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gene
rali
Bulg
aria
annu
al re
port
2011
1annual report 2011
Table of contents
The Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 2:3
Letter from the Chairman and CEO . . . . . . 4:5
Economic and Insurance Market Development . . . . . . . . . . . . . . . . . . 6:7
Generali Bulgaria Holding Profile . . . . . . . 8:13
Generali Insurance Profile . . . . . . . . . . . . 15:19
Generali Life Insurance Profile . . . . . . . . 21:23
Generali Zakrila Health Insurance Profile . . . . . . . . . . . . . . 25:27
Generali Zakrila Medical and Dental Centre Profile. . . . . . . . . . . . .28:30
2011 Key campaigns . . . . . . . . . . . . . . . . . 31
Independent Auditors’ Report . . . . . . . . .32:33
Generali Bulgaria
2annual report 2011
Generali GroupInternational since 1831
over 82,000employees
more than 60 countries in the worldin 5 continents
65 millioncustomers
69 billion euroin premiums
One of theleading
insurance companies in the world, the Leader for Life
insurancein Europe
One of theworld’s
leading assetmanagers
with over
€460 billionunder management
A leader in real estate with
€28 billionproperty assets
3annual report 2011
GEN
ER
ALI
PP
F H
OLD
ING
PR
OFI
LE
CZECH REPUBLICČeská pojišťovnaGenerali Pojišťovna
POLANDGenerali & Generali Życie
SLOVAKIAGenerali Slovensko
HUNGARYGenerali-Providencia
SLOVENIAGenerali Zavarovalnica
CROATIAGenerali osiguranje
UKRAINE Generali Life Insurance
BULGARIA Generali Bulgaria HoldingGP Reinsurance
ROMANIA Generali Romania
SERBIADelta Generali Osiguranje
MONTENEGRODelta Generali Osiguranje Podgorica
KAZAKHSTAN Generali Life
RUSSIAGenerali PPF Life InsuranceGenerali PPF General Insurance
BELARUSGenerali
GeneraliPPF Holding
Manages almost
€15 billion in assets through its
subsidiaries
Generali Bulgaria, part of Generali PPF Group€35.0 million in premiums written in 2011, capturing a 4% market shareGP Reinsuranceover €773 million in premiums written
Generali PPF GroupGenerali and PPF Group haveincorporatedtheir operations in 14 countries of Central and Easter Europe, thereby creating one of the region’s largestinsurance groups.
4annual report 2011
Letter from the Chairman
Acting for the first time as the Chairman of the Management Board of Generali Bulgaria Group companies, on behalf of the Board members and on my personal behalf I have the pleasure to convey the Annual Report of the Group for the year 2011. I have inherited a great legacy and I am really excited about the future.
Last year Generali Bulgaria s companies closed the year with gross premium written in the amount of BGN 70.2 million.
Net loss of the companies amounted to BGN 2 million in 2011 compared with a profit of BGN 6.6 million a year earlier. The result had been burdened by the overall negative trends on the Bulgarian insurance market as well as with the continuing underperforming of the financial investments.
Gross written premium on the non-life market amounted to BGN 1,362.1 million and was by 1% lower in comparison to the previous year. Still the signs of the crisis are here but the market is displaying a slow recover.
During the last few years Generali Bulgaria s companies began a process aimed at changing not only the financial results, but introducing a complete shift in the way of work - from the sales process to the processes in service units of the company. Nevertheless I think that we succeed to handle those changes in an excellent manner.
Back to the present market conditions and in the context of many market difficulties and severe competition we had to face, I estimate Generali Bulgaria Group achievements during the past year as promising and a good foundation for the year to come.
Our companies have always aspired to provide the necessary conditions and prerequisites for profitable growth of the Group s business. The main direction for the companies development is not gaining market share at any cost but rather offering successful and profitable products to the best interest of our customers and partners, and better returns for the shareholders.
5annual report 2011
We would like the year 2012 to constitute a new beginning for Generali Bulgaria after all changes that had taken place, including ones on the Management Board level. We as Management board are convinced that the strength of our company is going to be defined by the core of our business strategy based on: multi-channel distribution, complexity of our products offer, good investments results, proximity and partnership for the company’s stakeholders: our shareholders, our Clients and all Business Partners in conjunction with efficient services and proper prices.
Our strategy is build around the customers we treasure more than everything else. We try to deliver best products and services to the Bulgarian families, the corporate business and small and medium enterprises providing, security and stability. The foundations of our business, our core purpose has always been and will be to create value for customers to earn their loyalty.
We believe that every human being has the right of the freedom of choice, and I am excited to report that during 2011 we have started our online business and we have launched a brand new Customer Self Service Portal. We also launched our Facebook page, which we consider as a great communication channel with our customers and partners. During 2012 we will develop and enhance all our innovative products and services utilizing the grate worldwide experience of Generali Group to provide our customers with products and services wherever and whenever they need them.
The Group of Generali Bulgaria Companies has a great team of professionals dedicated to the company and its’ development, ready for the market challenges and providing the bone of our innovative approach. I would like to express our sincere gratitude to all of them, but not only. These achievements are also due to all our customers and business partners who responded with great loyalty to our efforts and who have reposed great trust in us. We will keep working to fulfill their expectations in the coming years as well.
