiums.
When non-life and health insurance contracts are terminated, the calculated revenues from premiums are decreased by the
proportional portion of the unexpired period for which the insurance premium has been calculated. In the books of account,
gross insurance premiums and reinsurance and/or co-insurance share are recorded separately.
Revenues from insurance premiums are monitored separately by insurance group and class.
5.17.2 Revenues and expenses from investments
Revenues and expenses from investments include revenues arising from accrued interest, gains/losses from the disposal
of investments, dividends, gains and losses from foreign exchange differences, and revenues and expenses at the expense
of the reversal of impairment or impairment of financial assets.
Revenues and expenses for interest on investments are recognised through profit or loss upon their occurrence and are
calculated in accordance with the effective interest rate method. In the balance sheet, the interest on all debt securities is
posted together with the Company's investments.
Profit (loss) arising on disposal of investments available for sale is recognised in the income statement through
financial revenues and expenses. As regards financial assets recognised at amortised cost, profit or loss is recognised in
the income statement when such assets are revalued due to impairments or impairment previously recognised for these
assets is reversed.
Gains and losses from exchange difference are calculated for assets in foreign currencies. They are translated at the
balance sheet date by applying the reference exchange rate of the European Central Bank published by the Bank of
Slovenia. Relevant exchange rates published by the Bank of Slovenia on a monthly basis for business entities can also be
used for foreign currency translation.
Dividend income on a capital instrument is recognised in the income statement when the right to receive payment is
established.
Impairments and reversal of impairment of financial investments
Losses due to impairment are recognised and assets are revalued if there is objective evidence of impairment due to an
event occurring after the initial recognition of the assets and that event has an impact on the estimated future cash flows
from the financial asset.
135
Annual Report
for 2013
If during the period after a loss on debt securities has been recognised, the amount of impairment loss is decreased and if
this decrease can be objectively related to an event that took place after the impairment was recognised, the previously
recognised loss on debt securities due to impairment in the income statement is reversed through the revaluation account.
5.17.3 Other insurance revenues
Fee and commission income and other income for insurance contract management are recognised as other insurance
revenues.
Other revenues
Under other revenues, other net insurance revenues arising from realised gross subrogated receivables and revaluatory
operating revenues are carried. Furthermore, other revenues include revenues from rentals of the Company’s investment
properties charged on the basis of the concluded leasehold contracts and other operating revenues such as the recovered
amount of previously written-off debt, received fines and damages, and other similar items.
5.17.4 Net expenses for claims and benefits paid
Net expenses for claims and benefits paid are direct expenses arising from the insurance business. They are carried
separately by insurance class.
In accordance with IFRS, net expenses for claims and benefits paid are composed of gross calculated claims/losses that
include direct appraisal costs and are increased in the income statement by calculated claims for the received co-insurance
and decreased by the calculated claims of the ceded co-insurance and reinsurance and increased by the change in net
claims provisions.
Net expenses for claims/losses arising from health insurance contracts also include revenues or expenses from
equalisation schemes.
5.17.5 Operating expenses
Gross operating expenses are recognised as historical costs by natural and functional groups in the income statement.
Appraisal costs are an integral part of expenses for claims paid, while acquisition costs and other operating costs are
presented separately. In the disclosures, total operating expenses are presented by natural and functional groups.
Acquisition costs are recognised in the income statement when they are incurred. Since these costs refer to the period
when contracts are active, they are accrued in the portion that relates to the period after the reporting date. The Company
accrues costs for the acquisition of non-life insurance contracts.
Under life insurance contracts with discretionary participation feature and investment contracts with discretionary
participation feature, acquisition costs are accrued on the basis of the Zillmer adjustment method when mathematical
provisions are calculated.
5.17.6 Other insurance expenses
Other insurance expenses include expenses such as expenses for preventive activity, contributions for settling claims for
damage made by uninsured and unidentified vehicles, and other net insurance expenses.
5.17.7 Other expenses
Expenses from investment properties, revaluatory operating expenses, and other operating and financial expenses not
arising from investments are carried under other expenses.
136
Annual Report
for 2013
5.17.8 Lease
Lease is classified as a financial lease if it transfers substantially all risks and rewards incidental to ownership. Lease in
which significant risks and rewards incidental to ownership of an item of property, plant or equipment are not transferred to
the lessee is classified as an operating lease.
Payments made under operating leases are charged as operating expenses for operating lease to the income statement on
a straight-line basis over the whole period of the lease. Revenues from rentals are recognised in the period in which they
are incurred.
5.18
TAXES AND DEFERRED TAXES
Tax expense includes current tax and deferred tax; the tax expense is recognised either in the income statement or in the
statement of other comprehensive income, when the taxes refer to revenues or expenses, which are recognised in the
statement of other comprehensive income (in equity), i.e. when tax liabilities are recognised as tax assets from prior
periods.
Tax assessment
The Company charges and pays the insurance business tax in compliance with the Insurance Contracts Tax Act with the
rate of 6.5% of the taxable amount.
For the taxable part of its operations, the Company charges the VAT in compliance with the Value Added Tax Act and
exercises the right to deductible VAT. For its principal activity, the Company has the right to 1% deducted VAT (the rate is
controlled annually). For its real property leasing activities, the Company exercises the right to 100% deducted VAT.
The corporate income tax levied on income is calculated in line with the Corporate Income Tax Act by applying the tax rates
effective at the balance sheet date. For the financial year 2013, the corporate tax rate was 17%.
Deferred taxes
Deferred taxes are effects of the differences between the carrying amount of the posted items in the balance sheet and
their tax value, calculated in accordance with the liability method under the balance sheet for all temporary differences.
Deferred taxes are accounted for as deferred tax assets or deferred tax liabilities.
Deferred tax assets and deferred tax liabilities have been established for the financial year under review and for the past
financial years to the extent that it is probable that future taxable profit will be available and tax will be paid to the tax
authorities (recovered from the tax authorities), by applying the tax rates and tax regulations effective as at the balance
sheet date. Any deductible temporary differences are recognised if it is to be expected that disposable taxable income will
be posted, against which the temporary differences can be utilised. Any deductible temporary differences are recognised by
the prescribed tax rate for the year when disposable taxable profit is expected.
Deductible temporary differences are expenses not recognised for tax purposes that arise primarily from provisions set up
for employee benefits, calculated depreciation that exceeds the amount of the calculated depreciation at the rates
recognised for tax purposes, and revaluation adjustments as a consequence of temporary impairment of receivables and
financial investments.
137
Annual Report
for 2013
6. SIGNIFICANT ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS
The Company uses estimates and assumptions, which may significantly affect the amounts of assets and liabilities reported
in the subsequent financial year. The estimates and assumptions are constantly checked and are based on past experience
and other factors, including expected future events.
6.1
IMPAIRMENTS OF AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available-for-sale financial assets are impaired when the management finds that there is objective evidence of a significant
or prolonged decline in the fair value of such assets below their cost. Determining what is a significant and prolonged
requires consideration. In the course of this consideration the Company checks, among other factors: the normal volatility of
the stock price and how long stocks prices have been falling, the financial position of the issuer, performance of the industry
and the sector, changes in technology and in cash flows from operations and financing, and changes in an active market for
such a financial asset due to any financial problems of the issuer.
In its accounting policies, the Company takes as a criterion of significance that influences the recognition of the relevant
portion of impairment of equity securities in the income statement a decline in the fair value below their cost of 40% or 9
months sustained significant decline in fair value.
For 2013, the management estimated that there had been a longer-term reduction in fair value below cost in relation to
certain securities by more than 40% over the last two months. On the basis of an expert opinion, and the recommendations
and internal accounting policies, the investments that complied with the established significance criteria have been
permanently impaired. The total loss arising out of the permanent impairment of the available-for-sale financial investments
has been recognised immediately in the income statement, while other revaluation of these assets have been recognised in
the statement of other comprehensive income.
6.2
IMPAIRMENT LOSSES ON RECEIVABLES
In determining whether losses from impairment of receivables should be recognised in the profit and loss statement, it
should be weighed whether there are indications of any lowering of future cash flows of a group of receivables. Such
indicators can involve changes in the repayment of receivables or economic circumstances which can be linked to a
potential halt in the repayment of loans or receivables. The management uses estimates based on past losses. The
methodology and assumptions used in the determination of amounts and dates of cash flows should be reviewed on a
regular basis in order to eliminate the differences between estimated and actual data. Since the majority of older
receivables have been sold to the subsidiary Prospera d.o.o., the current analysis would not show the real situation.
Considering that the company Prospera d.o.o. generates only minimum profits from its collection of Adriatic Slovenica
factored receivables, value adjustments to receivables can be estimated as realistic. In the financial year 2013, the
Company applied the same methodology for the calculation of impairments of receivables as in previous years.
6.3
OUTSTANDING CLAIMS PROVISIONS
The whole calculation of provisions for outstanding claims/losses is based on estimates and assumptions related to the
ultimate development of incurred losses. The Company forms provisions for claims incurred and already reported, but not
finally settled on the basis of both known information about those losses and past experience. The estimates by individual
losses are reviewed on a regular basis and corrected when each new piece of information is obtained. A higher rate of
uncertainty in assessing liabilities that should be settled by the Company due to the incurred losses, present liabilities for
incurred but not reported claims (IBNR). Provisions for IBNR claims are determined by the Company on the basis of the
examination of the past loss events by using various mathematical and statistical methods. The Company assumes that
losses will also be incurred in the future in a way similar to what happened in the past, i.e. takes into account observed
trends and deviations. When calculating provisions for outstanding losses/claims, the estimates of successful future
recourses are taken into account, as well as the estimate regarding the level of future expenses to settle claims. The
suitability of the used assumptions and estimates is reviewed on a regular basis and new findings are used for the following
measurement.
138
Annual Report
for 2013
Liability adequacy test for insurance contracts
The Company carries out a liability adequacy test with the aim to determine whether its provisions set up at the balance
sheet date are sufficient to cover its liabiities. The test is carried out by calculating the best estimate of provisions such as
the current value of all cash flows arising from the in-force insurance contracts. The calculation for the test is made by using
the current estimates of future cash flows. At the balance sheet date, this calculation is compared with the technical
provisions formed.
If the liability adequacy test shows a deficiency in the carrying amount of liabilities, the Company recognises such
deficiency as increased liability in the income statement.
The liability adequacy test is carried out separately for the life and non-life business.
Life insurance business
For the purpose of establishing whether provisions for life insurance are adequate, the Company combines lines of
insurance business in homogenous groups, and specifically:
-
life insurance contracts;
life insurance contracts with a discretionary participation feature (DPF);
voluntary additional pension insurance.
The expected cash flows are generated under:
⋅
⋅
premiums (life insurance and additional accident cover),
claims paid (death, endowment, annuities, surrender, accident claims),
expenses (other payments of fees and commissions, administrative costs, costs of losses).
any other expected cash flows from insurance contracts.
With regard to individual cash flows, the following assumptions have been taken into account:
-
covenants in individual insurance policies (amount of the premium, the schedule of premium payments, the sum
insured for death and at maturity, amount of annuities),
technical bases of the relevant products (tables of mortality/morbidity, interest rate, costs of front-end fees, other
administrative expenses),
assumptions (mortality rates, redemption rates, future inflation, claims paid under accident policies, etc.). The
assumptions used are explained separately.
The cash flows for individual years are discounted on the last day of the reporting (accounting) period.
Economic and operating assumptions
Risk discount rate
For the purpose of calculating the present value of the expected future cash flows, the discount rate used is presented by
the curve in the graph "AAA-rated euro area central government bonds" AAA- credit rating for investment-grade
government bonds in the euro area as of 2 January 2014.
Inflation
The assessment of expected expenses takes into account the expected inflation rate of 2% for all following years.
Costs/expenses
The costs of contract administration, claims handling, and asset management have been included in the calculation based
on the Company's experience from the past years. The estimated future costs are divided into fixed costs that increase
depending on the forecasted inflation, and variable costs. Specific features of individual insurance products are taken into
consideration when dividing the costs.
139
Annual Report
for 2013
Mortality rates
The estimations of mortality rates are based on analyses of the Company's own life insurance portfolio. However, for
annuity insurance, the Slovene population's mortality ratio has been considered, namely the Slovenian annuity tables 2010.
Surrender rates
The relevant surrender rates are based on the analysis of redemptions and other early cancellations of the Company's own
portfolio in the past years, divided according to insurance categories and insurance duration. The assumptions are revised
and adjusted annually.
Claims arising from additional (extra) accident coverage
These claims are estimated on the basis of historical claims ratio from such insurance contracts in the Company's portfolio
in the past years.
Results of the liability adequacy test for the financial year 2013
The liability adequacy test (LAT) results of 31 December 2013, showed no deficiencies in any class of life insurance. See
additional notes in Section 4.
Non-life insurance and health insurance business
The Company has tested the adequacy of the provisioning for unearned premiums for non-life insurance and health
insurance contracts. The provisions for losses and provisions for bonuses, discounts and cancellations are calculated on
the basis of current estimates; hence, it is deemed that the provisions for these liabilities have been made in the adequate
amount.
The liability adequacy test is thus limited to the unexpired portion of active (unexpired) contracts. It is performed by
examining the difference between the expected amount of claims for losses and the expenses attributable to the unexpired
portion of policies still in force at the balance sheet date and the amount of the formed provision for unearned premiums.
Under the classes of insurance where inadequate amount of unearned premium provisions in relation to the expected loss
events, has been determined, the Company forms additional provisions for unexpired risks and recognises them in the
financial statements as liabilities within the framework of other technical provisions.
Result of the adequacy test for the financial year 2013
As at 31 December 2013, the Company formed provisions for unexpired risks of comprehensive car and aircraft insurance,
other non-life insurance, credit and suretyship insurance, thus ensuring an adequate amount of provisions.
6.4
ESTIMATES OF FUTURE PAYMENTS UNDER LIFE INSURANCE CONTRACTS
The principal estimates and assumptions used for the calculation of liabilities arising from the issued life insurance
contracts refer to expected mortality, cancellation, return on investment, administrative expenses and future premiums.
These assumptions are determined when concluding a contract and are used to calculate liabilities in the course of the
insurance period. New assessments are prepared at every following reporting period for the purpose of establishing
whether previously determined liabilities are adequate. If it is decided that the liabilities are adequate, the assumptions are
not changed. If liabilities are not adequate, the assumptions are modified so as to reflect expectations in accordance with
the best estimate. A more detailed description of assumptions and the way in which they are determined can be found in
the section about the liability adequacy test in the section on insurance risk.
6.5
EMPLOYEE BENEFITS
Employee benefits are recognised in the financial statements on the basis of estimates of future liabilities that will derive
from:
140
Annual Report
for 2013
- payments of jubilee benefits to the employees who will fulfil in the future the statutory/legal conditions;
- termination benefits for the employees who will fulfil in the future the conditions for retirement and who will be employed in
the company on that day.
Future liabilities are calculated on the basis of the actuarial calculation assumptions as a discounted value of future cash
flows, while taking into account certain assumptions.
Main assumptions included in the calculation of provisions for termination and jubilee benefits are:
- discount rate of 2.86% (2012: 2.5%),
- expected salary growth in the Company, including the expected salary increase due to promotion of 2.7% (2012: 2.7%)
- expected mortality expressed in the Slovenian tables 2007 (2012: Slovenian mortality tables 1992),
- the future turnover is determined by taking into account the age of the employees, and specifically 18% for the age group
between 20 and 30 years of age, 10% for the age group between 30 and 40 years of age and 5% for the employees aged
40 or and more (the same as in 2012).
141
Annual Report
for 2013
7. RISK MANGEMENT
The Company is already by the nature of its business exposed to insurance risk, since its activity is underwriting insurance
contracts with which it assumes risk from its policyholders. As all other financial organisations, the Company is also
exposed to various financial risks such as liquidity, credit and market risk (interest rate, currency and price risk). In addition
to exposure to insurance and financial risks, insurance companies are also exposed to operational risks. The text below
explains how Adriatic Slovenica manages these groups of risks.
The purpose of risk management is to ensure stable and long-term operations and decrease exposure to individual risks.
Risk management is a continuous cyclical process that can be broken down into three stages. In the first stage, potential
risks are identified. In the second stage, individual risks are modelled and measured. On the basis of the risk identification
and measurement, the Company’s management adopts adequate measures to mitigate or control these risks (the third
stage). In addition, a continuous monitoring system has been established to assess the effectiveness of the applied
measures, to monitor the remaining risks and to early identify potential new risks. The leverage at management’s disposal
is various and depends on the level of exposure and the type of risk.
In order to be efficient, the risk management system follows the strategy and risk management policy approved by the
Company's Management Board. The aim of efficient risk management is not to avoid risks by any means, but rather to
accept consciously the adequate risks and to execute appropriate measures to either limit these risks or, if they are
realised, limit the economic damage. The Company accepts risks, knowing that businesses with higher risk level usually
bears higher yield. The optimum balance between risk and yield is crucial for ensuring adequate safety of policyholders and
at the same time expanding the value of the company.
In addition to setting the guidelines regarding the ratio between risks, returns and capital, and the guidelines for the
implementation of business policies and strategies for individual areas in the Company, the Management Board cares for
the promotion of transparent and clear decisions and processes which represent important building blocks of risk
awareness culture in the Company. With constant optimisation and expansion of the risk management function, the
Company remains prepared for the risks in its future business operations.
7.1
CAPITAL ADEQUACY REQUIREMENTS AND CAPITAL MANAGEMENT
One of the Company's most important missions that it is also required by law is ensuring an adequate level of capital
(capital adequacy) in line with the volume and types of insurance business and the risks it is exposed to in the course of its
operations.
In the framework of its capital management policy, the Company pursues the goal of maintaining a certain surplus of
available capital above the required level (pursuant to applicable legislation), which provides security against unpredictable
adverse events, guarantee for continued operation and coverage for potential losses from current operations.
The Company complies with the regulatory requirements regarding capital adequacy if its eligible capital exceeds the
amount of the regulatory minimum capital determined in accordance with the rules for capital adequacy and its calculation.
The Company performs the calculation and checks its capital adequacy on a quarterly basis.
At the same time, the Company intensively prepares for the new European insurance regulation Solvency II which brings
along a broader concept of risk in insurance business and the related higher capital requirements and, consequently, the
need for new measures in capital management. In the past years, Adriatic Slovenica participated in several impact studies
and stress tests prescribed by the EIOPA and the national supervisory authority; the impact of different methodologies and
calculation parameters on capital adequacy of insurance companies to be calculated in compliance with the Solvency II
regime were tested. The Company has applied one of the methodologies (QIS5) for several years in a row to study the
impacts of individual business aspects and decisions on the Company's capital adequacy under the Solvency II regime, and
to assess and forecast its capital adequacy in future financial years.
According to the calculations, the Company carries spare available capital surplus exceeding the capital adequacy
requirements. After the spin-off and transfer of the life insurance portfolio from sister insurance company KD Življenje,
capital adequacy of Adriatic Slovenica calculated according to QIS5 methodology improved even further. Having acquired
the knowledge of business decisions impact on calculation results, the Company will direct its further activities concerning
142
Annual Report
for 2013
capital adequacy under Solvency II primarily into defining an adequate level of target capital adequacy with regard to the
Company's strategy and will, consequently endeavour with individual business decisions to achieve that target to the
greatest extent possible.
In compliance with Pillar 2 requirements of Solvency II, the Company will in addition have to perform self-assessment of
risk and solvency, which means that to the best of its knowledge and understanding of its business operations the
Company will have to assess its capital adequacy and compare the obtained results with the prescribed standard formula,
and in case of major deviations be able to explain them. The capital adequacy assessed in this way will have to be in
accord with the Company's business strategy and future oriented (for a 3 to 5 years period).
As at 31 December 2013, the insurance company was fully compliant with the capital adequacy requirements for insurance
business carrying a surplus of eligible capital in the amount of 29,035,281 euros and specifically in the area of non-life
insurance in the amount of 27,072,541 euros and in the area of life insurance in the amount of 1,962,740 euros.
Capital adequacy of the insurance company
v EUR
Share capital (tier 1)
Regulatory capital
Total core (tier 1) and supplementary (tier 2) capital
Eligible capital of the insurance company
Regulatory minimum capital
Surplus/deficit in eligible capital
7.2
7.2.1
As at 31 December 2013
Non-life
Non-life
Life insurance
insurance Life insurance insurance
12,479,003
57,249,497
5,201,159
55,441,384
3,700,000
9,386,033
3,500,000
10,257,306
12,479,003
57,249,497
5,201,159
55,441,384
12,479,003
55,230,639
5,201,159
53,783,915
10,516,263
28,158,098
3,916,053
30,771,919
1,962,740
27,072,541
1,285,106
23,011,996
TYPES OF RISKS
Insurance risks
Insurance risks are all possible risks which the Company faces during its principal activity, that is acceptance of risk from a
policyholder. Given the nature of insurance contracts, insurance risk is random and unpredictable. It can be realised at any
stage of the company's principal activity, be it the formation of insurance product (the product is improperly designed), the
formation of price (the amount of premium is insufficient to cover contractual obligations and compensation of losses) or
accepting risks for insurance (wrong decision about risk acceptance, non-compliance with the price list and terms of
insurance, signing insurance contracts based on false data, improper reinsurance for particular risks, improper assessment
of probable maximum loss (PML), insurance for concentrated risks (e.g. geographic concentration), insufficient employee
qualifications for risk assessment). When accepting risks for insurance, the following risks can occur as well: the risk of
insufficient technical provisions, damage or loss risk (the risk that the reported number or amount of claims will exceed the
expected values and that the retention will be too high due to improper reinsurance security, especially in case of
catastrophic events), the risk of change in policyholder behaviour (which reflects especially in the number of insurance
fraud attempts) and, last but not least, the risk of changes in the economic environment, which can lead to a lower number
of policies signed due to a lower purchasing capacity and a higher number of cancelled contracts and of claims made.
The Company manages insurance risks primarily through adequate reinsurance arrangements, effective implementation of
internal controls, internal auditing and through forming adequate technical provisions to cover future liabilities from already
issued insurance contracts. Much attention is devoted to the development of new products to ensure that already in the
process of product development; the relevant statistics are carefully observed, confirming the appropriateness of the
considered assumptions. After the implementation of a product, the Company constantly monitors the underwriting results
by class of insurance, analyses any deterioration and corrects premium rates or terms of insurance, if necessary. The other
area, critical for the realisation of insurance risks, is the acceptance of risks to be insured. The company controls this risk by
means of instructions on accepting the risks to be insured, stricter criteria and procedures for risk acceptance, especially for
high sums insured and comprehensive coverage. Specialised departments in charge of high risks (in the field of non-life
143
Annual Report
for 2013
insurance) monitor the development of particular insurance contracts and may deny renewal of contracts or re-assess the
accepted risk. Reinsurance security is an important means of insurance risk management and will be described in further
detail in the following text.
Concentration of insurance risk
Concentration of insurance risk can arise from a single insurance contract or from a number of insurance contracts covering
low-probability events with high damage potential, such as insurance against earthquakes or other natural disasters.
The table below presents possible concentration of insurance risk, and specifically the Company’s exposure to large
policyholders and beneficiaries.
