Annual Report
2009
Contents Address of the Chief Executive Office ...................................................................................................................................... 2 Management Boards of the Company .................................................................................................................................... 4 Report of the Board of Directors .................................................................................................................................................... 6 Owners
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General Review of the Economy Domestic Insurance Market
Business Performance of Generali-Providencia
Property Insurance Business
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Review of the Personal Insurance Business
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Review of the Motor Insurance Business Sales Activities of Generali
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Claims Settlement Services
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Customer Relationships Management
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Our Most Valuable Assets: Employees
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Behind the Scenes
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Processes and Risks Marketing Activities
Generali 20 .......................................................................................................................................................................................................... 29
Balance Sheet ................................................................................................................................................................................................. 36 Profit and Loss Statement ................................................................................................................................................................. 38 Profit and Loss Account ....................................................................................................................................................................... 40 Appendix . .............................................................................................................................................................................................................. 42
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Address of the Chief Executive Office Dear Customers, dear Partners, I am proud to present you with the report on our Company’s 2009 results and achievements. Despite adverse economic trends, Generali-Providencia Insurance Ltd. closed another successful business year. We can regard the prior year particularly successful if we look at our achievement in reflection of the performance of the domestic insurance sector. Last year, as a result of the global financial crisis and new tax regulations adopted in Hungary, insurance companies and insurance associations reported a 6.7 percent drop in premium income, and adjusted premium income was 3.1 percent lower than in 2008. Although Generali was not immune to these adverse effects, on the whole our company managed to improve its positions in the Hungarian insurance market. Due to the confidence customers placed in us and as a result of our responsible operations, we managed to sustain our stability and profitability, and did not need to recognize significant impairment loss on our investments either. We closed the 2009 business year with a total of HUF 127.7 billion written premiums and nearly HUF 13 billion profit after tax. When reviewing the performance of business lines, I do take pride in the outstanding achievement of the personal insurance business where, in a market characterized by deteriorating gross new business acquisition, Generali, ahead of the largest market players, ranked first with total portfolio premiums of HUF 5.325 billion. This achievement well reflects the major efforts Generali made last year to develop and offer suitable products in response to customer demands which changed within the crisis. Thus our Europe Treasury unit-linked insurance we launched early in the year, could make a significant contribution to the portfolio premium of new business sales of regular premium life insurance, by offering customers a euro-based investment option. Our company closed a successful year in non-life insurance, too. Our prompt responses and adequate adaptation to changed market conditions proved to be effective in this area, as well. Due to our flexible insurance products and new developments such as the launch of a new home insurance product, Homeguard Premium (Házôrzô Prémium) cover package, and on the service side due to our outstanding claim settlement processes, Generali reported written premiums of HUF 47.138 billion and became market leader in non-life insurance exclusive of motor insurance. In administration, we carried out several improvements last year to provide services with increasing efficiency: we have completed comprehensive developments to the insurance technical system of our life insurance business, optimized our priority life insurance processes to establish even higher standards and improved accuracy in serving our
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» Address of the Chief Executive Office Management Boards of the Company Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
customers, and we have proceeded with the developments in claims settlement we started earlier. Through training our customer service staff and improving our business processes, we can provide smoother customer services both in customer service walk-in centers and in our telephone customer service. To increase the efficiency of our sales activities we commenced upon several developments. With the investment of significant funds, the overall structural renewal of the largest of our own sales channels, the Composite Network was completed by the end of the year. A redesigned career system, a reviewed incentive scheme and a new sales recruit process seem to have put this dominant sales network of the company both in terms of headcount and performance, onto a promising growth path. To emphasize its commitment to the concept of partnership, Generali continued to consciously develop sales relationships and cooperate with business partners in 2009, which endeavor is now coordinated by a solid business unit, the Insurance Brokers and Dealers Directorate. The work we accomplished is best reflected in our external sales performance. Adaptation to changes requires flexibility and prompt decision making from the management of the company, as well. Therefore, at the beginning of 2009 we redesigned the management structure of our company. By expanding the management team to have six members from January 2009, we ensured improved efficiency of strategic management in all key business lines of our company. In 2009 Generali celebrated the 20th anniversary of its return to the Hungarian insurance market. The long history of Generali, dating back to as early as 1831, offers a timeless heritage, which is the solid foundation of our business operations today. If we wish to understand what makes a company successful for such a long time, we will only see that in its spirit and philosophy, Generali has always pursued openness and prompt adjustments to changes. And last but not least Generali has always dared to act with a pioneer spirit, taking the initiative whether with respect to insurance products or to operational processes. This mentality, this corporate culture is the key to a further balanced growth of our company. I firmly believe that living with these values our company will overcome the crisis with renewed strength, and keeping this timeless spirit alive, we will achieve our goal to make Generali-Providencia a dominant insurance services provider of Hungary. Budapest, 4th March 2010.
dr. Mátyás Pálvölgyi Chief Executive Officer, Chairman of the Board
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Management Boards of the Company Board of Directors
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dr. Mátyás Pálvölgyi
László Ilics
Chief Executive Officer Joined Generali in 1990. Managing Director since 1994, Chief Executive Officer and Chairman of the Board since 1995.
Deputy CEO, Managing Director in charge of the non-life business and insurance technical areas. Joined Generali in 1991, Member of the Board since 1999. Deputy Chairman of the Board since 2000.
Anna Hegedûs
Zoltán Paál
Managing Director in charge of finance. Joined Generali in 1999, Member of the Board since 1999.
Managing Director in charge of personal insurance. Joined Generali in 1993, Member of the Board since 2004.
Address of the Chief Executive Office » Management Boards of the Company Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Other Members of the Management Team
Kristóf Hegedûs
Ferenc Sinkó
Managing Director in charge of IT and organizational development. Joined Generali in January 1999, Member of the Management team since 1 January 2009.
Managing Director in charge of property insurance, external sales channels and the Specialized Sales Department. Joined Generali in 1993, Member of the Management team since 1 January 2009.
Supervisory Board Jaroslav Mlynárˇ, Chairman Luisa Coloni Máté Jánosi
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Report of the Board of Directors Owners In January 2008 the large privately held investment group PPF and the Trieste based international Generali Group merged their Central East European subsidiaries, creating Generali PPF Holding B.V. with a written premium of close to 3.105 billion euro in 2009. Through its subsidiaries, Generali PPF Holding manages assets amounting to approximately EUR 14 billion and serves 10 million clients across the region. Generali PPF Holding is a joint venture company of Assicurazioni Generali (51% share) and the PPF Group (49% share), registered in the Netherlands, with its main organizational branch based in Prague, in the Czech Republic. Generali PPF Holding operates in 14 Central and Eastern European countries: the Czech Republic, Hungary, Poland, Slovakia, Russia, Romania, Serbia, Slovenia, Bulgaria, Croatia, Ukraine, Montenegro, Kazakhstan and Belarus. The strategic goal of the Holding is to consolidate its position in the markets in which it is already present and to strengthen its operations in the new markets in the CEE region.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
General Review of the Economy In 2009 Hungarian economy shrank by more than 6 percent, and there are no expectations for recovery of the growth path in 2010 either. Rising unemployment, deteriorating retail sales, and a struggling Hungarian foreign trade suffering from a strong euro while being exposed to the EU15 and in particular to Germany, at best may be anticipated to remain unchanged. Consumer price inflation fell to 4.2 percent. As a result of the crisis, consumer demand had dropped dramatically and put increasing downward pressure on prices. Thereafter the increase of indirect taxes (VAT) in the middle of the year could be included by retailers in consumer prices only to a lesser extent which surprised investors and analysts several times. The state budget was in line with expectations, putting no further pressure on capital markets. The government adopted the 2010 Budget Bill at a record speed, winning the confidence of investors and particularly of the IMF, yet it is worth highlighting certain risk factors its realization is exposed to: unemployment, retail sales, public transportation, municipalities, loan delinquencies in the banking system, parliamentary elections. The current account balance improved much more favorably during the year than projections indicated. The positive foreign trade balance reached historic highs primarily because the fall in imports was far stronger than the decline in exports. After the first (Fall 2008) and the second (March 2009) shock, the bond market started to consolidate from the second quarter of the year; yields leveled off from double-digit peaks and the five-year CDS premia decreased to around 200 basis points. The National Bank of Hungary pressed ahead with the easing cycle started in July and cut the base rate several times. The stability of the forint improved as well against the euro and the exchange rate leveled off from a high of above 300. In the second half of the year, the exchange rate of the domestic currency floated within the HUF/EUR 265280 band, which was facilitated by the fundamentally positive external sentiment with only smaller fluctuations resulting from the excess liquidity.