Respectfully Yours,
Ivaylo YosifovChairman and CEO Generali Bulgaria Holding EAD
6annual report 2011
Economic and Insurance Market Development
Bulgarian Economic environment 2011
Bulgarian economy continued to recover in 2011 as there have been two trends of development. The production GDP was BGN 75.2 bln in 2011. On the one hand, external demand and Bulgarian export has begun to grow quite fast, having a positive effect on the dynamics of the GDP. On the other hand, domestic demand decreased and had a suppressing effect on economic growth.
As at the end of 2011 Bulgaria had a relatively low budget deficit amounting to BGN 1.58 bln. or 2.1% of the forecasted GDP for the year. As a comparison, the deficit for 2010 was BGN 2.82 bln. or 4% of GDP. As a result of the tax collection measures undertaken by the government since the end of the previous year, tax revenue to the national budget exceeded the revised estimates for the year as tax revenue to the national budget was 111% of the annual plan.
While Europe is in a debt crisis, Bulgaria is among the best performers in the region. We report one of the lowest government debts to GDP ratios – 15%. The fiscal reserve of the government as at the end of 2011 amounted to BGN 5 bln., which provides fiscal stability.
In 2011, there have been no significant amendments to the corporate income tax and individuals’ income tax legislation. The country still has the lowest tax rates for the households and the business in the EU – 10%. The tax burden which is one of the lowest in the European Union is considered as an important indicator for attracting new investments.
At the end of 2011 the credit rating agency Standards & Poor’s has confirmed the stable outlook of country’s credit rating, which is currently BBB.
According to the National Statistical Institute, the average annual inflation for 2011 was 4.2 %. Thus it exceeded the budgeted one of 3.7% for 2011,
as well as the adjusted one of 3.9 % in the three years government’s macroeconomic forecast.
The basic interest rate in Bulgaria as at end of December 2011 remained almost unchanged compared to the end of 2010 – 0.22%.
7annual report 2011
Bulgarian Insurance market indicators 2011
At the end of 2011, the total number of licensed insurers domiciled in Bulgaria was 34 out of which 18 - non-life insurance companies, 14 – life insurance companies and 2 – life insurance cooperations. In 2011, active reinsurance have been provided by four general insurance companies, one life insurance company and the general reinsurance company – GP Reinsurance EAD. The amount of reinsurance premiums collected on active reinsurance was estimated to BGN 1 537 031 thousand, out of which BGN 20 825 thousand was attributed to general insurance, BGN 2 380 thousand – to life insurers and BGN 1 513 826 thousand to GP Reinsurance EAD.
The gross written premiums realized by insurers registered in Bulgaria amounted to BGN 1 613 760 thousand in 2011, being a decrease by 1.0% on an annual basis.
The amount of insurance sector assets at the end of 2011 increased by 2.0% compared to 2010 and amounted to BGN 2 973 374 thousand. The amount of assets in the non-life insurance sector increased by 3.9 % on an annual base and reached BGN 1 928 468, and in life insurance sector decreased by 1.3% to BGN 1 044 907.
The total equity of insurance companies decreased by 5.7% on an annual basis and reached BGN 914 331 thousand, out of which BGN 542 853 thousand pertained to the non-life insurance sector and BGN 371 479 thousand – to the life insurers.
Bulgarianeconomy continued
to recover in 2011
Thelowest
governmentdebts to
GDP ratios– 15%
Insurance sector assets
at the end of 2011
increased by 2.0%
8annual report 2011
Generali Bulgaria Holding ÅAD is a member of Generali PPF Holding B.V. which operates in 14 Central and Eastern European countries. Through its subsidiaries, Generali PPF Holding manages assets of EUR 15 billion and serves more than 13 million clients across the region.
Generali PPF Holding is registered in the Netherlands and its main organizational branch is based in Prague, Czech Republic. Generali PPF Holding B.V. is a joint venture company of Assicurazioni Generali (51% share) and PPF Group (49% share).
Generali Bulgaria is one of the leaders in offering non-banking financial services in Bulgaria via its subsidiary companies: Generali Insurance AD - non life insurance, Generali Life Insurance AD - life insurance, Generali Zakrila Health Insurance AD - health insurance. Generali Bulgaria is a preferred partner in retail segment for medium and small enterprises and for large corporate clients, providing high-quality services and aiming to meet its clients’ expectations, needs and preferences. The rationally built network throughout the country provides an opportunity for fast and quality servicing of clients through 83 general representative and representative offices.
Generali Bulgaria Holding is a major shareholder in Generali Insurance AD with 99.87 % direct ownership and Generali Life Insurance AD with 99.56 % direct ownership. Both insurance companies have offices in all regions of the country. The primary activity of Generali Zakrila Health Insurance AD is voluntary health insurance. Generali Bulgaria Holding EAD holds 94.47% of the company through direct investment.
