Supplemental Information on the Financial Situation and Information for Investors

Listed Security Issuer Information

Shareholder Structure

Since 2006, the Company’s sole shareholder has been CZI Holdings N.V. Česká pojišťovna’s ultimate controlling entity is Assicurazioni Generali S.p.A.

Controlling entities wield control based on the weight of their votes alone. Information on mutual relations with Group companies is presented in the notes to the financial statements and in the notes to the consolidated financial statements, as well as in the report on related-party transactions, which are included in this Annual Report. Česká pojišťovna is not dependent on any other entity in the Group.

Securities Issued by Česká pojišťovna

Shares

As at 31 December 2015, the approved share capital consisted of 40,000 dematerialised, registered ordinary shares totalling CZK 4,000 million.

Bonds

On 13 December 2012, as part of its bond programme, Česká pojišťovna issued 500,000,000 bonds with a total nominal value of CZK 500 million. The bonds bear interest at a fixed rate of 1.83% p.a.

The lead manager of the bond issue is Raiffeisenbank a.s.

Principal Business according to the Current Articles of Association and Types of Insurance Written

Česká pojišťovna is a composite insurer offering a wide range of life and non-life insurance classes.

The Company also engages in all activities related to its ownership interests in other legal entities.

Shareholder Rights and Obligations

Holders of the Company’s ordinary shares are entitled to receive dividends approved in individual time periods, and are entitled to exercise one vote per share held at General Meetings.

Capital gains and other income from shares are taxed in accordance with Czech legislation, i.e. Act No 586/1992 on income tax, as amended. Profit-sharing is taxed at a special tax rate of 15%. Exceptions to this are possible under international double taxation treaties.

Articles of Association

Česká pojišťovna’s Articles of Association valid in 2015 were approved by the Company’s sole shareholder on 17 June 2014. In addition, the Company was subjected to Act No 90/2012 on companies and cooperatives (the Business Corporations Act) as a whole.

Those Articles of Association were subsequently revised on 30 October 2014 and 10 June 2015.

Fees Paid to the Audit Firm in 2015

The audit firm’s fees for audit services provided to the ČP Group in 2015 totalled CZK 21.06 million.

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The audit firm provided no other services to Česká pojišťovna or Group companies.

Solvency of Česká pojišťovna

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Remuneration Principles

Remuneration Principles – Members of the Board of Directors and Supervisory Board

In general, the compensation model applied to the Company’s governing bodies and executives reflects the long-term strategy of simplicity and transparency in the motivation and remuneration of all employees of Česká pojišťovna.

Other benefits of members of the Board of Directors are regulated either directly in the Board Membership Contract (e.g. compensation for non-use of company cars) or by an internal Company regulation granting members of the Board of Directors generally the same scope of benefits as Company employees.

Members of the Supervisory Board are entitled to regular fixed monthly remuneration derived from their Board Membership Contract approved in advance by the sole shareholder (the General Meeting). The amount is paid monthly, by the 15th day of the calendar month following the month in which the board member’s claim arose.

If a member of one of the Company’s governing bodies holds office only for part of the calendar month (e.g. in cases where he ceases to be a member of a Company body), he is entitled to remuneration on a pro rata basis.

Members of governing bodies who are concurrently employees of the Company receive remuneration pursuant to principles stipulated universally for the entire Company in the form of Pay Rules and the Social Programme, which is an integral part of the Collective Agreement.

In total, members of the Board of Directors drew healthcare contributions in an aggregate amount of CZK 64,000; members of the Supervisory Board did not draw on these contributions.

None of the members of the Board of Directors or the Supervisory Board used an executive car.

Remuneration Principles for Other Employees

Base Pay
Employees’ base pay is governed by the Pay Rules and rules defined by the Collective Agreement. The specific base pay amount for executive positions is stipulated individually in each executive’s contract, or by a pay assessment, and is in line with standard practice in the Czech market.

Bonus and Other Variable Pay Components
Variable remuneration at ČP follows the guidelines on remuneration for individual departments. The rules in those guidelines are updated regularly. Employees who have not been set a variable component of remuneration may be granted a special bonus under the Collective Agreement.

