Annual Report 2015

Founding member of Czech Insurance Association

Insurer of the Year ERV Evropská pojišťovna was voted the Insurance Company of 2006 to 2014 by the Association of Czech Insurance Brokers.

Already for the thirteenth time in a row, our company has been awarded by experts and the general public as "The Best Travel Insurer“ in TTG Travel Awards.

We help not only on your trips. We support the Safety Line Association. Together we help children to solve their problems!

Humanitarian workers of People in Need are insured by ERV Evropská pojišťovna.

Content Basic Information .............................................................................................. 4 Key Figures........................................................................................................... 5 Organisational Chart......................................................................................... 6 International Group........................................................................................... 7 Management Board Report............................................................................ 8 Supervisory Board Report.............................................................................. 9 Profit Distribution........................................................................................... 10 Report on Relations between Related Parties.................................... 10 Auditor’s Report.............................................................................................. 12 Balance Sheet.................................................................................................. 14 Profit and Loss Account............................................................................... 16 Statement on Changes in Equity.............................................................. 17 Annex to the Financial Statements......................................................... 18

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ERV Evropská pojišťovna annual Report 2015

Basic Information

4    /

Registered Address

ERV Evropská pojišťovna, a. s. Křižíkova 237/36a 186 00 Praha 8 The Company is registered at the Commercial Register of the Municipal Court of Prague, sect. B, file, 1969; reg. no. 49240196.

Shareholders

Europaeiske Rejseforsikring A/S, Denmark Europäische Reiseversicherung AG, Germany Europäische Reiseversicherung AG, Austria

Management Board

JUDr. Vladimír Krajíček, Praha –– Chairman Mgr. Ondřej Rušikvas, Praha –– Member Ing. Libor Dvořák, Čelákovice –– Member Ing. Štěpán Landík, Praha - Member

Supervisory Board

Richard Gustav Johann Bader, Germany – Chairman Mag. Wolfgang Lackner, Austria – Vice-Chairman Gabriele Bayer, Germany – Member

ERV Evropská pojišťovna annual Report 2015

75% 15% 10%

Key Figures

(TEUR)1

2015 (TCZK)

2014 (TCZK)

2013 (TCZK)

16 122

435 686

379 589

296 615

Technical result

1 533

41 438

36 372

28 359

Result for the year

1 603

43 328

45 999

30 595

15 404

416 300

419 014

367 960

Shareholders' equity

9 247

249 891

246 537

230 746

Technical provisions - gross

3 596

97 169

97 265

81 434

Gross premium written

Total assets

1)

Gross Premium Written (TCZK)

500 000

500 000

50 000 416 300

379 589

40 000

367 960

300 000

30 000

200 000

200 000

20 000

100 000

100 000

10 000

0

0 2015

2014

0 2015

2013

Result for Premium the Year (TCZK) Gross Written (TCZK)

500 000 50 000 43 328435 686

2015

2013

50 000 43 328

419 014

400 000 30 595296 615

300 000 30 000

367 960

40 000

300 000

30 000

200 000 20 000

200 000

20 000

100 000 10 000

100 000

10 000

0

0

0

2015 2015

2014 2014

2013 2013

ERV Evropská pojišťovna annual Report 2015

201

Result for the

Total Assets (TCZK)

416 300 379 589

400 000 40 000

2014

500 000

45 999

45 99 43 328

419 014

400 000 296 615

300 000

5    /

Result for the Yea

Total Assets (TCZK)

435 686

400 000

1 EUR = 27,025 Kč

0 2015

2014

2013

2015

ORGANIGRAM ERV Evropská Organisational Chart platný od 1. 1. 2015 as at 31st December 2015 Managing Director