Generali Bulgaria Holding PROFILE
9annual report 2011
Generali Bulgaria Holding - main activities in 2011 and development directions in 2012
The activity of Generali Holding EAD in 2011 is mainly focused on the following areas:
Continuing optimization of expenses and automation of the insurance procedures;
Maintaining the market share in the Non-life Insurance and Health Insurance sectors;
Restructuring and centralization of the activity of the separate entities in the Group aiming at expenses optimization;
Significant increase in the sale capacity through the agent network;
Significant improvement in the claims ratio of Non – life insurance and Health insurance;
Decrease in the share of the old insurance portfolio and at the same time gradual increase in the share of the new portfolio composed of Group standard products;
Significant increase in the profitability of Generali insurance AD.
The Main directions for development in 2012 are the following
Review of the Holding’s corporate policies and strategies;
Stabilization of the profitable business in Non-Life insurance;
Achievement of positive result in the Life Insurance and Health Insurance sectors, as a result of the business restructuring and optimization.
Continuation of the process of expenses optimization and automation of the insurance procedures;
Significant increase in the sales capacity through the network of agents.
10annual report 2011
Mr. Ivaylo Yosifov Chairman of the Management Board
Mr. Marian HrotkaMember of the Management Board
Mr. Konstantin VelevMember of the Management Board
Mrs. Diana ManevaMember of the Management Board
Mrs. Marie KovarovaChairperson of the Supervisory Board
Ms. Luisa ColoniMember of the Supervisory Board
Mr. Bedrich HejlMember of the Supervisory Board
Boards and Officers
Management Board
Supervisory Board
11annual report 2011
Financial Section
Consolidated financial statementsas at 31 December 2011
(all amounts in BGN thousand) 2011 2010
Insurance premium revenue 64,703 77,720
Insurance premium ceded to reinsurers (13,492) (17,731)
Net insurance premiums 51,211 59,989
Income from investment property 285 277
Net realized gains from financial instruments available-for-sale 2,834 2,789
Net gains from financial instruments at fair value through profit or loss
162 296
Interest income 1,756 1,946
Other operating income 1,952 2,961
Net income 58,200 68,258
Insurance claims and loss adjustment expenses (32,599) (28,931)
Insurance claims and loss adjustment expenses recovered from reinsurers
5,896 2,940
Total claims and loss adjustment expense, net (26,703) (25,991)
Profit participation reserve (205) (362)
Expenses for the acquisition of insurance and investment contracts
(11,035) (11,134)
Marketing and administration expenses (13,355) (11,847)
Other operating expenses (7,047) (10,638)
Expenses for health services (1,585) (1,285)
Expenses (59,930) (61,257)
(Loss) / profit from operating activities (1,730) 7,001
Finance costs (699) (360)
(Loss) / profit before income tax (2,429) 6,641
Income tax credit 426 (39)
(Loss) / profit for the year (2,003) 6,602
Attributable to:
-Equity holders of the company (1,949) 6,596
-Non-controlling interest (54) 6
Comprehensive income:
(Loss) / profit for the year (2,003) 6,602
Revaluation of available-for-sale securities, net of tax (1,198) 264
Revaluation of properties, net of tax (34) (154)
Other changes (8) (49)
Total comprehensive income (3,243) 6,663
12annual report 2011
Financial Section
Consolidated financial statementsas at 31 December 2011
(all amounts in BGN thousand) 2011 2010
ASSETSProperty and equipment 16,205 17,125
Intangible assets 241 185
Investment property 1,129 365
Debt securities:
- available for sale 49,510 47,117
- at fair value through profit or loss 2,448 2,564
Equity securities:
- available for sale - 782
- at fair value through profit or loss 1,099 878
Loans and receivables, including insurance receivables 19,751 19,253
Current income tax paid in advance 145 146
Deposits 36,903 39,045
Reinsurers’ share of technical reserves 8,092 6,329
Other assets 6,351 5,886
Cash and cash equivalents 4,833 5,853
Total assets 146,707 145,528
EQUITYOrdinary shares 83,106 83,106
Reserves 32,438 33,678
Accumulated loss (74,662) (72,659)
Minority interest - -
Total equity 40,882 44,125
LIABILITIESBorrowings 6,601 6,250
Insurance reserves 87,806 80,266
Investment contracts 943 812
Deferred income tax liabilities 255 516
Retirement benefit obligations 144 175
Insurance and reinsurance payables 6,169 9,696
Commission payables - current 751 482
Trade and other payables – current 2,819 2,811
Trade and other payables – non-current - 31
Income tax liabilities 4 -
Unused paid leave 333 364
Total liabilities 105,825 101,403
Total equity and liabilities 146,707 145,528
13annual report 2011
Non-consolidated financial statements as at 31 December 2011
Asset management
(BGN thousand)2011 2010
Book value Share (%) Book value Share (%)
Investment property 9,181 10,11% 9,181 10,12%
Investment in subsidiaries 81,611 89,89% 81,227 89,52%
Financial Assets Available for sale - - 328 0,36%
Total Investment 90,792 - 90,736
Share capital
(BGN thousand) 2011 2010
Share capital 83,106 83,106
Share capital and reserves 95,131 95,134
Revaluation reserves - 91
Accumulated loss (2,998) (4,245)
Total 92,133 90,980
Shareholding StructureNumber
of sharesPercent of the capital
of the company
Generali PPF Holding 102,600 100,00
Activity result
(BGN thousand) 2011 2010
Profit/(loss) before income taxes 1,285 (4,200)
Taxes (38) (45)
Profit/(loss) for the year 1,247 (4,245)
Administrative expenses (1,570) (1,836)
Revenue from services and other revenues 1,252 1,901
Profit /(loss) from investments 1,604 (4,262)
Non- operating loss (1) (3)
Other financial expenses, net (1) (3)
Financial Section
Generali: Client satisfaction is our top priority.