All employees are set targets in financial, business/functional and development areas.

Where employees have a bonus component incorporated into their pay, rules for the granting of the bonus are approved by the Company management in the directive entitled “Pay Regulation for the Payment of Bonuses to ČP Employees”. The bonus base for employees depends on the importance of their job and its impact on the Company’s earnings (the base wage multiple varies from a multiple of three to twelve).

The process of the final evaluation of targets and the subsequent payment of bonuses takes place in accordance with the process described in the above directive at the end of the year. An employee’s specific bonus amount is subject to approval by the member of the Board of Directors responsible for the area concerned. The payment of senior employees’ bonuses is conditional on the resulting performance of selected economic indicators.

Other Benefits
All Company employees, including executives, are entitled to a CZK 333 per month life insurance contribution under the Social Programme, as provided for in the Collective Agreement. At the same time, they have the option to receive a pension plan contribution of CZK 300–1,500 per month, according to rules stipulated in the Collective Agreement. Employees may also take part in health-focused activities under the WE FIT programme, including vaccinations, health days, medical examinations, training and sports events.

Persons with Executive Authority

In 2015, the Company recorded no loans or advances extended to members of the Board of Directors or the Supervisory Board.

No member of the Company’s Board of Directors or Supervisory Board is in a conflict of interest due to membership of another company’s governing bodies.

In 2015, the following changes were made to the Company’s bodies:

Board of Directors:

• Luciano Cirinà ceased to be a member and ceased to hold office within the Board of Directors on 3 July 2015;
• Štefan Tillinger ceased to be a member and ceased to hold office within the Board of Directors on 1 June 2015;
• Jiří Fialka ceased to be a member and ceased to hold office within the Board of Directors on 30 June 2015;
• Marek Jankovič was appointed as a member of the Board of Directors on 3 July 2015 and was elected as the Chairman of the Board of Directors as of 7 July 2015;
• Karel Bláha was appointed as a member of the Board of Directors on 1 June 2015;
• Tomáš Vysoudil was appointed as a member of the Board of Directors on 1 July 2015.

Supervisory Board:

• Martin Sturzlbaum ceased to be the Chairman of the Supervisory Board on 7 July 2015;
• Luciano Cirinà was appointed as a member of the Supervisory Board on 3 July 2015 and was elected as the Chairman of the Supervisory Board on 7 July 2015.

Principal activities of members of the Board of Directors and Supervisory Board in other companies, to the extent they are material for the Company, in 2015:

No member of the Board of Directors or Supervisory Board has been convicted of any fraud-related crime.

Cash Income of Persons with Executive Authority in 2015

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The Company’s management comprises only the members of the Board of Directors.

Cash income is defined as the sum of all cash income received by the board member for the 2015 accounting period (in particular, board membership remuneration, executive pay, wages, bonuses, income under other contracts and collective endowment life insurance on death or survival).

Cash income received by members of the Company’s governing bodies directly from the Company totalled CZK 72 million. This includes income both from acting as members of the governing body and from acting as Company executives.

In-kind income is defined as the sum of the values of all non-cash (in-kind) income items that the board member received (in particular executive cars, managerial healthcare programme, and benefits under the Collective Agreement).

Entities in which Česká pojišťovna Holds a Participating Interest Exceeding 10% of its Own Net Current Period Earnings

As at 31 December 2015, based on figures available to Česká pojišťovna as at the compilation date of this Annual Report:

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Standalone Report on Company Management

I. Internal Process of Control over Compilation of the Financial Statements
The information set forth below concerns internal control principles and procedures and rules governing the Company’s and the Group’s approach to risks to which the Company and the Česká pojišťovna Group are exposed in relation to the financial reporting process.

Česká pojišťovna has implemented an internal control and management system that minimises the risk of incorrect reporting, which relates to the ability of the internal information system to provide timely and accurate information for purposes of internal decision-making and for the purposes of external reporting.