Secretariat

Úsek generálního ředitele

Sekretariát Board Assistant

Management Board / Představenstsvo

Asistent představenstva

6    /

Sales Division

Marketing & Communication

Legal & Compliance

Úsek obchodu

Odd. marketingu a komunikace

Právní sekce

Private Insurance

Internal Audit

Odd. privátního pojištění

Vnitřní audit

Corporate Insurance

International Section

Odd. korporátního pojištění

Mezinárodní sekce Actuary Pojistný matematik

Operations Division

Claims & Assistance

Úsek operativy

Odd. škod a asistence Policy Administration

Alternative Products

Odd. správy pojištění

Alternativní produkty

Customer Service Centre

Recourse Section

Klientské centrum

Sekce regresů

Finance Division

Accounting

Risk Mgmt / Controlling

Úsek financí

Odd. učtárny

Řízení rizik / Kontroling

Underwriting

Human Resources

Odd. underwritingu

Sekce lidské zdroje

IC Technologies

Logistics

Odd. ICT

Provozní sekce

ERV Evropská pojišťovna annual Report 2015

International Group The Danish Europaeiske Rejseforsikring A/S that has been dealing with travel insurance for already more than 90 years founded our Company in 1993. Europaeiske holds 75% of our shares and the other shareholders are Europäische Reiseversicherung AG from Germany (15%) and Austria (10%). In 1995 the German company started to form one of the largest international travel insurance groups that includes nowadays also our sister companies in Germany, Denmark, Sweden, Spain, United Kingdom, Italy, Ireland, Portugal, Poland, Turkey, Ukraine, Russia, China and India.

Via our shareholders we belong to the Group of Munich Re - the international reinsurance leader. In 1994 Evropská Cestovní Pojišťovna (today ERV Evropská pojišťovna) became a member of the International Association of European Travel Insurers (IAE) uniting specialised insurers bearing similar name from all around Europe. Via this association, today called European Travel Insurance Group (ETI Group), we can closely co-operate with many travel insurers on an international level. Our clients enjoy an important advantage of active assistance provided world-wide by our daughter Euro-Center Prague.

Members ETI Group Austria Belgium Czech Republic Denmark Finland France Germany Hungary Italy Netherlands Norway

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ERV Evropská pojišťovna annual Report 2015

Poland Portugal Russia Slovakia Spain Sweden Switzerland Turkey Ukraine United Kingdom

Management Board Report on the Company Activities in 2015 Last year, our insurance company successfully built on the development attained in the previous year. Although the entire non-life insurance market grew only slightly and outgoing tourism stagnated in spite of the economic growth, we again achieved doubledigit percentage growth in the premiums written. We have maintained a leading position among insurance companies offering travel insurance on the Czech market, which has not been at all easy in the sharply competitive environment. Our financial results again placed us among the most successful members of our international group of specialised travel insurance companies, something for which our entire team of our associates can rightly take pride. We appreciate that for the ninth time in a row the Association of Czech Insurance Brokers chose us as the Insurance Company of the Year in the specialised insurer category. Furthermore, in the TTG Travel Awards we were selected as the insurance company with the best travel insurance, for the 13th time in a row. We see this award, granted by experts as well as the general public, as a commitment that only strengthens our resolve to maintain the high quality of services we provide. Because the outgoing tourism market again constricted last year, it is very important for us that we were chosen as the travel insurance supplier not only by nine of the ten largest tour operators, but also by hundreds of travel agencies and by airlines. Together, we faced the turbulence in foreign tourism that increasingly reflects the complexities of international political developments. Our profound understanding of the issue and close cooperation with the Association of Czech Travel Agents allowed us hand in hand with Czech Insurance Association to actively influence the adoption of an amendment of the Tourism Act. In spite of numerous obstacles, we successfully ensured that tour operator insolvency insurance would continue in a reasonable scope. Naturally, large tour operators account for the greatest share of our sales. Last year, however, smaller partners accounted for the greatest increase of sales, in particular, travel agents and airline ticket agents. In this segment, the total volume of premiums

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ERV Evropská pojišťovna annual Report 2015

received increased by 19 % from year to year. We are happy that our traditional concept of agent care was successfully adapted to their individual needs. It meant not only a further advance in electronic data exchange technology, but above all, investments into training and vendor support. Direct sales to the private clientele were up by 6 % last year, to which on-line sales contributed the most. Aside from the development of on-line systems, we also invested into a new mobile application that offers clients a fast and smart way to contact the insurance company and, above all, access to instant assistance while abroad. The broadening of the Sbaleno product line before the summer season clearly contributed to increased interest in our individual insurance. In corporate insurance, we achieved record growth of 8 %. Closer cooperation with leading brokerage firms bore fruit. Together, we attracted many new corporate clients. Because this segment is very important for us, we are shifting our services to a new level, especially in terms of the flexibility of our offer of appropriate insurance coverage matching the diverse needs of companies. Overall, ERV Evropská reported gross premium written of CZK 436 million for 2015, which is 15 % more than in 2014. A large part of the turnover is consistently generated by medical expenses insurance, followed by travel cancellation and luggage insurance. The technical result was CZK 41 million, non-technical result reached CZK 12 million.