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Domestic Insurance Market In 2009 Hungarian insurance companies and insurance associations (hereinafter referred to as insurers) posted a total of HUF 830.3 billion of premium income, which is a 6.7 percent decrease compared to the same period of the previous year, after a decrease of 4.2 percent earlier. The adjusted premium income (regular premium + 10 percent of life single premium) amounting to HUF 709.6 billion lags behind the results of 2008 by 3.1 percent, which is to be compared with the 2.5 percent growth of the previous year. Primarily as a result of a 23.8 percent drop of premium income from single premium products, the total premium income of the life insurance line (HUF 411.1 billion) decreased by 10.9 percent in comparison with the previous year. HUF 419.2 billion of non-life premium income represents a decline of 2.3 percent compared to the growth of 1.9 percent of last year. Calculating with adjusted written premiums, the decrease of life insurance business was higher than the decrease of non-life insurance: with a drop of 4.1 percent, adjusted premium income totaled HUF 290.3 billion. The proportion of life and non-life insurance within the portfolio (on the basis of adjusted premium income) has changed to 40.9 percent and 59.1 percent, respectively. In the compulsory motor TPL insurance business, premium income of HUF 130 billion, represents a fall of 3.3 percent compared to the previous year. Premium income from other non-life insurance products, not including compulsory motor TPL, decreased by 1.9 percent to total HUF 289.3 billion. After years of continuous shrinking, market concentration continued to decrease in 2009 as well: five market leading companies represent 60.9 percent of all adjusted premium income, which is to be compared to 70.5 percent of the previous year. In terms of adjusted premium income the ranking of market leading insurers was the following: the market leader is Allianz Hungária Biztosító Zrt. with 21.9 percent (down 0.9 percentage points), ranking second is Generali-Providencia Biztosító Zrt. with a market share of 17.1 percent (up 0.3 percentage points); third is Aegon Biztosító Zrt. with a market share of 11.7 percent (up 0.4 percentage points). The fourth position is taken by ING Biztosító Zrt. with a market share of 10 percent (down 0.3 percentage points), and Groupama Garancia Biztosító Zrt. is ranking fifth with a market share of 9.2 percent (down 0.2 percentage points).
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Business Performance of Generali-Providencia Generali-Providencia closed the 2009 financial year with total written premiums of HUF 127,719 million (-4.8 percent). Written premiums adjusted for ten percent of life single premiums (hereinafter: adjusted written premiums) fell by 1.6 percent during the year.
Written premium
Life premium income dropped by 11 percent, while adjusted life premium income fell by 2.5 percent. The decrease of written premiums induced by matured traditional life insurance policies could not be offset by increasing written premiums of the unitlinked insurance business and thus written premiums of regular premium life contracts dropped by 1.3 percent in total. Generali’s life written premiums from single premiums dropped by 40.4 percent: the financial crisis had its most adverse effects on the sales of these products. With a total decrease of 1.2 percent, non-life written premiums declined to HUF 84,173 million. In the motor insurance business, written premiums of compulsory motor TPL insurance fell 4.6 percent, and premiums of Casco insurance decreased by 7.8 percent in comparison to prior periods. Premiums written for retail home policies increased by 4.6 percent, while written premiums for corporate property insurance dropped by 0.9 percent. In the personal insurance business we recorded written premiums 13 percent higher than a year earlier.
Our expenditures on payouts on life insurance (overall changes in gross loss expenses and mathematical reserves) dropped by 22.8 percent, which was a direct result of the reducing volume of maturing traditional life insurance policies. The surrender of unitlinked products grew moderately in 2009. The loss ratio of non-life insurance (taken account of overall changes in gross loss expenses and mathematical reserves) reduced to 53.1 percent from 54 percent. With less storm related claims reported than last year, the loss ratio of home insurance improved significantly, leading to a lower loss ratio of property insurance, down from 53.1 percent to 49.1 percent. Due to the larger weight of property insurance within the portfolio, we have achieved an improvement in the overall non-life loss ratio. We have seen the loss expenses of motor insurance increase moderately from 58.3 percent last year to 59.8 percent; while the loss ratio of personal insurance was up to 39.8 percent from 31.1 percent last year reflecting mainly the increasing volume of claims paid on unemployment insurance.
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Insurance Claims and Services
Costs
Total costs of the Company (including change in the accrued acquisition costs and the balance of other income and other expenditures) totaled HUF 41,460.8 million in 2009, which represents an 0.1 percent increase compared to the prior period. Fixed costs dropped by 3.8 percent, and the fixed cost ratio (with adjusted written premiums) improved by 0.3 percentage points from 17.1 percent to 16.8 percent. Commission payouts (including accrued acquisition costs) were up 4.2 percent.
Investment Portfolio, Investment Performance
The Company’s investment portfolio improved by 0.7 percent to total HUF 205.5 billion. With an improvement of 31.5 percent, the portfolio of unit-linked life insurance amounts to HUF 75.5 billion. In 2009 Generali reported HUF 13.8 billion financial profit on investments (not including unit-linked life insurance). This is a 23 percent improvement compared to the prior year. Generali reported a profit before tax of HUF 15,394 million for 2009. Our profit after tax totaled HUF 12,945 million.
Review of the Personal Insurance Business Life Insurance
Despite dramatic market conditions in 2009, our company could strengthen its position in the life insurance business as a result of new product developments and process improvements. The portfolio premium of new business sales of regular premium life insurance totaled HUF 5.325 billion, of which HUF 773.8 million was from the Europe Treasury unit-linked insurance, launched in the spring. New business growth continues to be driven by unit-linked life insurance products. In line with market trends, premium income from our single and regular payment insurance products compared unfavorably with previous results. After a dramatic halt at the beginning of the year, our sales activities recovered, mostly due to the sales of CIB Globe (CIB Glóbusz), an insurance product launched in the fall in cooperation with CIB, which generated a premium income of HUF 1.5 billion. One of our key tasks in 2009 was to develop and offer suitable products to our partners in response to customer demands which changed as a result of the crisis. Therefore, we launched eight new riders, including an unemployment rider, as well as eight new asset funds for our life insurance products. When selecting the eight new asset funds, we aligned our offer to rising customer demand for built-in guarantees whether savings are made in EUR or in HUF. The asset fund our customers received the best was the PriceFix 2019 (ÁrfolyamFix 2019) asset fund, with a total of HUF 700 million allocated to it in 2009.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
In order to establish safer and more efficient operations, in 2009 we carried out comprehensive developments to the insurance technical system of our life insurance business. We added an extra modification option to our life insurance products taken out with bank loans, so that customers in difficult financial situations may choose to suspend premium payment on their contract. In the fall we improved our regular premium unit-linked life products with a term extension option, by which customers may wait for a payout date with more favorable price levels than at their maturity date. We optimized our priority life insurance processes to establish even higher standards and improved accuracy in serving our customers: starting from March, personal insurance modification requests and benefit payout claims are received at a central fax number. Due to our digital archiving and electronic job escalation system, all modification and transaction requests related to unit-linked life insurance received before 16 hours on any given day are executed by our administrative staff on the very same day. We paid particular attention to the professional development of our TeleCenter staff as well. As the proportion of unit-linked insurance grew within our new business, an increasing number of customer demands were related to unit-linked life insurance. While at the beginning of the year only 33 percent of our operators were able to handle these types of customer calls, after a professional training 80 percent of them now have the necessary knowledge for this task. The company closed the 2009 financial year with portfolio growth in accident and health insurance. With a portfolio growth of HUF 907 million (+ 22.7 percent) of regular premium accident and health insurance, we managed to increase our market share. In the accident insurance segment, we achieved 2.3 percent growth in terms of regular premium contracts and reported HUF 2.548 billion portfolio premium. As for single premium products, our premium income totaled HUF 501 million. In the health insurance segment, with respect of regular premium contracts the company reported HUF 2.353 billion portfolio premiums (+56.5 percent), while in terms of single premium contracts portfolio premiums totaled HUF 1 million. This large rise in regular premium contracts reflects that net premium records kept with respect to a contract by a large financial institute were modified to gross premium records. In 2009 unit-linked, traditional life and individual health and accident insurance products were integrated into the standard corporate premium calculator and insurance quote generator system. We have made the first move to the establishment of electronic insurance quote service.
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Accident and Health Insurance
Property Insurance Business Retail Property Insurance
In 2009, reflecting the effects of a dramatic drop in mortgage loans and sluggish household consumption, sales of home insurance halted and the number of cancelled policies increased. Against the economic backdrop, our company reported premium growth of HUF 1.1 billion with more than 547 000 contracts and a portfolio premium of HUF 20.6 billion for the year. Our performance was strengthened in the summer by the launch of our new home insurance product, Homeguard Premium (Házôrzô Prémium) cover package, containing unique services, unparalleled in the market. We facilitated the sales of the product by the Homeguard coupon promotion launched in the fall. Premium growth of HUF 593 million reported in condominium insurance was a result similar to that of previous years. With an overall 22 percent market share the company sustained its 2nd position, and with more than 40 percent share of the condominium insurance market we continued to be the market leader among Hungarian insurers.