15annual report 2011
Generali Insurance PROFILE
Till 2007, Bulgarian insurance market had shown stable growth mainly
as a result of the assured proceeds from the obligatory motor third party
liability, the increasing prices of the insurance assets, higher standard
of living etc. According to preliminary data for 2011, gross written
premiums of the general insurance companies was BGN 1 362 649
thousand, registering a decrease by 1.1% on an annual basis.
Claims expenses in the non life segment amounted to BGN 695 964
thousand as the decrease on annual basis was 7.1%. The amount of
gross technical reserves increased by 5.7 % on an annual basis and
reached BGN 1 454 098 thousand.
The greatest share in the aggregate portfolio of the general insurance
companies still belongs to the motor car insurance products “Casco”
(34%) and “Motor third party liability” (37.5%) or 71.5% in total premium
income for the sector. These are followed by property insurance “Fire
and natural disasters” and „Other property insurance”, with premium
income that accounted for 18.5% of the total premium income.
Significant events that affected the general insurance market were:
Since 1 June 2011, an electronic system for assessment, control
and management of risk was introduced for issuing of electronic
policies for MTPL. This step is among the main factors explaining
the growth in MTPL sales by some 8% in 2011 compared to
2010.
A change in Ordinance ¹ 27 had been introduced, according to
which the total amount of administrative and acquisition costs
incorporated in the technical plan for MTPL cannot exceed 20%
of the premium net of taxes and charges stipulated in the local
legislation.
Since 8 October 2011, changes in the Insurance Code were
introduced which prohibits placement of signs, marks or other
visible indicators on motor vehicles which directly or indirectly
indicate the existence of insurance contract related to this vehicle.
At the end of the year, the market leaders in the non-life insurance
segment were DZI General Insurance with approx. 13% market share,
Armeets AD which held some 12% market share, followed by Bulstrad
Vienna Insurance Group which ranked third with some 11% market share.
At the end of 2011, Generali Insurance AD ranked 9th with approx. 4 %
market share and it was recognized as one of the most stable insurance
companies in the market.
16annual report 2011
In 2011 the management s key efforts were directed towards the following main areas
Keeping the market position and market share of the Company in the circumstances of reassessment of the sales policy, improving the professional qualification and skills of the employees in the sales network, organization of incentive schemes and increase of the number of active agents;
Improving the claims ratio, the control over the administrative and operating expenses leading to positive financial results of the Company for the financial year;
Integrating Company’s activities according to the requirements and criteria set by Generali PPF Holding;
Centralization of the business processes and their establishment through IT solutions;
Product and underwriting policy with focus on motor car insurance;
The Company successfully realized and launched a new internet portal for direct online sales of MTPL insurance policies. In the developing of the portal, the company relied on the long experience and cooperation of the parent company in the area of online insurance. By this step, Generali Insurance AD became the first Bulgarian Insurance company initiating direct online sales of insurance policies;
Company’s participation in QIS 5.5 research, organised by Generali PPF Holding, indicated high level of capital adequacy
Maintaining strong positions in the field of corporate sales;
Keeping the quality of risk profile, diversification of the portfolio, continuing the process of launching property insurance for the retail clients;
Key performance indicatorsThe Company has reported gross written premiums for 2011 in the amount of BGN 54,972 thousand, which represents increase by 1.6% compared to 2010. Nevertheless, there was a decrease in earned premiums with approximately BGN 9 mln., which was more than 15%. This decrease was due to change in unearned premium reserve, which in 2011 has increased by BGN 5.5. mln while in 2010 the decrease was by approximately BGN 4 mln. There were three main reasons for the unfavourable change in the reserve:
Approximately BGN 11 mln. of gross written premiums were recorded in December 2011 as a result of intense sale campaigns and the revenue will be realized in 2012. In comparison, this represents 20% of the total premium revenue written for the whole year or some 3 times higher monthly premium compared to the monthly average gross written premium for 2011. There was no such tendency for 2010.
Policies with approximately BGN 2 mln. of gross written premiums for 2011 enter in force in 2012 (100% unearned premium reserve was accrued as at 31.12.2011 for them).
Premium on construction and assembly works’ corporate policies written in 2009 was realised in 2010.
Key Financial Indicators Claims paid, net of recourses and abandons, in 2011 amounted to BGN 21,611 thousand,
which was an increase by BGN 2,557 thousand or 13% compared to 2010.
Administrative expenses amounted to BGN 11,861 thousand. Compared to 2010, they increased by 10.8% or BGN 1,158 thousand. The amount of administrative expenses was impacted by:
17annual report 2011
The increase in payroll expenses related to the newly opened Sales Academy, as well as payments related to compensations for terminated job positions;
Change in the processes and the leasehold improvements of the new building, rented under operating lease;
Incurring of unexpected expenses not budgeted for.