Insurance risk concentration arising from the largest policyholders as at 31 December 2013
In EUR
Life insurance
Health insurance
Non-life insurance
Total
Aggregate
As share of
As share of
Aggregate
premium – 10 insurance group premium – 100 insurance group
largest
aggregate
largest
aggregate
policyholders
premium
policyholders
premium
47,478
0.30%
183,910
1.16%
230,465
0.58%
914,435
2.29%
306,489
0.27%
446,532
0.40%
11,651,295
8.52%
22,271,805
16.29%
12,235,727
4.00%
23,816,682
7.79%
Insurance risk concentration arising from the largest policyholders as at 31 December 2012
In EUR
Life insurance
Health insurance
Non-life insurance
Total
Aggregate
As share of
Aggregate
As share of
premium – 10 insurance group premium – 100 insurance group
largest
aggregate
largest
aggregate
premium
policyholders
premium
policyholders
25,995
0.33%
148,773
1.90%
41,581
1.09%
211,560
5.56%
379,834
0.35%
503,399
0.47%
12,201,863
8.19%
23,805,435
15.97%
12,649,273
4.71%
24,669,166
9.18%
In the light of the fact that the share of the top 10 and top 100 largest policyholders and beneficiaries in proportion to the
entire portfolio is relatively small, we can draw a conclusion that the concentration of large policyholders does not expose
the Company to high risk.
As regards non-life insurance, the Company is exposed to various types of risk associated with the sectors of the economy
in which policyholders engage in business activities. The table shown below presents the concentration of liabilities arising
from non-life insurance business by industry in which the policyholders operate; the table shows the ultimate loss
(maximum sum insured) broken down according to the sum insured in four categories.
144
Annual Report
for 2013
Concentration of liabilities arising from non-life insurance by industry as at 31 December 2013
Sum insured
in EUR
Construction risks
Manufacturing risks
Commercial risks
Household risks
Total
Up to 300,000 euros
Net of
With
reinsurance
reinsurance
9,216,359
276,232,075
4,105,840,601
5,127,579,087
9,518,868,122
7,118,230
263,118,312
4,098,873,140
5,124,876,204
9,493,985,886
Over 300,000 up to 1,000,000 euros
Over 1.000.000 euros
Net of
With
Net of reinsurance
With
reinsurance
reinsurance
reinsurance
13,749,753
368,862,914
1,646,639,787
412,833,494
2,442,085,947
5,280,000
255,698,788
1,630,262,381
407,775,595
2,299,016,764
159,086,371
3,555,351,605
6,399,683,522
320,049,691
10,434,171,188
3,960,000
252,240,000
804,930,000
42,150,000
1,103,280,000
Concentration of liabilities arising from non-life insurance by industry as at 31 December 2012
Sum insured
in EUR
Construction risks
Manufacturing risks
Commercial risks
Household risks
Total
Up to 300,000 euros
Net of
With
reinsurance
reinsurance
20,600,420
329,422,750
4,218,835,741
5,186,606,232
9,755,465,143
12,791,606
277,801,713
4,212,153,676
5,184,581,470
9,687,328,466
Over 300,000 up to 1,000,000 euros
Over 1.000.000 euros
Net of
With
Net of reinsurance
With
reinsurance
reinsurance
reinsurance
36,006,659
385,558,825
1,708,051,492
432,982,506
2,562,599,482
8,067,789
290,982,024
1,691,063,288
427,677,749
2,417,790,849
279,614,133
3,844,884,657
6,570,516,963
323,609,394
11,018,625,147
6,120,000
272,780,000
829,820,000
42,600,000
1,151,320,000
* The adjusted value of concentration of liabilities shows a decrease in exposure for 2012, mainly in manufacturing and
commercial risks, due to a change in the system of risk profile processing which completely abolished multiple capture of
policies, which was difficult to avoid in previous years. The new processing system provides a survey of the largest
exposure at a given date,
To provide a realistic insight into the Company’s exposures, the concentration of liabilities arising from non-life insurance
contracts presents only total insured sums for basic hazards, since, as a rule, they represent the highest exposure to
potential losses on a policy. Since the coverage of earthquake hazards is additional insurance, it has not been included in
the above table. In 2012 and 2013 earthquake insurance contracts were ceded to reinsurers on a proportionate basis at the
rate of 80%.
The table below shows the concentration of insurance risk arising from life insurance contracts, and specifically the
aggregate underwritten sum insured slotted into five categories according to the amount of the sum insured under a
separate insurance contract.
Aggregate underwritten sum insured under all contracts as at 31 December 2013 and as at 31 December 2012
in EUR
0–9,999 euros
10,000–29,999 euros
30,000–59,999 euros
60,000–99,999 euros
Over 100,000 euros
Total
Net of reinsurance With reinsurance Net of reinsurance With reinsurance
2013
2013
2012
2012
132,748,440
122,414,834
404,114,330
385,254,121
151,878,635
90,859,465
920,025,611
828,998,497
49,444,047
25,508,965
587,523,311
381,110,548
415,572
187,363
200,762,968
79,734,931
562,004
562,004
96,344,146
30,471,750
2,208,770,367
1,705,569,848
335,048,698
239,532,631
145
Annual Report
for 2013
For annuity insurance risk concentration is presented with total annual annuities classified into five categories, depending
on the amount of the annual annuity per individual insured. Annual annuity is considered to be the amount, which the
insured would receive if the payments under the contract were due.
Structure of annually paid annuities
in EUR
Annual annuity
payments to the
insured person as at
31 December
0–9,999 euros
10,000–29,999 euros
30,000–59,999 euros
60,000–99,999 euros
Over 100,000 euros
Total
TOTAL ANNUAL ANNUITY PAYMENTS IN 2013
amount
%
14.28%
35.74%
20.68%
11.93%
17.37%
100%
661,540
1,655,813
957,963
552,560
804,450
4,632,326
TOTAL ANNUAL ANNUITY PAYMENTS IN 2012
amount
670,819
1,644,846
919,850
537,145
804,349
4,577,009
%
14.66%
35.94%
20.10%
11.74%
17.57%
100%
Concentrations of insurance risk with respect to the company’s annuity business remains at the same level as in 2012 and
the highest number of annuity payments made on a yearly basis falling in the 1,000 euros to 2,000 euros bracket.
Non-life insurance contracts and health insurance contracts
For the majority of insurance contracts, the unearned premium reserve is calculated in accordance with the accounting
practice – the pro-rata temporis method, where the calculation takes into account changes in assets covering non-life
insurance provisions by insurance class during the term of insurance contracts. Credit insurance contracts are an
exception, since the amount of the covering assets/insurance decreases, and construction and assembly/installation
insurance contracts where the amount of covering assets/insurance increases. For these insurance contracts the
calculation of unearned premiums takes into account the variable amount covering assets/insurance and the assumption of
a constant claims frequency throughout the life of the insurance contract.
The entire calculation of provisions for claims outstanding is founded on the estimates and assumptions of the ultimate
development of claims incurred. The calculation of the provision for claims outstanding claims is divided in two parts
considering the nature of individual outstanding claims.
Claims reported but not settled (hereinafter: RBNS)
Provisions for claims outstanding are based on the estimated ultimate cost of claims incurred but not settled at the
statement of financial position date, whether reported or not, separately for each claim. The material/tangible damages are
assessed by claim adjusters employed in the Company, while the nonmaterial damages and claims incurred in court
proceedings are assessed by lawyers (attorney-at-law) of the Company. The assessments are made on the basis of
experience by taking into account the expected future trends (inflation, service price inflation, and change in court
practice...). Within the framework of the provision for claims outstanding, the provisions for claims arising from liability
insurance contracts were also formed and they are paid out as annuities and namely in the amount of the capitalised value
of the annuity by taking into account a 2.75% interest rate.
Claims incurred but not reported (hereinafter: IBNR)
The majority of provisions for IBNR liabilities were calculated by applying the Chain-Ladder (triangle) method based on the
statistical method for recognised losses.
The recognised claims /losses are arranged in a triangle where the lines represent the year of loss occurrence, while the
columns represent the number of years lapsed after the year in which the loss occurred until the year in which claims are
recognised or paid. The claim recognised in a particular year is the sum of the calculated amounts of claims during the year
in which the claim incurred (i) and including the year (i+j) and the amount of the provision for claims outstanding for the
reported claims at the end of i+j. Large claims are taken into account in the triangle (chain ladder) only up to the amount of
146
Annual Report
for 2013
the large claim and this amount is determined for every class of insurance. The development factor represents the relation
between the recognised claims for an individual year and the recognised claims for the previous year, In the case that the
triangle/chain ladder demonstrates that the development has not been completed, the development factor is also
determined. The prediction of ultimate cost of claims is based on the calculation of the average annual development
factors.
For every year in which claims are incurred, the IBNR provision is calculated as the difference between the ultimate claim
cost and the recognised claims. Any negative amounts are set to zero, During the last year in which claims were incurred,
the prediction of the ultimate claims cost is verified by calculating the expected future ultimate claim costs through the
estimated result of the insurance class and the premium earned. For the calculation of the IBNR provision for those years,
the higher of the two amounts is taken into account.
Provisions for incurred but not reported claims (IBNR) included in outstanding claims provisions
Insurance class in EUR
Accident insurance
Health insurance
Aircraft insurance
Goods in transport insurance
Liability for aircraft insurance
Liability for ship/boat insurance
Credit insurance
Travel assistance insurance
Life insurance
Total
Provision for incurred
Provision for incurred
but not reported claims but not reported claims
(IBNR)
(IBNR)
31 December
31 December
2013
2012
10,670,895
9,721,424
6,026,131
5,122,025
2,004,481
1,933,716
115,423
58,731
141,118
61,383
1,338,175
1,021,075
1,528,458
1,195,092
41,471,090
37,457,267
28,006
13,515
11,813,906
12,640,073
33,059
23,571
177,317
212,432
76,533
42,066
2,202
2,494
225,191
216,781
494,941
4,610,642
74,332,286
76,146,928
The liabilities, which arise from contracts for traditional life insurance with a discretionary participation feature (DPF), are
calculated on the technical assumptions used for the calculation of premiums for the product, i.e., by taking into account
more prudent assumptions arising from regulatory requirements or judgements made by the Company.
The main assumptions used by the Company are the following:
- future mortality (in the past, the insurance contracts portfolio of the Company was too small to be used for own
experience; hence mortality estimate are based on statistical tables and specifically: for whole life insurance and
endowment insurance the Company uses the Slovenian mortality tables from the year 1992 and 2007, while for annuity
insurance German tables from the year 1987 and 1994 are used),
- the interest rate in the 2.6% to 4.0% bracket,
the acquisition costs up to the maximum statutory amount.
The assumptions used for the purpose of determining the adequacy of the provisions formed for life insurance contracts,
are described in more detail in the section on the liability adequacy test.
147
Annual Report
for 2013
In the financial year 2013, the Company did not modify the assumptions used for the calculation of liabilities arising from life
insurance contracts.
Loss development
The table below presents the development of claim payments for non-life insurance. The amounts comprise the claims
settled and claims reserved, as recognised by the insurance company in individual years.
Loss development in non-life insurance
Cumulative claim payment
before 2007
At the end of loss year
1 year after loss year
2 years after loss year
Cumulative loss estimate
Total losses paid until 31 Dec. 2013
19,381,672
Provisions for outstanding claims - balance 31
2007
108,738,545
106,372,343
105,968,274
105,349,656
105,958,430
104,800,746
103,746,421
103,746,421
100,306,772
3,439,648
2008
120,566,723
118,496,776
117,455,256
117,524,811
115,587,514
114,800,364
114,800,364
108,642,919
6,157,445
Accident/loss year
2009
2010
117,773,190
106,123,654
109,844,795
98,882,126
109,454,915
96,330,471
107,637,944
95,301,074
105,953,158
105,953,158
95,301,074
99,181,388
87,434,899
6,771,770
7,866,175
2011
103,900,951
92,331,285
90,568,304
90,568,304
79,085,516
11,482,787
2012
109,732,984
104,142,780
104,142,780
83,813,631
20,329,149
2013
90,848,539
90,848,539
53,399,648
37,448,891
Provisions for outstanding claims in non-life insurance (excluding health insurance), as recognised in the balance
sheet
Provisions as at 31 December 2012
Provisions as at 31 December 2013
Provisions for
Listing + IBNR
valuation costs
Total
120,759,566
5,082,090
125,841,656
112,877,537
4,776,896
117,654,433
Sensitivity test analysis
The Company performs the sensitivity test-based risk analysis to measure the changes in performance indicators
(parameters) set out below on its profit or loss as at the last day of the financial year.
Sensitivity test – parametric
Sensitivity factor
Description of the sensitivity factor applied
Technical interest rate and investment return (insurance and Impact of a change in market interest rates by a 1% increase
investment contracts)
or decrease
The impact of an increase/reduction in maintenance expenses
Costs/expenses
other than acquisition expenses by 5%
Assurance mortality/morbidity
The impact of an increase in mortality/morbidity rates by 5%
Annuitant mortality
The impact of a reduction in mortality rates by 5%
Loss ratio in relation to premium
The impact of an increase in loss ratios by 5%
Individual calculations presented in the tables below have been made so as to take into account the modification to a
particular sensitivity factor while other assumptions are left unchanged.
148
Annual Report
for 2013
Impact on net profit before tax generated by the Company
in EUR
Factor
Costs/expenses +5 %
Costs/expenses -5 %
Interest rates +1 %
Interest rates -1 %
Assurance mortality +5 %
Annuitant mortality -5 %
Loss ratio +5 %
Loss ratio -5 %
31 December 2013
31 December 2012
(2,848,848)
2,848,848
11,938,944
(10,216,196)
120,115
190,022
(13,038,407)
13,038,407
(2,774,586)
2,774,586
4,003,898
(5,439,390)
63,856
(68,538)
(10,762,365)
10,762,365
The Management Board of Adriatic Slovenica believes that the Company manages its risks successfully and professionally.
The role of reinsurance is important in the process as an additional risk-hedging tool used by the Company within the
framework of its efforts to manage insurance risks in line with a prudent person rule.
7.2.2
Insurance risks management through reinsurance protection
Purpose and objectives of reinsurance protection
Reinsurance protection enables insurance companies to assume insurance risks above its own assets, that is, issuing
insurance contracts above own capacities, while at the same time it provides for solvency and liquidity of operations,
stability of operating results and financial soundness and thus presents one of significant elements of risk management in
the insurance business.
The type, form, scope and structure of the reinsurance purchases are planned on the basis of the amount of the maximum
own shares of the Company and the volume, uniformity, quality and types of the insurance portfolio, considering the
characteristics and specifics of individual classes of insurance. In this context, the Company focuses on the establishment
and provision of the optimum reinsurance protection both against individual large losses and against aggregated exposure
of the Company’s portfolio of insurance business to natural forces and other insurable natural hazards.
Reinsurance contracts provide the Company automatic reinsurance coverage for the majority of the risks assumed up to
the agreed limit and under the agreed conditions, and in some cases even coverage against possible errors in risk
assessment.
For exceptional risks, which exceed the contractual reinsurance protection by scale or content of the cover provisions, the
Company provides special optional reinsurance protection. The program of the planned reinsurance is composed of
traditional proportional and non-proportional forms of reinsurance protection. The Company carefully monitors the
frequency and the scale of risks reinsured under a special optional basis within the framework of operational risk
management.
Analysis of the Company’s portfolio from the aspect of reinsurance risk
In 2013, with a 45% share, non-life insurance accounts for the largest line of business in the Company’s insurance portfolio
premium structure, followed by health insurance with a 37% share, and life insurance with an 18% share. The health
insurance portfolio is highly homogenous and due to a high number of small losses statistical models can be used and
given the current scope and scale of insurance covers, no reinsurance protection is needed. The life insurance portfolio is
also relatively homogenous, although a small portion of risks exceeds the Company's maximum retention; hence it is
covered with a proportional, and in the event of mass losses, with an additional (extra) non-proportional contractual
reinsurance protection.
In the financial (reporting) year 2013, Adriatic Slovenica ceded EUR 51,371,704 in premiums for reinsurance protection,
which is by 8 % less than in the previous year 2012. Out of this sum, EUR 41.5 million or 81% of total reinsurance premium
makes the quota share reinsurance premium for land vehicle insurance which decreased by 8.6% in comparison to 2012.
149
Annual Report
for 2013
The aggregate amount of the premiums ceded to reinsurers accounts for 16.8% of written gross premiums under all
In 2013, Adriatic Slovenica recorded only a few individual loss events that activated reinsurance cover. The Company
estimates that those losses had no major impact on the volume of reinsurers' shares. The greates impact results from the
vehicle insurance quota share reinsurance contracts. The aggregate amount of the reinsurers’ share in losses experienced
in 2013 was EUR 26,252,320, out of which EUR 22,711,475 related to the quota share reinsurance contract and EUR
3,540,845 to other insurance.
Reinsurance concentration in the 2013 financial year
Type of reinsurance
in EUR
Motor QS
Quota share reinsurance of earthquake risk
Non-life Gross Risk XL reinsurance
Engineering Risk XL reinsurance
Non-life Cat XL reinsurance
Non-life, i.e. annual aggregate Cat XL losses
XL reinsurance motor vehicle liability insurance and green cards
XL reinsurance of comprehensive automobile insurance (casco)
Other non-life insurance
Health insurance
Life insurance
TOTAL CONTRACT YEAR 2013
Reinsurance
premium
41,519,734
1,767,777
1,568,633
142,758
1,608,622
917,927
645,300
46,100
2,178,238
871,109
51,266,197
Structure of
reinsurance
premium
80.99%
3.45%
3.06%
0.28%
3.14%
1.79%
1.26%
0.09%
4.25%
1.70%
100.00%
Reinsurance
policy fees
13,859,857
481,931
141,998
284,603
14,768,388
Written
reinsurance
claims/losses
22,711,475
1,446
324,613
911,173
103,235
250,114
701,342
272,300
25,275,699
Change in
unearned
premiums for
reinsurance
(4,782)
82,076
51,636
(3,859)
125,071
Change in
outstanding
claims
Impact of
provisions for reinsurance
reinsurance result on profit
2,895,434 (2,052,968)
(2,221) (1,291,402)
(1,244,019)
73,800
(68,958)
(1,256,955) (1,954,404)
(107,103)
(839,718)
250,079
(145,106)
(46,100)
445,561
(837,701)
(56,180)
(374,244)
2,242,416 (8,854,622)
The above table shows the reinsurance concentration for all policies.
Reinsurance concentration in the 2012 financial year from the 2012 contractual year
Type of reinsurance
in EUR
Motor QS
Quota share reinsurance of earthquake risk
Non-life Gross Risk XL reinsurance
Engineering Risk XL reinsurance
Non-life Cat XL reinsurance
Non-life, i.e. annual aggregate Cat XL losses
XL reinsurance motor vehicle liability insurance and green cards
XL reinsurance of comprehensive automobile insurance (casco)
Other non-life insurance
Health insurance
Life insurance
TOTAL CONTRACT YEAR 2012
Reinsurance
premium
41,519,734
1,767,777
1,568,633
142,758
1,608,622
917,927
645,300
46,100
2,178,238
871,109
51,266,197
Structure of
reinsurance
Reinsurance
premium
policy fees
80.99% 13,859,857
3.45%
481,931
3.06%
0.28%
3.14%
1.79%
1.26%
0.09%
4.25%
141,998
1.70%
284,603
100.00% 14,768,388
Written
reinsurance
claims/losses
22,711,475
1,446
324,613
911,173
103,235
250,114
701,342
272,300
25,275,699
Reserved
reinsurance
claims/losses
(4,782)
82,076
51,636
(3,859)
125,071
Impact of
reinsurance
result on profit
2,895,434
(2,221)
73,800
(1,256,955)
(107,103)
250,079
445,561
(56,180)
2,242,416
The above table shows the reinsurance concentration for the policies taken out in 2012.
In the reinsurance programme of Adriatic Slovenica for 2013, the proportional reinsurance protection prevails considering
the reinsurance premium amount. However, taking into account the number of contracts, the non-proportional loss surplus
security prevails.
The structure of the reinsurance programme is comparable with the previous year, since contract forms remained
unchanged in 2013. All major contracts, with the exception of earthquake and motor vehicle proportional reinsurance, are
non-proportional.
150
Annual Report
for 2013
7.2.3
Financial (market) risks
The Company is exposed to market risks through its financial assets and liabilities, and reinsurance assets and liabilities
arising from its insurance contracts. The key market risk that the Company faces is that the future market changes will
reflect on the value of the Company's financial assets, meaning that the receivables from insurance contracts will not be
covered by counterparties (credit risk), which could eventually lead to a situation when the inflows from financial
investments will not suffice for covering the outflows, arising from insurance contracts.
The most important components of market risk are:
⋅
⋅
⋅
⋅
⋅
⋅
liquidity risk,
credit risk,
risk of change in prices of debt securities,
interest risk,
currency risk, and
risk of change in other prices
The Company manages and controls the risks to which it is exposed by constant monitoring of cash flows and ensuring that
it always has enough liquid assets at its disposal to settle its liabilities, by investing its assets in a manner which ensures
stable long-term returns which exceed the amount of returns on insurance liabilities, by matching the terms of financial
assets against financial liabilities, and by ensuring adequacy of financial assets.
Taking into account Slovenia’s macroeconomic conditions and the situation in the banking sector in 2013 as well as the
related risk management, the Group fully discloses the exposure of the Company’s investment portfolio to Slovenia as well
as to Slovenia and the banking sector, as presented in the table below.
Exposure of investments
Exposure of investments to Slovenia
EXPOSURE TO THE REPUBLIC OF
SLOVENIA
investments in bonds issued by the RS
investments in Slovene bonds of banks
investments in shares of Slovene banks
deposits with Slovene banks
in %
18.71%
8.30%
2.28%
0.25%
7.88%
With respect to the developments on the Slovene capital market in 2013 and the related impairments, notes are provided in
disclosures to individual items of financial statements in sections 8.5 and 8.18.2.
All disclosures related to financial risk management do not include assets and liabilities of unit-linked life insurance
guarantee funds as the policyholders bear full financial risks. In 2013, total assets amounted to EUR 224,029,384, of which
unit-linked assets equalled EUR 213,925,868 and other balance-sheet categories of guarantee fund policyholders totalled
EUR 10,103,516.
The following tables show how the Company manages and controls market risks. All the risks are monitored by the
Company at the level of individual guarantee funds, i.e. assets backing liabilities, while the analysis of assets and liabilities
(ALM – asset liability management) for financial risk management at the insurance contract level is presented in the tables
below.
The first table presents the balance of all assets and liabilities by individual items and how the amount of particular financial
assets and of aggregate assets by insurance class and investment contracts matches the amount of liabilities. The tables
containing the results of the asset and liability analysis for financial risk management for 2013 and 2012 show that the sum
of assets and liabilities is not equal to the sum of individual amounts by insurance class, since in the category ”financial
receivables, other operating receivables, other assets and liabilities" assets and liabilities were offset also at the level of the
aggregate sum.