Corporate Insurance
As a consequence of adverse economic conditions, the number of liquidated enterprises increased in 2009, and fewer start-up companies were established. This trend was clearly reflected in the SME segment of the insurance market, but left market forces intact, so Generali had no problem maintaining its dominant position in 2009 as well. Despite tightening opportunities and our largely successful premium discount promotion, we managed to sell almost as many insurance contracts as in the previous year; the number of cancelled policies however continued to grow. On the whole, the company closed the year with a minor decrease in terms of both premium and number of sales. The aggregate number of policies in the portfolio was more than 30,000, with portfolio premiums of nearly HUF 4 billion.
Insurance of Corporate and International Clients
The tendency of decreasing premiums in the Hungarian MLE (medium and large enterprises) insurance segment started in 2008 continued in 2009, as well. Increasingly frequent mass claims, in Hungary mostly related to storms and floods, the adverse impacts of the financial crisis, and the effect that the pricing policy of reinsurers has on the direct insurance sector are expected to bring along changes sooner or later. The low number of new investments in the past one or two years is causing even more difficulties in the market by making the insurance market as saturated as never before. Despite the above trends, the company managed to strengthen its market presence in the large enterprises sector and in the international property insurance business, and reported growth in respect of both number of sales and portfolio premium in 2009. We will continue to focus on our top priority: to sustain and improve premium quality services we are recognized for. In corporate underwriting, we will continue to capitalize on the opportunities offered by our parent company, the Generali PPF Holding.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
The market of third party liability insurance has not been immune to the impacts of the recession brought about by the global financial crisis, and overall suffered a drop of performance in 2009. Our company also failed to deliver the portfolio growth target, which was set in response to the market opportunities of prior periods. Negative sales results reflect a decrease of fronting income and an increasingly fierce price competition which results in a reduction of premium rates. As a consequence of these impacts, our general third party liability written premiums declined, but written premiums of profession third party liability insurance improved relative to prior years. As we do not anticipate a significant recovery in the economic environment in 2010, and expect the price competition to remain equally fierce, the exploitation of new market openings is of primary importance. To that end, we have developed a new family legal expenses and liability insurance product, named FamilyCare, which we expect to sell in growing numbers in 2010, too.
Third Party Liability Insurance
The unprecedented economic downturn experienced in 2009 had a significant adverse impact on the construction industry and consequently on the contractor’s insurance business, as well. The volume of new investments fell 4.3 percent, as reported by the Hungarian Central Statistical Office. A large number of enterprises are facing liquidation and many find themselves in funding difficulties. Under these conditions where the number of new private investments is fairly low, it is particularly important that our company be present and establish new relationship in every one of them. Retaining of existing customers is only possible by giving substantial price discounts. Government investments, including large projects such as the Budapest construction of Metro 4, or the construction of two railways started this year, were somewhat expanded. Our company participates in insuring these projects. Government investments will continue to provide a stable basis for keeping the market up or even contribute to a recovery, but for the time being no positive signs are apparent either in the public or in the private sector.
Contractor’s All Risk Insurance
Despite a drop of nearly 50 percent in the leasing market of machinery and equipment, our machinery breakdown written premiums did not shrink in 2009. Changed market conditions of the economic crisis, and growing financial difficulties customers must face, put us in a position where we had to respond to severe challenges. By developing services to adjust to customers needs, including coverage provided for older machinery, we strove to maintain or even increase our market share. The tightening market with a permanent reduction of premium rates predicts a drop in written premiums and an increase of loss ratio. This adverse tendency is particularly present in the machinery breakdown insurance taken out for large facilities.
Machinery Breakdown Insurance
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Cargo Insurance
In 2009 the Hungarian cargo insurance market continued to shrink. The downturn was caused by an overall diminishing performance of the logistics industry and decreasing premium rates kept down by fierce competition. Despite adverse economic conditions, our company reported a premium income almost equal to that in the previous year, and our insurance portfolio grew 10 percent while maintaining a positive loss ratio. In addition to emphasizing new client acquisition, we focus on the improvement of services and offering our existing customers higher quality services. To that end, we expanded our product range, implemented simplified processes and adjusted our offers to respond to the needs of customers.
Agricultural Insurance
With an increasing number of contracts, we closed the 2009 financial year with premium income equal to the prior period. The average premium of our agricultural policies fell by HUF 50,000 which principally reflects a dramatic drop in the prices of insured crops. Even under difficult market conditions our annual portfolio premiums improved by 6 percent due to a higher volume of sales made during the year. Within our agricultural portfolio the proportion of crop insurance further expanded and our current share in this segment is nearly one third of the insurance market. The number of claims reported was down relative to last year, but there was a 10 percent increase in crop losses claimed. On the whole, our loss ratio showed a favorable trend. Our new premium rates book was introduced as of December 1st. Examination of its impact and restructuring the current mechanism of claims command will be our top priorities in 2010.
Review of the Motor Insurance Business Motor Third Party Liability Insurance
The market of motor third party liability insurance, characterized by fierce price competition for years and in 2009, was further hit by the impact of the global financial crisis. Portfolio premiums in the market fell 5.2 percent. Our company reported a decline of 6.7 percent, higher than that of the overall market, and closed the year with HUF 16.3 billion in portfolio premiums. New business volumes grew by 2.3 percent, but our gross new portfolio premiums suffered a drop of 1.1 percent. Although we sold a higher number of new MTPL contracts than in the preceding year, with lower average premium rates this could not offset the portfolio reduction caused by the departing of our customers. Due to the fact that Generali designed its premium rates structure in proportion to real risks in this area, our MTPL loss ratio improved by 0.7 percentage points relative to the previous year. The 2009/2010 campaign for third party liability insurance with delayed force was dominated by increasingly fierce price competition. We anticipate this keen premium competition to continue in the future and expect a reduction of average market premiums.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
In 2009 shrinking of the Casco market continued and was accelerated by the impact of the economic crisis. Premium income in the market fell 6.8 percent compared to the prior period, reflecting a drop in car sales, increasing price competition and decreasing average insurance rates. We do not expect this negative market tendency to change in 2010 either. Our company closed the year with a total drop of 8.6 percent in portfolio premiums. New business sales of Casco insurance improved by 6.4 percent in terms of contract number; however its gross new portfolio premiums were 8.7 percent down compared with 2008. In relation to market results, however (-23.8 percent in terms of new contracts, and -35.4 percent in terms of gross new portfolio premiums) our performance for the year compares favorably. Although our Casco loss ratio grew relative to the previous year, it is still outstandingly good. We anticipate a further reduction of average premium rates in the market, which Generali will need to adjust to in order to maintain its competitive edge. In line with our former strategy, besides new customer acquisition we will equally focus on increasing the satisfaction of existing customers.
Motor Hull (Casco) Insurance
Sales Activities of Generali 2009 was a year of changes in the life of Generali’s Composite Network. Reorganization of the sales channel was chiefly intended to enhance the competitiveness of sales agents, increase the number of active agents, and thus improve the efficiency of customer and partner service provision. For the work coordinated within the framework of a Network Building project, findings of an in-company agent satisfaction survey we had carried out served as a basis. The project intended to define a clear career path and develop a new, dynamic incentive scheme for agents. In accordance with the new structure after December our Composite network is divided into 3 regions, 20 regional directorates and 128 agencies. The key advantage of the new organization is its openness; meaning that the number of agencies is no longer determined by geographical location but rather by individual talent, commitment and actual performance. We expect these reforms to bring along an attractive workplace where the pro-activeness of agents will grow to create stable living for the employees and managers of the network.
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Composite Sales Organization
Life-Line (Életvonal) Network of Financial Advisors
In 2009 Life-Line, a network of 500 financial advisors, chose to offset the negative impacts of the global financial crisis by focusing on the protection of its portfolio. As a result of our efforts we closed the year with a minimal loss of portfolio. In the last quarter of the year we already reported performance growth. These results are good grounds to rely on for 2010, a year which we expect to be just as difficult as the previous one. At the end of the year, our aggregate portfolio premiums were nearly HUF 6.4 billion, of which life premiums amounted to HUF 4.9 billion. The number of agents within our sales network grew to exceed 500. In 2010 one of our strategic goals will be a further expansion of our sales network.
Insurance Brokers and Dealers Sales Channel
Emphasizing its commitment to the concept of partnership, in 2009 as well Generali continued to consciously develop sales relationships and cooperate with business partners. Our social events carried symbolic meaning: in February we honored our best brokers with an exclusive gala dinner, in December we organized a first Santa Clause Party for the children of our sales partners. Both events were communicating the concept of shared value creation, similarly to charity events where we raised HUF 1 million with the help of the insurance brokers who honored us with their participation. The organizational changes implemented last year are well established by now and allows us to work with a stable, committed workforce. Our sales force was trained for B2B sales in its most advanced and in terms of results most efficient form. This quality was well reflected in figures: nearly 40 percent of Generali’s gross new business sales was generated through our channel which is only a bit behind the results of the previous year. We viewed positively the fact that the decline in our motor insurance portfolio premiums was lesser than the drop of motor vehicle sales. We further strengthened our relationships with dealers and as a result of international cooperation we launched a Toyota own-label Casco. In 2009 our online sales processes have gained growing importance: with remarkable professional support and developments shared by our broker partners we managed to boost new business volumes. With conscious, focused cooperation in personal insurance we achieved material growth in terms of new business sales. Our unit-linked product, which we designed especially for insurance brokers, made a real contribution to this success. The outstanding performance of external sales as well as the exceptional quality of our partner relationships are joint achievements. We consider the three first prizes (best provider in motor insurance, retail and corporate property insurance) and one second prize we were awarded in four categories by the Hungarian Association of Independent Insurance Brokers for the quality of our services as an acknowledgement of the excellent work of all organizational units of Generali.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Generali’s Partner Network closed its fourth full financial year in 2009. Our results have been adversely affected by reductions in mortgage loans and investment market volatility. To adjust to changed market conditions, in the second half of the year we paid more attention to financial planning which was soon reflected in the growing sales of retail insurance, and particularly in our increasing non-life performance. On 15th of December 2009, however, for efficiency purposes all business units of the ‘Partner’ Network were merged into the regional sales directorates of the organization of the Life-Line Network.
