Annual Report 2015

D. Segment reporting

The Board of Directors as the Company’s chief operating decision maker makes decisions on how to allocate resources and assesses performance of these operating segments: life insurance operating segment, non-life insurance operating segment, operating segment of the Branch in Poland (PL branch). These segments represent a component of the Company:

  • that engages in business activities from which the Company may earn revenues and incur expenses;
  • whose operating results are regularly reviewed by the management of the Company to make decisions about resources to be allocated to the segment and assess its performance; and
  • for which discrete financial information is available.

 
Products offered by operating segments include:

Gross earned premiums revenue in CZK million, for the year ended 31 December20152014
Life9,62410,844
Traditional life insurance7,9899,327
Unit linked insurance1,6351,517
Non-life18,56218,347
Motor7,9957,987
Accident, Health and Disability638720
Marine, aviation and transport261234
Property7,5097,249
General liability2,0962,008
Other63149
Branch3,0452,526
Total31,23131,717

XLS

Note C.3 of the financial statements provides further information about significant terms and conditions of insurance products.

All segment revenues are generated from sales to external customers. There is no single external customer that would amount to 10% or more of the Company’s revenues.

Management has determined the operating segments based on the reports periodically reviewed by the Board of Directors that are used to make main strategic decisions. The Board of Directors assesses the performance of the Branch based on the income statement and in case of other operating segments based on a measure of net technical results. Net financial income is not allocated to segments, as this type of activity is driven by the central treasury function of the Company. Other income and expenses are also not allocated to segments.
 
The segment information provided to the Board of Directors for the year ended 31 December 2015 is as follows (in CZK million):

 LifeNon-lifeTotalReconciling itemIncome Statement ČPIncome Statement PL branchNote
Gross
Insurance premiums9,62418,56228,186–28,186–
Insurance benefits and claims(4,932)(9,443)(14,375)(1,237)(15,612)–
Total costs(1,844)(4,617)(6,461)–––
Commissions and other acquisition costs
(1,185)(3,606)(4,791)–––
Administration costs
(659)(1,011)(1,670)–––
Other technical items(115)(76)(191)–––
Gross technical result2,7334,4267,159–––
Reinsurance
Premiums ceded to reinsurers(1,275)(8,599)(9,874)–(9,874)–
Reinsurer´s share on claims4384,3674,805144,819–
Total costs3201,8712,191–––
Commisions and other acquisition costs
3201,8712,191–––
Reinsurance technical result(517)(2,361)(2,878)–––
Net
Insurance premiums8,3499,96318,312–18,312–
Insurance benefits and claims(4,494)(5,076)(9,570)(1,223)(10,793)–1
Total costs(1,524)(2,746)(4,270)–(4,270)–
Commissions and other acquisition costs
(865)(1,735)(2,600)9(2,591)–2
Administration costs
(659)(1,011)(1,670)(9)(1,679)–2
Other technical items(115)(76)(191)191––3
Net technical result2,2162,0654,281(1,032)3,249–
Financial Income
Net financial result––646–––
Eliminations––1,373–––
Total financial investments income––2,0191,0203,039–4
Total other income and expenses––(267)12(255)–5
Income taxes––(754)–(754)–
Loss after tax from discontinued operations–––––(1,187)
Net profit for the year––5,279–5,279–

XLS

The main reconciling items between the Management Report and the Income Statement report are:

  1. The reconciling item of insurance benefits and claims are changes of unit-linked provisions in the amount of CZK 1,223 million which are reported in the Income Statement as insurance benefits and claims while it is presented within financial income in the Management Report.
  2. Different classification of acquisition costs and administration costs – mainly service costs in the amount of CZK 9 million.
  3. Other income and Other expenses as reported in the Income Statement are split in the Management Report between other technical items and total other income and expenses.
  4. The aggregate effect of Note 1, 3 and 5.

 
The segment information provided to the Board of Directors for the year ended 31 December 2014 is as follows (in CZK million):

 LifeNon-lifeTotalReconciling itemIncome Statement ČPIncome Statement PL branchNote
Gross
Insurance premiums10,84418,34729,191–29,191–
Insurance benefits and claims(6,018)(9,103)(15,121)(1,342)(16,463)–
Total costs(2,180)(4,553)(6,733)–––
Commissions and other acquisition costs
(1,468)(3,419)(4,887)–––
Administration costs
(712)(1,134)(1,846)–––
Other technical items(73)(87)(160)–––
Gross technical result2,5734,6047,177–––
Reinsurance
Premiums ceded to reinsurers(1,313)(8,254)(9,567)–(9,567)–
Reinsurer´s share on claims4083,4993,907153,922–
Total costs3291,7362,065–––
Commissions and other acquisition costs
3291,7362,065–––
Reinsurance technical result(576)(3,019)(3,595)–––
Net
Insurance premiums9,53110,09319,624–19,624–
Insurance benefits and claims(5,610)(5,604)(11,214)(1,327)(12,541)–1
Total costs(1,851)(2,817)(4,668)–(4,668)–
Commissions and other acquisition costs
(1,139)(1,683)(2,822)34(2,788)–2
Administration costs
(712)(1,134)(1,846)(34)(1,880)–2
Other technical items(73)(87)(160)160––3
Net technical result1,9971,5853,582(1,167)2,415–
Financial Income
Net financial result––875–––
Eliminations––510–––
Total financial investments income––1,3851351,520–4
Total other income and expenses––(189)1,032843–5
Income taxes––(731)–(731)–
Loss after tax from discontinued operations–––––(411)
Net profit for the year––4,047–4,047–

XLS

The main reconciling items between the Management Report and the Income Statement report are:

  1. The reconciling item of insurance benefits and claims are changes of unit-linked provisions in the amount of CZK 1,327 million which are reported in the Income Statement as insurance benefits and claims while it is presented within financial income in the Management Report.
  2. Different classification of acquisition costs and administration costs – mainly service costs in the amount of CZK 34 million.
  3. Other income and Other expenses as reported in the Income Statement are split in the Management Report between other technical items and total other income and expenses.
  4. The aggregate effect of Note 1, 3 and 5.
  5. Significant part of the total difference in the amount of CZK 1,032 million is represented mainly by valuation of AFS instruments in the amount of CZK 1,187 million which is reported in the Income Statement as total other income and expenses while in the Management Report they are presented in the financial income section.

 
The following table shows key figures per operating segment:

In CZK million, for the year ended 31 December 2015Non-lifeLifeTotal
Capital expenditure *(144)(100)(244)
Depreciation and amortisation(202)(127)(329)
Impairment losses recognised(292)(357)(649)
Reversal of impairment losses29623319
Total segment assets36,31972,265108,584
In CZK million, for the year ended 31 December 2014Non-lifeLifeTotal
Capital expenditure *(205)(78)(283)
Depreciation and amortisation(259)(154)(413)
Impairment losses recognised(208)(209)(417)
Reversal of impairment losses19935234
Total segment assets39,38572,883112,268

XLS

* Additions to non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets and rights arising under insurance contracts.

Segment assets and liabilities are not regularly included in the reports provided to the Board of Directors.

Geographical information
The Company operated in 2015 mainly in the Czech Republic and in EU countries. For the year 2015 9.75% of the income from insurance was generated by discontinued operations – branch in Poland (2014: 7.96%). More than 99% of the remaining income from insurance contracts came from clients in the Czech Republic.