Technical result, before income from investments was negative – BGN 3,581 thousand. In 2010 the amount was positive - BGN 2,971 thousand. The lower results were due to the following changes:
Increase in paid claims;
Increase in claims reported but not settled;
Increase in unearned premium reserve;
Increase in acquisition costs;
Increase in administrative expenses;
The investment activities of Generali Insurance AD are in line with the underlying principles of security, profitability and liquidity achieved in compliance with the general and insurance legal requirements. The structural frame of the investment portfolio of the Company in 2011 conformed to those principles and goals.
Income from interest on deposits decreased in the current period which was due to the combined effect of the decrease in the interest rates, as well as decrease in monthly average deposit exposition.
The growth in interest income from financial assets available for sale was due to the newly acquired government bonds in 2011.
Net income from investment property in 2010 was two times higher than this for 2011 which was due to the full sale of building and land, classified as investment properly in 2010. In 2011, the Company has not realised any sales of investment property.
Structure of Generali Insurance AD portfolio in 2011Under the conditions of continuously intensifying financial crisis in 2011, the Company focused its sales mainly on the obligatory insurance Motor third party liability, which has been less affected by the shrinking insurance market. Vice versa, with the introduction in 2011 of more strict measures for control over validity and existence of insurance policies by the regulator, premiums written for 2011 on Motor third party liability have increased by 8% compared to 2010. This type of insurance has 39.7% share in the insurance portfolio of Generali Insurance AD as at 31.12.2011; in comparison the aggregated share in the insurance portfolio of all insurance companies in Bulgaria is 37.1%.
In 2011, the Company continues to mobilise its available resources directed in the priority development of household insurance products, products for small and medium sized enterprises, products covering corporate risks in line with the principle of risk analysis and acceptance according to the methodology for underwriting of corporate risk adopted by GENERALI. As at 31.12.2011 General Insurance AD managed to keep the share of property insurance products up to 33.65%, which exceeds the average market levels (18.4% as of 31.12.2011) while the share of motor CASCO was 20,46%, which was below the average market share (34% as of 31.12.2011).
The property insurance, including underwriting of engineering risk results from Company’s efforts to promote this line of business compensated by the introduction of financial, aviation and other risks on the one hand and following the conservative approach and risk acceptance relating to CASCO (Motor Hull) Insurance on the other hand, with the purpose to strengthen the insurance portfolio, which also leads to the lower gross premium written and market share of the CASCO insurance products.
18annual report 2011
Asset management
(all amounts in BGN thousand) 2011 2010
Net insurance premium revenue 37,391 42,167
Net insurance claims (18,405) (18,493)
Expenses for the acquisition of insurance contracts, net of reinsurance
(7,788) (7,453)
Administrative expenses (11,861) (10,703)
Profit participation expenses (205) (362)
Other insurance expenses (3,498) (2,890)
Other insurance income 785 705
(22,567) (20,703)
Technical result before net income from investments
(3,581) 2,971
Net income from investments 3,776 4,079
Gain on disposal of property and equipment 87 1,020
Profit before tax 282 8,070
Income tax credit /(expense), net 447 (9)
Profit for the year 729 8,061
Financial Section
19annual report 2011
Asset management
(all amounts in BGN thousand)
Assets
As at 31 December
2011 2010
Reinsurer’s share in technical reserves 7,655 5,943
Deferred acquisition costs, net of reinsurance 4,971 4,544
Deferred income tax assets, net 73 -
Intangible assets 204 128
Property and equipment 3,930 4,321
Investment property 438 217
Non-current assets held for sale 12 -
Other assets 833 725
Insurance receivables 16,395 14,109
Equity securities, available for sale - 32
Debt securities:
- Available for sale 40,522 38,010
- At fair value through profit and loss 835 843
Bank deposits 25,195 29,521
Cash and cash equivalents 2,524 5,069
Total assets 103,587 103,462
Gross Insurance (technical) reserves
31.12.2011 31.12.2010
Unearned premium reserve (UPR) 29,269 23,784
Reported but not settled reserve (RBNS) 26,807 22,789
Incurred but not reported reserve (IBNR) 17,449 19,442
Profit participation reserve (PSR) 339 362
Other insurance reserve (ER) 45 45
TOTAL: 73,909 66,422
Financial Section
Generali: Secures every step of your life.
21annual report 2011
Generali Life Insurance PROFILE
Gross written premiums accumulated by life insurance companies
operating in Bulgaria at the end of 2011 in the aggregate income
statement for the sector was BGN 244 691 thousand which was
a decline by 0.5% on an annual basis. Benefits and compensations
paid by life insurers amounted to BGN 95 359 thousand being
a decrease by 1.2% on an annual basis. The amount of gross
technical provisions increased by 11.1% on compared to 2010 and
reached BGN 634 968 thousand.
The technical result achieved by life insurers amounted to BGN
4792 thousand compared to BGN 14 702 thousand in 2010, and
the net result amounted to BGN 16 006 thousand, compared to
BGN 22 721 thousand a year earlier.