The ”Partner” Network
With nearly 120 graduate advisors and 15 managers, the ‘Magister’ Sales Network is specialized to sell insurance for small and medium size enterprises. Currently there are 4130 insurance contracts under the management of the network. In line with our philosophy we continued to pursue target group oriented sales, which was best apparent in the organization of professional events and cooperation established with trade organizations throughout the year. The relationships we developed with universities further deepened through our participation by offering on-the-job internships and giving insurance courses in 2009.
The ‘Magister’ Sales Network
After the emergence of the global economic crisis in 2009, one of the greatest tasks we faced was the establishment of cooperative efforts with our partners in order to supply information and guidance to both our workforce and customers so that their decisions are not governed by panic. To that end, we organized meetings with customers, and modified the professional and motivational training programs of our staff to adjust to changed circumstances. In this context, we placed particular emphasis on portfolio maintenance tasks. The channel contributed HUF 2.1 billion of life new business sales to the business results of Generali as well as also managed to increase its home insurance sales volumes.
MLM Sales Organization
As a result of organizational developments the Banking Sales Channel has a sales force of 60 advisors and cooperates with six bank branch offices. In respect of premium income from banking cooperation, our company had a volatile year in 2009. Our annual premium income from collective payment protection, health and accident insurance was 15 percent higher than a year before. Negative trends in unemployment however were reflected in a significant increase of the loss ratio at our company as well. As a direct result of the downturn of mortgage loans, there was a substantial decline in the home insurance gross new business relative to previous years and the loss of portfolio could not be offset. Our closed-end single premium unit-linked product, launched in the branch offices of our strategic partner CIB bank at the end of the year, took a great start, and we met our sales targets. In 2009 we closed another successful year with the savings account package designed especially for children and launched in 2006 together with CIB Bank; during the year nearly 3,800 new accounts were opened.
Banking Sales Channel
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Specialized Sales Department
The Specialized Sales Department serves over 45,000 customers and has an insurance portfolio of HUF 5.6 billion. The sales performance of the international motor insurance channel was substantially affected by another plunge in car sales in 2009, and suffered an increased portfolio loss. In the premium segment we offered advanced services for customers principally by developing insurance schemes. As a result of the cooperation between Porsche Insurer and Generali, today Porsche Casco is complemented by Generali MTPL. In the dealerships of the Porsche Brokerage Firm we launched our specialized flexi-services, already successful in BMW (halving deductibles, brand loyalty insurance, delivery to a service-garage, car rental services). In cooperation with Weltautó, we have integrated these supplementary services into our insurance products for high quality used cars. Generali’s presence at BMW, the leading brand of the segment, and at Mercedes and Audi continues to be over 50 percent.
”Provincia”, The Country Sales Organization
‘Provincia’ sales channel is specialized for serving families and enterprises of the countryside, particularly those operating or working in agriculture. All 220 members of the organizational unit are self-employed, supported by a professional back office. The sales of agricultural insurance for large enterprises, as well as sales of SME and retail agricultural insurance products exceeded HUF 3 billion in 2009, while the loss ratio of agricultural insurance decreased significantly.
Direct Sales Channel
The Direct Sales Channel works in cooperation with the campaign management group which is in charge of planning and coordinating sales campaigns, as well as with two in-company and one external call centers. In its third year of operations, its activities continued to expand. In addition to telephone and DM sales, Generali’s online sales activities are now also coordinated by Direct Sales. In 2009, on the phone we sold primarily Casco, home and accident insurance, while our DM campaigns focused on offering accident insurance and the products and services of banking partners to our customers. On the generalidirekt.hu website, visitors could take out motor TPL, home and accident insurance, and could calculate premiums for Casco products. The launch of online sales was well received and in 2 months more than 4000 contracts were concluded. We will continue to devote special attention to the development of direct sales tools and activities as apparently customers are increasingly keen on convenient solutions.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Claims Settlement Services In 2009 the economic crisis affected personal insurance services in several aspects. Although the volume of maturing life insurance policies dropped to one third in comparison to previous years, surrenders of life insurance were up 20 percent and benefit payouts on surrendered policies increased from HUF 8.4 billion in the prior period to HUF 11.5 billion. In addition, the number of carry-overs grew by 30 percent (this service option was used to settle regular premium dues from top-ups or extraordinary premiums already paid on the contracts). There was an increase in claims reported for the unemployment supplementary cover of portfolio insurance related to bank loans as well: aggregate benefit payouts doubled, while the number of submitted claims tripled within the period. In order to facilitate the promptness of claim settlement, we use Generali TeleCenter to contact these customers, so that after they supply all missing documents, we can settle the payouts as soon as possible.
Personal Insurance Service and Claim Settlement
In 2009 our company received more than 210,000 property insurance claims and we delivered payouts for customers in a total of HUF 23.2 billion. The comprehensive organizational changes implemented a year before had positive impacts on the claim settlement of property insurance as well and we saw the expected results with respect to efficiency and customer services. Throughout the year we have completed several developments to further improve the quality of our services which are now standardized at the country level, and to make sure that our services are in line with customer demands. We automated the management of reporting and claim settlement process of one of our key partners, Europ Assistance Ltd. As a new feature, in 2009 we expanded our PartnerPortal application, custom-made for our sales partners, an interface for reporting claims where users can also monitor administrative processes. We have redesigned the online claim reporting interface of Generali, with increasingly efficient processing capabilities due to its support systems. We have also made improvements to our national repair service network established nearly a year ago to assist with the repairs of electronic equipment and technical appliances damaged in insured events: our partner service shops can contact our customers within 1-2 days after the insurance claim is made and transport the damaged appliances for repairs.
Property Insurance Claim Settlement
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Motor Claims Settlement
In 2009, Generali received nearly 75,000 motor insurance claims, and settled nearly HUF 15 billion of loss payments for our customers. With respect to organization of work a significant change was the introduction of homeworking for our loss surveyors dealing with retail claims. This required a large amount of workflow reengineering. To further enhance efficiency we continued the improvements started in previous years. To facilitate and simplify recording of claims, we integrated our internal applications in Q4 of the year. Generali’s proprietary application, Generali Expert System (GES) provides valuable assistance for our staff in managing and recording fully digitized claim files, and is now available for all our loss surveyors. In 2009 we signed agreements with most partner insurers on the electronic sending and receiving of claim files. This further accelerated our processes and resulted in significant savings in mailing costs. In the spring and fall we conducted an opinion poll among our claimants and we are using the feedback and experience gained this way to improve our processes in the future. In 2009 we completely redesigned the communication process with cooperating car repair shops. The positive results we gained encouraged us to continue to operate the system we implemented in 2008 to monitor car repair shops and claim files. The Motor Claim Settlement division played a significant role in the cooperation with the Association of Hungarian Insurance Companies (MABISZ) and partner insurers in 2009 as well. Among others, together with several other insurers we undertook to audit the work of MABISZ with respect to claims with personal injuries.
International Motor Claims Settlement
For years our company has been recognized for its international motor insurance claim settlement activities, as reflected in the satisfaction of both our customers and our insurer partners. In this area our company continues to be the market leader. For 2009 we reported revenues of HUF 165 million from handling fees, and HUF 80 million from Casco regress. Our aggregate revenues totaled HUF 395 million.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Customer Relationships Management It is of primary importance for our Company that the administration related to our core business should create value for our customers. The customer service office and our staff working in customer service are the link between the brand, the service and the customer. Continuous training of our employees and a motivating incentive scheme are key to the excellent customer services we provide. To improve the quality of customer servicing, in 2009 we implemented a number of changes, process and system developments in our customer relationships division, which incorporates customer service walk-in centers, telephone-, web- and paperbased customer servicing areas, and the complaints management of the company. One of the key performance indicators of our work is the quality we deliver when serving our customers. This reflects how much the service we provide is in line with customer expectations and how professional we are in our dealings with customers who contact our company. We receive objective feedback on our performance through regular quarterly mystery shopping. In 2009 mystery shopping was complemented by semiannual surveys which provide benchmarks by examining competitors as well. Findings show that our recognition is on a permanent increase. For the first time this year we carried out a customer satisfaction survey with the NPS method, which also had positive results. The number of customer visits at the customer service walk-in centers of Generali was on the increase in 2009. Full use of our taskboard-workflow application allowed that digitized tasks can now be processed at any time and any location of the country. A steady workload of our staff increased the efficiency of administration. After the implementation of a standardized operational order on 1st of January 2009, we are now available to our customers with new office hours. Adverse economic conditions in 2009 required us to adopt rationalization measures in customer services as well. As a result of the restructuring, a network of 38 Generali Points took the place of our former 50 customer service walk-in centers. This capacity reduction of personal customer services was offset by strengthening our telephone and online channels.