151
Annual Report
for 2013
Analysis of assets and liabilities for financial risk management as at 31 December 2013
in EUR
ASSETS
Financial assets at fair value through profit or loss
- listed
Government bonds
- listed
- non-listed
Government bonds
- listed
- non-listed
Government bonds
Total debt financial instruments
- listed
- listed
- non-listed
Total equity financial instruments
Loans, deposits and financial receivables
Investments in subsidiaries and associates
Total financial investments
Amount (technical provisions) transferred to reinsurers
Receivables from insurance business and other operating
receivables
Other assets
Total assets
LIABILITIES
Liabilities from insurance contracts
- non-current liabilities
- current liabilities
Liabilities from insurance contracts with DPF
Equity capital
Other liabilities
Total liabilities
Non-life
insurance
contracts,
excluding
health
insurance
Health
insurance
contracts
Life insurance
contracts
Total
25,694,530
20,089,089
5,605,441
10,759,727
9,296,618
1,463,108
31,934,502
7,269,649
6,764,852
17,900,000
68,388,758
2,320,833
2,320,833
26,568,031
18,708,208
7,859,823
28,888,864
30,600,616
21,543,080
149,421,319
26,042,501
2,133,938
2,015,872
118,066
2,124,540
1,037,479
1,087,062
2,328,590
605,945
1,722,645
6,587,068
4,072,950
3,876,415
196,536
4,072,950
10,594,833
430,114
21,684,965
-
5,090,757
4,882,302
208,455
25,212,089
10,308,950
302,874
14,600,265
50,931,697
13,856,654
0
37,075,043
81,234,543
1,133,345
1,133,345
10,383,547
7,790,822
2,592,725
11,516,892
16,719,273
109,470,708
209,820
32,919,224
26,987,263
5,931,961
38,096,356
20,643,047
302,874
17,150,435
85,194,789
21,732,248
6,764,852
56,697,689
156,210,369
3,454,179
3,454,179
41,024,528
30,375,444
10,649,083
44,478,707
56,936,553
21,973,193
279,598,822
26,252,320
89,280,541
4,350,446
61,242,249
330,337,055
11,439,363
2,035,771
1,607,855
36,767,955
22,625,118
3,018,376
2,701,614
138,025,635
102,241,572
9,404,593
65,376,077
482,873,386
161,670,371
67,088,256
94,582,115
67,980,397
100,686,289
88,354,659
12,331,630
330,337,056
15,311,320
14,876,498
434,823
12,163,919
9,292,715
1,620,497
7,672,219
36,767,955
102,318,889
90,508,717
11,810,172
13,053,114
22,653,633
2,558,595
20,095,038
138,025,636
176,981,691
81,964,753
95,016,938
102,318,889
90,508,717
11,810,172
93,197,430
110,375,376
92,358,109
18,017,267
482,873,386
This table should be read together with the note in Section 7.2.3., paragraph 6.
152
Annual Report
for 2013
Analysis of assets and liabilities for financial risk management as at 31 December 2012 - adjusted
in EUR
Non-life
insurance
contracts,
excluding
health
insurance
Health
insurance
contracts
Life insurance
contracts
Total
ASSETS
- listed
Government bonds
- listed
27,141,833
627,595
3,316,347
31,085,775
23,428,511
624,302
1,944,756
25,997,570
3,713,322
3,293
1,371,591
5,088,205
10,436,589
2,141,573
20,668,619
33,246,781
8,953,315
1,036,827
7,541,947
17,532,090
- non-listed
Government bonds
200,771
200,771
1,483,274
-
1,104,746
-
12,925,901
15,513,921
42,155,317
3,324,304
24,912,655
70,392,276
- listed
12,198,296
195,506
4,608,416
17,002,218
- non-listed
Government bonds
13,421,785
16,535,235
105,312
3,023,486
2,650,538
17,653,701
16,177,636
37,212,422
Total debt financial instruments
79,733,738
6,093,472
48,897,621
134,724,831
- listed
- listed
- non-listed
2,227,215
2,227,215
29,316,280
14,601,305
14,714,975
4,444,937
4,199,874
245,063
2,032,553
2,032,553
3,558,665
2,357,970
1,200,696
4,259,768
4,259,768
37,319,882
21,159,148
16,160,733
Total equity financial instruments
31,543,495
4,444,937
5,591,218
41,579,649
Investments in subsidiaries and associates
35,271,541
11,877,161
18,380,213
63,106,703
20,995,227
432,570
Other assets
167,544,001
23,646,242
48,721,573
8,164,526
64,606,767
22,848,140
11,313,426
1,959,960
2,460,464
72,869,052
68,239
940,101
1,394,699
2,116,886
260,838,981
23,714,481
58,527,485
11,519,184
68,588,000
Total assets
312,683,108
38,581,990
77,388,976
423,188,132
174,671,031
72,812,065
101,858,966
73,801,267
64,210,811
46,653,886
17,556,925
312,683,109
16,813,654
6,688
16,806,966
7,535,377
14,232,959
807,857
13,425,102
38,581,990
71,720,707
70,553,419
1,167,288
4,836,632
831,637
6,770
824,868
77,388,976
191,484,685
72,818,753
118,665,932
71,720,707
70,553,419
1,167,288
86,173,275
73,809,465
47,468,513
26,340,952
423,188,132
Receiv ables from insurance business and other operating receiv ables
-
21,427,797
LI ABI LITI ES
Liabilities from insurance contracts
Liabilities from insurance contracts with DPF
Equity capital
Other liabilities
Total liabilities
In the tables showing the classification of assets by maturity into non-current and current assets for 2013 and for 2012, the
sum of assets and liabilities is not equal to the sum of individual amounts by insurance groups (funds), since in the category
carrying ”other assets and liabilities”, assets and liabilities have been offset between the funds only at the level of the
aggregate sum. This table should be read together with the note in Section 7.2.3., paragraph 6.
153
Annual Report
for 2013
Classification of assets by maturity into non-current and current assets as at 31 December 2013
In EUR
Non-current assets
Debt securities
Available for sale
- listed
- non-listed
Held to maturity
- listed
- non-listed
Equity securities
Available for sale
- listed
- non-listed
Investments in subsidiary and associates
Amount (technical provisions), transferred to reinsurers
receivables
Other assets
Total assets
Current assets
Debt securities
At fair value through profit or loss
- listed
Equity securities
- listed
- non-listed
receivables
Other assets
Total assets
Non-life
insurance
contracts,
excluding
health
insurance
Health
insurance
contracts
Life insurance
contracts
Total
42,694,228
31,934,502
25,169,650
6,764,852
10,759,727
10,759,727
26,568,031
26,568,031
18,708,208
7,859,823
21,543,080
3,871,906
94,677,245
12,935,904
4,453,130
2,328,590
2,328,590
2,124,540
2,124,540
4,072,950
4,072,950
3,876,415
196,536
430,114
3,034,712
11,990,906
-
76,143,786
50,931,697
50,931,697
0
25,212,089
24,909,215
302,874
10,383,547
10,383,547
7,790,822
2,592,725
10,391,635
96,918,968
(0)
123,291,145
85,194,789
78,429,937
6,764,852
38,096,356
37,793,482
302,874
41,024,528
41,024,528
30,375,444
10,649,083
21,973,193
17,298,253
203,587,119
12,935,904
45,538,390
30,604,178
183,755,716
456,891
12,447,797
470,011
1,145,404
98,534,384
46,465,292
31,749,582
294,737,897
25,694,530
25,694,530
25,694,530
2,320,833
2,320,833
2,320,833
26,728,710
54,744,073
13,106,597
2,133,937
2,133,937
2,133,937
7,560,122
9,694,059
-
5,090,757
5,090,757
5,090,757
1,133,345
1,133,345
1,133,345
6,327,638
12,551,740
209,820
32,919,224
32,919,224
32,919,224
3,454,179
3,454,179
3,454,179
39,638,300
76,011,703
13,316,417
43,742,151
4,350,446
30,638,071
146,581,339
10,982,472
2,035,771
1,607,855
24,320,158
22,155,106
3,018,376
1,556,210
39,491,252
55,776,280
9,404,593
33,626,496
188,135,489
As at the end of 2013, the Company’s non-current assets prevail with a 61 % share, leaving behind the company’s current
assets accounting for 39 % of total assets.
154
Annual Report
for 2013
Classification of assets by maturity into non-current and current assets as at 31 December 2012 - adjusted
In EUR
Non-current assets
Debt securities
Available for sale
- listed
- non-listed
Held to maturity
- listed
- non-listed
Equity securities
Available for sale
- listed
- non-listed
Investments in subsidiary and associates
receivables
Other assets
Total assets
Current assets
Debt securities
- listed
Equity securities
- listed
- non-listed
receivables
Other assets
Total assets
Non-life
insurance
contracts,
excluding
health
insurance
Health
insurance
contracts
Life insurance
contracts
Total
52,591,906
42,155,317
28,733,531
13,421,785
10,436,589
10,436,589
29,316,280
29,316,280
14,601,305
14,714,975
20,995,227
9,087,808
111,991,220
10,790,993
5,465,877
3,324,304
3,218,992
105,312
2,141,573
2,141,573
4,444,937
4,444,937
4,199,874
245,063
432,570
2,120,253
12,463,637
-
45,581,274
24,912,655
22,262,117
2,650,538
20,668,619
20,467,848
200,771
3,558,665
3,558,665
2,357,970
1,200,696
10,170,637
59,310,576
5,231
103,639,056
70,392,276
54,214,640
16,177,636
33,246,781
33,046,010
200,771
37,319,882
37,319,882
21,159,148
16,160,733
21,427,797
21,378,698
183,765,433
10,796,225
18,014,720
31,850,561
172,647,495
361,550
12,825,187
86,360
59,402,167
18,014,720
32,298,471
244,874,849
27,141,833
27,141,833
27,141,833
2,227,215
2,227,215
2,227,215
26,183,733
55,552,780
12,855,249
627,595
627,595
627,595
9,756,908
10,384,503
-
3,316,347
3,316,347
3,316,347
2,032,553
2,032,553
2,032,553
8,209,576
13,558,476
63,007
31,085,775
31,085,775
31,085,775
4,259,768
4,259,768
4,259,768
41,728,005
77,073,548
12,918,256
30,706,853
8,164,526
32,756,206
140,035,613
11,313,426
1,959,960
2,098,914
25,756,803
940,101
1,394,699
2,030,526
17,986,808
40,512,765
11,519,184
36,289,529
178,313,283
At the end of 2012, the Company’s non-current assets prevail with a 54% share, leaving behind the company’s current
assets accounting for 46% of total assets.
155
Annual Report
for 2013
Liquidity risk and assets measured at fair value
Exposure to liquidity risk is reflected in possible liquidity problems and/or the ability of the Company to meet contractual
liabilities arising from the concluded insurance contracts and other current liabilities arising from operations conducted by
the Company.
The Company mitigates its exposure to liquidity risk by maintaining a suitable structure and adequate diversification of
investments, planning future cash flows to cover future foreseeable liabilities and providing an adequate volume of highliquidity investments in order to cover future contingencies.
The following tables present the types of the company's liabilities according to their maturity. In addition, liabilities arising
from unit-linked insurance contracts are also disclosed.
Overview of maturity of liabilities in 2013
Liabilities
In EUR
Non-life and health insurance
Life insurance
Debt securities (issued)
Other liabilities
Total Liabilities
Carrying
amount
176,981,691
212,077,431
102,318,889
122,317,946
613,695,958
Undiscounted cash flows from liabilities
No maturity
date
-
Up to 1 year
109,903,757
4,003,400
8,599,494
32,774,976
155,281,626
1-5 years
41,344,431
37,923,198
16,615,577
89,542,971
185,426,177
5-10 years
17,250,511
42,128,145
24,986,863
84,365,519
10-15 years over 15 years
7,834,993
647,998
29,373,340 98,649,349
26,582,719 67,385,240
63,791,052 166,682,588
Overview of maturity of liabilities in 2012
Liabilities
In EUR
Non-life and health insurance
Life insurance
Debt securities (issued)
Other liabilities
Total Liabilities
Carrying
amount
191,484,685
24,010,618
71,720,707
74,384,095
361,600,105
Undiscounted cash flows from liabilities
No maturity
date
-
Up to 1 year
117,607,945
2,450,978
8,534,794
30,560,851
159,154,567
1-5 years
44,796,170
18,356,346
30,369,051
43,823,244
137,344,811
5-10 years
19,305,652
16,750,113
37,845,584
73,901,349
10-15 years over 15 years
9,774,919
12,505,425 16,979,804
30,112,659 65,769,298
52,393,003 82,749,102
Measurement of financial assets and financial liabilities at fair value
⋅
⋅
⋅
Level 1 includes the assets where fair value is determined entirely on the basis of prices quoted on an active
market,
Level 2 includes the assets where fair value is determined on the basis of the valuation models where the inputs
are obtained from publicly accessible market data (e.g.: market interest rates, credit spreads, ratings). This level
comprises unquoted debt securities whose price is determined on the basis of the yield curve of securities
comparable in terms of maturity, rating, credit spread; unquoted hybrid debt securities whose fair value is
measured on the basis of market maker models using market variables; and Slovenian bank and government debt
securities for which an active market exists. In case of Slovenian bank bonds fair value is determined on the basis
of the required return rates of government bonds with comparable maturity and the credit spread in terms of rating
under Solvency 2 requirements, while in case of Slovenian govenrment bonds fair value is based on the yield of
Slovenian government bonds of comparable maturity achieved on an active market.
Level 3 includes the assets where fair value is determined on the basis of the valuation models where inputs that
cannot be based on observable market are taken into account.
156
Annual Report
for 2013
Carrying amounts and fair value1
In EUR
FINANCIAL ASSETS
Cash
Deposits, loans and financial receivables
Reverse repo agreements
Derivative financial instruments
Other financial assets held for trading
Financial assets at fair value through profit or
Investment property
Total financial assets
Carrying amount
2013
Fair value
2013
2012
2012
9,404,593
56,936,553
36,373,403
38,096,356
126,219,317
28,356,692
295,386,914
11,519,684
63,107,111
35,345,542
33,246,781
107,712,157
250,931,275
9,404,593
54,521,675
36,373,403
36,963,816
126,219,317
28,397,134
282,475,346
11,519,684
63,131,483
35,345,542
33,450,812
107,712,157
251,159,679
350,840
350,840
28,214
28,214
350,840
350,840
28,214
28,214
FINANCIAL LIABILITIES
Loans
Total financial liabilities
The below presentation of financial assets by fair value hierarchy does not include held-to-maturity financial assets, cash,
deposits, loans and financial receivables as well as financial assets without a level amounting to EUR 14,119,072.
Financial assets categorised into a “fair value hierarchy” in 2013
in EUR
Financial assets measured at fair value
through profit or loss, held for sale
Equity securities
Debt securities
Investment coupons of mutual funds
through profit or loss, at initial
recognition
Equity securities
Debt securities
Equity securities
Debt securities
Investment property
Total assets
Level 1
Level 2
Aggregate fair
value
Level 3
23,048,766
2,358,017
19,594,587
1,096,161
3,048,354
3,048,354
-
-
26,097,120
2,358,017
22,642,941
1,096,161
7,372,274
7,372,274
104,161,267
29,931,806
74,229,461
134,582,306
10,842,988
10,842,988
13,891,342
28,356,692
28,356,692
7,372,274
7,372,274
115,004,255
29,931,806
85,072,449
28,356,692
176,830,340
The Company has in its financial investments portfolio also the investments measured at the cost of purchase in the
amount of EUR 16,255,721. The Company checks every year the value of those investments for impairment if necessary.
During the year under review, there was an impairment in the amount of EUR 2,337,868.
1
Including receivables from the guarantee fund with investment risk.
157
Annual Report
for 2013
Financial assets and financial liabilities categorised into a “fair value hierarchy” in 2012
in EUR
through profit or loss, held for sale
Equity securities
Debt securities
through profit or loss, at initial
recognition
Equity securities
Debt securities
Equity securities
Debt securities
Investment property
Total assets
Level 1
Level 2
25,521,256
1,610,207
21,772,171
2,138,878
9,852,869
9,852,869
79,126,526
21,684,539
57,441,987
114,500,651
Aggregate fair
value
Level 3
-
-
25,521,256
1,610,207
21,772,171
2,138,878
-
11,266,658
10,341,507
925,151
91,442,522
21,684,539
69,757,983
128,230,436
-
1,413,789
488,638
925,151
12,315,996
12,315,996
13,729,785
-
The Company 's financial investment portfolio also includes investments valued at cost totalling EUR 22,313,950. Every
year the Company checks the value of these investments in case impairments are necessary. In 2012, impairments in the
amount of EUR 4,767,659 were formed.
Financial assets and liabilities classified in Level 3 of the fair value hierarchy
in EUR
Assets measured at fair value
Total assets
7.2.4
Total profit/loss
Total profit/loss in comprehensive
1 January 2013 in profit or loss
income
30,430,337
30,430,337
(3,503,918)
(3,503,918)
-
Purchase
3,334,000
3,334,000
Sale
31/12/2013
(1,903,728) 28,356,692
(1,903,728) 28,356,692
Credit risk
Credit risk is a potential loss of the Company in case of failure by the third party/debtor to fulfil the contractual obligations.
The segments most exposed to credit risk are: financial investments, loans and receivables, receivables from insurance
contracts and reinsurance assets.
Within the framework of the credit risk management process, the following procedures are carried out: constant monitoring
of credit rating of issuers of financial instruments and ensuring adequate dispersal of investments between investments
involving a degree of risk and no-risk investments. Credit risk associated with receivables from insurance transactions and
receivables associated with reinsurance is monitored by Adriatic Slovenica on the basis of assessing the collectability of
individual receivables. Credit rating procedures are based on obtaining and checking of publicly accessible information on
the current financial position of the issuers of financial instruments and their future liquidity.
The procedures used for the management of credit risk associated with reinsurance do not different from those followed
when financial assets are invested and are based on checking credit rating of a reinsurer. In accordance with the strategy
for credit risk management, liabilities covered by reinsurance arrangements are reinsured by investment-grade reinsurers.
158
Annual Report
for 2013
Maximum exposure to credit risk by category of financial assets as at 31 December 2013
Total on 31
December
In EUR
AAA-A
BBB-B
CCC-C
Not rated
2013
6,195,910 15,697,590
51,013 10,974,712
32,919,224
Debt securities
6,195,910 15,697,590
51,013 10,974,712
32,919,224
3,167,624 18,980,722
15,948,010
38,096,356
Debt securities
3,167,624 18,980,722
15,948,010
38,096,356
Available- for-sale financial assets
61,751,697
5,972,616 17,348,136
85,072,449
Debt securities
61,751,697
5,972,616 17,348,136
85,072,449
501,853
5,002,025
5,423,663 46,009,012
56,936,553
9,865,388 101,432,033
11,447,293 90,279,869 213,024,583
Receivables arising from insurance contracts and other operating receivables
41,139,362
159,582
60,942,629 102,241,573
Reinsurers’ share of technical provisions
21,893,364
3,844,412
514,545
26,252,320
2,469,095
2,816,700
1,478,970
2,639,828
9,404,593
Total assets exposed to credit risk
75,367,208 108,252,727
12,926,263 154,376,871 350,923,069 *
*Due to spreading reinsurance over a number of reinsurers in accordance with the reinsurance contracts, the Company does not
separate items with regard to credit risk for all reinsurers included in reinsurance contracts. This table should be read together with the
note in Section 7.2.3., paragraph 6.
Maximum exposure to credit risk by category of financial assets as at 31 December 2012
Total on 31
December
In EUR
AAA-A
BBB-B
CCC-C
Not rated
2012
5,117,916 12,539,854
409,008 13,018,998
31,085,775
Debt securities
5,117,916 12,539,854
409,008 13,018,998
31,085,775
2,946,187 17,552,099
103,678 12,644,817
33,246,781
Debt securities
2,946,187 17,552,099
103,678 12,644,817
33,246,781
Available- for-sale financial assets
45,997,702
5,102,132 19,292,441
70,392,276
Debt securities
45,997,702
5,102,132 19,292,441
70,392,276
50,000 19,669,077
4,816,011 38,572,022
63,107,111
8,114,103 95,758,732
10,430,829 83,528,278 197,831,942
Receivables arising from insurance contracts and other operating receivables
18,597,973
257,730
39,671,782
58,527,485
Reinsurers’ share of technical provisions
18,475,385
4,059,603
1,179,493
23,714,481
30,529
305,830
8,847,771
2,335,554
11,519,184
Total assets exposed to credit risk
45,217,991 100,381,895
19,278,600 126,715,107 291,593,093
* Due to spreading reinsurance over a number of reinsurers in accordance with the reinsurance contracts, the Company does not
separate items with regard to credit risk for all reinsurers included in reinsurance contracts.
In the tables with maximum exposure to credit risk by classes of financial assets for the years 2013 and 2012, the sum of
receivables and liabilities is not equal to the sum of individual amounts by insurance groups since in the category with other
receivables and liabilities offsetting has been made between individual funds only at the level of the aggregate sum.
159
Annual Report
for 2013
Credit risk: Financial instruments that are not past due and those that are past due, but not impaired, as at 31 December 2013
Total past due and not impaired
In EUR
Financial investments (debt securities)
Loans and financial receivables
Amount (technical provisions) ceded to reinsurers
Receivables from Insurance contracts and other receivables
Insurance receivables
Recourse receivables
Other receivables
Total
Neither past
due nor
From 31 to 90
impaired
Up to 30 days
days
156,088,029
24,884,219
26,252,320
87,378,618
80,086,776
7,291,842
294,603,187
-
From 91 to
270 days Over 270 days
-
Total past-due
date and not
impaired
-
Total past due and impaired
Value
Value
adjustment – adjustment –
individual
group
Gross value impairment impairment
122,340
122,340
939,019
24,622
304,958
26,399,940 2,539,109 8,997,876
17,771,574 1,091,008 7,288,391
3,133,245 1,109,356
961,179
5,495,120 338,746
748,307
27,461,298 2,563,731 9,425,174
Net value
609,438
14,862,955
9,392,176
1,062,711
4,408,067
15,472,393
Total past due
date and
impaired
609,438
14,862,955
9,392,176
1,062,711
4,408,067
15,472,393
Total
156,088,029
25,493,657
26,252,320
102,241,572
89,478,952
1,062,711
11,699,909
310,685,017
Credit risk: Financial instruments that are not past due and those that are past due, but not impaired, as at 31 December 2012
v EUR
Neither past
due nor
impaired
Financial investments (debt securities)
134,724,831
Loans and financial receivables
Amount (technical provisions) ceded to reinsurers
Receivables from Insurance contracts and other receivables
Insurance receivables
Recourse receivables
58,638,892
23,714,481
44,592,967
42,819,974
1,772,993
261,671,171
Other receivables
Total
From 31 to 90
Up to 30 days
days
221,182
221,182
221,182
Value
Value
Total past-due
adjustment – adjustment –
date and not
From 91 to
individual
group
270 days Over 270 days impaired
Gross value impairment impairment
Net value
Total past due
date and
impaired
-
-
-
-
-
-
-
-
12,479
12,479
12,479
-
5,607
5,607
5,607
239,268
239,268
239,268
167,397
31,290,499
21,485,177
7,340,302
2,465,019
31,457,896
2,363,633
932,131
1,076,136
355,367
2,363,633
65,275
14,921,563
9,787,265
3,917,460
1,216,838
14,986,838
102,123
14,005,303
10,765,781
2,346,707
892,814
14,107,425
160
-
Total
134,724,831
102,123 58,741,015
- 23,714,481
14,005,303 58,837,537
10,765,781 53,825,023
2,346,707
2,346,707
892,814
2,665,807
14,107,425 276,017,864
Annual Report
for 2013
Risk of changes in prices of equity securities
This risk is defined as the risk of changes in the price of equity type investments which would affect the expected return of
financial assets or their value, recognised in the investment portfolio of the Company. To mitigate this risk, the company
maintains a sector and geographic spread of investments, does not cross the allowed limitations of exposure towards
individual issuers and invests its assets in investments with an appropriate ratio between risk and profitability.
Interest rate risk
The risk of changes in interest rates is reflected in the risk that the fair value of future cash flows from financial instruments
will decline in relation to future cash flow expectations at the time of purchase of the financial instrument. The latter is
reflected in the following: a change in market value of debt securities with fixed return, except when they are classified as
held-to-maturity investments, or the risk associated with the ability to reinvest financial assets at maturity under at least
identical conditions with those for financial assets past due.
With the aim to manage the Company’s exposure to interest rate risk, the Company applies the following procedures:
-
-
for liabilities with determinable future cash flows, it employs immunization procedures, which allow it to balance the
average duration of investments with the average duration of liabilities;
balancing interest rates on assets and on liabilities;
ensuring a suitable structure of investments in terms of profitability and duration.