The “Life” insurance and annuity products still generate the largest
part of total premium income in the life insurance segment. The
premium revenues for these products accounted for approx. 74.5%
of the premium income generated in the sector. The insurance
product Accident accounted for some 8.5%.
As at the end of the year the leaders in the life insurance market
are: Allianz Bulgaria Life with 23% market share; DZI ranked
second with some 13.5% market share. Generali Life Insurance
AD kept its market share from 2010 to 4.5% and ranked 9th in the
life insurance market.
22annual report 2011
Key performance indicators The net loss of the company for 2011 amounted to BGN 1,265
thousands compared to the loss of BGN 1,108 thousands as at 31 December 2010.
The technical result for the year was a loss in the amount of BGN 1,248 thousand, compared to BGN 1,118 thousand in 2010 being an increase by 11.62%. The technical loss for the period was due to the loss realized by the historical portfolio and the inadequate volumes of decentralized sales.
Acquisition and administrative costs for 2011 reached BGN 4,343 thousands compared to BGN 4,971 thousand in year 2010 (decrease by 12.63%). This decrease came as results of the portfolio restructuring activities showing signs of improvement in year 2011.
The operating result from investments was positive, in the amount of BGN 664 thousand, having decreased by 19.60% compared to the result for 2010.
Other operating expenses decreased from BGN 4,565 thousand to BGN 1,029 thousand. The decrease was mainly due to the expenses for impairment and write off of uncollectible loans related to “Life” insurance policies which were significantly higher in 2010 which mainly came from the decrease of the old portfolio.
The main directions for business develop-ment in 2012 / Year 2012 Projects
Centralized policy administration
Attracting and training of new managers for representatives (private entrepreneurs). Further application and optimization of supporting programmes for representatives and launching of a specific programme for expansion of agents’ network
Optimization of human resources and administrative expenses in Head Office
Further development of standard group life policies and new IT solutions
Cancelation of the unprofitable part of the old portfolio of Life Insurance and conversion of some old products to new life products.
23annual report 2011
Activity results (BGN thousand) 2011 2010
Loss before tax -1,260 -1,129
Income tax expenses - -
Effect of temporary differences -5 21
Profit for the year -1,265 -1,108
Result from operating activities -1,248 -1,118
Net premiums earned 9,091 12,757
Net insurance claims expense -6,257 -5,800
Acquisition and administrative costs -4,343 -4,971
Operating income from investments 644 801
Other operating income 646 660
Other operating expenses -1,029 -4,565
Financial expenses -12 -11
Assets management / Investments by classes of business
(BGN thousand)2011 2010
Book value Share (%) Book value Share (%)
Investment properties 691 3.87% 148 0.83%
Equity securities 1,099 6.15% 1,182 6.59%
– Available for sale - - 304 1.69%
– At fair value through profit and loss 1,099 6,15% 878 4,90%
Debt securities 7,705 43.11% 7,864 43.86%
– Available for sale 6,398 35,80% 6,445 35,95%
– Through profit and loss 1,307 7,31% 1,419 7,91%
Deposits 6,267 35.07% 5 27.89%
Loans 2,108 11.80% 3,735 20.83%
Receivables, including insurance receivablesTotal investments 17,870 100.00% 17,929 100.00%
Insurance reserves(BGN thousand) 2011 2010
Insurance reserves in life insurance
Unearned Premium Reserve (UPR) 2,143 2,282
Mathematical Reserve 8,426 8,318
Outstanding Claims Reserve 757 858
Reserve on policies, where the investment risk is born by the policyholder
943 812
Total 12,269 12,270
Financial Section
Generali: Affordable health care solutions.
25annual report 2011
Generali Zakrila Health Insurance PROFILE
In 2011, gross premium income of companies operating in the voluntary health insurance amounted to BGN 40 373 thousand which was a decrease by 4.3% on annual basis. Claims for voluntary health insurance amounted to BGN 23 785 thousand having an increase of some 1.3% on an annual basis.
Total assets of health insurance companies at the end of 2011 increased by 5.8% on annual basis and amounted to BGN 82 877 thousand. Total equity of health insurance companies increased by 6% on annual basis and reached BGN 53 949 thousand. The amount of health insurance reserves increased by 7.1% on annual basis and reached BGN 15 468 thousand.
The result of voluntary health insurance for 2011 was negative and amounts to BGN - 1 194 thousand, compared to BGN -3 179 thousand for 2010. Voluntary health insurance companies complete the reporting period with negative financial result of BGN -32 thousand, BGN -1 326 thousand a year earlier.
Insured people under contracts of voluntary health insurance at the end of 2011 were 188 363, compared to 207 307 people at the end of the previous year.
The largest premium package, in share, was other health insurance packages – 31% and outpatient medical care – approx. 23%.
In 2011 Generali Zakrila Health Insurance AD owned some 12% market share and ranked third in the voluntary health insurance market, by which it handed over the second position to United Health-Insurance Fund “Doverie” AD.
In the end of 2011 the number of health insured persons in Generali Zakrila Health Insurance AD is little below 23 thousand people
employed under corporate and individual health insurance contracts. The total number of health insured persons increased compared to 2010 mainly due to the opportunity of the insured persons to include members of their families in the insurance set under the same favorable conditions.