Walk-in Customer Services
To facilitate the efficiency of customer services, on 1st of January 2009 we adopted a simplified IVR structure for our telephone customer service, which enables customers to reach a qualified operator sooner. We have delivered both our service targets and our call abandonment rate target, which improved further. After a long training and development period, the Personal Insurance Contact Center reached the professional competence level which is required for the customer services of financial institutions. An important novelty in 2009 is that customer contacts received by fax or e-mail are processed in a digitized workflow after they are digitally archived.
Generali ContactCenter
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Complaints Management
There have been fundamental organizational changes in complaints management: in April 2009, a Central Customer Relationship and Complaints Management Group was set up. The group is in charge of coordinating the complaints management operations of the company, and of communicating with the Hungarian Financial Supervisory Authority in relation to customer complaints. To replace the former branched out system, we implemented a centralized complaints management process. This new business process and the new group gave an orderly basis for these operations. There have been a number of developments to increase the clarity and accuracy of measurements and statistics. All answers to customer complaints are first checked by a centralized control to make sure the customer’s complaint is indeed answered, and all issues raised in the complaint are resolved before they are returned to the customers. The system also enables us to filter complaints for gathering information we can then apply to improve our processes.
Serving Customers Online – www.generali.hu
We improved the corporate website by adding several new functions in 2009. The most prominent step was taken in the online sales of insurance. We redesigned our premium calculators for motor TPL and home insurance products and implemented fully electronic sales of insurance. This means that the conclusion of the insurance contract and the delivery of the policy are fully automated, and are performed electronically without human assistance. We aligned the internet presence of Generali-Providencia Insurance Ltd. and its subsidiaries to create a uniform online design, and launched a home page at Generali.hu with links to all the websites of Generali’s primary subsidiaries.
Our Most Valuable Assets: Employees Generali’s success is based on its committed, highly qualified employees. It is the Company’s aim to ensure attractive opportunities for our professionals so that they can pursue their career goals within the organization in the long term. In 2009 we extended the range of optional benefits within our cafeteria system. We supported healthy life styles of our employees by offering a variety of services at reduced rates. We reward the commitment and long term hard work of our staff within the framework of our employee loyalty program: after 5, 10, 15, or 20 years with Generali our employees are provided loyalty premiums in optional forms. To ensure that employees may exercise their statutory rights of participation we ensure that the acting Workers Council outgoing after their first three-year period of operations be followed by a new, currently functioning Workers Council. This also allows for an institutional communication between employees and the employer.
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Our operations in workforce development and management trainings involved a wide range of activities in 2009, too. Trainings of our managers to help them respond to the new challenges imposed by a changing environment continued. In 2009 we organized official educational courses to provide agents with the opportunity to obtain the professional qualification they are required for their work. The main focus of our sales trainings remained the improvement and consolidation of the professional knowledge of our sales staff. In the education of agents, we modified the syllabus of the preliminary course and in response to market demands, we paid more attention to unit-linked products. As an important new feature e-learning was introduced in sales trainings. After completing the preparatory work, we have drawn up 12 course materials with the involvement of an external partner. The training is supplemented by consultation days which relate to particular topics. Course materials may be accessed - anytime and from anywhere - through the course player application of the PartnerPortal. In 2009 we continue to organize Generali Orientation Days, in a new form and with new content, to facilitate smooth integration of our new recruits. Our employees could participate in regular skills development in 2009, as well. We organized competence development trainings for a number of positions, and continued our long established, optional skills-related training courses for employees. In addition to workforce development, our company is committed to supporting vocational training establishments such as vocational schools or universities.
Behind the Scenes Permanent development and improvement of our procurement and supplier management processes are essential for facilitating the achievement of Generali’s business targets, its efficient operations, and for enhancing satisfaction of both external and internal customers. Several developments that began in 2008 delivered results only in 2009. The outsourced customer correspondence, centralized office supplies and delivery of stored products are all being conducted with great efficiency and quality. Our staff grew to like our new electronic supply ordering system, the SAP SRM application, or in our regional centers the electronic posting option of mails. A new feature implemented in 2009 is our Asset Tracking Module which allows employees to monitor up-to-date, detailed list of all assets, which they are assigned to use and are financially liable for, and which also allows automated electronic movement and accounting of all assets. Last year, central procurement was extended to include new activities (e.g.: courier services, company car maintenance), and by announcing new tenders for our existing suppliers, we managed to lower prices and realize savings in our costs.
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Procurement and Supplier Processes
IT Solutions Helping our Employees, Partners and Customers
In common with prior years, our IT solutions increasingly rely on workflow execution of automated or human activities in relation to more and more business processes which improves the efficiency of our administrative processes. The application of the lean methodology is an excellent way to turn designed and optimized business processes into IT solutions with the help of Business Process Management products. As a result, in 2009 the processing time of our claim settlement, policy delivery and payout processes all shortened. To support sales activities we introduced a new software which advisers can have on their notebooks to provide tailor-made financial advice for their customers. Additionally, our portals were extended by new functions. The proposals uploaded here will link to the automated policy delivery process.
IT Support of Business Processes
In line with the rationalization of processes and profile clearing, the Department of IT Support of Business Processes was terminated in its past format. A part of its functions was assigned to the IT and Administration Training Group, the successor business unit. The primary task of the new group is to support non-life administration by implementing new applications, training workforce and providing assistance in the use of IT applications. Additionally, the group is in charge of implementing IT resources for the company as a whole, and providing training in non-life IT applications. Another result of the termination of the former department was the establishment of the Sales Process Development Group, with the aim to provide IT training and to support the implementation requirements of sales units. Besides the development and adoption of the new model, 2009 was devoted to spreading the culture of e-learning. We have developed technological procedures to produce in-company e-learning materials. We have increased the number of e-materials on IT and sales training topics. This is the path we will continue to follow next year, hoping that the use of e-learning technologies can be integrated in the daily practice of sales and business administration processes.
Generali PartnerPortal
After a fully paperless electronic sales process was implemented as a milestone in the compulsory motor TPL campaign, the PartnerPortal opened new dimensions in the digital support of sales activities in 2009. When providing services for contracted partners of agents, one of the most important administrative processes is an active participation in their claim settlement. To facilitate this the portal now offers a full feature claim reporting application. Our sales partners acknowledged another important function of the portal, which is that it keeps records of their commission settlement documents even for future reference and paper based documentation is eliminated altogether. Another advantage of this development is its cost efficiency. From this year on, the portal offers its partners the most advanced form of learning, e-learning opportunities. In line with the latest business intelligence trends and focusing on content sharing online info communication,
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
the portal enabled communication at the sales channel level. With an identical number of users, visits of the portal increased by around 40 percent.
Processes and Risks In 2009 our company had its management system audited successfully in accordance with the ISO 9001:2000 standard. The supervision was once again carried out by the Det Norske Veritas Hungary Ltd., one of the most acknowledged auditing firms in Hungary. The primary focus of the audit was the efficiency of our contracting processes. We take pride in the fact that all of the reviewed areas showed several strong points. We started the implementation of the results of a project we launched in 2008 with the main objective to redesign our process management system. A review of the whole of our administration system and a renewal of our documentation environment were intended to better adjust to the demands of our internal customers, and to satisfy their needs at the highest possible level. After adopting the principles of LEAN management and establishing the necessary methodological foundations, we kicked off several process re-engineering projects with the principal purpose of optimizing our business processes in accordance with the requirements of our customers and partners. To accelerate the developmental process, to ensure that process automation is realized at the highest possible level, we implemented new process supporting tools both in the business side and in IT.
Quality and Process Management
In compliance with regulatory provisions and the requirements of the market, Generali pays particular attention to its risk management activities, and from 2008 it has a dedicated organizational unit in charge of coordinating the tasks related to this matter. In 2009 Generali had significant achievements in terms of financial risk management. The company participated in updating the quantitative impact studies organized within the framework of Solvency II, and was also involved in the related regulatory work. Our company implemented a market-based internal model of the group (Economic Balance Sheet) which will allow for a more precise assessment of capital requirements for business decisions. In that context an improved, more precise method was adopted to manage market risks. The development of an operational risk management model integrated into the process management system was completed and its incorporation into technical systems began. With this new model Generali’s liquidity may be maintained even in a mid-term (six-month) shortage of liquidity in the securities market.