Classification of financial assets and liabilities on the basis of fixed and variable interest rates 2
in EUR
ASSETS
Debt securities
Loans and deposits
Total
LIABILITIES
Debt securities
Total
Fixed interest rate
2013
2012
Variable interest rate
2013
2012
Total
2013
2012
154,380,454
54,359,200
7,984,765
132,503,028
59,133,993
11,519,684
1,707,575
1,307,623
-
2,221,803
1,222,114
-
156,088,029
55,666,823
7,984,765
134,724,831
60,356,107
11,519,684
216,724,420
-
203,156,705
-
3,015,198
-
3,443,917
-
219,739,617
-
206,600,622
-
-
-
-
-
-
-
Insurance and investment contracts with the discretionary participation feature - DPF
The Company is exposed to interest rate risk under insurance and investment contracts with the DPF component only in
association with the payments guaranteed by the contract. The contract-based payments to policyholders are increased by
the pro rata share in the positive result from life and annuity insurance contracts. The Management Board of the Company
approves the amount of the attribution of the additional profit under an individual contract.
Investment contracts with DPF (pension insurance)
Within the framework of investment contracts with the discretionary participation feature (DPF) linked to pension insurance,
the Company is bound by the requirements related to minimum guaranteed rate of return to the policyholders. Any
additional benefits/profits are allocated to policyholders. The table below presents the average rate of return achieved on
investments that relate to pension insurance, and the guaranteed rate of return that should be achieved.
2
Including receivables from the guarantee fund with investment risk.
161
Annual Report
for 2013
Actual exposure to risk associated with the pension scheme/plan
Pension insurance scheme/plan
Average return on investments for the period
Regulatory (guaranteed) return
2013
1.42%
2.30%
2012
4.38%
2.30%
Difference in interest rates
0.88%
2.08%
Due to the failure of achieving the guaranteed return in 2013, the insurance transferred EUR 215,877 of own funds to the
supplemental voluntary pension insurance guarantee fund.
Currency risk
Currency (foreign exchange) risk is the risk that the exchange rate between the domestic currency in which investments are
measured and the currency in which the value of individual investments is denominated will fluctuate and, consequently,
negatively affect the value of investments.
Currency risk
EUR
ASSETS
Equity securities
Debt securities
Debt securities
Equity securities
Debt securities
Investments into subsidiaries or associates
Total financial investment
Receivables from insurance operations and other operating
receivables
Other assets
Total assets exposed to currency risk
LIABILITIES
Liabilities arising from insurance contracts
Other liabilities
Total liabilities exposed to currency risk
RDS
RON
HKD
HRK
Total
31
Dec 2013
Other
2,188,567
32,919,224
38,096,356
38,096,356
125,119,264
40,046,814
85,072,449
56,936,553
21,973,193
277,233,158
1,016,326
1,016,326
407,038
407,038
1,423,364
128,962
128,962
128,962
120,324
120,324
120,324
693,001
693,001
693,001
14
14
14
36,373,403
3,454,179
32,919,224
38,096,356
38,096,356
126,219,317
41,146,868
85,072,449
56,936,553
21,973,193
279,598,822
9,404,593
286,637,751
0
1,423,364
128,962
-
693,001
14
9,404,593
289,003,416
253,048,260
-
-
-
-
-
-
253,048,260
-
-
-
120,324
-
-
-
The Company is subject to changes in foreign exchange rates, which affect its financial position and cash flows. Since the
Republic of Slovenia is member of the Economic and Monetary Union (EMU) and uses the euro, it is estimated that the
exposure of the Company to currency risk is relatively low. Assets exposed to the currency risk are disclosed for 2013. The
Company’s liabilities are expressed in euros and are not separately exposed to the currency risk. In 2012, the Company’s
investment portfolio was mainly in euros and was not exposed to the currency risk. Assets denominated in foreign
currencies were acquired after the acquisition of demerged assets of KD Življenje.
162
Annual Report
for 2013
Pricing risk
Pricing risk is defined as the risk of changes in price of equity type investments, which can change depending on
macroeconomic factors (systematic risk), or depending on the operations of the Company itself (non-systematic risk).
The Company minimises the risk of change in market prices of equities by respecting the highest permissible share of such
investments, thus limiting the systematic risk, and by dispersing investments in equities, thus limiting non-systematic risk of
fluctuation in market prices. In its life insurance operations, the Company mitigates pricing risk by concluding unit-linked life
7.2.5
Market risk sensitivity analysis
Factors
The methods and assumptions used in the preparation of the sensitivity analysis for the types of market risks to which the
Company is exposed, are presented in the table below.
Sensitivity factor
Description of the sensitivity factor applied
The effect of a ±50 bp (basic points) change in market interest rates (i.e. the effect on
profit and on equity if the market interest rate changes by 50 bp). A change of ±50 bp
would be a change in excess of 1 % in comparison with the interest rate change in the
Interest rates
previous year.
Securities rates
Effect of the ±5% change in prices of securities as at 31 December 2013.
The effect of the change in the market price of financial assets is reflected in the
The change in price of financial ±15% changes in the share price, investment company shares price, price of
assets
structured securities and price of mutual fund units as at 31 December 2013.
Sensitivity analyses
Analysis of sensitivity to change in the interest rate
in EUR
31 December 2012
Interest rate change of +50 bp
Interest rate change of -50 bp
31 December 2013
Interest rate change of +50 bp
Interest rate change of -50 bp
Effect on profit
Effect on equity
(588,984)
462,625
(1,595,642)
1,542,064
(580,503)
427,383
(2,275,956)
2,403,359
Analysis of sensitivity to change in foreign currency rates
The majority of investments made by the Company is denominated in euros since its liabilities which arise out of insurance
contracts are also euro-denominated. The Insurance Act (ZZavar) stipulates that an insurance company must match its
investments of the long-term business fund (assets covering mathematical provisions) with long-term guarantees against its
liabilities arising under insurance contracts whose amount depends on the fluctuations in the exchange rates of foreign
currencies to at least 80%. Since the liabilities incurred by Adriatic Slovenica are denominated in euros, it can be concluded
that the majority of its investments have been made in euro-denominated securities; hence its exposure to currency risk is
very low.
163
Annual Report
for 2013
Analysis of sensitivity to changes in prices of equity securities
in EUR
31 December 2012
Change in prices of equities +15%
Change in prices of equities -15%
31 December 2013
Change in prices of equities +15%
Change in prices of equities -15%
Effect on profit
Effect on equity
513,032
(513,032)
7,596,703
(7,596,703)
518,127
(518,127)
6,172,030
(6,172,030)
Under the sensitivity analysis, the changes in prices of shares refer to the closing rate on the reporting date; hence, as at
31 December 2012 for the previous year and as at 31 December 2013 for the current year.
In the context of the investments of the unit-linked policies, the investments reflect as much as possible the value of units of
the mutual investment funds, which arise out of insurance contracts. The changes in values have no material effect on the
company’s profit or loss. The change has an impact on the income from investments and at the same time on the changes
in the amount of provisions, which means that the changes in the prices of securities have no material impact on the
company’s profit or loss.
7.2.6
Operational risk and strategic risk
In the recent years, but even more so from the introduction of Solvency II Directive, operational risk is often categorised
among the most important risks. It includes the risk of loss due to inadequate, failed or non-existent internal controls,
unprofessional or inappropriate employee behaviour, system or infrastructure malfunction or any other external factors,
including legislation changes, operating interruptions due to natural catastrophes or epidemics, competition and similar.
The key moment for the management of operational risks is their identification and assessment and in the second stage,
the execution of measures for their minimisation and uninterrupted monitoring of other risks. Adriatic Slovenica identified
the existing operational risks and established a mechanism of indicators for early detection of new risks. The Company has
carried out the necessary precautions for the minimisation or elimination of critical operational risks. Other operational risks
are carefully monitored and appropriate internal controls as well as the whole internal environment are arranged in the way
to minimise other risks and prevent the occurrence of new ones.
Strategic risks can also be treated as a special form of operational risks. They can occur in the early stages of strategy
planning, strategy execution, management and strategic decision-making and supervision of the Company. The realisation
of these risks can crucially affect the ability of the Company to reach its strategic goals. In order to eliminate these risks, it is
of utmost importance that the Company clearly determines responsibilities and competences, establishes an effective
communication and reporting system and constantly monitors fulfilment of the set goals.
164
Annual Report
for 2013
8. NOTES TO INDVIDUAL ITEMS OF FINANCIAL STATEMENTS
8.1
INTANGIBLE ASSETS
Changes in intangible assets
in EUR
AT COST
Balance as at 1 January 2012
Direct increases - investments
Direct increases - advance payments
Decreases during the year
Balance as at 31 December 2012
Spin-off assets
New balance as at 1 January - after spin-off
Transfers between intangible assets, investment
property, and property, plant and equipment
VALUE ADJUSTMENT
Other changes
Spin-off assets
New balance as at 1 January- after spin-off
Depreciation during the year
Revaluation owing to impairment of assets
Transfers between categories within INCA
BOOK VALUE
Material in rights
and licences
Software
ND assets in the
process of
acquisition
Total
1,431,755
10,323,477
959,883
604,796
(26)
11,888,130
975,868
0
4,768
4,768
2,065
10,501,536
964,652
604,796
(178,085)
11,892,899
2,409,688
1,431,755
-
12,863,998
1,389,857
(324,282)
6,834
-
14,302,587
1,389,857
(324,282)
1,431,755
11,130
13,940,703
6,834
11,130
15,379,292
286,351
286,351
6,783,018
(26)
(10,489)
8,278,570
728,179
9,006,749
1,816,122
(324,282)
(2,549)
10,496,039
-
6,961,078
(178,085)
(10,489)
8,278,570
728,179
9,006,749
1,816,122
(324,282)
286,351
(2,549)
10,782,391
1,145,404
3,609,560
3,444,663
4,768
6,834
3,614,329
4,596,901
As at 31 December 2013, the operating liabilities to suppliers of intangible assets amounted to EUR 188,824, which are
disclosed under Company’s other liabilities. The Company has no financial liabilities arising from the purchase of intangible
assets, no intangible assets pledged as security, no legal restrictions were put on intangible assets nor were these assets
pledged as collateral for debt. The Company does not have any internally generated intangible assets nor does it have any
intangible assets acquired by a government grant.
The intangible assets will be finally amortised by 2024 based on their determined useful lives and the applied amortisation
rates. The Company uses the straight-line amortisation method and in 2013 it did not change the amortisation rates.
Amortisation of intangible assets is posted in the income statement among operating costs.
The Company determined that as at 31 December 2013 there was no need for impairment of intangible assets.
165
Annual Report
for 2013
8.2
PROPERTY, PLANT AND EQUIPMENT
Changes in property, plant and equipment
in EUR
AT COST
Direct increases - advance payments
Other changes
Spin-off assets
Direct increases – advance payments
Activated assets in the process of acquisition
Transfers between categories within intangible fixed
assets
VALUE ADJUSTMENT
Spin-off assets
New balance as at 1 January- after spin-off
BOOK VALUE
Land and
building
Property, plant
and equipment in Investment in
process of
foreign tangible
Office and other
acquisition
fixed assets
equipment
Total
14,161,266
1,358
(20,397)
13,430,079
2,104,003
140,292
(998,267)
258,870
496,829
420,966
-
178,059
-
27,850,216
2,602,190
561,258
(1,018,663)
9,460,640
(2)
23,602,866
180,006
23,782,872
11,183
-
14,676,108
808,310
15,484,418
222,949
261,738
(801,893)
(515,703)
660,961
660,961
497,716
140,293
(8,751)
12,274
12,274
-
8,944,937
(2)
38,939,936
1,000,590
39,940,526
720,665
402,031
11,183
(810,644)
2,495,400
-
-
-
2,495,400
26,289,455
15,167,213
(11,183)
1,279,036
12,274
(11,183)
42,747,979
1,712,016
145,681
-
10,763,005
989,928
(937,566)
178,059
1,359,682
3,217,379
53,093
3,270,472
252,321
-
-
(178,059)
12,475,022
1,135,610
(937,566)
10,815,368
572,551
11,387,919
1,038,933
(695,550)
-
8,445
8,445
1,841
-
1,359,682
14,032,747
634,089
14,666,836
1,293,096
(695,550)
330,917
3,853,711
11,731,302
-
10,286
330,917
15,595,299
20,385,487
22,435,745
3,860,741
3,435,911
660,961
1,279,036
1,988
24,907,189
27,152,680
As at 31 December 2013, the operating liabilities to suppliers of property, plant and equipment amounted to EUR 108,266,
which are disclosed under Company’s other liabilities. There were no no financial liabilities arising from property, plant and
equipment acquisition. The Company has no property, plant and equipment pledged as security, no legal restrictions were
put on them nor were these assets pledged as collateral for debt.
With the exception of land and buildings, which have longer useful lives and are expected to be fully depreciated by 2087, it
is expected that all other items of property, plant and equipment at the Company's disposal to be fully depreciated based on
the determined useful lives and depreciation rates by the year 2023. The Company uses the straight-line depreciation
method and in 2013 it did not change the depreciation rates. Moreover, it did not change the depreciation rates for the
166
Annual Report
for 2013
acquired plant, property and equipment as part of demerged assets from the former insurance company KD Življenje.
Amortisation of property, plant and equipment is posted in the income statement among operating costs.
After the spin-off by acquisition, on 1 October 2013 the Company transferred two investment properties totalling EUR
2,495,400 to its plant, property and equipment and allocated them for the performance of operations. The fair value of these
investment properties as at 31 December 2013 equalled EUR 2,350,185 and was higher than their book value in the
amount of EUR 2,495,400.
Based on the Company's estimate, no impairment of property, plant and equipment was needed as at 31 December 2013.
8.3
INVESTMENT PROPERTIES
Changes in investments in land and buildings in 2013 and balance as at 31 December 2013
in EUR
AT COST VALUE
Balance as at 1 January
Transfer from/to property, plant and equipment
As at 31 December
VALUE ADJUSTMENT
Depreciation in the financial year
Transfer from/to property, plant and equipment
As at 31 December
BOOK VALUE
As at 31 December
2013
2012
33,072,632
3,334,000
(3,618,361)
(2,495,400)
30,292,870
28,338,528
14,357,339
(44,831)
(9,578,404)
33,072,632
2,642,294
345,306
(720,505)
(330,917)
1,936,177
4,312,391
330,667
(7,615)
(1,993,149)
2,642,294
28,356,692
30,430,338
The Company leases entire investment properties or business premises that are part of investment properties/buildings. All
operating leases can be cancelled. Rents are charged at market prices and are re-assessed if necessary.
During the year, the Company transferred two investment properties to property, plant and equipment. More detailed
information is provided in the section on changes in property, plant and equipment (Section 8.2).
In April 2013, under normal market conditions the Company invested in real estate by acquiring a property (lands and
buildings) in Ljubljana in the amount of EUR 1,910,000 and classified it as investment property. At the end of October 2013,
a real property in Ljubljana was acquired totalling EUR 1,424,000. It was classified as an investment property.
In May 2013, the Company sold an investment property in the Ljubljana region in the amount of EUR 2,897,856. Upon its
disposal, a loss totalling EUR 942,436 was recognised.
In 2013, all liabilities arising from the acquisition and all receivables for the disposal of investment properties were settled in
full. Nevertheless, as at 31 December 2013 the Company recognised liabilities from investment property suppliers totalling
EUR 709,517 as a result of outstanding contractual provisions of the real property seller in the acquisition of real property in
2012.
The Company has no financial liabilities arising from the acquisition of investment properties, no investment properties
pledged as security, no legal restrictions were put on them nor were they pledged as collateral for debt.
The straight-line depreciation method is used for the calculation of investment property depreciation. In 2013, the
depreciation rates remained unchanged. The depreciation of investment properties is recognised in the income statement
under other operating expenses as investment property expenses.
Due to potential impairments, the Company checks the fair value of investment properties by appraisals made by external
certified appraisers for real estate valuation every two years. At the end of 2013, the management made a decision that no
impairments were necessary.
167
Annual Report
for 2013
Income and expenses from investment properties
in EUR
Revenues from investment properties
Revenues arising from internal rents charged on investment
properties
Other revenues arising from rents charged on investment properties
Gains on the disposal of investment properties
Expenses for investment properties
Depreciation
Direct operating expenses for investment properties that generate rental
income
Expenses for internal rental of investment properties that generate rental
income
Expenses from disposal of investment properties
8.4
31 Dec 2013
1,547,877
31 Dec 2012
1,660,856
-
592,261
1,060,178
1,547,877
(1,637,816)
(345,306)
8,417
(1,328,478)
(330,667)
(298,381)
(405,550)
-
(592,261)
-
(994,128)
FINANCIAL INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
Changes in investments in subsidiaries and associate
Company name
Subsidiary
AS neživotno osiguranje a.d.o., Serbia
PROSPERA družba za izterjavo d.o.o., Slovenia
VIZ zavarovalno zastopništvo d.o.o., Slovenia
Total
Associate
Nama trgovsko podjetje d.d., Slovenia
Ownership interest*
2013
2012
97
96
100
100
100
100
49
48
Balance in the books of
account in EUR
2013
2012
1,657,469
2,018,858
7,970,934
7,970,934
97,500
277,500
10,267,292
9,725,904
11,705,901 11,701,893
*The share of voting rights is equal to equity share.
Investement in subsidiaries and an associate – movement
in EUR
Subsidiaries
As at 1 January
Acquisition or establishment
Recapitalisation
Sales and disposals
Impairments
As at 31 December
Associates
As at 1 January
Acquisition
Sales and disposals
Impairments
As at 31 December
168
2013
2012
9,725,904
1,185,366
(643,978)
10,267,292
7,081,126
7,500
4,999,796
(2,362,519)
9,725,903
11,701,893
4,008
11,705,901
11,696,831
5,062
11,701,893
Annual Report
for 2013
AS neživotno osiguranje a.d.o.
At the end of 2012, Adriatic Slovenica paid in additional funds in the amount of EUR 404,523 in the subsidiary AS neživotno
osiguranje. The payment was made on 28 December 2012 with the aim of further increasing the capital of the subsidiary.
Since the payment was not entered in the Companies Register of Serbia, the Company disclosed it as a receivable from
the subsidiary AS neživotno osiguranje as at 31 December 2012. As at 8 January 2013 upon the entry of the capital
increase, Adriatic Slovenica recognized the increase in investment in AS neživotno osiguranje and derecognised the
receivable for the payment of the capital increase. As at 20 December 2013, Adriatic Slovenica paid in EUR 600,843 in AS
neživotno osiguranje in order to further increase the capital of the subsidiary. The payment was entered in the Companies
Register of Serbia, and the increase in investment in AS neživotno osiguranje was recognised at that same amount.
The investment in AS neživotno osiguranje is measured at cost less impairments and recognised as a long-term
investment. At the 2013 year-end, the Company valued the investment in the subsidiary based on business valuation,
determining that its fair (recoverable) value was lower than its book value. For the difference between the paid amount and
the value of appraisal, an impairment was made in the amount of EUR 643,978.
The impairment was recognised as a financial expense of available-for-sale assets (see disclosure 5.5.3).
The fair value of equity of AS neživotno osiguranje was estimated by an independent certified business valuator. The
methods and assumptions applied in the valuation as at 30 September 2014 were as follows:
− The valuation was made on the basis of the market value standard according to the present value of equity method
using the discounted future net cash flows for equity.
− The appraisal was based on a scenario that has a basis in the draft strategy of AS neživotno osiguranje until 2016,
amended with the forecasts until 2023 made by the certified business valuator.
− In discounting the future net cash flows to their present value, the business valuator used the cost of equity (i.e. the
required rate of return).
− In order to determine the cost of equity, the CAPM method was used, as there were empirical data available.
− In the calculation, first the net cash flow for a particular period was planned, then it was discounted by the determined
cost of equity (i.e. the required rate of return) and decreased by the residual value (determined by using the Gordon
model).
− The required return on equity according to the CAPM model is 20.19%.
− The assumptions used in the discount rate calculation are: the risk-free rate of return of 1.72% according to the CAPM
model, the risk-free rate of 5.02% after adjusting for inflation of Germany and Serbia, the beta ratio of 0.71 with
indebtedness, the (market) risk premium of 6%, the premium for a small enterprise of 6.03% and the political risk of
4.88%.
− The estimated cash flow growth rate is 2.0%.
− The estimated discount for the lack of marketability is 13.9%.
Prospera d.o.o.
The dividends earned from the subsidiaries are recognised in the profit or loss when the right to payment is obtained. In
2013, Adriatic Slovenica received the dividends in the amount of EUR 281,494 from the Prospera subsidiary. The dividends
were paid out in full on 1 June 2013.
Viz d.o.o.
In 2013, Adriatic Slovenica increased the capital of the VIZ subsidiary by EUR 180,000. The share capital was increased on
7 February 2013 amounting to EUR 90,000 and on 12 November 2013 totalling EUR 90,000.
Nama trgovsko podjetje d.d.
In 2013 Adriatic Slovenica received EUR 77,175 in dividends from the Nama subsidiary. The dividends were paid out in full
on 16 October 2013.
169
Annual Report
for 2013
Information on property and financial position of the Group’s subsidiaries
Company name
in EUR
Subsidiaries
PROSPERA družba za izterjavo d.o.o.
VIZ zavarovalno zastopništvo d.o.o.
Associates
Nama trgovsko podjetje d.d.
Assets
Capital
Revenues
Profit or loss for the year
2013
2012
2013
2012
2013
2012
2013
2012
8,875,416 9,490,214 5,657,579 5,086,279 6,504,290 3,545,220 (1,099,833) (13,952)
263,063
10,425,453 8,808,346 8,240,977 8,262,428 2,970,649 1,175,980
260,043
36,380
20,688
10,296
89,189
71,718
50,992
(128,970) (76,812)
2013
2012
2013
2012
2013
2012
2013
2012
134,774
12,500,080 12,345,071 10,470,432 10,495,993 12,852,128 14,104,058
24,999
For the reporting purposes, the balance sheet data of AS neživotno osiguranje are converted into euros at the reference
exchange rate of the European Central Bank. The exchange rate as at 31 December 2013 was applied to convert the
balance sheet items from Serbian dinars to euros, i.e. 114.14 (31 December 2012: 113.39), and the average annual rate of
112.945 (2012: 113.49) for the conversion of the profit or loss items.
8.5
FINANCIAL INVESTMENTS
As a result of the continued political and economic crisis in Slovenia, the required return on government bonds of the
Republic of Slovenia significantly increased in early 2013. Moreover, it was also affected by a downgraded credit rating of
Slovenia due to deepening problems in the banking sector and the slow adoption of appropriate government measures to
consolidate public finances. The required returns on 10-year government bonds rose from 5.51% to 6.59%, reducing the
value of investments in Republic of Slovenia government bonds. At the beginning of September, the Bank of Slovenia
issued a notice announcing gradual liquidation of two small banks.
Impairments of financial assets
The developments on the Slovene financial market and the announced gradual liquidation of two banks had an impact on
the value of Company’s investments, because of which in September 2013 the Company had to form impairments for its
investments in the shares of Probanka and subordinated bonds of both Probanka and Factor banka to 0.
On 19 December 2013, the Bank of Slovenia issued decisions on extraordinary measures to Nova Ljubljanska banka, Nova
Kreditna banka Maribor, Abanka, Factor banka and Probanka, deciding that as of 18 December 2013 all qualified liabilities
of these banks representing their share capital shall cease in full. In accordance with the decisions issued by the Bank of
Slovenia, in 2013 the Company realised a total loss in the total amount of EUR 14,288,460, while securities were removed
from central registers and the Company’s portfolios.