We insured over 752 tsd. clients in 2015, which is roughly by 13 % more than in 2014. We managed to preserve the average premium on the same level as the year before. The claims development in travel insurance was up last year, primarily due to the 25% increase in claims frequency, even though average claim amount held steady at around CZK 10,000. The importance of coordinating our steps with the international EuroCenter network, which focuses on managing the costs of medical treatment in all major tourist destinations around the world, was confirmed repeatedly. The growth in operating costs corresponded to the increased share of sales through partners receiving high commissions. In combination with a higher collection of premiums, and a significant reduction of the operating costs ratio, we managed to close the year with a very good financial result: a profit of CZK 43 million. Our solvency indicator again significantly exceeded the statutory requirements for our sector.

Our profit confirmed that ERV Evropská’s entire team of 50 employees again did an outstanding job last year. The Management Board would like to take this opportunity to thank them again for their excellent commitment and support for our shared goals. Last year, we managed to grow in spite of the significant growth in previous years. We know very well that maintaining such a trend is difficult, and in 2016, we cannot do without further innovation in services and technologies. Hence, we are planning further changes in our products and do not intend to neglect the most recent trends in terms of digitisation. In doing so, we are glad that we can rely on our company’s sound financial position and on the strong international backing of the ERV Group, ERGO, and Munich Re. Prague, January 2016

Vladimír Krajíček Chairman of the Management Board

Supervisory Board Report on Activities in 2015 The Supervisory Board of the ERV Evropská pojišťovna, a. s., held two meetings during the year 2015 carrying out its duties in accordance with the Company’s Articles of Association. In the year under review no change occurred in the composition of the Supervisory Board. The members had access to all Company documents when required. Co-operation with the Management Board was on a good level and all support materials were delivered on request. By means of written and personal reports the Management Board kept us informed of the business development and the financial position of the Company in the year under review. The Supervisory Board examined financial statements for the year, the Management Board Report, and the Management Board proposal on the balance sheet profit distribution for the year 2015. Having studied these documents, we agree to the proposal on the balance sheet profit distribution and have nothing to add to the annual report.

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ERV Evropská pojišťovna annual Report 2015

The auditor’s report on the year’s financial statements presented by KPMG Česká republika Audit, s.r.o., showed that the accounting and financial statements comply with the Czech legal regulations. We find the result of the audit satisfactory and have no further comments to it. According to the final result of our examination, we have no objection to raise and we are going to recommend the General Meeting of Shareholders to approve all documents submitted by the Management Board. During 2015 the Supervisory Board carried out all functions of the audit committee in accordance with the Act No. 93/2009 Coll. on auditors. Prague, January 2016

Richard Gustav Johann Bader Chairman of the Supervisory Board

Profit Distribution The Management Board proposes to distribute the profit for the financial year 2015 in the amount of TCZK 43 328 as follows: g

 llocate TCZK 2 166 to the statutory reserve fund a in accordance with the Articles of Association,

g

 se TCZK 41 162 to pay out dividends to the u shareholders in accordance with their share in the Company’s equity capital.