Risk Management
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Corporate Social Responsibility
As a result of the financial crisis both Hungarian enterprises and the general public were increasingly seeking stability and predictability. Generali is therefore highly committed to promoting this awakening willingness of society to invest in precautionary savings in a changing economic environment. In 2009 the company retained the wide range of its activities related to Corporate Social Responsibility (CSR), and continued with its endeavors to maintain sustainable operations. In line with its long term strategy, the company paid special attention to issues which relate to its core business and are of high social importance: health-consciousness, precautionary savings, risks management, accident prevention, road safety, and safety of property as well as environmental issues such as energy saving. We make conscious efforts to contribute to the sustainability of our natural environment. As a responsible insurer we need to make educated decisions to gain our customers’ confidence and to achieve predictable performance, and we need to continue the CSR activities we started, setting a good example for the wider general public. To present a summary of our achievements in corporate social responsibility and responsible operations, we have published our 2008 Sustainability Report. We take pride in the recognition that due to our efforts and activities related to sustainable operations our company was voted a shared second place among listed financial market players in the regional CSR communication top list (24/7) published in 2009 in the weekly economic magazine, Figyelő. The list assessed the clarity, communication, corporate governance, stakeholders relations and economic responsibility of Hungarian companies, and reviewed issues relating to their relationship with society and employees. In the Reputation rating list also published in Figyelő in August 2009, our company ranked third among financial institutions and first among insurance companies.
Marketing Activities CRM – Efficient Focus on Customers
Although our company has been devoted to maintaining high quality relationships with its customers, and retaining the existing customer-base, the crisis highlighted the importance of this area. Accordingly, our primary goal was the practical realization of the CRM strategy we defined in 2008. We conducted several large-scale research projects during the year and revealed a number of customer demands which were then incorporated into our product developments and processes. In 2009 we took a large step to realize regular controls of our processes and to keep up-to-date records of customer feedback. As a result, the business units which are in direct contact with customers can receive regular feedback on the quality of their work and the needs of our customers. The impacts
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Address of the Chief Executive Office Management Boards of the Company » Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
of the developments and process modifications we implemented on the basis of this feedback are well reflected in the growing satisfaction of our customers. We have designed an effective tool for sales staff which they can use to offer appealing, tailored solutions for our existing customers. In 2010 we will increase the role of online customer service and the promotion of convenience services which will enable us to offer faster service to our customers.
In 2009 our company paid special attention to using a wide range of marketing tools to support sales activities. To boost the sales of motor insurance we arranged intensive marketing support to the launch of two Casco products. In November 2009 we organized a national ATL communication campaign to promote our compulsory motor TPL insurance and our motor TPL product with delayed force. Our property insurance division was involved in a gift voucher promotion linked to Homeguard (Házôrzô) family home insurance and in a bon-promotion of property protection related to Homeguard (Házőrző) multi-apartment buildings insurance offered for condominium communities, where homeowner associations or condominium associations could win financial support for construction or renovation of shared parts of buildings to improve their security. In support of personal insurance sales we arranged marketing activities for our BodyGuard (TestŐr) accident and health insurance, and our unit-linked life insurance products. In cooperation with the Generali for Safety Foundation we sustained all the promotions we started over a decade ago. With the Szimba tender system we supported a number of educational institutions. Our Apple-Lemon promotion, arranged together with the National Center for Accident Prevention, involved junior high school students in spreading road safety advice at 24 locations to keep everyone safer on Hungarian roads. Once again in cooperation with the National Center for Accident Prevention, the Foundation carried out a national public interest advertisement campaign during the spring with the aim to emphasize road safety, and placed billboards on side of highways to draw drivers’ attention to the importance of keeping traffic rules.
27
Marketing Activities
Generali 20
History of the International Generali Group First Steps Generali, or Assicurazioni Generali Austro-Italiche as known back then, was founded on 26th December 1831 in Trieste. The name of the company truly reflects the intention of its founders: to offer general insurance services on international markets. Taking the best use of the extreme amount of share capital, nearly ten times more than the average at the time, the company soon commenced rapid and spectacular expansions. The first subsidiary of the company, Erste Allgemeine Unfall und Schadenversicherung, was established in Vienna on 24th January 1882, soon to be followed by several other insurance companies.
A Secure Investment Generali shares were first quoted on the Trieste stock exchange in 1857, and twenty years later the company began to pay dividends, which never needed to be suspended, not even in the years of wars. Generali shares grew to be a secure equity investment instrument over the years: stable, predictable investment for everyone from small investors to large asset managers.
From the Eagle to the Lion In the year following its foundation, Generali was granted an ‘imperial-royal patent’ which also entitled the company to use as its corporate logo the double-headed eagle, the emblem of the House of Habsburg. Generali could not remain immune to the revolutionary events of 1848. The company changed its name to Assicurazioni Generali, and the imperial emblem was gradually replaced by the insignia of the St. Mark’s Lion on official company documents. In its 50th jubilee year, in 1881 the company decided to unify its trademark and adopted the lion in its representation on the Venice Clock Tower as the standard official logo of Generali.
30
International Know-How Transfer The Mogliano Veneto Complex, opened in 1989 near Venice, does not only serve as a new head office of the concern’s governance but also houses a training center of Generali. In the twenty years since the center opened its doors, many experts of Generali from all over the world could extend and improve their knowledge there.
One Step Ahead of Changing Demands To respond to continuously changing and increasingly complex customer demands with efficient services, an extension of the product range was inevitable. Faithful to its pioneer spirit, Generali was one of the first insurers to respond to these new challenges. The foundation of Genertel in 1994 also marked the birth of the first Italian direct insurer (initially selling only on the phone). Banca Generali commenced operations in 1998, offering competitive and innovative banking services to the customers of the Group. After realizing the importance of Internet proliferation, the company was one of the first players in the insurance market to launch a corporate website and it has been continuously expanding the range of services available for customers online ever since.
A Leader of Global Markets The Generali Group is a dominant force in the European insurance industry, and a market leading service provider in life insurance. On the Forbes Global 2000 list the company was the best of the insurance sector ranking 45th altogether. After 178 years, today the Generali Group is present in 68 countries on five continents. The Group employs 84,000 employees and serves more than 60 million customers through 484 consolidated subsidiaries.
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History of Generali in Hungary The Launch of a ‘Benevolent Institute’ The first insurance institute in Pest, and also in Hungary, was founded by Generali on 29th May 1832. At the outset the majority of the company’s portfolio was made up of marine insurance of cargo transport on the Danube and fire insurance. After recovering from temporary difficulties following World War I, the company strengthened to have the largest variety of products on offer by the mid 1930s, and in the last year of peace it ranked third in Hungary both in terms of turnover and assets. After World War II Generali restarted operations in Hungary, but the endeavor was disrupted by the nationalization process.
The 1838 Great Flood in Pest In March 1838 a huge flood hit Pest: Generali did not only reimburse the losses, but also returned all payments made on the insurance of destroyed buildings and properties to customers. Often, when extreme losses occurred, Generali did not only pay the insurance claims, but also initiated humanitarian donations to help injured parties.
The Birth of a Profession In 1908, within the framework of trainings organized by the Budapest Academy of Commerce, the education of insurance professionals began in Hungary. Generali played an active role in supporting the educational program: it had given prizes in relation to the subject and published a college textbook on the basics of actuarial studies in German.
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The Return to Hungary The change of the political regime allowed for a return to the Hungarian insurance market. In 1989 Generali was the first insurer to initiate the foundation of a subsidiary in a former socialist country. In 1991 Generali became the sole owner of ÁB-Generali Budapest Insurance Ltd, established in 1989, and the majority owner of Providencia Austrian-Hungarian Insurance Ltd, established as a greenfield operation in 1989. This change of ownership was the first step of an extended, eight-year long synergy which was eventually closed on 30th April 1999, when as a result of the first merger of the Hungarian insurance industry, Generali-Providencia Insurance Ltd. was formed to become the second largest player of the Hungarian insurance market.
You will be Safe Under the Wings of the Lion As a composite insurer, our company offers a full range of insurance solutions for its retail, SME and large corporate clients. Through the subsidiaries of the Generali Group – Generali Asset Management Ltd., European Travel Insurer Ltd., Genertel Ltd., FundamentaLakáskassza Building Society Ltd., Europ Assistance Ltd., Generali Voluntary and Private Pension Fund, Generali Health Fund – as well as through its banking partners Generali can serve the Hungarian public with a complete range of financial solutions. During the twenty years of the company’s business operations in Hungary, 1.2 million customers, SME and large corporate partners trusted Generali-Providencia to provide insurance coverage for their homes and businesses, help them look after their beloved ones or provide for the future of their children and to ensure financial security for their retirement years. The confidence of our existing and future partners obliges us to support them with persistent attention, continuous developments, and the service quality we are expected to deliver in all the moments when our customers need the protection of insurance.