Presented below is the balance of financial investments as at 31 December 2013 by groups and compared with the balance
as at the 2012 year-end.
170
Annual Report
for 2013
8.5.1
Financial assets measured at fair value through profit or loss – at initial recognition
in EUR
Equity securities
Listed securities
Debt securities
Listed securities
Government bonds
Total
31 Dec 2013
10,167,434
10,037,161
130,274
10,167,434
31 Dec 2012
(adjusted)
839,552
839,552
9,823,970
9,532,148
291,822
10,663,522
31 Dec 2012
753,953
753,953
9,306,432
9,130,474
175,959
10,060,385
Financial assets measured at fair value through profit or loss – held for sale
in EUR
Equity securities
Listed securities
Debt securities
Listed securities
Government bonds
Total
31 Dec 2013
3,454,179
3,454,179
22,751,790
16,950,102
5,801,688
26,205,969
31 Dec 2012
(adjusted)
3,420,216
3,420,216
21,261,805
16,465,422
4,796,383
24,682,021
31 Dec 2012
3,091,346
3,091,346
20,751,440
16,182,934
4,568,506
23,842,785
in EUR
Equity securities
Listed securities
Non-listed securities
31 Dec 2013
41,024,528
31,729,006
15,076,069
31 Dec 2012
(adjusted)
37,319,882
22,683,907
19,948,562
31 Dec 2012
36,594,215
22,168,825
19,636,351
Impairment of the value of securities
Debt securities
Listed securities
Government bonds
Total
(5,780,547)
85,194,789
21,732,248
6,764,852
56,697,689
126,219,317
(5,312,587)
70,392,276
17,002,218
16,177,636
37,212,422
107,712,157
(5,210,961)
64,246,598
15,898,913
15,595,232
32,752,453
100,840,813
At the end of 2013, the Company evaluated the fair value of investments allocated to available-for-sale financial assets and
carried out an annual assessment of impairment needs, especially for the high value non-market securities from the past
years valued at cost. Based on expert assessment and internal accounting policies, the Company permanently impaired
investments, the fair value of which is lower than their acquisition costs for a longer period of time. The loss due to the
permanent impairment in the amount of EUR 2,550,931 was immediately recognised under financial expenses in the
income statement, while other revaluations of these assets were recognised in the statement of other comprehensive
income.
171
Annual Report
for 2013
in EUR
Debt securities
Listed securities
Government bonds
Total
31 Dec 2013
38,096,356
20,643,047
302,874
17,150,435
38,096,356
31 Dec 2012
(adjusted)
33,246,781
17,532,090
200,771
15,513,921
33,246,781
31 dec 2012
26,642,116
15,446,579
11,195,537
26,642,116
Effective interest rates (in %) for debt instruments not measured at fair value:
As at 31 December
Debt securitiesi
–
held-to-maturity
2013
2012
8.70%
4.06%
For a market value of the held-to maturity assets see Section 7.2.3. table Book and fair values.
8.5.2
in EUR
Loans
Long-term
Short-term
Deposits placed with banks
Long-term
Short-term
Financial receivables
Total
31 Dec 2013
24,223,927
5,121,443
19,102,484
31,442,896
12,176,810
19,266,086
2,179,649
57,846,472
31 Dec 2012
(adjusted)
7,623,175
3,525,963
4,097,213
49,440,091
17,852,735
31,587,356
6,043,844
63,107,111
31 dec 2012
7,620,200
3,522,987
4,097,213
45,076,971
15,686,285
29,390,686
6,043,844
58,741,015
Effective interest rates on loans and deposits
in %
Long-term loans in
- local currency
Short-term loans in
- foreignl currency
- local currency
Deposits placed with related parties
Short-term deposits
Long-term deposits
172
2013
2012
4.81
4.63
7.13
6.35
4.35
5.24
4.38
4.93
Annual Report
for 2013
Financial receivables
in EUR
Financial receivables arising from investment properties
Other financial receivables
Total
8.5.1
31 Dec 2013
964,705
1,214,944
2,179,649
31 Dec 2012
604,100
5,439,744
6,043,844
Changes in financial assets
in EUR
Balance as at 1 January 2012 (adjusted)
Exchange rate differences
Increase
Change of fair value (+/-) through profit or loss (market
rates)
Change of fair value (+/-) through revaluation surplus
(market rates)
Increase due to interest
Decrease
Fair value
Loans,
through profit
deposits and
or loss - held
financial
for sale
Held to maturity Available for sale receivables
13,710,355
7,679,813
19,356,328
130,694,061
70,170,280
97,864
6,113,745
40,103,640
16,792,185
66,723,363
888,389,375
Fair value through
profit or loss - at
initial recognition
Total
241,610,838
97,864
1,018,122,308
(238,104)
214,858
-
-
-
(23,246)
729,694
(9,652,169)
336,205
(23,750,360)
1,771,067
(4,672,799)
5,239,237
4,150,581
(94,976,608)
3,164,602
(898,617,147)
5,239,237
10,152,150
(1,031,669,083)
Impairment to lower (fair) value – through profit or loss
Balance as at 31 December 2012 (adjusted)
10,663,522
24,682,020
33,246,781
(4,118,477)
107,712,157
63,107,111
(4,118,477)
239,411,591
Spin-off assets
Exchange rate differences
Increase
Change of fair value (+/-) through profit or loss (market
rates)
Change of fair value (+/-) through revaluation surplus
(market rates)
Increase due to interest
Decrease
(0)
10,663,522
15,891,402
2,606,214
27,288,234
48,390
30,021,247
6,127,774
39,374,555
1,044,450
18,462,909
126,175,066
121,654,496
994,197,080
33,688,084
273,099,675
48,390
1,162,808,675
(15,636)
(371,271)
100,019
12,109,021
-
11,822,132
751,231
(17,123,085)
992,149
(31,772,779)
2,899,780
(5,012,533)
(14,049,916)
4,701,717
3,104,806
(112,262,046) (1,009,053,713)
(14,049,916)
12,449,685
(1,175,224,156)
Impairment to lower (fair) value – through profit or loss
10,167,434
26,205,969
(309,916)
38,096,356
173
(12,109,021)
126,219,317
6,491,188
69,598,299
57,846,472
(12,418,937)
258,535,548
Annual Report
for 2013
8.6
UNIT-LINKED LIFE INSURANCE ASSETS
Structure of unit-linked life insurance assets
Net value of
Net value of
investments as at 31 investments as at 31
Name of mutual fund
December 2013
December 2012
ALTA GLOBAL
2,541,156
2,118,261
Deposit redeemable on demand placed with DEŽELNA BANKA SLOVENIJE
1,776,663
d
Deposit redeemable on demand placed with BANKA KOPER d. d.
352,873
44,697
Deposit redeemable on demand placed with ABANKAVIPA D.D.
455,924
528,600
DEUTSCHE BK LOND DB 0 06/01/17
2,790,000
1,074,100
4,927,620
2,739,050
2,624,205
209,888
EKSKLUZIV S.
975,105
GZUR GY
56,515
KD Balkan
11,394,384
1,374,335
KD Bond
2,457,151
466,234
KD Dividendni, delniški
13,265
KD FINANCE
110
KD Galileo
32,176,995
9,084,450
KD Indija - Kitajska
14,458,291
711,002
KD Latinska Amerika
7,988,426
479,389
KD Maximus
5,860,323
KD MM
1,557,312
291,273
KD NOVA ENERGIJA
353,595
KD Novi trgi
12,428,974
160,513
KD Prosperita
1,304,015
419,410
KD Prvi Izbor
11,879,826
1,657,060
KD Rastko
13,583,871
1,987,598
KD Russia
6,660,396
229,245
KD SEVERNA AMERIKA
7,050
KD Surovine in energija
4,381,817
21,465
KD Tehnologija
5,722,475
18,951
KD Victoria
1,864,411
KD Vitalnost
5,507,769
21,186
KD Vzhodna Evropa
5,542,520
1,598
KS Aktivni naložbeni paket
12,460,290
KS Dirigent
8,667,830
KS KD Vrhunski
10,157,274
MAX GARANT PLUS ENKRATNI S.
380,720
MAX GARANT PLUS OBROČNI S.
1,373,789
MAX GARANT S.
6,293,700
Policna posojila
8,886,541
POTENCIAL PLUS S.
570,746
POTENCIAL S.
210,220
PSP MODRA LINIJA
72,670
67,481
PSP OPTIMA
7,022
5,540
PSP PIKA
105,923
124,743
PSP ŽIVA
414,218
408,785
SafePort Focus Fund
70,774
SafePort Gold&Agriculture Fund
8,522
SafePort Gold&Silver Mining Fund
118,782
Safeport LOICK Bio-Products&Bio-Energy Fund
4,891
SafePort Physical Gold 95+ Fund
35,540
SafePort Physical Silver 95+
480,499
SafePort Precious Metals 95+ Fund
82,185
SafePort Silver Mining Fund
374,088
SafePort Strategic Metals&Energy Fund
979,101
TREND PLUS S.
321,640
TREND S.
455,400
VZLE GY
111,219
S kupaj
213,925,866
24,605,609
The investments made for the benefit of unit-linked life insurance policyholders in the total amount of EUR 213,925,868
were completely invested in mutual funds, in accordance with the choice of the policyholders. The assets of the
policyholders invested in the products of DEUTSCHE BK LOND DB 0 12/01/16, DEUTSCHE BK LOND DB 0 06/01/17 and
DEUTSCHE BK LOND DB 0 12/01/27 totalled EUR 10,341,825 and were invested in structured securities linked to the
index of selected equity funds and with the principle guaranteed by the issuer Deutsche Bank AG London. Compared to the
174
Annual Report
for 2013
previous year, the unit-linked investments significantly increased at the end of 2013, mainly due to the life insurance
portfolio transfer from the former insurance company KD Življenje.
Changes in unit-linked life insurance financial assets
in EUR
Spin-off assets
Increase
Decrease
Change of fair value (+/-) through profit or loss (market rates)
Deposit placement
Deposit withdrawal
Accrued interest
Balance as at 31 December
8.7
2013
24,605,609
179,905,347
204,510,956
51,892,283
(42,360,544)
965,783
79,232,483
(80,385,944)
70,849
213,925,866
2012
24,196,126
5,350,391
(4,340,524)
(3,120,264)
12,164,555
(12,645,454)
21,604,830
AMOUNT OF INSURANCE TECHNICAL PROVISIONS TRANSFERRED TO REINSURERS
Share of reinsurers/coinsurers in insurance technical provisions
in EUR
- from insurance contracts for incurred and reported claims
- from insurance contracts for incurred, but not reported claims
Total non-current part
- unearned premiums
- from insurance contracts for incurred and reported claims
- from insurance contracts for incurred, but not reported claims
Total current part
Total
8.8
2013
6,890,163
6,045,741
12,935,904
787,861
8,833,439
3,695,116
13,316,417
26,252,320
2012
6,214,525
4,581,700
10,796,225
664,578
8,839,018
3,414,660
12,918,256
23,714,481
RECEIVABLES
Balance of receivables
in EUR
Receivables from direct insurance operations
Receivables from reinsurance and co-insurance
Current tax receivables
Other receivables
Total receivables
As at 31 Dec
2013
31,221,402
41,540,215
2,259,833
42,419,386
117,440,836
Calculated
Calculated
value
value
adjustment as
adjustment as Net value as at As at 31 Dec
at 31 Dec Net value as at
at 31 Dec 2013 31 Dec 2013
2012
2012
31 Dec 2012
7,978,299
23,243,104
33,159,502
10,404,711
22,754,791
117,067
41,423,147
19,060,239
188,937
18,871,302
2,259,833
1,713,383
1,713,383
3,441,619
38,977,767
22,189,610
6,691,548
15,498,061
11,536,985
105,903,851
76,122,733
17,285,196
58,837,537
As at the 2013 year-end, the receivables increased by 95% compared to the preceding year.
175
Annual Report
for 2013
A major share in total receivables represents other receivables and receivables from reinsurance and coinsurance. At the
2013 year-end, both groups contributed the most to higher total receivables. Compared to the previous year, as at 31
December 2013 receivables from reinsurance and coinsurance were significantly higher due to a 50% quota share
reinsurance contract for motor vehicle insurance concluded in 2012. Pursuant to the provisions of the quota share
reinsurance contract, the bulk of these receivables (totalling EUR 40,701,214) are due on 29 April 2014, thus the charged
amounts will remain outstanding until this date.
Higher other receivables compared to the preceding year were mainly the result of higher receivables for reinsurance
commission, which at the end of 2013 increased due to the quota share reinsurance contract concluded in 2012.
Among the receivables as at 31 December 2013, the receivables from direct insurance operations almost entirely related to
the receivables disclosed by the Company to the policyholders from the insurance premium.
As at 31 December 2013, other receivables from direct insurance operations were offset in the amount of EUR 4,156,460
and other operating receivables totalling EUR 16,946,989.
Every financial year, the Company checks the adequacy of fair value assessments – liquid value of receivables or assess
the net realisable value based on actual realised cash flows in the last observed period for an individual type of receivables
(it applies to receivables from insurance premiums and subrogated receivables). If such data is not available, a projection is
performed based on other credible sources (see Section 6.2).
Changes in receivable allowances
in EUR
As at 1 January 2012
Changes during the year
Spin-off assets
Changes during the year
Receivables
from insurance
operations
22,476,288
(11,756,892)
10,719,396
150,414
10,869,810
(2,774,444)
8,095,366
Subrogations
4,068,173
925,422
4,993,595
4,993,595
(2,923,061)
2,070,534
Other
receivables
1,358,382
213,823
1,572,205
278,161
1,850,366
(479,281)
1,371,085
Total
27,902,843
(10,617,646)
17,285,196
428,575
17,713,771
(6,176,786)
11,536,985
Receivable allowances decreased primarily due to the sale of receivables to Prospera, for which allowances were made at
the book value.
8.9
OTHER ASSETS
Other assets – balance total
in EUR
Inventories
Deferred expenses and accrued revenues
Total
31 Dec 2013
9,728
4,143,930
2,137,408
6,291,066
176
31 Dec 2012
16,966
3,364,431
2,546,542
5,927,939
Annual Report
for 2013
2.9.1
Changes in deferred acquisition costs
in EUR
Utilised in 2012
Formed in 2012
Spin-off assets
Utilised in 2013
Formed in 2013
8.10
Long-term deferred
acquisition costs
0
0
1,254,231
1,254,231
2,508,461
Short-term deferred
acquisition costs
3,552,336
(3,519,457)
3,331,551
3,364,431
113,587
3,478,017
3,647,126
4,231,024
14,834,185
CASH AND CASH EQUIVALENTS
in EUR
Cash on hand and cheques received
Balances on accounts
Short-term deposits redeemable on demand
Short-term deposits placed (maturity date up to 3 months)
Other cash
Total
31 Dec 2013
47,715
1,949,504
7,984,765
116,643
10,098,627
31 Dec 2012
27,556
512,930
10,488,490
490,708
11,519,684
The effective interest rate in 2013 paid on call deposits was between 0.3% and 1.7% (2012: from 0.3% to 1.7%).
177
Annual Report
for 2013
8.11
EQUITY
Balance of equity
in EUR
Share capital
Capital reserves
Reserves from profit
Legal reserves
Reserves for treasury shares
Statutory reserves
Other reserves from profit
Reserves for equalisation of credit risk
Reserves for equalisation of catastrophic claims
Reserves for positive result from supplemental health
insurance
Other reserves from profit
Treasury shares / shares (as deductible item)
Revaluation surplus
Retained net profit
Net profit for the financial year
TOTAL
Number of ordinary shares
Aggregate value of indivisible capital
Aggregate value divisible capital
31 Dec 2013
42,999,530
4,211,782
15,333,563
1,519,600
13,813,963
1,011,998
3,363,797
31 Dec 2012
40,338,758
2,514,276
14,920,976
1,519,600
13,401,376
1,004,578
2,958,631
9,438,167
(2,343,818)
22,576,176
10,410,814
93,188,047
-
5,798,769
3,639,398
(664,988)
17,499,645
11,964,675
86,573,342
9,666,780
50,762,890
42,425,157
53,469,624
33,103,718
For distribution and
not for distribution
categories
not distributable
not distributable
not distributable
not distributable
not distributable
not distributable
not distributable
not distributable
distributable
not distributable
not distributable
distributable
distributable
As at 31 December 2013, the subscribed and fully paid in share capital of the Company amounted to EUR 42,999,530. The
share capital is divided into 10,304,407 ordinary no-par value shares. All shares are registered shares. In 2013, after the
spin-off process of part of assets of the former insurance company KD Življenje, the share capital of Adriatic Slovenica
increased by EUR 2,660,772 or 637,627 ordinary no-par value shares. The increase was entered in the Companies
Register on 1 October 2013. More information is available in Section 4 and shown in the statement of changes in equity
(Section 1.4).
At the General Meeting of Shareholders of 27 May 2013, the direct owner of Adriatic Slovenia and the sole shareholder
adopted the decision to allocate EUR 11,000,000 of the accumulated profit for the dividend payment to shareholders. The
other part of the accumulated profit amounting to EUR 18,464,320 was not distributed and was transferred to the 2013
accumulated profit. Dividends were paid out in full by 31 May 2013.
Ownership structure
As at 31 December 2013, KD Group held 10,304,407 shares, i.e. 100%. In 2013, its stake increased by 637,627 ordinary
no-par value shares.
Distribution of accumulated profit and loss coverage
Adriatic Slovenica ended 2013 with a profit before tax totalling EUR 15,920,603 and a net profit for the year amounting to
EUR 13,583,099. After the completion of financial statements, the management adopted a decision on the use of net profit,
determined the accumulated profit and formed a proposal on accumulated profit distribution.
The Management Board of the Company immediately allocated the net profit before taxes for the year for life insurance in
the amount of EUR 3,146,924 for covering part of the loss arising from life insurance in previous years totalling EUR
3,146,924. The net profit before taxes for the year for pension insurance during the period of annuity payments amounting
178
Annual Report
for 2013
to EUR 39,938 was used for immediate coverage of total loss arising from pension insurance from previous years equalling
EUR 12,840. As at 31 December 2013, the Management Board covered the remaining part of the losses brought forward
for life insurance amounting to EUR 1,352,158 by using the share premium, which exceeded the percentage of mandatory
amount determined by law.
As at 31 December 2013, Management Board of the Company used the profit brought forward from previous years in the
amount of EUR 400,066 to cover in full the current loss arising from unit-linked life insurance.
After covering the losses for the current year and forming share premium, as at 31 December 2013 Management Board of
the Company transferred part of the net profit for the 2013 financial year equalling EUR 10,410,814 to the accumulated
profit.
Reserves and revaluation surplus
The Company forms profit reserves on the basis of the provisions laid down in the Companies Act (ZGD-1) with regard to
forming statutory reserves and on the basis of the decision passed by the Management Board with the approval of the
Supervisory Board with respect to the requirements to achieve and maintain the appropriate capital adequacy level (other
profit reserves).
After 2013 ended, in accordance with the Insurance Act, the Company additionally formed other profit reserves in the
amount of EUR 412,587 for catastrophic risks, of which EUR 293,397 were allocated for catastrophic loss equalisation
(earthquakes), EUR 111,769 for nuclear peril and EUR 7,421 for credit risk equalisation.
Until 2013 the Company also formed other profit reserves from the net profit before taxes of supplemental health insurance
in accordance with the Health Care and Health Insurance Act (ZZVZZ), of which half was allocated to form other profit
reserves, always after determining the net profit before taxes of supplemental health insurance guarantee fund. In 2013, the
amendment to the ZZVZZ-H eliminated the requirement to form profit reserves for a half of the net profit before taxes of
supplemental health insurance. As at 31 December 2013, the Company did not form any new reserves from the half of the
net profit before taxes of supplemental health insurance and remained undecided with respect to the use of reserves
formed in previous years.
Share premium
As at 31 December 2013, the share premium of the Company is divided into payments exceeding the lowest issue amount
of shares or amount of subscribed contributions (paid-in surplus) totalling EUR 1,724,217 and the reversal of general
revaluation equity adjustment amounting to EUR 2,487,565.
In 2013 in the spin-off by acquisition, the Company increased its share premium by paid-in surplus in the amount of EUR
3,049,664 and then used EUR 1,352,158 to cover the loss.
In accordance with the provision of paragraph 10 of Article 64 of the Companies Act (ZGD), share premium and statutory
reserves (tied-up reserves) may be used only under the following conditions:
• if the total amount of this reserves does not reach the percentage of the share capital determined by law or the
Memorandum and Articles of Association, they may only be used for:
to cover a net loss for the financial year if it cannot be covered from a net profit brought forward
or from other profit reserves,
to cover a loss brought forward if it cannot be covered from a net profit for the financial year or
from other profit reserves;
• if the total amount of these reserves exceeds the percentage of share capital determined by law or the
Memorandum and Articles of Association, the surplus amount of these reserves may be used to cover a net loss
brought forward if it cannot be covered from a net profit for the financial year, provided that profit reserves are not
simultaneously used for a payout of profit to the members.
179
Annual Report
for 2013
Treasury shares
In 2013, neither the Company nor any third party for the account of the Company accepted any new treasury shares as
security. Moreover, as at 31 December 2013 neither the Company nor any third party for the account of the Company held
any treasury shares as security.
Revaluation surplus
The revaluation surplus entirely refers to revaluation of non-current financial assets available for sale at fair value. Within
equity, the revaluation surplus was decreased by the deferred taxes payable.
As at the 2013 year-end, the revaluation surplus from pension insurance amounting to EUR 24,826 was recognised as an
increase in mathematical provisions.