At Group level, responsibility for implementing a commensurate system of internal controls is delegated to individual Group companies. Thus, each company is directly responsible for managing this risk.

A unified accounting manual is used by all Group companies to compile the consolidated financial statements. All material Group companies are audited by the same audit firm as Česká pojišťovna.

Česká pojišťovna systematically works to improve its internal control system in the field of financial reporting; this process has accelerated since the Company and its subsidiaries became part of the Generali Group.

II. Compliance with the Code of Corporate Governance
While no code of corporate governance is legally binding on Česká pojišťovna a.s., it voluntarily complies with the Czech Insurance Association’s Code of Ethics in Insurance and the Generali Group Code of Conduct.

The Czech Insurance Association’s Code of Ethics in Insurance can be viewed at www.cap.cz.

The Generali Group Code of Conduct can be viewed at www.ceskapojistovna.cz/eticky-kodex.

III. Description of the Principles and Functioning of Company Bodies

Board of Directors of Česká pojišťovna
The Board of Directors is the governing body responsible for managing the Company’s activities and acting in the Company’s name. The Board of Directors takes decisions on all Company matters that are not reserved by law or the Articles of Association for the General Meeting or the Supervisory Board. Its authority ensues from Czech legislation and the Company’s Articles of Association.

The Board of Directors has at least three and no more than nine members. Members of the Board of Directors serve for five-year terms. From among its members, the Board of Directors elects and removes from office one Chairman and one Vice-Chairman.

The Board of Directors’ activities are governed by the activity plan, which the Board of Directors approves for each calendar year in advance. The draft plan, including, in particular, the meetings schedule, is submitted to the Board of Directors by the Chairman, and is prepared by the Company Secretary based on the Chairman’s instructions. The Board of Directors meets as needed, but not less than once every two months. The Board of Directors’ activity plan is amended and clarified as necessary on an on-going basis during the year. If necessary, the Chairman of the Board of Directors may call a meeting of the Board of Directors not specified in the activity plan in order to discuss urgent matters relating to the Company.

The Board of Directors also exercises its authority outside of meetings, in the course of the Company’s day-to-day operations.

The composition of the Board of Directors as at the date the Annual Report was published is set forth on page 17 of this Annual Report.

Česká pojišťovna Supervisory Board
The Supervisory Board of Česká pojišťovna is the Company’s oversight body. It oversees the exercise of the responsibilities incumbent upon the Board of Directors and the pursuit of the Company’s business activities. Its competence is derived from Czech legislation and the Company’s Articles of Association. In particular, the Supervisory Board oversees the functionality and effectiveness of the Company’s management and control system, as well as matters related to its strategic direction.

The Supervisory Board of Česká pojišťovna has at least three members and no more than five members, the specific number being determined by the General Meeting. Members of the Supervisory Board serve for terms of five years.

The Supervisory Board’s activities are governed by the activity plan, which the Supervisory Board approves for each half-year in advance. Outside of the activity plan, the Supervisory Board discusses such matters as may arise between its meetings, provided that the nature of such issues so requires. Meetings of the Supervisory Board are held as needed, but no fewer than four times per year.

Individual checks, investigations, examinations, and inspections of Company materials, etc., are conducted by members of the Supervisory Board either individually or in groups authorised by the Supervisory Board in a resolution adopted at a Supervisory Board meeting or as separately authorised by the Chairman outside of a Supervisory Board meeting. Afterwards, at the immediately following Supervisory Board meeting, the Supervisory Board is informed of the activities conducted by individual members or groups authorised by the Supervisory Board and of the results thereof. If any serious findings or circumstances arise from the checks, the Chairman of the Supervisory Board is informed of such on an on-going basis, even between Supervisory Board meetings.

The composition of the Supervisory Board as at the date the Annual Report was published is set forth on page 19 of this Annual Report.