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For 20 Years in Hungary Again 1989. ÁB Generali and Providencia Austrian-Hungarian Insurance Company are founded. 1990. ÁB Generali closes the year with HUF 1.5 billion and Providencia with HUF 2.5 billion of premium income. 1991. The Generali Group becomes the majority owner of Providencia AustrianHungarian Insurance Company and ÁB Generali Insurance Company. ÁB Generali continues operations with a new name, Generali Budapest Insurance Company. 1992. The headquarters and regional directorates of Providencia are linked with IT connections. 1993. Generali’s colleagues transport humanitarian goods worth several hundred thousand forint to Eszék in a company passenger van. 1994. Providencia reports premium income over HUF 10 billion and the company becomes profit-making in a record time, as early as in its fifth year of operation. 1995. Generali’s first major Hungarian real estate development, the headquarters building is completed in Budapest, becoming a dominant structure in the landscape of Teréz Boulevard. 1996. First in the Hungarian insurance industry, Providencia gets an ISO 9001 certificate. 1997. Generali is involved in the foundation of Lakáskassza First General Building Society Ltd. and of Európai Utazási Biztosító (European Travel Insurer) Ltd as their owner.
Évgyûrûk Private Pension Fund begins operations.
1998. Lakás Horizont Plusz, a home insurance product package is launched as a first move in the direction of providing complex financial services. 1999. Generali Budapest Insurance Ltd. and Providencia Austrian-Hungarian Insurance Ltd. merge operations to form Generali-Providencia Insurance Ltd.
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– A Review of Key Events
Évgyûrûk Voluntary Pension Fund begins operations (from 2006 Generali Voluntary Pension Fund).
Product roll-out of Aranyszárny unit-linked insurance.
2000. Mestervonal-24 (Craftsmen Hotline), a home assistance service is introduced, at the beginning available only for customers in Budapest. 2001. Generali Asset Management Ltd. is founded. 2002. Generali PartnerPortal, an application supporting both internal and external customers, is launched.
Évgyûrûk Health Fund begins operations (from 2006 Generali Voluntary Health Fund).
2003. Generali-Providencia takes over the Hungarian portfolio of Zürich Insurer. 2004. Generali-Providencia reports premium income of over HUF 100 billion. 2005. In a survey conducted by Euromoney, a British business trade journal, GeneraliProvidencia is recognized as the sector’s best company in Central and Eastern Europe.
The establishment of Generali Pont, a customer service network, begins.
2006. The International Insurance Brokers’ Association awards Generali the title of Best Insurer in Central and Eastern Europe. 2007. Genertel Insurance Ltd., the first direct insurer in Hungary, is launched. 2008. The new owner of Generali-Providencia is the Generali PPF Holding.
Generali Voluntary Pension Fund launches its private pension fund branch, and the new name of the fund becomes Generali Voluntary and Private Pension Fund.
2009. In the Reputation rating list published in 2009, Generali ranks 18th among the largest Hungarian corporations as the most outstanding company of the insurance industry.
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Balance Sheet on 31st of December 2009 Assets
In thousand HUF
A. Intangible assets B. Investments
I. Land and buildings
II. Shares and other equity 1. Equity investments in parent and affiliated companies 2. Debt securities issued by parent and affiliated companies 3. Equity investments in joint and associated companies 4. Debt securities issued by joint and associated companies
III. Other financial investments 1. Equity investments in other companies
2008
2009
2009
2009
2009
Total
Total
Life
Non-life
Non insurance tech. Activity
1 947 773
3 063 158
1 455 000
1 608 158
0
196 008 107
194 632 868
87 860 931
106 771 937
0
679 546
679 107
679 107
0
0
16 722 708
15 739 372
2 000 000
13 739 372
0
11 004 364
10 879 692
0
10 879 692
0
5 000 000
4 000 000
2 000 000
2 000 000
0
718 344
859 680
0
859 680
0
0
0
0
0
0
178 228 025
177 869 921
85 181 824
92 688 097
0
19 433 759
20 058 979
1 941 761
18 117 218
0
153 325 167
153 729 841
79 312 700
74 417 141
0
3. Participation in investment pools
0
0
0
0
0
4. Mortgage loans
0
0
0
0
0
369 099
531 119
377 381
153 738
0
5 100 000
3 549 982
3 549 982
0
0
0
0
0
0
0
377 828
344 468
0
344 468
0
0
0
0
0
0
57 419 096
75 481 171
75 481 171
0
0
D. Receivables
9 062 438
6 533 293
342 749
6 185 360
5 184
4 278 156
2 829 914
37 717
2 787 013
5 184
4 144 806
2 692 890
5 027
2 687 863
0
133 350
137 024
32 690
99 150
5 184
1 744 950
1 872 259
0
1 872 259
0
2. Debt securities
5. Other loans 6. Deposits with credit institutions 7. Other investments
IV. Deposits with ceding companies V. Valuation adjustments of investments
C. Investments for the benefit of unit-linked life insurance policyholders
I. Receivables out of direct insurance operations 1. Receivables from insurance policyholders 2. Receivables from insurance intermediaries
II. Receivables out of reinsurance operations
III. Reinsurance amounts of life insurance technical provisions
IV. Other receivables
E. Other assets
0
0
0
0
0
3 039 332
1 831 120
305 032
1 526 088
0
9 526 510
12 349 353
3 328 125
8 970 284
50 944
1. Tangible assets and inventories
1 503 653
1 448 769
329 393
1 068 432
50 944
2. Bank deposits, cash in hand
8 022 857
10 900 584
2 998 732
7 901 852
0
3. Own shares repurchased
0
0
0
0
0
4. Other
0
0
0
0
0
F. Prepaid expenses and accrued income
15 286 972
13 996 331
10 524 762
3 471 569
0
1. Accrued interests and rents
8 665 484
7 228 773
4 337 122
2 891 651
0
2. Deferred acquisition costs
4 488 417
3 854 825
3 827 548
27 277
0
3. Other prepaid expenses and accrued income
2 133 071
2 912 733
2 360 092
552 641
0
289 250 896
306 056 174
178 992 738
127 007 308
56 128
Total assets
36
Address of the Chief Executive Office Management Boards of the Company Report of the Board of Directors » Balance Sheet Profit and Loss Statement Profit and Loss Account Appendix
Liabilities
A. Shareholders’ equity
I. Subscribed capital
II. Subscribed but unpaid capital (-)
III. Capital reserve
IV. Accumulated profit reserve (+)
In thousand HUF
2008
2009
2009
2009
2009
Total
Total
Life
Non-life
Non insurance tech. Activity
26 366 018
29 311 209
10 264 054
19 300 134
-252 979
4 500 000
4 500 000
2 018 750
2 481 250
0 0
0
0
0
0
4 996 489
4 996 489
1 837 146
3 159 343
0
12 384 366
16 098 790
5 148 051
10 804 745
145 994
667 832
770 740
246 466
524 274
0
0
0
0
0
0
3 817 331
2 945 190
1 013 641
2 330 522
-398 973
0
0
0
0
0
184 539 084
170 921 140
86 222 315
84 698 825
0
1. Life insurance provision
10 459 726
6 059 082
1 266 309
4 792 773
0
2. Mathematical provisions
85 052 332
82 711 039
81 091 790
1 619 249
0
a) life insurance provision
83 248 974
80 971 971
80 971 971
0
0
255 637
225 057
119 819
105 238
0
0
0
0
0
0
1 547 721
1 514 011
0
1 514 011
0
65 572 725
58 429 490
1 474 080
56 955 410
0
2 658 082
2 004 568
1 058 507
946 061
0
13 086 268
13 418 407
0
13 418 407
0
7 709 951
8 298 554
1 331 629
6 966 925
0
57 419 096
75 481 171
75 481 171
0
0
1 289 889
553 363
161 312
392 051
0
0
130 788
0
130 788
0
V. Non-distributable reserve
VI. Valuation reserve
VII. Profit or loss for the financial year (+)
B. Subordinated loan capital C. Technical provisions
b) health insurance provision c) accident insurance annuity provision d) liability insurance annuity provision 3. Provision for claims outstanding 4. Provisions for premium refund 5. Equilisation provision 6. Other provisions D. Technical provisions for unit-linked life insurance policyholders E. Provisions F. Deposits receivable from reinsurance business ceded G. Liabilities
13 777 298
23 190 344
4 143 127
18 741 146
306 071
I. Liabilities out of direct insurance operations
2 096 813
2 012 255
612 467
1 399 788
0
II. Liabilities out of reinsurance operations
3 666 515
9 388 721
659 534
8 729 187
0
III. Debenture loans
0
0
0
0
0
IV. Debts
0
0
0
0
0
V. Other liabilities
8 013 970
11 789 368
2 871 126
8 612 171
306 071
5 859 511
6 468 159
2 720 759
3 744 364
3 036
649 337
576 000
576 000
0
0
5 210 174
5 892 159
2 144 759
3 744 364
3 036
H. Accrued expenses and deferred income 1. Accrued income 2. Accrued costs and expenses 3. Deferred income Total liabilities
0
0
0
0
0
289 250 896
306 056 174
178 992 738
127 007 308
56 128
37
Profit and Loss Statement for the business year January 1 – December 31 2009 In thousand HUF
Income 1. Premiums written 2.