Surplus arising from the revaluation of available-for-sale financial assets – balance
in EUR
Revaluation surplus associated with non-current available-for-sale financial assets
31 Dec 2013
(2,343,818)
31 Dec 2012
(664,988)
Revaluation surplus from financial investments, which belong to holders of
life insurance policies with DPF
Total
-
6,769
(2,343,818)
(664,988)
Changes in revaluation surplus from available-for-sale financial assets with profit
in EUR
Spin-off assets
Effect of lowered tax rate
Profits (losses) recognised in revaluation surplus
Net change due to revaluation
Change in deferred taxes due to revaluation
Transfer of profits (losses) from revaluation surplus to profit or loss
Change in revaluation surplus transferred on disposal to profit or loss
Change in deferred taxes on realisation of revaluation surplus
Transfer of negative revaluation surplus to profit or loss on impairment
The change deferred taxes from impairments through profit or loss
180
2013
(664,988)
(492,914)
(1,157,902)
13,786
6,872,546
8,280,176
(1,407,630)
(8,072,248)
2012
(3,469,197)
(173,467)
3,196,751
3,805,656
(608,905)
(219,076)
2,709,488
1,495,154
(460,545)
(12,435,168)
2,113,979
(2,343,818)
(239,225)
(1,755,959)
280,953
(664,988)
Annual Report
for 2013
8.12
INSURANCE TECHNICAL PROVISIONS
Insurance technical provisions (liabilities arising from insurance contracts) – gross and net
Gross +
received coinsurance as
at 31 Dec
2013
in EUR
Reinsurance +
ceded coinsurance as t
31 Dec 2013
Net as at 31
Dec 2013
40,856,151
Unearned premiums
41,562,648
706,497
Claims provisions for
117,654,433
25,336,004
Gross +
received co- Reinsurance +
insurance as
ceded coat 31 Dec
insurance as
2012
at 31 Dec 2012
92,318,429
Net as t 31
Dec 2012
46,078,029
612,688
45,465,342
125,841,655
23,033,555
102,808,101
- reported claims
53,054,814
15,595,147
37,459,668
56,215,800
15,037,195
41,178,606
- not reported claims
64,599,619
9,740,857
54,858,761
69,625,855
7,996,360
61,629,495
397,179
-
397,179
613,143
-
613,143
Provisions for bonuses and discounts
Total non-life insurance
2,056,111
-
161,670,371
26,042,501
2,056,111
2,138,203
135,627,870
174,671,030
23,646,242
2,138,203
151,024,788
Unearned premiums
9,219,471
-
9,219,471
10,272,798
-
10,272,798
6,091,059
-
6,091,059
6,533,655
-
6,533,655
- reported claims
969,034
-
969,034
507,524
-
507,524
5,122,025
-
5,122,025
6,026,131
-
6,026,131
-
514
6,688
Provisions for bonuses and discounts
790
-
790
514
Mathematical provisions
-
-
-
6,688
-
-
-
-
-
-
Total health insurance
15,311,320
-
15,311,320
16,813,654
-
16,813,654
Unearned premiums
534,060
81,364
452,695
536,191
51,890
484,300
6,346,980
128,455
6,218,524
928,084
16,348
911,736
- reported claims
1,736,338
128,455
1,607,882
433,143
16,348
416,795
4,610,642
-
4,610,642
494,941
-
494,941
94,975,223
-
94,975,223
70,004,702
-
70,004,702
Mathematical provisions
462,628
-
462,628
251,730
-
251,730
Total life insurance with DPF
102,318,889
209,820
102,109,070
71,720,707
68,239
71,652,468
Total liabilities arising from insurance contracts
279,300,580
26,252,321
253,048,260
263,205,391
23,714,481
239,490,910
Overview of mathematical provisions by guarantee fund and type of contract
Long-term business fund
in EUR
Life insurance
Pension insurance
Supplementary health insurance
Other health insurance
Additional pension insurance during annuity payment period
Long-term business fund Fond Polica
Long-term business fund FP Dirigent
Long-term business fund FP Aktivni paket
Long-term business fund KD Vrhunski
Total – long-term business funds
Registration
number of
long-term
business fund
5063361022
5063361021
5063361024
5063361023
5063361026
5063361027
5063361028
5063361029
5063361031
5063361030
181
Gross
provision
31 Dec 2013
88,734,198
5,843,988
25,868,399
397,036
149,213,654
11,450,232
13,152,486
12,147,841
306,807,834
Reinsurance
provision
31 Dec 2013
-
Net provision
31 Dec 2013
Net provision
31 Dec 2012
88,734,198
5,843,988
25,868,399
397,036
149,213,654
11,450,232
13,152,486
12,147,841
306,807,834
63,785,318
5,801,146
24,009,497
6,688
418,239
94,020,887
Annual Report
for 2013
Changes in insurance technical provisions
in EUR
Movements in unearned premium
Spin-off assets
Increase in liabilities
Decrease in liabilities
Gross 2013
Reinsurance
2013
Net 2013
Gross 2012
Reinsurance
2012
Net 2012
56,887,018
46,642
56,933,659
49,391,602
55,009,083
664,578
664,578
787,861
664,578
56,222,440
46,642
56,269,081
48,603,741
54,344,505
58,582,110
54,014,559
55,709,651
691,506
664,578
691,506
57,890,603
53,349,981
55,018,144
51,316,179
787,861
50,528,318
56,887,018
664,578
56,222,440
70,011,390
-
70,011,390
68,942,117
-
68,942,117
Spin-off assets
27,973,807
-
27,973,807
-
-
-
97,985,197
-
97,985,197
-
-
-
Increase in the period
10,468,005
-
10,468,005
12,726,042
-
12,726,042
Decrease in the period
14,201,190
-
14,201,190
11,877,270
-
11,877,270
723,211
-
723,211
220,501
-
220,501
94,975,223
-
94,975,223
70,011,390
-
70,011,390
Reported claims
57,156,467
15,053,543
42,102,925
56,715,655
8,579,737
48,135,918
Not reported claims
76,146,928
7,996,360
68,150,568
83,874,075
651,920
83,222,155
133,303,395
23,049,903
110,253,492
140,589,731
9,231,657
131,358,074
5,974,928
168,287
5,806,641
-
-
-
139,278,323
23,218,190
116,060,133
-
-
-
41,103,903
8,146,863
32,957,040
38,766,444
2,081,462
36,684,982
(18,612,426)
(2,039,050)
(16,573,375)
(26,029,411)
805,973
(26,835,384)
50,530,477
12,432,183
38,098,294
57,509,519
15,093,735
42,415,784
Reported claims
55,760,185
15,723,602
40,036,584
57,156,467
15,053,543
42,102,925
Not reported claims
74,332,286
9,740,857
64,591,428
76,146,928
7,996,360
68,150,567
130,092,471
25,464,459
104,628,012
133,303,395
23,049,903
110,253,492
3,003,589
-
3,003,589
2,400,333
-
2,400,333
461,733
-
461,733
-
-
-
3,465,322
-
3,465,322
-
-
-
2,414,659
-
2,414,659
2,721,300
-
2,721,300
2,963,273
-
2,963,273
2,118,044
-
2,118,044
2,916,708
-
2,916,708
3,003,589
-
3,003,589
Movements in mathematical provisions
Change of current-year DPF part
Movements in claims outstanding
Spin-off assets
Decrease in provisions due to payments
Change in provisions from preceding years +/Increase in provisions in the current year
Movements in other insurance technical provisions
Spin-off assets
182
Annual Report
for 2013
8.13
INSURANCE TECHNICAL PROVISIONS FOR UNIT-LINKED LIFE INSURANCE POLICYHOLDERS
Insurance technical provisions for unit-linked life insurance policyholders
in EUR
Claims provisions
- reported claims
Provisions for unit-linked life insurance policyholders
Reinsurance +
Gross +
Reinsurance +
Gross + received coceded coreceived coceded coinsurance as at 31 insurance as at Net as at 31 Dec insurance as at insurance as
Dec 2013
31 Dec 2013
2013
31 Dec 2012 at 31 Dec 2012
244,820
244,820
1,121
244,820
244,820
1,121
211,832,611
24,009,497
211,832,611
-
Total unit-linked life insurance
212,077,431
-
212,077,431
24,010,618
-
Net as at 30
Dec 2012
1,121
1,121
24,009,497
24,010,618
Changes in technical provisions for unit-linked life insurance policyholders
in EUR
Movements in claims outstanding
Reported claims
Not reported claims
Spin-off assets
Decreased provisions due to payments
Change in provisions from preceding years +/Increase in provisions in the current year
Reported claims
Not reported claims
Movements in claims outstanding for reported
and non-reported claims for unit-linked life
insurance policyholder
Spin-off assets
8.14
Gross 2013
Reinsurance
2013
Net 2013
Gross 2012
Reinsurance
2012
Net 2012
1,121
1,121
110,513
111,634
60,521
(1,567)
195,274
244,820
244,820
-
1,121
1,121
110,513
111,634
60,521
(1,567)
195,274
244,820
244,820
8,829
8,829
5,608
(2,100)
1,121
1,121
-
8,829
8,829
5,608
(2,100)
1,121
1,121
24,009,497
177,218,929
201,228,426
33,244,547
22,640,361
211,832,611
-
24,009,497
177,218,929
201,228,426
33,244,547
22,640,361
211,832,611
18,102,073
8,567,857
2,660,432
24,009,497
-
18,102,073
8,567,857
2,660,432
24,009,497
OTHER PROVISIONS
As at 31 December 2013, other provisions totalled EUR 2,766,811 and comprised provisions for severance pay in the
amount of EUR 828,220 and provisions for jubilee benefits equalling EUR 1,938,592. In 2012, the provisions for severance
pay amounted to EUR 1,138,450 and the provisions for jubilee benefits to EUR 1,692,193.
Changes in provisions for employee benefits
in EUR
Spin-off assets
Increase in the current period
2013
2,830,643
204,044
3,034,687
319,967
2012
2,554,485
2,554,485
337,020
Decrease due to paid termination benefits and jubilee benefits
Other changes
(346,056)
(241,786)
2,766,812
(297,260)
236,398
2,830,643
183
Annual Report
for 2013
The calculation for 2013 used different assumptions about the discount rate and other mortality tables than in 2012.
Moreover, the new pension legislation in force from 1 January 2013 was taken into account. The provisions as at 31
December 2013 also include all taxes and contributions. The effect of changes in assumptions and the new legislation
amounted to EUR –39,895 (2012: EUR 259,876)
8.15
OTHER FINANCIAL LIABILITIES
Changes in loans and other current financial liabilities
in EUR
Spin-off assets
Increase
Decrease
2013
3,987,252
23,060
4,010,312
356,103
(3,273,625)
1,092,790
2012
419,223
419,223
3,578,296
(10,267)
3,987,252
Offset of other financial liabilities was made at the Company level between financial liabilities and financial receivables in
the total amount of EUR 978,169. As at 31 December 2013, the liabilities for received loans equalled EUR 336,628.
The interest rate on loans is the respective applicable interest rate equal to the interest rate for interest on loans between
related parties in accordance with the Rules on the recognised interest rate. None of the received loans were specially
secured.
8.16
OPERATING LIABILITIES
Adriatic Slovenica d. d. has no secured liabilities.
Operating liabilities
in EUR
Liabilities arising from direct insurance contracts
Liabilities arising from reinsurance and co-insurance
Tax liability
Total
31 Dec 2013
6,037,334
84,425,515
2,424,641
92,887,490
31 Dec 2012
5,447,091
44,927,684
827,782
51,202,556
Compared to 2012, the operating liabilities as at the 2013 year-end increased mainly as a result of higher liabilities from
reinsurance and co-insurance. The Company recognised more of these liabilities due to a 50% quota share motor vehicle
reinsurance contract (concluded in 2012). As at 31 December 2013, these liabilities included liabilities from reinsurance
premiums not yet due totalling EUR 82,657,749. According to the contract, they are due on 29 April 2014.
For 2013 the Company accounted for the current tax liabilities at a 17% tax rate, initially by individual guarantee funds
rather than by individual statements. The current tax liability is shown in the table above in the amount as charged at the
Company level (see notes in Section 8.24).
184
Annual Report
for 2013
8.17
OTHER LIABILITIES
Other liabilities
in EUR
Liabilities for dividend payment
Other operating (trade) liabilities
Accrued costs/expenses and deferred revenues
Total
31 Dec 2013
2,223
27,909,451
7,999,252
35,910,926
31 Dec 2012
2,223
9,322,588
6,990,703
16,315,514
Adriatic Slovenica does not have any liabilities with a maturity date over 5 years.
8.17.1 Other operating liabilities
The bulk of other operating liabilities is accounted for by other current operating liabilities (40%). As at 31 December 2013,
these liabilities amounted to EUR 7,674,445 (2012: EUR 9,322,588 ) and primarily included expenses for acquisition fees
(Fond insurance policies).
Other operating liabilities include non-current operating liabilities totalling EUR 2,059,205, mostly acquired upon the
acquisition of assets of the former insurance company KD Življenje and with a maturity less than 5 years. In addition, other
operating liabilities include liabilities from suppliers equalling EUR 3,788,667, other liabilities arising from insurance
transactions in the amount of EUR 3,085,850 , operating liabilities from employees totalling EUR 2,300,420 and other
operating liabilities equalling EUR 419,757.
8.17.2 Accrued expenses and deferred income
Accrued expenses and deferred income
in EUR
Accrued expenses - operating
Accrued expenses - for unused annual holidays
Prepaid expenses - acquisition costs and unexpired commissions
Prepaid expenses from equalisation scheme for supplementary health insurance
Other deferred and accrued items
Total
185
31 Dec 2013
1,163,562
1,260,167
859,450
1,167,585
1,781,280
6,232,043
31 Dec 2012
2,211,797
919,580
815,736
1,876,556
1,167,034
6,990,703
Annual Report
for 2013
8.18
INCOME
8.18.1 Premium income from insurance and financial contracts
Net premium income from insurance and financial contracts in 2013
Change in
in EUR
Reinsurers'/
unearned
coinsurers' share Change in gross
premiums for
Written gross
in written
unearned
reinsurance and
insurance premiums
premiums
premiums
coinsurance share
Net revenues
from insurance
premiums
41,820,425
(19,665,895)
1,658,424
(1,577)
23,811,377
Accident insurance
35,342,445
16,650,947
15,458,453
11,615,136
6,632,845
(19,742,486)
(3,735,651)
(3,701,909)
(1,271,065)
(599,190)
1,679,012
346,558
(97,425)
84,113
(131,147)
52,697
15,415
8,962
(12,211)
23,727
17,331,668
13,277,269
11,668,081
10,415,974
5,926,235
Credit insurance
Other non-life insurance, excluding health insurance
61,838
-
1,005,005
-
1,066,843
9,377,645
(1,671,713)
(29,158)
6,795
7,683,568
Insurance contracts for non-life insurance, excluding health
insurance
136,959,734
(50,387,909)
4,515,381
93,809
91,181,016
112,602,959
1,053,326
-
113,656,286
(983,796)
48,773
29,474
18,265,785
37,012,119
0
-
-
37,012,119
652,933
-
-
-
652,933
Insurance contracts with discretionary participation feature
19,171,334
Unit-linked insurance contracts
Investment contracts with discretionary participation feature
Total
-
56,836,385
(983,796)
48,773
29,474
55,930,837
306,399,078
(51,371,704)
5,617,481
123,283
260,768,138
Net premium income from insurance and financial contracts in 2012
Change in
unearned
Reinsurers'/
in EUR
Written gross
insurance premiums
coinsurers' share Change in gross
premiums for
in written
unearned
reinsurance and
premiums
premiums
coinsurance share
Net revenues
from insurance
premiums
46,828,894
(22,120,376)
1,258,221
1,932
25,968,672
Land motor v ehicle insurance
Accident insurance
40,069,487
18,068,815
15,477,648
12,436,597
6,598,137
(21,351,197)
(4,118,719)
(4,337,100)
(1,420,581)
(358,548)
1,084,610
(134,158)
(236,782)
(42,485)
(76,957)
13,818
938
61,802
(1,976)
(92,211)
19,816,719
13,816,876
10,965,568
10,971,555
6,070,421
949,069
(1,240)
1,064,160
Credit insurance
Other non-life insurance, ex cluding health insurance
116,331
-
9,757,333
(1,614,300)
(72,947)
(718)
8,069,367
insurance
149,353,242
(55,320,820)
2,728,571
(17,656)
96,743,338
107,452,224
Insurance contracts for non-life insurance, excluding health
-
7,817,382
3,844,683
-
-
-
3,844,683
685,770
-
-
-
685,770
(9,273)
106,450,787
Total
7,096
-
Insurance contracts with discretionary participation feature
Inv estment contracts with discretionary participation feature
(292,486)
(1,001,437)
7,522,719
12,347,835
(292,486)
7,096
(9,273)
12,053,172
269,153,301
(55,613,306)
1,734,230
(26,928)
215,247,297
186
Annual Report
for 2013
8.18.2 Financial income and expenses from investments and investments in associates
Financial income and expenses from investments in 2013
in EUR
Financial revenues arising from interest and dividend
Financial revenues arising from interest
Financial revenues arising from dividend
Financial revenues arising from unrealised gains
Financial revenues arising from net unrealised gains (i.e.
reversals of impairment)
Financial revenues arising from net positive foreign
exchange differences
REVENUES FROM INVESTMENTS
Financial expenses arising from investments in associates
due to impairment
Financial expenses arising from impairment of financial
assets not measured at fair value through profit or loss
Financial expenses arising from realised capital losses
Financial expenses arising from net unrealised capital
losses
Financial expenses arising from net negative foreign
EXPENSES FOR I NVESTMENTS
Net financial result from investments
Financial
investments heldto-maturity
2,868,271
2,868,271
-
Financial
investments
available for
sale
4,562,968
3,794,792
768,176
4,235,774
2,868,271
-
(309,916)
(2,419,298)
(2,729,214)
139,057
8,798,742
(643,978)
Financial
Financial
investments at investments at
Financial
fair value
fair value
investments in
through profit through profit or
loans and
or loss – held
loss – at initial
financial
for sale
recognition
receivables
908,216
862,950
45,266
191,999
2,429,977
2,234,994
194,983
890,558
52
9,560
1,100,267
3,330,095
-
-
4,118,926
4,118,926
2,677
4,121,603
Total
14,888,358
13,879,934
1,008,425
5,318,331
9,612
2,677
20,218,978
-
(643,978)
(1,526,287)
(1,820)
(90,996)
-
(309,916)
(4,038,401)
(12,435,168)
(371,324)
(1,514,178)
-
(14,320,669)
(14,605,433)
(5,806,691)
(373,144)
727,124
(1,605,174)
1,724,921
187
4,121,603
(19,312,964)
906,013
Annual Report
for 2013
Financial income and expenses from investments in 20123
in EU R
Financial revenues arising from interest and dividend
Financial revenues arising from interest
Financial revenues arising from dividend
Financial revenues arising from unrealised gains
Financial revenues arising from net unrealised gains (i.e.
reversals of impairment)
Financial revenues arising from net positive foreign
1,408,866
1,408,866
-
REVENUES FROM INVESTMENTS
Financial expenses arising from investments in associates
due to impairment
1,408,866
Financial expenses arising from impairment of financial
assets not measured at fair value through profit or loss
Financial expenses arising from realised capital losses
Financial expenses arising from net unrealised capital
losses
Financial expenses arising from net negative foreign
EXPENSES FOR INVES TMENTS
Net financial result from investments
3
Financial
investments heldto-maturity
Financial
investments
available for
sale
4,554,317
4,149,052
405,265
2,322,771
-
-
-
-
(131,194)
-
6,877,089
(2,362,519)
(827,617)
(4,118,477)
(131,194)
1,277,672
(7,308,613)
(431,524)
Financial
Financial
investments at investments at
Financial
fair value
fair value
investments in
through profit through profit or
loans and
loss – at initial
financial
or loss – held
for sale
recognition
receivables
471,599
434,069
37,530
389,885
729,694
729,694
415,440
214,850
1,770,172
1,076,334
-
(56,808)
(56,808)
1,019,526
2,915,306
-
Total
12,099,608
11,656,813
442,795
3,128,096
1,985,022
9,936
9,936
4,945,068
17,222,662
-
-
(2,362,519)
-
-
(131,194)
(884,425)
-
(4,333,911)
(215,434)
(215,434)
2,699,872
FI stands for Financial investments. The abbreviation can be found in the tables 'Financial income and expenses from investments for 2013 and for 2012'.
188
4,935,132
4,935,132
-
4,945,068
(7,712,048)
9,510,614
Annual Report
for 2013
Net gains/losses from held-for-trading financial assets
in EUR
Realised profits
Unrealised profits
Realised losses
Unrealised losses
Total
2013
897,637
1,219,229
(707,458)
(1,590,500)
(181,092)
2012
1,054,176
835,968
(721,098)
(621,118)
547,927
Net gains/losses from financial assets at initial recognition through profit or loss, excluding investment risk
in EUR
Realised profits
Unrealised profits
Realised losses
Unrealised losses
Total
2013
178,260
276,194
(290,866)
(291,831)
(128,242)
2012
205,126
689,824
(17,662)
(927,929)
(50,641)
The revaluation effects of available-for-sale financial assets for 2013 are recognised in other comprehensive
income and are presented in Section 8.11.
Impairment of securities of available-for-sale financial assets
in EUR
Impairment through profit and loss
Equity securities
Debt securities
Government bonds
Total
2013
3,992,518
8,442,650
12,435,168
2012
4,113,118
4,113,118
By 30 September 2013, the following impairments were made for available-for-sale financial assets: for
investments in subordinated bonds of Probanka totalling EUR 3,821,765, for Probanka shares in the amount of
EUR 1,563,928 and for investments in subordinated bonds of Factor banka equalling EUR 4,498,545. Impairment
losses were recognised among financial expenses for available-for-sale financial assets in the profit and loss
statement.
Impairment of securities of held-to-maturity financial assets
in EUR
Impairment through profit and loss
Debt securities:
Government bonds
Total
2013
2012
309,916
309,916
-
By 30 September 2013, the following impairments were made for held-to-maturity assets: for investments in
subordinated bonds of Probanka equalling EUR 100,019 and for investments in subordinated bonds of Factor
banka totalling EUR 209,897. Impairment losses were recognised among financial expenses in the profit and loss
statement.
189
Annual Report
for 2013
8.18.3 Other insurance income
Management commission income and other insurance income
in EUR
Fee and commission income
Revenues from reinsurance fees/commissions and from shares in
positive technical result from individual reinsurance contracts
Revenues from front-end/entry costs for insurance contracts
Other management fee income
Other fee income for management of insurance contracts
Total
2013
21,584,161
2012
12,555,036
14,599,638
12,528,747
6,984,523
2,495,217
26,289
464,682
2,495,217
24,079,378
464,682
13,019,718
8.18.4 Other operating income
Other operating income
in EUR
Other net insurance revenues
Revaluation operating revenues
Revenues arising from rents charged for investment
properties
Revenues arising from disposals of investment properties
Other operating revenues
Other operating revenues
2013
9,794,103
6,562,547
2012 adjusted
1,992,826
1,218,767
2012
7,299,207
1,218,767
1,547,877
2,087,108
19,991,636
1,652,439
8,417
668,510
5,540,958
1,652,439
8,417
664,944
10,843,774
The majority of other operating income includes other net insurance income as a result of the acquisition of the
life insurance portfolio from the former KD Življenje. Revaluation operating income increased due to the sale of
receivables to the subsidiary Prospera d.o.o., releasing the adjustments made by the Company and,
consequently, increasing its revaluation income.
190
Annual Report
for 2013
8.19
NET CLAIMS INCURRED
Net claims incurred in 2013
Revenues from
Gross claims settled recourse receivables
27,891,112
(1,002,533)
29,857,182
(703,761)
7,247,411
(4,970)
8,347,944
(75,185)
8,913,757
(17,057)
3,660,830
(27,407)
1,048,465
(892,136)
in EUR
Accident insurance
Fire and natural disasters Insurance
Credit insurance
Other non-life insurance, excluding health insurance operations
Share of reinsurance/
coinsurance in claims/
benefits paid
(8,369,877)
(13,698,501)
(460,463)
(1,047,300)
(526,629)
(281,860)
-
Change in outstanding
Change in gross
claims provisions for
outstanding claims
reinsurance/
Expenses from
provisions
coinsurance share equalisation scheme
(5,882,595)
(2,903,189)
(810,647)
145,095
(1,373,009)
(201,324)
(1,163,952)
877,849
517,525
(121,100)
625,841
24,427
(72,777)
-
Net expenses for claims/
benefits paid
9,732,918
14,789,367
5,207,646
6,939,356
8,766,496
4,001,831
83,552
3,407,449
(69,522)
(607,721)
(27,608)
(124,208)
-
2,578,390
90,374,150
(2,792,571)
(24,992,350)
(8,187,223)
(2,302,449)
-
52,099,557
91,938,863
(74,271)
Life insurance
12,088,396
-
21,065,802
-
710,717
-
Non-life insurance contracts, excluding health
insurance contracts
Additional pension insurance
Insurance contracts and investment life insurance
contracts
Total
33,864,915
-
-
216,177,928
(442,596)
-
4,304,559
95,726,554
(556,032)
56,180
-
11,297,024
-
133,186
-
-
21,198,988
-
-
-
-
710,717
(291,520)
(2,866,842)
(291,520)
(422,846)
56,180
-
33,206,728
(25,283,870)
(9,052,665)
(2,246,270)
4,304,559
181,032,840
The increase in net claims incurred in 2013 was partly impacted by operating expenses and other operating
expenses in the total amount of EUR 6,162,300 carried forward to the gross claims incurred.