Management Committee
The Management Committee is an advisory body to the Board of Directors. Management Committee members are each member of the Board of Directors and the Chief Marketing & Customer Development Officer. Other persons designated by the Chairman of the Board of Directors may be invited to Management Committee meetings. The Management Committee discusses significant matters in the operational management of the Company. The Management Committee may, on the instructions of the Board of Directors, coordinate the activities of the Company and the companies it manages in the Czech Republic in accordance with the Generali Group’s holding policy.

ČP Audit Committee
The Česká pojišťovna Audit Committee is a Company body that, in particular, monitors the procedure applied in the preparation of financial statements, the effectiveness of the Company’s internal control the risk management and internal audit system, and the process behind the statutory auditing of the financial statements and, where appropriate, consolidated financial statements, assesses the independence of the statutory auditor and audit firm and, in particular, the provision of additional services to the auditee, and recommends an auditor to the supervisory body.

The Audit Committee consists of three members appointed by the General Meeting based on their expertise and qualifications for carrying out their responsibilities of office. Two Audit Committee members are independent and have at least three years’ experience of accounting or statutory auditing.

The competence of the Audit Committee ensues from Czech laws, in particular Act No 93/2009 on auditors, as amended, and the internal regulations of Česká pojišťovna. The Committee reports to the Company’s General Meeting and, in certain areas, also operates as an advisory body to the Board of Directors. Its decisions constitute recommendations to the Board of Directors, which bears final responsibility for the Company’s system of internal controls, the proper conducting of internal checks, and the risk management system. The Audit Committee also regularly informs the Supervisory Board of the results of its activities.

The Audit Committee meets at least twice per year, and the Chairman of the ČP Board of Directors, the ČP Chief Executive Officer, the ČP Internal Audit Director, and, where appropriate, the external auditor have standing invitations to attend the meetings as guests. In addition, line managers and other Company employees may be invited to Audit Committee meetings as necessary to provide the Committee with information. Their participation, however, is limited only to the relevant agenda item(s).

The Company’s Annual General Meeting is held at least once per year, no later than six months from the last day of the accounting period. The Board of Directors is entitled to convene an Extraordinary General Meeting at any time. The Supervisory Board convenes the General Meeting whenever it is in the Company’s interests to do so.

The General Meeting has a quorum if shareholders are present, the aggregate nominal value of whose shares is at least fifty per cent (50%) of the Company’s share capital.

After verifying the quorum, the General Meeting elects its chairman, clerk, two verifiers of the minutes, and persons authorised to count votes. The persons elected by the General Meeting to these offices may or may not be shareholders. Until the chairman is elected, the General Meeting is chaired by a member of the Board of Directors authorised to do so by the Board of Directors. If the General Meeting has been convened by the Supervisory Board, until election of the chairman it is chaired by a person authorised to do so by the Supervisory Board. If the General Meeting has been convened on the basis of a court order and the court has not designated a General Meeting chairman, it may be chaired by any shareholder until such time as the General Meeting elects a chairman.

Should a shareholder at the General Meeting make a motion in a matter that is to be discussed in the agenda set for the General Meeting in question (an “original motion”), an entirely new motion of the shareholder’s own (a “new motion”) or a motion revising or otherwise amending an original motion (a “countermotion”), then she or he is required – in the case of countermotions to motions the content of which is set forth in the invitation to the General Meeting or in the General Meeting announcement, or in the event that a notarial record must be made of the General Meeting’s decision – to deliver his or her motion or countermotion in writing to the Company at least five working days prior to the General Meeting date. This rule does not apply to motions for election of specific persons to Company bodies.

The Board of Directors is required to publish its countermotion along with its opinion, if possible, at least three days prior to the date announced for the General Meeting.

Should a shareholder wish to make a new motion or countermotion during the General Meeting, he or she must submit it to the General Meeting chairman.

Voting at the General Meeting takes place by ballot.

If the General Meeting does not have a quorum within one (1) hour of the time set forth in the invitation as the beginning of the General Meeting, the convener shall convene a compensatory General Meeting under the conditions and in the manner set forth in the Business Corporations Act.

Česká pojišťovna currently has a sole shareholder, who wields the authority of the General Meeting in accordance with the Business Corporations Act and the relevant procedures above.