The total health insurance premium income of Generali Zakrila Health Insurance AD for 2011 is BGN 4,778 thousand, which is lower compared to 2010 by BGN 786 thousands, or by 14.13%. In 2011 the Company renewed successfully the contracts with some big corporate clients. Sales in 2011 were focused on profitable companies and successful business sectors with less insured persons but sufficient premium coverage.
In 2011 the Company continued implementing its underwriting policy, based on the actuarial analysis and control over risk development.
The ongoing monitoring of the development of the loss ratio for the major health insurance contracts, which affect to a greater extend the Company’s results, continued. These contracts are the focus of the Company in terms of quality of service.
26annual report 2011
Key performance indicators The Company realized negative result from the operating activity
as of 31.12.2011 in the amount of BGN 701 thousand compared to loss of BGN 117 thousand as of 31.12.2010.
The net premiums earned decreased and as of 31.12.2011 amounted to BGN 4,734 thousand compared to BGN 5,069 thousand as of 31.12.2010.
The net claims incurred increased by BGN 250 thousand, from BGN 2,821 thousand as of 31.12.2010 to BGN 3,071 thousand as of 31.12.2011. Paid claims decreased by some BGN 161 thousand, but the claims ratio deteriorated – in 2011 it is 64.87 %, compared to 50.70 % in the previous year. This is due to the release of reserves in 2010 which had a positive impact on the claims ratio but in 2011 such positive effect is missing.
The acquisition and administrative costs reached BGN 2,623 thousand (decrease by 4.06%). The expenses ratio, computed based on the net premiums earned, increased from 53.93 % to 55.40 % which is a result mainly of the decrease of the net premiums earned.
The investments decreased from BGN 8,794 thousand to BGN 8,547 (decrease by 2.81 %) due to sale of shares in investment funds and changes in market prices.
The main efforts in the activity of Generali Zakrila Health Insurance during 2012 will be focused in the following directions:
Achieving the budgeted premium income;
Increasing of the share of the new business in the Company’s portfolio;
Increasing sales through regional sales network and agents;
Continuation of the strict control and monitoring of the compensations for claims and reduction of the administrative expenses;
Keeping current market position of the Company;
Strong emphasis on development of channels for mass sales/ regional structure and its agency network, new product for individual customers;
Preliminary risk analysis and signing health insurance contracts at a price that could cover servicing costs according to the defined packages in the contract;
Regular monitoring over risk development for the significant health insurance contracts and undertaking of immediate actions when there are indications of occurrence of negative factors;
Strict control over the payments of the health insurance premiums and undertaking of immediate actions for their collection in case of delay or other established problems;
Suspending the project for development of the new informational system VIAS for business administration;
Achieving better financial results by the Company’s subsidiary Generali Zakrila Medical and Dental Center
.
27annual report 2011
Business results
(BGN thousand) 2011 2010
Loss before income tax -1,299 -469
Income tax expense 21 -5
Result for the year -1,278 -474
Operating result -701 -117
Net premiums earned 4,734 5,069
Net claims incurred -3,071 -2,821
Acquisition costs and administrative expenses -2,623 -2,734
Operating income from investments 400 460
Other operating income 3 13
Other net operating expenses -144 -104
Financial expenses and impairment of intangible assets
-598 -352
Assets management / Investments
(BGN thousand)31.12.2011 31.12.2010
Book value Share (%) Book value Share (%)
Deposits 4,547 53.20% 4,400 49.77%
Receivables 1,104 12.92% 1,312 15.00%
Financial assets available for sale 2,590 30.30% 2,780 31.78%
Financial assets at fair value through profit and loss
306 3.58% 302 3.45%
Total investments 8,547 8,794
Net health insurance reserves
(BGN thousand) 31.12.2011 31.12.2010
Health insurance reserves
Unearned premium reserves 1,489 1,541
Unexpired risk reserve 484 388
Outstanding claims reserve 237 124
Total 2,210 2,053
Financial Section
28annual report 2011
Generali Zakrila Medical and Dental Centre PROFILE
Generali Zakrila MDC EOOD is a medical institution for specialized non-hospital medical care. Generali Zakrila MDC EOOD remains one of the leading medical institutions in Sofia. It implements its activity in several directions:
Service to voluntarily insured persons in Generali Zakrila Health Insurance AD;
Service to patients not insured in Generali Zakrila Health Insurance AD;
Service to patients under contract by National Health Insurance Fund /NHIF/;
Service to insured patients in other private health insurance companies;
Service to patients under direct corporate contracts /mainly prophylaxis/;
Service to individual patients as part of the product “Special clients’ cards”.
Most of the patients of the Centre are people who have been insured by Generali Zakrila Health Insurance AD. During 2011, 29,611 examinations of 8,589 insured people were performed in Generali Zakrila MDC EOOD. In the same period 9,352 manipulations and 16,652 clinical and microbiological laboratory examinations were performed. Prevention examination of 8,589 patients have been performed during the year. On the basis of their contracts, the patients have attended on the average 4 examinations and 5 general check-ups (instrumental and laboratory). Significant part of the prevention activities have been provided around the country by mobile teams.