Net claims incurred in 2012 - adjusted
Change in
outstanding claims
in EUR
Accident insurance
Fire and natural disasters Insurance
Share of reinsurance/ Change in gross
provisions for
Gross claims settledRevenues from coinsurance in claims/ outstanding claims
reinsurance/
Expenses from equalisation
adjusted
Gross claims settled recourse receivables
benefits paid
provisions
coinsurance share
scheme
28,732,970
27,573,943
(1,819,253)
(6,685,447)
(7,543,030)
(9,011,201)
-
Net expenses for claims/
benefits paid
3,674,039
31,872,227
8,020,235
8,726,782
10,162,172
30,520,828
7,480,695
8,210,856
9,676,113
(1,089,103)
(1,197)
(152,173)
(19,891)
(12,321,758)
(268,219)
(452,289)
(421,974)
(1,774,799)
(1,084,050)
2,335,921
421,735
(3,593,984)
(702,466)
(772,809)
(78,933)
-
13,092,583
5,964,303
9,685,431
10,063,108
Credit insurance
3,941,301
1,708,386
3,769,874
1,690,943
(90,196)
(1,846,712)
(353,924)
(12,523)
(407,163)
(264,693)
219,545
17,511
-
3,309,563
(398,032)
Other non-life insurance, excluding health insurance operations
4,750,509
4,368,717
(92,067)
(458,555)
(407,594)
89,219
-
3,881,511
97,914,581
93,291,969
(5,110,591)
(20,974,690)
(8,723,672)
(13,833,120)
-
49,272,507
-
-
Non-life insurance contracts, excluding health
insurance contracts
86,678,289
85,169,214
(195,782)
Life insurance
6,160,469
5,948,062
(8)
3,097,544
2,987,896
-
-
Additional pension insurance
901,969
883,938
-
-
10,159,982
9,819,896
(8)
194,752,852
188,281,078
(5,306,381)
Insurance and financial contracts - life insurance
Total
-
1,395,530
-
3,469,920
91,347,957
41,807
14,874
-
6,154,378
(7,707)
-
-
3,089,836
-
-
-
901,969
(62,764)
34,099
14,874
-
10,146,183
(21,037,454)
(7,294,043)
(13,818,246)
3,469,920
150,766,647
(62,764)
The net claims incurred for 2012 were adjusted or increased for the retained portion of operating expenses and
other operating expenses totalling EUR 6,471,774. The disclosure of net claims incurred was also adjusted for
”Income from subrogation receivables“ (more information in Section 3.1).
191
Annual Report
for 2013
Net claims incurred classified into expenses for the current year and expenses for previous years
in EUR
Expenses for claims and benefits paid for current
year
Gross 2013 Reinsurance 2013
226,531,040
29,569,190
Claims and benefits paid
Change in outstanding claim provisions
Expenses from equalisation scheme
Expenses for claims and benefits paid for
previous years
Claims and benefits paid
Change in outstanding claim provisions
Total
8.20
Net2013
196,961,851
Gross 2012
211,409,569
Reinsurance
2012
34,049,727
Net 2012
177,359,842
171,500,731
50,725,751
4,304,559
17,137,007
12,432,183
-
154,363,724
38,293,568
4,304,559
150,430,130
57,509,519
3,469,920
18,955,992
15,093,735
-
131,474,138
42,415,784
3,469,920
(17,968,062)
41,810,355
(2,039,050)
8,146,863
(15,929,011)
33,663,492
(25,787,222)
39,016,340
805,973
2,081,462
(26,593,195)
36,934,877
(59,778,416)
(10,185,913)
(49,592,503)
(64,803,562)
(1,275,489)
(63,528,073)
208,562,979
27,530,140
181,032,839
185,622,347
34,855,700
150,766,647
COSTS
8.20.1 Costs by natural groups
in EUR
Operating costs for material
Acquisition costs
Operating costs for services
Depreciation/amortisation
Labour costs
Payroll – wages and salaries
Social security costs
Pension insurance costs
Other labour cost
Provisions for termination benefits and jubilee benefits
Total
2013
1,349,949
23,856,776
20,982,822
3,109,217
27,243,602
19,893,016
1,387,938
1,937,319
3,747,542
277,786
76,542,366
2012 -adjusted
1,183,987
19,858,347
18,361,687
2,641,676
24,862,920
17,883,292
1,355,360
1,622,577
3,407,985
593,706
66,908,616
The Company charges the input VAT to its costs as percentage of the tax deductible input VAT, decreasing the
costs for the amount equal to the input VAT.
8.20.2 Costs by functional groups
in EUR
Costs related to acquisition of insurance and investment contracts
Costs related to financial asset management
Costs related to PPE management
Other costs for management fees
Costs of sale
Other costs/expenses
Total costs/expenses by functional groups
2013
20,417,630
1,733,034
546,946
2,240,802
21,815,615
23,652,738
70,406,765
2012 -adjusted
19,671,222
1,372,879
487,447
3,564,834
21,062,913
14,277,547
60,436,843
8.20.3 Labour costs for own agents
In EUR
Labour costs
Wages and salaries
Social security costs
Pension insurance costs
Other labour cost
Costs of services provided by private individuals
Total
2013
6,857,877
4,945,037
370,443
553,587
988,811
369,043
7,226,921
192
2012
6,915,262
5,065,812
378,189
461,843
1,009,418
283,723
7,198,985
Annual Report
for 2013
8.20.4 Auditor’s remuneration
The audit of annual financial statements of Adriatic Slovenica for 2013 was performed by the audit firm KPMG
Slovenija d.o.o., while the audit for 2012 was conducted by the audit firm Ernst & Young d.o.o.
Fees paid for auditor’s services in 2013
in EUR
Statutory audit of the annual report 2011
Other audit services
Tax counselling services
Other non-audit services
KPMG Slovenija d.o.o.
75,579
60,993
-
Total fees for independent auditor's services
Other
136,572
10,960
19,311
4,792
Total
10,960
75,579
60,993
19,311
4,792
35,063
171,635
21,034
228,675
Total
7,366
74,338
21,034
228,675
249,709
331,413
Fees paid for auditor’s services in 2012
v EUR
Other audit services
Tax counselling services
Other non-audit services
Ernst & Young d.o.o.
7,366
74,338
-
Total fees for independent auditor's services
81,704
Other
8.20.5 Operating lease
The Company mainly uses operating lease to rent the business premises in which it conducts its operating activities. To a
lesser extent, it also concluded operating lease agreements for parking facilities, computer hardware, office and other
equipment. Most operating lease agreements were concluded for an indefinite period and some for a fixed period. All
agreements concluded for a fixed period may be terminated, the last such agreement falling due in 2018. Of all operating
lease agreements, as at 31 December 2013 the longest operating leases of the Company were contracted until 2019,
provided that the operating lease terms and conditions remain unchanged.
All expenses arising from operating lease agreements are directly recognised in the profit and loss statements as rental
costs on a straight-line basis over the entire lease term.
8.21
OTHER INSURANCE EXPENSES
Other insurance expenses
in EUR
Expenses for preventive activities
Contribution for covering losses caused by uninsured and unknown vehicles
Other net insurance expenses
Total
2013
829,925
40,787
25,498,368
26,369,081
2012
13,187,505
174,798
3,786,914
17,149,217
Other net insurance expenses account for the largest portion among other insurance expenses and mainly relate
to expenses for management commissions and write-offs of receivables.
193
Annual Report
for 2013
8.22
OTHER EXPENSES
Other expenses
in EUR
Revaluation operating expenses
Expenses for depreciation of investment properties
Other expenses for investment properties
Expenses for disposal of investment properties
Other operating expenses
Finance expenses
Total
2013
486,185
345,306
298,381
994,128
1,235,992
1,641,804
5,001,796
2012
68,181
330,667
405,550
1,484,634
396,507
2,685,540
The majority of other expenses in 2013 is accounted for by other operating expenses and financial expenses. A
significant portion of other operating expenses or almost a half is accounted for by administrative taxes and legal
expenses related to collection procedures, followed by expenses for membership fees for the Chamber and
associations as well as other similar expenses.
8.22.1 Financial expenses
Financial expenses
in EUR
Finance expenses for interest - issued bonds
Finance expenses for interest -other
Other finance expenses
Finance expenses arising from other financial liabilities
Finance expenses arising from fees and commissions
Finance expenses arising from operating liabilities
2013
13,698
1,628,106
1,079,579
78,569
469,958
1,641,804
Total
194
2012
10,703
385,804
175,674
78,569
131,561
396,507
Annual Report
for 2013
8.23
REINSURANCE RESULT
The reinsurance result shown below by insurance class presents the net reinsurance result, which does not
include any reinsurance premiums or claims.
Reinsurance result for non-life insurance in 2013
Insurance class
in EUR
Accident insurance
Health insurance
Aircraft insurance
Credit insurance
Insurance of assiistance
Reinsurance
premiums
3,735,651
19,742,486
661
70,011
223,575
3,533,741
1,261,560
Reinsurance
claims
460,463
13,698,501
19,989
1,035,834
526,521
Gross
reinsurance
result
3,275,188
6,043,985
661
70,011
203,586
2,497,907
735,039
Reinsurance
commissions
1,179,976
6,031,593
9,769
512,647
55,925
Net
reinsurance
result
2,095,212
12,392
661
70,011
193,817
1,985,261
679,114
19,665,895
16,197
64,598
539,135
44,536
97,000
72,307
1,082,648
50,150,002
8,369,877
271,069
542
(32)
587,189
24,969,953
11,296,019
16,197
64,598
268,066
44,536
96,457
72,339
495,460
25,180,049
6,282,178
1,607
3,831
15,643
24,744
350,213
14,468,125
5,013,841
14,589
64,598
264,236
44,536
80,814
47,594
145,247
10,711,924
Reinsurance result for non-life insurance in 2012
Insurance class
in EUR
Accident insurance
Health insurance
Aviation insurance
Credit insurance
Insurance of assiistance
Reinsurance
premiums
4,118,719
21,351,197
661
78,928
166,932
4,163,399
1,384,621
22,120,376
14,347
67,640
288,179
60,305
70,603
89,391
1,065,271
55,040,569
195
Gross
Net
Reinsurance reinsurance Reinsurance reinsurance
claims
result
commissions
result
268,219
3,850,499
1,034,195
2,816,304
12,321,758
9,029,439
5,121,976
3,907,463
661
661
(13)
78,941
78,941
23,975
142,958
5,111
137,846
436,996
3,726,402
439,133
3,287,270
413,086
971,535
3,746
967,790
6,686,812
15,433,563
5,539,628
9,893,935
14,347
1,435
12,912
(122)
67,762
67,762
216,941
71,238
(1,926)
73,165
12,523
(12,523)
(12,523)
60,305
60,305
13,545
57,058
6,877
50,181
(117)
89,508
23,625
65,883
421,172
644,099
280,687
363,412
20,814,774
34,225,795
12,454,487
21,771,308
Annual Report
for 2013
8.24
CORPORATE INCOME TAX
Taxes
in EUR
Corporate income tax charge
Deferred tax income/(expense)
Total
2013
(1,771,818)
(565,686)
(2,337,504)
2012
(1,855,823)
(2,096,428)
(3,952,252)
2013
15,920,603
(16,982,227)
13,253,884
(1,769,802)
10,422,458
17.00%
(1,771,818)
14.68%
2012
17,130,766
(18,284,513)
12,921,331
(1,457,456)
10,310,129
18.00%
(1,855,823)
27.42%
Tax base and rate for the calculation of corporate income tax
in EUR
Profit or loss before taxes
Revenue adjustment to level recognised for tax purposes
Expense adjustment to level recognised for tax purposes
Tax allowance
Total tax base
Rate used for income tax calculation
Income tax
Effective tax rate
Adjustment between the actual and the calculated tax expense by applying the effective tax rate
in EUR
Profit or loss before taxation
Tax calculated by using official tax rate (2012: 18%, 2011: 20%)
Income excluded from the tax base
Dividend income exempt from tax
Adjustment of income to the level recognised for tax purposes (decrease)
Expenses not recognised in the tax base
Increase in expenditure (not recognised for tax purposes in previous years)
Adjustment of income to the level recognised for tax purposes
Use of tax allowance in the current year
Other changes in deferred taxes in the income statement
Profit or loss after taxation
Profit or loss after taxation
2013
Value
17
2,706,502
(2,886,979)
(128,565)
(2,758,414)
2,253,160
(11,214)
2,264,375
(300,866)
565,686
2,337,504
14.68%
2012
Value
Rate
18
3,083,538
(3,291,212)
(82,072)
(3,209,140)
2,325,840
(8,759)
2,334,599
(262,342)
2,096,428
3,952,252
23.07%
Under the Slovene tax legislation, it is possible that the tax authority in certain cases levies tax on the company’s
operating activities by using an approach that differs from the one used by the Company. In 2013, the Tax
Administration of the Republic of Slovenia did not conduct any corporate tax inspections. Therefore, a possibility
exists that a tax inspection will take place at a later date and it may result in additional tax charges being
imposed. However, the management believes that the corporate income tax return encompasses all expenses
and income in accordance with the provisions of the law and that no further obligations will be imposed in the
event of a tax inspection.
As a rule, the tax base calculated for corporate income tax is higher than profit before tax posted in the income
statement as a result of the portion of non-deductible expenses, representing permanent differences.
The ratio between the tax expense and the determined tax base for 2013 is 14.68% (2012: the effective tax rate
was 23.07%).
196
Annual Report
for 2013
In Slovenia, the tax liability from the tax base for 2013 was calculated at a 17% tax rate. The effect of a lower tax
rate for the year totalled EUR 104,225, increasing the profit for 2013 for that same amount. In 2012, the tax
liability was calculated based on the 18% tax rate.
8.25
DEFERRED TAXES
Deferred taxes are the result of calculating current and future tax effects, i.e. the future recovery (settlement) of
the book value of assets (liabilities) recognized in the balance sheet of the Company and the transactions and
other business events during the relevant period, offset and recognized in the consolidated financial statements
of the Company in the case of the same tax authority.
Recognised deferred tax amounts
in EUR
Deferred tax assets
– receivables for deferred tax to be recovered
Deferred tax liabilities
– liabilities for deferred taxes pending payment
31 Dec 2013 31 Dec 2012
3,816,023
3,776,953
3,816,023
3,776,953
1,512
48,129
1,512
48,129
Overview of bases for deferred tax receivables as at 31 December 2013 and 31 December 2012
in EUR
Due to impairment/value adjustments of receivables for premiums, for recourse
receivables and for other current receivables
Due to impairment/value adjustments of financial investments
Due to impairment/value adjustments of provisions and depreciation above the statutory
rate
Total
Deferred
tax liability
Base 2013
2013
Base 2012
Deferred
tax liability
2012
11,673,582
8,613,918
1,984,509
1,464,366
14,913,780
6,405,215
2,386,205
1,024,834
2,159,695
22,447,195
367,148
3,816,023
2,286,958
23,605,954
365,913
3,776,953
Overview of bases for deferred tax liabilities as at 31 December 2013 and 31 December 2012
Deferred
tax liability
Base 2012
2012
Base 2012
in EUR
Due to reversal of impairment of financial investments
Total
8,895
8,895
1,512
1,512
300,807
300,807
Deferred
tax liability
2012
48,129
48,129
Deferred taxes taken to equity in a given year
in EUR
Revaluation surplus (deferred taxes)
Revaluation surplus of financial investments, pertaining to policyholders of life insurance with DPF
Total
197
31 Dec 2012
(259,589)
1,151
(259,589)
31 Dec 2012
740,643
1,083
740,643
Annual Report
for 2013
Changes in deferred taxes
in EUR
Total
Net balance of assets and liabilities as at 1 January 2012
Debited/credited to income statement
Debited/credited to equity
Debited/credited to income statement due to change in tax rate
Debited/credited to equity due to change in tax rate
Net balance of assets and liabilities as at 31 December 2012
Spin-off assets
Net balance of assets and liabilities as at 31 December 2013
6,565,895
(956,716)
(567,176)
(1,139,712)
(173,467)
3,728,824
391,785
4,120,609
(825,866)
245,803
260,180
13,786
3,814,512
Changes in deferred tax liabilities (without offsetting)
Impairment
reversal to
fair value
14,995
36,133
v EUR
Other
-
Total
14,995
36,133
Spin-off assets
(2,999)
48,129
48,129
-
-
(2,999)
48,129
48,129
-
(49,625)
3,008
1,512
-
(49,625)
3,008
1,512
Deferred tax assets by calculation basis
in EUR
Spin-off assets
Receivables
from direct
insurance
contracts
3,956,576
(1,681,106)
(791,315)
1,484,155
158,476
1,642,630
(370,756)
92,760
1,364,634
Non-current
and current
financial
investments
1,218,578
569,668
(519,696)
(70,086)
(173,629)
1,024,835
68,842
1,093,676
10,703
306,861
53,126
1,464,366
198
Other noncurrent
receivables
from
insurance
contracts
636,307
162,193
(127,261)
671,239
671,239
(406,714)
41,952
306,478
Reserves for
jubilee and Amortised above
termination mandatory rate
Provisions for
benefits at for computer
Other current unused R&D tax
retirement
software
receivables
incentives
Total
269,049
227,756
272,625
- 6,580,890
18,199
(49,730)
12,711
- (968,065)
- (519,696)
(53,810)
(45,551)
(54,526)
- (1,142,549)
(173,629)
233,438
132,475
230,810
- 3,776,951
19,870
50,710
297,896
253,307
132,475
281,519
- 4,074,848
(50,380)
(47,368)
67
38,583 (825,865)
306,861
32,252
8,280
31,811
260,180
235,179
93,387
313,397
38,583 3,816,023
Annual Report
for 2013
8.26
NET EARNINGS (LOSS) PER SHARE
The basic net earnings per share that refers to the holders of ordinary shares and is calculated by dividing the net
profit (loss) for the year attributable to the holders of ordinary shares (numerator) with the weighted average
number of ordinary outstanding shares for the reporting period (at the reporting date).
Earnings (loss) per share
in EUR
Net profit or loss for the financial year
Weighted average number of ordinary shares outstanding
Basic and adjusted net earnings / loss per share (in EUR)
31 Dec 2013
13,583,099
9,827,497
1.38
31 Dec 2012
13,178,514
9,666,780
1.36
All shares issued by the parent company are ordinary registered shares; therefore, the diluted net earnings per
share are equal to the basic net earnings per share.
Changes in shares
2013
9,666,780
637,627
10,304,407
As at 1 January
Change (recapitalisation/disposal)
As at 31 December
8.27
2012
9,666,780
9,666,780
ISSUES, REDEMPTIONS AND PAYOUTS OF SECURITIES AND DIVIDENDS
In 2013 Adriatic Slovenica did not issue, redeem or pay out any debt or equity securities.
Dividend per share
Amount of dividends (in euros)
Dividend per share (in euros)
2013
11,000,000
1.14
2012
10,000,000
1.03
Dividends are formed from the accumulated profit determined by the Company after the financial year ended and
are paid in the foreseen amount after the General Meeting of Shareholders adopted such a resolution.
On 27 May 2013, the General Meeting of Shareholders of Adriatic Slovenica adopted a resolution to allocate EUR
11,000,000 for the payment of dividends to the shareholders at the latest by 31 May 2013. The dividends were
paid in full by 31 May 2013.
199
Annual Report
for 2013
9. RELATED PARTY TRANSACTIONS
In this section, the Company discloses transactions with related legal entities, shareholders, subsidiaries and associates,
the management of Adriatic Slovenica and the senior management of subsidiaries. In 2013, there were no significant
transactions between Adriatic Slovenica and its related parties carried out under unusual market conditions and likely to
affect the presentation of the Company ’s financial position. In the reporting year, the Company received adequate
payments and reimbursements in all transactions made with the parent company KD Group and those transactions were
carried out at arm’s length. All transactions with the subsidiary were performed as transactions between knowledgeable,
willing parties.
9.1
RELATED PARTIES
The related parties of Adriatic Slovenica as at 31 December 2013 are listed below:
KD Group d. d. – direct owners
Subsidiary AS neživotno osiguranje a.d.o., Serbia
Subsidiary PROSPERA družba za izterjavo d. o. o.
Subsidiary VIZ, zavarovalno zastopništvo d. o. o. (=WIZ)
Associate NAMA d.d. Ljubljana
All other associates of Adriatic Slovenica:
Other associates are the companies which are associated with the Company through management and supervisory bodies,
i.e. Management and Supervisory Board members.
Sale of goods and services
in EUR
Shareholder of Adriatic Slovenica d.d
Subsidiaries of Adriatic Slovenica d.d.
Associate of Adriatic Slovenica d.d.
Other associated/affiliated companies of Adriatic Slovenica d. d.
Total
2013
205,796
113,731
2,160
743,575
1,065,261
2012
155,282
187,917
650
1,002,623
1,346,472
The Company sold the receivables totalling EUR 2,968,692 to the Prospera subsidiary.
Purchase of goods and services
in EUR
Total
2013
442,533
50,989
1,009,354
1,502,876
2012
10,701
10,294
6,923
910,602
938,520
31 Dec 2013
1,602,014
107
108,038
1,710,158
31 Dec 2012
1,007
297,568
107
75,357
374,039
Receivables of the Company from related parties
in EUR
Total
200
Annual Report
for 2013
Liabilities of the Company from related parties
in EUR
Total
31 Dec 2013
150,922
502,650
12
103,468
757,052
31 Dec 2012
12,903
479,637
134
88,833
581,507
Purchase of investment properties from related parties
in EUR
Other associates of Adriatic Slovenica d.d.
Total
2013
1,424,000
1,424,000
2012
14,190,345
14,190,345
In 2013, the Company did not sell any investment properties to its related parties.
Purchase of securities
in EUR
Total
2013
1,185,366
4,008
649,867
1,839,241
2012
5,007,297
5,062
5,012,359
Sale od securities
in EUR
Total
2013
(103,277)
(103,277)
2012
-
Bonds issued by the shareholder of Adriatic Slovenica
in EUR
At the beginning of year
Spin-off assets
Bonds purchased from third parties
Interest charged
Interest received
Valuation/measurement
At the end of the reporting period
2013
6,853,801
1,316,282
8,170,083
973,301
559,050
(559,050)
509,242
9,652,626
201
2012
7,513,729
421,867
(421,867)
(659,928)
6,853,801
Annual Report
for 2013
Bonds issued by other related parties of Adriatic Slovenica
in EUR
Spin-off assets
Bonds purchased in the Group
Bonds sold to third parties
Interest charged
Interest received
2013
3,914,942
534,808
4,449,750
1,658,524
412,440
(412,440)
(57,353)
6,050,921
2012
7,795,055
(3,833,403)
508,247
(531,580)
(23,377)
3,914,942
2013
537,372
(421,267)
116,105
2012
625,143
(58,785)
(146,556)
419,802
2013
1,657,469
1,005,366
(643,978)
2,018,858
2012
981,126
3,038,862
(2,362,519)
1,657,469
2013
281,494
(281,494)
-
2012
-
Shares issued by the shareholder of Adriatic Slovenica
in EUR
Permanently impaired
Shares of the subsidiaries of Adriatic Slovenica
in EUR
Shares purchased from the issuer
Shares of the subsidiary PROSPERA družba za izterjavo d.o.o.
in EUR
Dividends paid
Dividends received
Shares of an associate of Adriatic Slovenica
in EUR
Shares purchased from other related companies
Shares purchased from third party
Dividends paid
Dividends received
2013
11,701,893
4,008
77,175
(77,175)
11,705,901
2012
11,696,831
5,062
11,701,893
Shares of other related parties of Adriatic Slovenica
in EUR
Spin-off assets
Shares purchased from other related companies
Shares sold to other related companies
Dividends paid
Dividends received
2013
8,053,672
(4,691,590)
3,362,082
649,867
(103,277)
54,457
(54,457)
(752,887)
(343,081)
2,812,704
202
2012
9,686,382
335,406
(77,990)
152,877
(1,785,587)
8,311,088
Annual Report
for 2013
The Company sold the shares in the total amount of EUR 103,277 to the parent company.