Prague, January 2016

Vladimír Krajíček Chairman of the Management Board

Report on Relations Between Related Parties in 2015 ERV Evropská pojišťovna, a. s. (hereinafter “the Company”) is a subsidiary company of the Danish travel insurance leader Europaeiske Rejseforsikring A/S, Copenhagen, which holds 75% of the shares. Europäische Reiseversicherung AG, Munich holds 15% of the Company shares and the remaining 10% is held by the Austrian company Europäische Reiseversicherung AG, Vienna. Controlling parties and relation description Europaeiske Rejseforsikring A/S, Denmark, is the founder and the mother company of the Company. The Company has an agreement with Europaieske about using VIP Portal by the Company clients. The Company has the agreement with this company on a cooperation agreement on selling Danish Global Corporate travel insurance on the Czech market. Europäische Reiseversicherung AG, Germany, is the mother company and 100% shareholder of Europaeiske Rejseforsikring A/S, Denmark, and concurrently holds 25% share in Europäische Reiseversicherung AG,

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ERV Evropská pojišťovna annual Report 2015

Austria. Directly or indirectly thus controls 92,5% share of the Company. The Company has agreements with this company, respectively with its Polish branch on a computing system daGama usage in Poland, agreement on user support of the respective software, agreement on personal data protection and agreement on claims management. ERGO Versicherungsgruppe AG, Germany, is 100% shareholder of the Europäische Reiseversicherung AG, Germany. There is an agreement between the Company and ERGO Versicherungsgruppe AG on groups accounting system usage. Furthermore there is an agreement between the companies on consulting services in respect of Solvency II implementation and an agreement on an internal audit service provision. Münchener Rückversicherung AG, Germany, is the main shareholder of ERGO Versicherungs-gruppe AG, Germany with 99,5% share. Münchener Rückversicherung AG participate on the reinsurance scheme of the Company with respect to travel insurance, liability insurance and

tour operators insolvency insurance. Reinsurance billing is stated in the reinsurance contracts signed between the Company and the reinsurer, and under the conditions applicable to third parties. Controlled parties and relation description Euro-Center Prague, s. r. o., Czech Republic, is 100% daughter company of the Company. It was established in 2002 under the name of EUROALARM Assistance Prague. Its subject of business is a provision of assistance services in respect of travel insurance. The Company has signed with Euro-Center Prague, s.r.o. a cooperation agreement on assistance service provision for clients, cooperation agreement on claims handling in tour operators insolvency insurance, agreement on administrative services provision, agreement on movable property lease and agreement on subtenancy. According to the Company decision, as the only venturer, the Company received CZK 9 254 000 profit share for 2015. Etics ITP, s. r. o., Czech Republic, is 100% daughter company of the Company and was established in 2005. Its subject of business is insurance mediation and claims settlement. The company has closed with this broker company the contract on sales representation, agreement on cooperation with claims set-tlement and an agreement on subtenancy. Relations to other related parties Euro-Center Holding SE, Czech Republic, is a company coordinating assistance services within the concern of Europäische Reiseversicherung AG, which controls 83,33% of shares. The Company itself controls 16,66% of shares. The Company has concluded a cooperation agreement on provision of assistance services to clients and an agreement on subtenancy with Euro-Center Holding SE. According to the gen-eral shareholders meeting decision the Company received CZK 600 000 profit share for the year 2015. CJSIC “European Travel Insurance, Russia, is 100% daughter company of Europäische Reiseversicherung AG, Germany. In 2015 the Company closed an amendment to the cooperation agreement from 2011 with the Russian company in particular related to cooperation in IT, management processes and internal audit principles implementation. PJSC “European Travel Insurance”, Ukraine, is 100% daughter company of Europäische Reiseversicherung AG, Germany. In 2015 the Company closed an agreement with the Ukrainian company in particular related to

11    /

ERV Evropská pojišťovna annual Report 2015

cooperation in business development, management processes and internal audit principles implementation. MEAG MUNICH ERGO AssetManagement GmbH, Germany, belongs to the concern of Münchener Rückversicherung AG and deals with asset management and investment advisory. The company provide to the Company services in the area of investments and asset management. All contracts with above mentioned parties are closed under conditions applicable to third parties. In 2015 the Company hasn´t closed any other agreement with any other company belonging to the Münchener Rückversicherung concern. The exact amount of mutual receivables and liabilities is set out in the annex at the day of closing books. The Company has neither controlling agreements with shareholders nor agreements on profit transfer. We declare that, according to Section 82 of law about commercial corporations, we have stated in this report on relations between related parties in 2015 all new or valid known to us structure of relations between controlling and controlled parties, as well as relations between the controlled party and parties controlled by the same party, roles of the controlled parties, methods and means of control and assessment of loss inception. We declare that, we are not aware of any fact that the above mentioned agreements caused any losses to the Company. At the same time we declare that, there is no potential liability for the Company arising from the above mentioned relations and therefore there is no consequent risk for the Company. Prague, January 2016