Also in 2011 the medical teams of Generali Zakrila MDC have performed medical examinations and anti flu vaccinations to insured clients. These medical examinations took place not only at the medical centre but also at the defined for the purpose places around the country including examination and anti flu vaccination. Besides the area of prophylactic examinations Generali Zakrila MDC has kept its leading position also in the area of the specialized examinations and consultations carried out in pre-hospital medical care. Generali Zakrila MDC EOOD works with consultants, specialists and professionals and thus is able to carry out rapid diagnosis of medical problems, and provides an adequate treatment in accordance with the requirements and criteria of good medical practice.In 2011 the number of patients who were not insured in Generali Zakrila MDC EOOD and were served by the Company was 2,150. Their number has decreased 1.04 times compared to the previous year (2,446 in 2010). This decrease was due to the newly introduced possibility the treatments of those patients to be covered by the NHIF. 3,695 procedures have been carried out, 2,157 persons made a total number of 7,052 clinical and microbiological examinations. In 2011, the number of the patients for which the medical expenses were covered by NHIF was 2,053; 535 treatments and 6,015 clinical and microbiological examinations were performed.
29annual report 2011
Key performance indicators The net income from services and other income for the year ended
31.12.2011 amounted to BGN 1,504 thousand and decreased by 0.93 % compared to 2010. The reduction was mainly due to the decrease of other income. Income from services remained at the level of 2010.
Administrative expenses amount to BGN 1,543 thousand and decreased by 3.20 % compared to 2010. This is a direct result of the measures for reduction of the administrative expenses implemented during the year.
The main efforts in the activity of Generali Zakrila Health Insurance during 2012 will be focused in the following directions:
Achieving the budgeted premium income;
Increasing of the share of the new business in the Company’s portfolio;
Increasing sales through regional sales network and agents;
Continuation of the strict control and monitoring of the compensations for claims and reduction of the administrative expenses;
Keeping current market position of the Company;
Strong emphasis on development of channels for mass sales/ regional structure and its agency network, new product for individual customers;
Preliminary risk analysis and signing health insurance contracts at a price that could cover servicing costs according to the defined packages in the contract;
Regular monitoring over risk development for the significant health insurance contracts and undertaking of immediate actions when there are indications of occurrence of negative factors;
Strict control over the payments of the health insurance premiums and undertaking of immediate actions for their collection in case of delay or other established problems;
Suspending the project for development of the new informational system VIAS for business administration;
Achieving better financial results by the Company’s subsidiary Generali Zakrila Medical and Dental Center.
Objectives for the Company’s activity in 2012:
Implementation of the planned indicators of the revenue of Generali Zakrila MDC EOOD;
Continuation of the launched in 2011 tendency for increase of the share of income sources that are different from the ones from the parent company in the total revenue of the Company;
Further optimization of Company’s costs;
Gradual upgrade of the medial equipment available in the clinic laboratory in the centre;
Ending 2012 with profit as a result of achieving the above objectives.
30annual report 2011
Activity results
(BGN thousand) 2011 2010
Profit /(loss) before tax -42 -77
Income tax expenses 1 -1
Profit /(loss) for the period -41 -78
Operating profit/(loss) -42 -77
Administrative expenses -1,543 -1,594
Income from services and other income 1,504 1,518
Financial Section
Generali Bulgaria2011 Key Campaigns
Cultural sponsorship - Generali supported the exhibition of the contemporary Italian artist Nunzio Bibbo
Generali Bulgaria’s successful summer-autumn OOH image
New beginning - In 2011 Generali Bulgaria launched its online sales portal
Promoting Casco - one of top targeted products - with up to 50% discount for new customers
Awarding the best Brokers - a memorable trip to Rome
32annual report 2011
Independent Auditors’ ReportTo Shareholder of the Generali Bulgaria Holding EAD
Report on the separate Financial StatementsWe have audited the accompanying separate financial statements of Generali Bulgaria Holding EAD (the “Company”) which comprise the separate balance sheet as of 31 December 2011 and the separate statement of comprehensive income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these separate financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s ResponsibilityOur responsibility is to express an opinion on these separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
33annual report 2011
Opinion In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial position of Generali Bulgaria Holding EAD as of 31 December 2011, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
Report on Other Legal and Regulatory RequirementsManagement is also responsible for preparing the Annual Report in accordance with the Accounting Act.
We are required by the Accounting Act to express an opinion whether the Annual Report is consistent with the annual separate financial statements of the Company.
In our opinion, the Annual Report set out on pages 3 to 16, is consistent with the accompanying separate financial statements of the Company as of 31 December 2011.
Rositsa Boteva Petko DimitrovRegistered Auditor Pricewaterhouse Coopers Audit OOD
30 March 2012Sofia, Bulgaria
Rositsa Boteva Petko DimitrovRegistered Auditor Pricewaterhouse Coopers Audit OOD
Generali Bulgaria Holding EAD68, Knyaz Alexander Dondoukov Blvd. 1504 Sofia, BulgariaTelephone (+359) 2 92 67 111 Fax (+359) 2 92 67 112
www.generali.bg