The transactions carried out by the Company with its related parties in 2013 involved the following:
insurance contracts, claims, payment of insurance fees/commissions;
⋅
renting of business premises and parking places;
⋅
purchase and sale of investment properties;
⋅
purchase and sale of securities.
Loans received and loans given
Loans given to the shareholder of Adriatic Slovenica
in EUR
Approved loans
Repaid loans
Interest accrued
Interest reduction
At the end of year
Paid interest
2013
980,012
29,200,000
(19,480,000)
202,507
(202,522)
10,699,997
169,481
2012
934,996
5,980,000
(5,935,000)
102,142
(102,126)
980,012
-
The loans were given at market interest rates from 3.5% to 5% and were adequately secured (bills of exchange, equity
securities and credit lines with banks). The changes in the table include the increases and decreases in loans of the former
KD Življenje.
Loans given to other related parties of the Company
in EUR
Approved loans
Repaid loans
Approved loans (purchase of company within the group)
Interest accrued
Interest reduction
At the end of year
Paid interest
2013
3,502,283
11,200,000
(4,900,000)
297,657
(298,329)
9,801,611
184,778
2012
1,199,962
6,500,000
(6,000,000)
1,802,245
301,932
(301,856)
3,502,283
-
The loans to other related parties were given at market interest rates from 3.5% to 6%. They are secured with equity
securities, mortgages on real property, bills of exchange and equity stakes.
Loans received from subsidiaries of Adriatic Slovenica
in EUR
Approved loans
Repaid loans
Interest accrued
Interest reduction
At the end of year
Paid interest
2013
28,214
2,740,000
(2,429,900)
13,698
(1,172)
350,840
1,172
2012
2,085,000
(2,057,300)
10,703
(10,189)
28,214
-
In 2013, Adriatic Slovenica received short-term loans from the subsidiaries Prospera and VIZ in the total amount of EUR
2,740,000 and repaid the loans totalling EUR 2,429,900. The interest rate used was the effective interest rate equal to the
interest rate on loans between related parties. None of the received loans were specially secured.
The Company did not conduct any business with banks as the related parties in 2013.
203
Annual Report
for 2013
9.2
SUBSIDIARIES AND ASSOCIATES
Subsidiaries
Head office: Bulevar Milutina Milankovića 7V, Novi Beograd
Company registration number: 20384166
VAT identification number: 105510418
No. of employees as at 31 December 2013: 107.
Activity: Non-life insurance
As at 31 December 2013, the Adriatic Slovenica's equity stake in the subsidiary reached 96.74%. The reporting period of
the financial statements is equal to the calendar period ended 31 December 2013.
The tax rate applied for the calculation of the corporate income tax was 15% as determined by the local legislation in
Serbia.
Adriatic Slovenica as the controlling company did not give or receive any loans from the subsidiary AS neživotno
osiguranje.
As the controlling company, Adriatic Slovenica will compile a consolidated annual report of AS neživotno osiguranje, which
will be published and available at the registered office of Adriatic Slovenica and its website.
PROSPERA družba za izterjavo d. o. o.
Head office: Koper, Ljubljanska cesta 3, 6000 Koper
VAT identification number: SI34037616
Activity: Other financial services, except insurance and pension funding
As at 31 December 2013, Adriatic Slovenica had a 100% equity stake in the subsidiary Prospera. The reporting period of
the financial statements equals the calendar year ended 31 December 2013.
The tax rate applied in the calculation of the corporate income tax was 17%.
In 2013, Adriatic Slovenica concluded loan agreements with Prospera for short-term loans with the possibility of gradual
drawdown. In accordance with the loan agreements, the received loands were repaid within the contractual period (see
section 9.1).
Adriatic Slovenica as the controlling company will compile a consolidated annual report of the PROSPERA subsidiary,
which will be published and available at the registered office of Adriatic Slovenica and its website.
VIZ zavarovalno zastopništvo d. o. o.
Head office: Koper, Ljubljanska cesta 3, 6000 Koper
Activity: Services of insurance agents and brokers, other sevices auxiliary to insurance and pension funds, and services
auxiliary to financial services.
As at 31 December 2013, Adriatic Slovenica had a 100% equity stake in VIZ. The reporting period of the financial
statements is equal to the calendar period ended 31 December 2013.
204
Annual Report
for 2013
In 2013, Adriatic Slovenica concluded loan agreements with the VIZ subsidiary for short-term loans with the possibility of
gradual drawdown. In accordance with the loan agreements, the received loands were repaid within the contractual period
(see section 9.1).
Adriatic Slovenica as the controlling company will compile a consolidated annual report of the VIZ subsidiary, which will be
published and available at the registered office of Adriatic Slovenica and its website.
Associates
NAMA d. d. Ljubljana
Head office: Tomšičeva ulica 1, 1000 LJUBLJANA
Activity: The principal activity of Nama is retail trade services of food and non-food products.
As at 31 December 2013, Adriatic Slovenica's equity stake in NAMA Ljubljana equalled 48.51%. The reporting period of the
financial statements is equal to the calendar period ended 31 December 2013.
Adriatic Slovenica did not receive or give any loand to the subsidiary Nama in 2013.
In its consolidated financial statements, Adriatic Slovenica accounts for Nama Ljubljana using the equity method.
9.3
SHAREHOLDERS
With a 100% equity stake, KD Group is the sole shareholder of Adriatic Slovenica. Business cooperation with KD Group is
outlined in the subsections below (section 9).
9.4
MANAGEMENT
The management consists of the members of the Management Board and the Supervisory Board and the employees on
individual employment agreements.
Transactions with the Management of Adriatic Slovenica
The income received by the members of the Management and Supervisory Boards of Adriatic Slovenica for the
performance of their duties in the 2013 financial year.
The insurance company Adriatic Slovenica made the following payments for 2013 to the members of the
Management Board
in EUR
Gabrijel Škof
Willem Jacob Westerlaken
Matej Cergolj
Member of the Management Board
Member of the Management Board until
30 Nov 2013
Commissio
Remunerat
Variable
ns,
Annual Reimburse
ion for
Gross
part of
Insurance bonuses
holiday
ments of
work in
salary
remunerati
premiums and other
allowance
costs*
subsidiarie
on
fringe
s
benefits
86,406
39,478
1,048
1,850
600
3,033
121,412
30,182
1,048
4,722
54
32,773
105,698
28,820
1,048
1,647
605
4,037
-
Including travel expenses using own vehicle and daily allowance at home and abroad.
Income of employees on individual employment agreements
The Company paid out to the employees working on the basis of the collective agreement, but who are not subject to the
tariff section of the collective agreement, remuneration totalling EUR 3,388,069 for 2013, of which EUR 2,680,259 were
paid for gross salaries and EUR 707,810 for other remuneration (annual holiday allowance, bonuses, reimbursement of
205
Annual Report
for 2013
costs, including travel expenses using own vehicle, daily allowances, termination benefits, jubilee benefits and other
benefits).
Insurance company Adriatic Slovenica made the following payments to the members of the Supervisory Board for
2013
Fees for
attending
board
sessions
in EUR
Matjaž Gantar
Aljoša Tomaž
Sergej Racman
Tomaž Butina
Aleksander Sekavčnik
Ljuba Miljušević
Matjaž Pavlin
Viljem Kopše
Chairman
Member
Member
Member
Member
Member, representative of employees
21,600
19,200
19,200
19,200
19,200
19,200
19,200
19,200
Insurance company Adriatic Slovenica made the following payments to the members of the Audit Committee for 2013:
in EUR
Fees for attending board sessions
Matjaž Gantar
1,875
Milena Georgievski
2,078
Polona Pergar Guzej
2,550
Mojca Kek
2,070
Matjaž Pavlin
2,430
The management and supervisory bodies of the former insurance company KD Življenje received income for the
performance of their duties from 1 Janury 2013 to 30 September 2013, during which the spin-off of KD Življenje by merger
with Adriatic Slovenica was underway. The members of the management and supervisory bodies had an indirect impact on
the operating activities of Adriatic Slovenica in 2013 through the management of the demerged portion of assets of the
former KD Življenje d.d.
Insurance company KDŽ made the following payments to the Management Board for the period from 1 Jan 2013 to
30 Sep 2013:
in EUR
Matija Šenk, President
Ingrid Kuk, Member
Gregor Sluga, Member
Variable
Profit
Annual
Commissions, Remuneration for
Reimburseme
part of Options and sharing
holiday
bonuses and other
work in
nts of costs*
Gross remunerati
other
remunerati Insurance allowance
fringe benefits
subsidiaries
salary
on
remuneration
on
premiums
117,881
1,048
787
2,836
44,680
349
377
1,022
99,650
363
1,048
875
1,976
-
The employees of KD Življenje d.d. working on the basis of the collective agreement, but who are not subject to the tariff
section of the collective agreement, received remuneration totalling EUR 1,335,043 for the period from 1 January 2013 to
30 September 2013, of which EUR 1,214,130 were paid for gross salaries and EUR 120,914 for other remuneration (annual
holiday allowance, bonuses, reimbursement of costs, including travel expenses using own vehicle, daily allowances,
termination benefits, jubilee benefits and other benefits).
206
Annual Report
for 2013
Insurance company made the following payments to the Supervisory Board of KDŽ for the period from 1 Jan 2013
to 30 Sep 2013:
Fees for attending board
sessions
in EUR
Jure Kvaternik, Chairman
1,875
Andrej Nemec, Memeber
1,650
Simona Jamnik, Memeber
1,500
Insurance company made the following payments to the Audit Committee of KDŽ for the period from 1 Jan 2013 to
30 Sep 2013:
in EUR
Fees for attending board sessions
Jure Kvaternik
800
Mojca Burkelca
800
Matjaž Rizman
600
As at the 2013 year-end, the Company carries the following current operating receivables and liabilities:
-
EUR 152 receivables and EUR 51 liabilities from the members of the Management Board. The former fully arise
from the insurance business (premiums due), whilst the latter arise from travel expense reimbursement.
-
EUR 376 receivables and no liabilities from the members of the Supervisory Board. All receivables arise from the
insurance business (premiums due).
-
EUR 11,862 receivables and EUR 977 liabilities from the employees employed on the basis of the contract to
which the tariff section of the collective agreement does not apply. The bulk of receivables in the amount of EUR
6,031 arises from the insurance business (premium due), while a small part equalling EUR 5,831 arises from rents
for parking places. The total sum of liabilities arises from travel expense reimbursement.
The above receivable arising from premiums are mostly non-matured receivables. The receivables arising from rents for
parking places are the receivables for the rents in December and were settled by deducting the relevant amounts from the
payroll in January 2014.
In 2013, the Company or its subsidiaries did not grant to or receive any loans and advances from the members of the
Management Board, the members of the Supervisory Board or the employees employed on the basis of the contract to
which the tariff section of the collective agreement does not apply. Furthermore, the management of Adriatic Slovenica did
not participate in any scheme offering share options and no significant transactions were made without entering them in the
accounting records of the Company .
Adriatic Slovenica has EUR 325 of receivables and EUR 129 of liabilities outstanding to the Management Board members
of subsidiaries and associates. The receivables arise from insurance premiums and rents for parking spaces, while
outstanding and not yet due liabilities arise from the payments of travel orders.
The Company has EUR 528 of receivables and EUR 51 of liabilities outstanding to the Supervisory Board members of
subsidiaries and associates. The receivables arise from insurance premiums and rents for parking spaces, while liabilities
arise from the payments of travel orders.
Transactions with the immediate family members of all Management Board and Supervisory Board members
In 2013, insurance transactions were made between Adriatic Slovenica and the immediate family members of all
Management Board, Supervisory Board and Audit Committee members, the immediate family members paying to the
insurance company the premium for the taken out insurance as shown below:
⋅
the immediate family members of all members of the Management Board paid the aggregate amount of EUR
1,246 of insurance premiums;
207
Annual Report
for 2013
⋅
⋅
the immediate family members of all members of the Supervisory Board paid the aggregate amount of EUR 7,468
of insurance premiums;
the immediate family members of all members of the Audit Committee paid the aggregate amount of EUR 4,025 of
insurance premiums.
The insurance premiums paid by the immediate family members of Adriatic Slovenica were paid on the basis of insurance
contracts taken out under normal market conditions or according to the tariffs with usual discounts for unrelated parties.
In 2013, based on the concluded insurance premiums, the insurance company paid EUR 527 for claims both to the
immediate family members of all members of the Supervisory Board and to the immediate family members of all members
the Audit Committee.
Transactions with senior management of controlling companies of Adriatic Slovenica
The senior management of Adriatic Slovenica comprises all members of the Management Board who manage and control
the parent company of KD Group and, at the highest level, the parent company KD.
In 2013, the senior management of controlling companies of Adriatic Slovenica did not receive any compensations from the
insurance company, except for the claims under the insurance contracts. The Company’s receivables carried in the books
of account at the end of 2013 and arising from the senior management of the parent companies up to the highest parent
company amounted to EUR 496. All outstanding receivables refer to the receivables arising from the insurance business
(premiums). As at 31 December 2013, the outstanding liabilities from the management board members related to travel
expense reimbursement and totalled EUR 51.
10. ADDITIONAL NOTES TO THE CASH FLOW STATEMENT
The statement of cash flows was compiled using the indirect method. In reconciling the cash flow from operating activities
using the indirect method, the profit or loss was adjusted for the effects of transactions of a non-cash nature and items of
income and expenses that are associated with the cash flows from investing and financing activities. In the context of the
cash flows from financing activities, the expenses for the payment of dividends are the same as the payments of dividends
recognized in the statement of changes in equity, as the dividends were paid out in full.
11. CONTINGENT RECEIVABLES AND LIABILITIES
Contingent receivables and liabilities are kept in the off-balance sheet. As at 31 December 2013, contingent receivables
and liabilities totalled EUR 50,469,400, the bulk of which was represented by the input value added tax in the amount of
EUR 25,086,928. The Company, as the taxable person for VAT, first classifies the input VAT as an off-balance-sheet item,
then deducts 1% of the input VAT as permitted by law.
Contingent receivables include securities pledged as collateral and mortgages as collateral for non-current loans to the
owner Adriatic Slovenica and other related parties in the amount of EUR 12,997,059. Moreover, contingent receivables
comprise outstanding subrogation receivables totalling EUR 9,898,280, receivables from the state equalling EUR 2,178,453
and receivables from premiums amounting to EUR 251,249. The Company recognises still pending labour law actions
taken over from the former insurance company KD Življenje in the total amount of EUR 57,432 as contingent liabilities.
Contingent receivables arising from an action against the Republic of Slovenia refer to the action lodged against the
Republic of Slovenia due to unlawful government interference in the motor vehicle insurance prices in the 1995–1998
period. The action against the Republic of Slovenia was filed so as to seek compensation for the loss incurred due to
unlawful government interference in the motor vehicle insurance prices in the 1995–1998 period based on the Prices Act in
force at that time. The provision of Article 26 of the Constitution of the Republic of Slovenia provides legal grounds for the
claim, which Adriatic Slovenica (Adriatic d.d. and the former Slovenica d.d., each separately) filed against the Republic of
Slovenia. The action filed by Adriatic was ruled on by the final judgement of the Higher Court. A parallel proceeding was
initiated with respect to the action filed by the former Slovenica and was still pending before the court at the end of 2013.
Therefore, as at 31 December 2013 Adriatic Slovenica still accounted for contingent receivables from the Republic of
208
Annual Report
for 2013
Slovenia. In February 2014, the Company received a final judgement of the Higher Court rejecting its claim. The Company
is now considering lodging an appeal on points of law against the judgement.
In 2012, Pozavarovalnica Sava filed an action against Adriatic Slovenica. The grounds of the dispute between Adriatic
Slovenica and Pozavarovalnica Sava was an action won against the Republic of Slovenia, specifically in the part related to
the action of Adriatic Koper. In its action, Pozavarovalnica Sava refers to reinsurance contracts concluded between Adriatic
Zavarovalna družba Koper and Pozavarovalnica Sava in the 1995–1998 period, as it believes that in the action won by AS
against the Republic of Slovenia AS received compensation for premiums, which increased the basis used for determining
the reinsurance premium. The law firm representing Adriatic Slovenica contested the action in its entirety, also because
Adriatic Slovenica did not receive any compensation from the Republic of Slovenia, only damages for the Government's
failure to determine compensation for having lowered the prices below the simple reproduction level. No further
developments in the matter were recorded in 2013.
The Company did not recognise any off-balance-sheet liabilities from pension payments or from other Group companies.
Furthermore, the Company did not conclude any option contracts in the form of derivatives that would be recognised as offbalance-sheet items.
12. AFTER BALANCE SHEET EVENTS
No events occurred after the end of the reporting period and before the conclusion of financial statements that would affect
the prepared financial statements for 2013.
Events after the reporting date significant for operations in 2014 are the following:
-
Since 2014 Adriatic Slovenica has been led by a four-member Management Board. The Supervisory Body
appointed Management Board members Varja Dolenc and Matija Šenk, who began their term of office after they
had acquired the licence from the Insurance Supervision Agency in January 2014.
209
Annual Report
for 2013
13. STATEMENT OF MANAGEMENT RESPONSIBILITY
The Management Board of Adriatic Slovenica is responsible for the preparation of the Annual Report for the year ended on
31 December 2013. In accordance with its responsibility, it confirms that the financial statements and the notes thereto
were prepared on a going-concern basis and that they comply with the applicable legislation and with International
Financial Reporting Standards as adopted by the European Union. The Management Board confirms that appropriate
accounting policies were consistently applied in the preparation of financial statements and that the use of accounting
judgements and estimates affecting the reported amounts of assets and liabilities and disclosures are based on the
principle of prudence. Furthermore, the Management Board confirms that the financial statements present a true and fair
view of the financial position and performance results of the Company for the financial year 2013.
The Management Board is also responsible for proper management of accounting, for taking appropriate measures to
protect the Company’s assets as well as other assets and for preventing and detecting fraud and other irregularities or
illegal acts.
The tax authorities may at any time inspect the Company’s books of account and tax returns and other records within five
years after the fiscal year in which tax returns should have been filed, which may result in additional tax liabilities, default
interest and penalties arising from corporate tax or other taxes and duties. The Management Board is not aware of any
circumstances, which may give rise to any material liabilities arising from these taxes and would have a significant impact
on the figures presented in the annual report or on the future financial position of the Company.
Koper, 19 March 2014
Management Board of the Company:
Gabrijel Škof,
Varja Dolenc
Willem Jacob Westerlaken
Matija Šenk
210
Annual Report
for 2013
14. STATEMENT OF ACTUARIAL OPINION
Opinion of the certified actuary for life insurance
”I performed an actuarial investigation of the amount of insurance technical provisions for the life insurance operations of
Adriatic Slovenica Zavarovalna družba d.d. as at 31 December 2013. The actuarial investigation was conducted in
compliance with the provisions of the Insurance Act (Official Gazette of the Republic of Slovenia No. 13/00 and
amendments in the period from 2001 to 2013), the Decision on detailed rules and minimum standards to be applied in the
calculation of technical provisions (Official Gazette of the Republic of Slovenia Nos. 3/2001, 69/2001 and 85/2005), the
Decision laying down the detailed rules for investments of premium reserves and premium reserve assets and on the
method and time limits for reporting (Official Gazette of the Republic of Slovenia No. 3/05) and the Decision on detailed
contents of certified actuary’s report (Official Gazette of the Republic of Slovenia Nos. 3/2001).
Adequate insurance technical provisions are the responsibility of the Management Board of the insurance company Adriatic
Slovenica. My task has been to verify whether the insurance company keeps adequate records for the purpose of the
valuation of liabilities arising from life insurance contracts concluded and to provide an opinion as to whether the sum of the
provisions set aside by the insurance company can be deemed adequate in terms of the liabilities arising from the life
insurance contracts concluded by the insurance company as well as in terms of any increase in liabilities resulting from a
distribution of surplus, i.e. allocation of profit, during the term of these life insurance contracts. For new types of life
insurance contracts that the insurance company started concluding in the course of the year under review, it has been my
task to verify whether the premiums and earnings from these contracts are sufficient and in accordance with reasonable
actuarial expectations, taking into account other financial sources available to the insurance company for the purpose of
fulfilling its liabilities arising from these contracts. My task was also to determine the minimum amount of equity required by
the insurance company based on its life insurance portfolio and to verify whether the insurance company fulfils all capital
adequacy requirements. I am convinced that the conducted actuarial investigation provides sufficient ground for this
statement of actuarial opinion.
It is my opinion that the premium written by the insurance company Adriatic Slovenica in the financial year 2013 and the
amount of insurance technical provisions set aside for liabilities arising from life insurance contracts by the insurance
company as at 31 December 2013, are adequate to enable the insurer to duly meet all commitments arising from the
concluded life insurance contracts.”
Certified Actuary
Nataša Đukić
Ljubljana, 7 March 2014
211
Annual Report
for 2013
Opinion of the certified actuary for non-life insurance on the Annual Report of the insurance company
Adriatic Slovenica
Zavarovalna družba d.d.
Ljubljanska cesta 3a
6000 Koper
I performed an actuarial investigation of the amount of insurance technical provisions set aside by the insurance company
Adriatic Slovenica d.d. as at 31 December 2013. The actuarial investigation was performed in accordance with the
provisions of the Insurance Act (Official Gazette of the Republic of Slovenia No. 99/2010) and relevant implementing
regulations which the insurance company was bound to respect as at 31 December 2013.
Adequate insurance technical provisions are the responsibility of the Management Board of the insurance company. My
task has been to verify whether the insurance company keeps adequate records for the purpose of the valuation of
liabilities arising from non-life insurance contracts, to give an opinion as to whether the sum of the mathematical provisions
set aside by the insurance company is sufficient to cater for the future liabilities of the insurance company arising under or
in connection with these insurance contracts, and to verify the adequacy of investments of long-term business funds and
business fund assets. For new types of insurance contracts that the insurer started concluding in the course of the year
under review, my task was to verify whether premiums and earnings from these contracts are sufficient and in accordance
with reasonable actuarial expectations, taking into account other financial sources available to the insurer for the purpose of
fulfilling its liabilities arising from these contracts. My task was also to determine the minimum amount of equity required by
the insurance company for its non-life insurance business, as well as to establish the capital adequacy of the insurance
company.
I am convinced that the conducted actuarial investigation provides sufficient ground for this statement of actuarial opinion.
In my opinion, the premium written by the insurance company in the financial year 2013 and the amount of insurance
technical provisions set aside for liabilities arising from non-life insurance as at 31 December 2013 are adequate to enable
the insurer to meet all its commitments arising from its non-life insurance contracts.
Ljubljana, 18 March 2014
Jadranka Maček
Appointed certified actuary
for non-life insurance of the insurance company
212
Annual Report
for 2013
15. INDEPENDENT AVDITOR’S REPORT
213

Adriatic Slovenica d. d.

Transcription

Similar documents

Suretech Solutions - Enterprise Ireland

Teleplan_GB_2006_Final

Teleplan Annual Report 2007 from website

Business Zone Brinje – Križpolje

Term Life Insurance - American Family Insurance

factsheet-engl-Covoare-Ungheni-Water_Purification

success stories

PDF Price list of advertising in magazine TV OKO/TV SVET valid

Branko DRAGIČEVIĆ1, Armin PALLAORO1, Robert GRGIČEVIĆ1

2015 - Tri-Lakes Cares