Change in technical provisions (gross)
3.
Income from reinsurance
2008
2009
134 116 921
127 718 748
14 836 933
3 891 693
7 135 700
39 455 446
3.1. Commission, profit participation
1 952 835
9 514 380
3.2. Loss recovery
5 089 015
12 720 706
93 850
17 220 360
11 534 289
23 533 618
3.3. Technical provision recovery 4.
Investment income
5.
Income from loss recovery
916,313
812 560
6.
Other technical income
203 258
45 979
83 855 804
73 301 430
Expenses 1.
Claims and benefits paid, claim settlement expenses
2.
Change in technical provisions (gross)
3.
Reinsurance expenses
4.
8 548 979
25 376 883
11 428 968
42 824 638
3.1. Premiums ceded to reinsurers
8 222 696
42 645 337
3.2. Change in provision recovery
3 206 272
179 301
35 627 625
36 755 182
25 726 945
28 038 139
9 900 680
8 717 043
21 109 411
7 768 620
Operating expenses 4.1. Acquisition costs 4.2. Administration expenses
5.
Investment costs (life)
6.
Other technical charges
1 423 537
1 275 172
Insurance technical profit/loss
6 749 090
8 156 119
38
Address of the Chief Executive Office Management Boards of the Company Report of the Board of Directors Balance Sheet » Profit and Loss Statement Profit and Loss Account Appendix
In thousand HUF
2008
Insurance technical profit/loss
2009
6 749 090
8 156 119
Other income
2 755 754
2 689 010
Other expenses
4 896 519
4 762 370
4 608 325
6 082 759
13 512 885
12 439 792
7 314 903
3 170 564
10 806 307
15 351 987
199 996
41 850
0
0
11 006 303
15 393 837
1 688 972
2 448 647
9 317 331
12 945 190
5 500 000
10 000 000
3 817 331
2 945 190
Profit/loss for the financial year Investment income (non-life) Investment costs (non-life)
Profit/loss from ordinary operations Extraordinary revenues Extraordinary expenditures
Pre-tax Profit/Loss Tax liability
After-tax Profit/Loss Approved dividends and profit sharing Balance sheet Profit/Loss
39
Profit and Loss Account for the business year January 1 – December 31 2009 Life business
In thousand HUF
Income
2008
2009
1. Premiums written
48 952 482
43 545 696
2. Change in technical provisions (gross)
14 836 933
2 779 711
315 359
246 057
3. Income from reinsurance 3.1. Commission, profit participation
88 333
72 510
133 750
145 092
93 276
28 455
11 433 523
23 412 383
5. Income from loss recovery
0
0
6. Other technical income
0
0
39 683 028
29 844 611
2. Change in technical provisions (gross)
115 612
18 720 733
3. Reinsurance expense
273 764
226 799
273 764
212 395
0
14 404
10 336 482
9 880 164
4.1. Acquisition costs
8 055 114
7 898 901
4.2. Administration expenses
2 281 368
1 981 263
21 109 411
7 768 620
0
0
4 020 000
3 542 920
3.2. Loss recovery 3.3. Insurance technical provision recovery 4. Investment income (life)
Expenses 1. Claims and benefits paid, claim settlement expenses
3.1. Premiums ceded to reinsurers 3.3. Change in insurance technical reserve 4. Operating expenses
5. Investment costs (life) 6. Other technical charges Insurance Technical Profit/Loss
40
Address of the Chief Executive Office Management Boards of the Company Report of the Board of Directors Balance Sheet Profit and Loss Statement » Profit and Loss Account Appendix
Non-life Business Income 1. Premiums written
In thousand HUF
2008
2009
85 164 439
84 173 052
0
1 111 982
6 820 341
39 209 389
2. Change in technical provisions (gross) 3. Income from reinsurance 3.1. Commission, profit participation
1 864 502
9 441 870
3.2. Loss recovery
4 955 265
12 575 614
574
17 191 905
4. Investment income (life)
100 766
121 235
5. Income from loss recovery
916 313
812 560
6. Other technical income
203 258
45 979
44 172 776
43 456 819
8 433 367
6 656 150
11 155 204
42 597 839
3.1. Premiums ceded to reinsurers
7 948 932
42 432 942
3.3. Change in insurance technical reserve
3 206 272
164 897
25 291 143
26 875 018
17 671 831
20 139 238
7 619 312
6 735 780
5. Other technical charges
1 423 537
1 275 172
Insurance Technical Profit/Loss
2 729 090
4 613 199
3.3. Insurance technical provision recovery
Expenses 1. Claims and benefits paid, claim settlement expenses 2. Change in technical provisions (gross) 3. Reinsurance expenses
4. Operating expenses 4.1. Acquisition costs 4.2. Administration expenses
41
Appendix Technical provisions
In thousand HUF
2008
2009
Net
Gross
Reinsurers’ share
Net
Technical provision for unearned premiums
10 459 726
10 118 497
4 059 415
6 059 082
Mathematical provision
85 052 332
84 742 514
2 031 475
82 711 039
Provisions for claims outstanding
65 572 725
81 361 262
22 931 772
58 429 490
1 886 469
1 572 094
519 360
1 052 734
771 613
951 834
0
951 834
13 086 268
13 418 407
0
13 418 407
7 709 951
8 949 338
650 784
8 298 554
57 419 096
75 481 171
0
75 481 171
241 958 180
276 595 117
30 192 806
246 402 311
Profit-independent premium refund provision Profit-dependent premium refund provision Equilisation provision Other technical provisions Technical provision for investments where the investment risk is borne by the policyholders of life insurance policies Technical provisions
Shareholders’ equity
In thousand HUF
2008
2009
Share capital
4 500 000
4 500 000
Capital reserve
4 996 489
4 996 489
12 384 366
16 098 790
667 832
770 740
Accumulated profit reserve Non-distributable reserve Balance Sheet Profit/Loss Shareholders’ equity
42
3 817 331
2 945 190
26 366 018
29 311 209
Address of the Chief Executive Office Management Boards of the Company Report of the Board of Directors Balance Sheet Profit and Loss Statement Profit and Loss Account » Appendix
Capital investments
In thousand HUF
2008
2009
13 122 857
14 450 566
158 325 167
157 729 841
18 076 497
20 058 979
Deposits receivable
377 828
344 468
Land and buildings
679 546
679 107
Bank deposits, cash in hand Securities Investment unit
Shares and participations
1 357 262
0
11 722 708
11 739 372
Policy loans
294 844
373 381
Other loans
74 255
157 738
57 419 096
75 481 171
17 159 366
22 593 129
4 952 148
7 986 660
0
0
Participating interests
Technical provision for investments where the investment risk is borne by the policyholders of life insurance policies of wich
government securities
equities and participations
NBH (National Bank of Hungary) Bills
Other securities
16 989 704
19 061 155
Investment unit
10 713 099
16 862 791
Bank account, bank deposits
Capital investments
7 604 779
8 977 436
261 450 060
281 014 623
Premium Income
In thousand HUF
2005
2006
2007
2008
2009
Life insurance
31 501 232
42 454 515
55 458 737
48 952 482
43 545 696
Motor insurance
38 722 420
42 097 457
40 305 239
39 584 043
37 035 137
Other insurance
36 275 407
38 778 720
42 504 971
45 580 396
47 137 915
106 499 059
123 330 692
138 268 947
134 116 921
127 718 748
Total
43
Report of the Supervisory Board The Supervisory Board has reviewed the report of the Board of Directors for the financial year of 2008 and verified that the Company’s operations were in compliance both with the Articles of Association and the business objectives approved by the Supervisory Board. Pursuant to the above, the Supervisory Board proposes that the General Assembly accept the report of the Board of Directors on the business activities of 2008. Furthermore, the Supervisory Board has received and reviewed the balance sheet of Generali Insurance Ltd. for the year 2008 . It has been acknowledged that the auditor (PricewaterhouseCoopers Ltd., Budapest) verified that the balance sheet and the consolidated balance sheet give a true and fair view of the financial position of the company and comply with statutory regulations, and that the auditor endorsed it with its unconditional verification clause as required by law. The Supervisory Board proposes that the General Assembly accept the balance sheet, the consolidated balance sheet and the profit and loss account. Budapest, 3 March 2010. On behalf of the Supervisory Board: Jaroslav Mlynárˇ Chairman
Verification Clause
“The annual report has been compiled in compliance with the provisions of the act on accounting and with general accounting principles. The annual report provides a true and fair view on the assets and the financial position as well as the profitability of the company.” Budapest, 22. February 2010. PricewaterhouseCoopers Ltd., Budapest (Registration number at the Chamber: 001464.) Árpád Balázs, Certified Auditor (kamarai tagsági szám: 006931)
44
Generali-Providencia Insurance Co. Ltd. Teréz krt. 42–44. Budapest H-1066 Phone: (+361) 301-7100 Fax: (+361) 452-3505 Web: www.generali.hu