Vladimír Krajíček Chairman of the Management Board

Libor Dvořák Member of the Management Board

Auditor's Report

12    /

ERV Evropská pojišťovna annual Report 2015

13    /

ERV Evropská pojišťovna annual Report 2015

Balance Sheet (TCZK)

2015

2014

2013

Correction

Net

Net

Net

Assets Gross Intangible fixed assets

33 644

-28 963

4 681

4 886

7 823

Investments in affiliated undertakings and participating interests, thereof:

26 126

0

26 126

21 763

23 174

Participations in controlled entities

26 126

0

26 126

21 763

23 174

310 074

0

310 074

311 157

275 635

Shares and other variable-yield securities, other participating interests

8 314

0

8 314

8 797

8 324

Bonds and other fixed-interest securities

177 246

0

177 246

187 910

168 145

131 272

0

131 272

115 828

95 559

45 974

0

45 974

61 697

61 881

Other financial placements thereof:

Securities recognized in fair value in P/L accounts (AFS) HTM securities issued by OECD countries

0

0

0

10 385

10 705

Deposits with financial institutions

Other HTM securities

124 514

0

124 514

114 450

99 166

Financial placements (investments)

336 200

0

336 200

332 920

298 809

Receivables arising from direct insurance, thereof:

17 655

-416

17 239

23 193

17 388

Receivable due from policyholders

10 960

-163

10 797

11 706

10 180

Receivable due from intermediaries

6 695

-253

6 442

11 487

7 208

Other recievables

8 039

0

8 039

11 165

9 199

Debtors

25 694

-416

25 278

34 358

26 587

Tangible fixed assets other than land and buildings, and inventories

21 951

-16 230

5 721

5 057

5 233

Cash on accounts in financial institutions and cash in hand

20 841

0

20 841

18 688

14 136

Other assets

42 792

-16 230

26 562

23 745

19 369

Deferred insurance acquisition costs, thereof:

15 316

0

15 316

15 828

11 318

In non-life insurance

15 316

0

15 316

15 828

11 318

8 263

0

8 263

7 277

4 054

18

0

18

0

0

Other temporary assets accounts, thereof: Estimated receivables Temporary assets accounts Total assets

14    /

ERV Evropská pojišťovna annual Report 2015

23 579

0

23 579

23 105

15 372

461 909

-45 609

416 300

419 014

367 960

2015

2014

2013

Correction

Net

Net

Net

Liabilities Gross Share capital

160 000

0

160 000

160 000

160 000

Other capital funds

23 916

0

23 916

20 191

21 334

Statutory reserve fund and other funds from profit

22 643

0

22 643

20 343

18 813

4

0

4

4

4

43 328

0

43 328

45 999

30 595

Profit or loss brought forward Profit or loss for the financial year Capital and reserves

249 891

0

249 891

246 537

230 746

Provision for unearned premium

54 673

0

54 673

58 272

52 252

Gross amount

62 379

0

62 379

65 850

58 539

Reinsurance share

-7 706

0

-7 706

-7 578

-6 287

Provision for outstanding claims

24 438

0

24 438

22 598

16 634

Gross amount

30 612

0

30 612

28 135

20 336

Reinsurance share

-6 174

0

-6 174

-5 537

-3 702

Provision for bonuses and rebates

1 343

0

1 343

1 187

1 033

Gross amount

1 343

0

1 343

1 187

1 033

Equalisation provision

2 835

0

2 835

2 093

1 526

Gross amount

2 835

0

2 835

2 093

1 526

83 289

0

83 289

84 150

71 445

Provisions for taxation

Technical provisions

1 503

0

1 503

3 364

0

Provisions for other risks/losses

1 503

0

1 503

3 364

0

Payables arising from direct insurance

6 198

0

6 198

6 268

6 012

Payables arising from reinsurance

1 629

0

1 629

1 793

1 650

40 638

0

40 638

47 568

41 483

1 366

0

1 366

1 607

1 892

0

0

0

174

0

48 465

0

48 465

55 629

49 145

4 696

0

4 696

3 551

1 482

Other temporary liabilities accounts, thereof:

28 456

0

28 456

25 783

15 142

Estimated payables

28 456

0

28 456

25 783

15 142

Temporary liability accounts

33 152

0

33 152

29 334

16 624

416 300

0

416 300

419 014

367 960

Other payables thereof: Tax liabilities and payables due to social security and health insurance institutions Payables due to entities in which the Company has a controlling influence Creditors Accrued expenses and deferred revenues

Total liabilities

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ERV Evropská pojišťovna annual Report 2015

Profit & Loss Account (TCZK)

Technical account non-life

2015

2014

2013

435 686

379 589

296 615

Ceded premium written

-43 254

-42 041

-29 305

Net premium written

392 432

337 548

267 310

Change in unearned premium, gross

-3 471

7 311

3 638

Change in unearned premium, ceded

-128

-1 291

2 815

396 031

331 528

260 857

2 117

2 345

2 514

431

197

223

-152 744

-115 506

-91 715

226

176

1 620

Change in outstanding claims provisions, gross

-2 477

-7 799

-2 032

Change in outstanding claims provisions, ceded

637

1 835

-740

-154 358

-121 294

-92 867

Change in other tech.provisions, net of reins.

-156

-154

18

Bonuses and rebates, net of reinsurance

-691

-832

-578

-185 777

-162 354

-129 410

-511

4 510

2 477

-22 947

-24 374

-22 854

8 211

7 711

8 836

-201 024

-174 507

-140 951

Other technical expenses, net of reinsurance

-170

-344

-104

Change in equalization provision

-742

-567

-753

41 438

36 372

28 359

Gross premium written

Net earned premium Allocated investment return transferred from the non-technical account Other technical revenues, net of reinsurance Gross claims paid Ceded claims paid

Net claims incurred

Acquisition costs Change in deferred acquisition costs Administrative expenses Reinsurance commissions and profit participation Expenses for underwriting business, net

Technical result non-life

Non-technical account

2015

2014

2013

Income from financial placement

17 556

35 369

17 295

Expenses connected with financial placement

-3 488

-14 268

-5 132

Allocated investment return transferred to the non-life insurance technical account

-2 117

-2 345

-2 514

8 968

9 335

9 830

Other expenses

-8 949

-9 685

-11 207

Income tax on ordinary activities

-9 943

-8 618

-5 894

-137

-161

-142

43 328

45 999

30 595

Other income

Other taxes not shown under preceding items Profit or loss for the financial year

16    /

ERV Evropská pojišťovna annual Report 2015

Statement on Changes in Equity (TCZK)

Share capital

Share premium

Reserve funds

Changes in valuation

160 000

0

17 129

18 394

Profit brought forward 4

FX gains (losess) and changes in valuation not included in the profit and loss statement

0

0

0

2 940

Net profit/loss for accounting period

0

0

0

Dividends

0

0

Transfer to funds

0

0

Balance at 31. 12. 2013

160 000

0

Balance at 1. 1. 2014

160 000

0

FX gains (losess) and changes in valuation not included in the profit and loss statement

0

Net profit/loss for accounting period

Profit / Loss

Total

33 672

229 199

0

0

2 940

0

0

30 595

30 595

0

0

0

-31 988

-31 988

1 684

0

0

-1 684

0

18 813

21 334

4

30 595

230 746

18 813

21 334

4

30 595

230 746

0

0

-1 143

0

0

-1 143

0

0

0

0

0

45 999

45 999

Dividends

0

0

0

0

0

-29 065

-29 065

Transfer to funds

0

0

1 530

0

0

-1 530

0

Balance at 31. 12. 2014

160 000

0

20 343

20 191

4

45 999

246 537

Balance at 1. 1. 2015

Balance at 1. 1. 2013

160 000

0

20 343

20 191

4

45 999

246 537

FX gains (losess) and changes in valuation not included in the profit and loss statement

0

0

0

3 725

0

0

3 725

Net profit/loss for accounting period

0

0

0

0

0

43 328

43 328

Dividends

0

0

0

0

0

-43 699

-43 699

Transfer to funds

0

0

2 300

0

0

-2 300

0

160 000

0

22 643

23 916

4

43 328

249 891

Balance at 31. 12. 2015

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ERV Evropská pojišťovna annual Report 2015

NOTES TO THE FINANCIAL STATEMENTS Year ending 31 December 2015 (in thousands of Czech Crowns “TCZK”)

GENERAL CONTENT Description and Main Activities

ERV Evropská Pojišťovna, a. s., was entered into the Commercial Register under the name Evropská Cestovní Pojišťovna, a. s., on 23. 4. 1993 (IČ 49240196). Company name was changed on 1. 7. 2014 last time. The Company’s shareholders are Europaeiske Rejseforsikring A/S, Denmark

75%

Europäische Reiseversicherung AG, Germany

15%

Europäische Reiseversicherung AG, Austria

10%

The Company obtained its insurance licence on 16. 9. 1993. On 28. 11. 2001 the Company applied to the Ministry of Finance for renewal of its licence to carry on insurance activities in accordance with Insurance Act No. 363/1999 Coll. The Ministry of Finance issued decision no. 322/2732/2002 setting out the scope of licensed insurance activities on 23. 1. 2002. On 15. 12. 2009 Czech National Bank issued decision no. 2009/9875/570 licensing extension of the scope of insurance activities for non-life insurance branches no. 1, 2, 7, 13 Coll. d), 15, 16 Coll. a), c), f), i), j) and 17. On 29. 2. 2012 Czech National Bank issued decision no. 2012/1900/570 licensing extension of the scope of insurance activities for non-life insurance branches no. 3, 8 and 9.

The Company carries out the following classes of non-life insurance: „„ Insurance against damage to or loss of property in the range of non-life insurance industry No. 8 „„ Insurance against damage to or loss of property in the range of non-life insurance industry No. 9 „„ Liability insurance for damage „„ Surety ship insurance „„ Insurance of miscellaneous financial losses „„ Assistance insurance to persons who get into difficulties while travelling or while away from their residence including insurance of financial losses directly connected to travelling

Registered Address ERV Evropská pojišťovna, a. s. Křižíkova 237/36a 186 00 Praha 8 Statutory Bodies Management Board: at 31 December 2015 JUDr. Vladimír Krajíček, Praha - Chairman Mgr. Ondřej Rušikvas, Praha – Member Ing. Libor Dvořák, Čelákovice – Member Ing. Štěpán Landík, Praha - Member

18    /

Supervisory Board: Richard Gustav Johann Bader, Germany – Chairman Mag. Wolfgang Lackner, Austria – Vice-Chairman Gabriele Bayer, Germany – Member

ERV Evropská pojišťovna annual Report 2015



The Company shall be represented by at least two members of the Management Board. When signing on behalf of the Company, the printed or written name of the Company must always be accompanied by the signature of at least two members of the Management Board.

Organizational Structure The Company is divided into three divisions – Divisions of Sales, Operations and Finance. Divisions are split into departments. The Company director manages internal audit, legal and international departments and secretariat directly.

Legal Conditions

At the day of closing the accounts all legal conditions of the Company are in accordance with the Insurance Act No. 277/2009 Coll., as amended (hereinafter "the Law"), with the Civil Code No. 89/2012 Coll., as amended, and with the Act on Intermediaries and Loss Adjusters No. 38/2004 Coll., as amended, including relevant execution directives and subsequent valid legal enactments.

The Company owns subsidiary company Euro-Center Prague, s.r.o., providing assistance Affiliated Undertakings and Participating Interest services related to the travel insurance business. Euro-Center Prague, s.r.o , was set up under the name EUROALARM Assistance Prague, s.r.o., with share capital of TCZK 200 in 2002. Company name was changed on 1. 8. 2014. The Company holds 100% share in Euro-Center Prague, s.r.o. In 2005 the Company set up another 100% subsidiary company Etics ITP, s. r. o., providing brokerage services and services of an independent loss adjuster. Etics ITP, s. r. o., was entered into the Commercial Register on 1. 2. 2006 and its share capital is TCZK 2 000. The Company also holds a 16,66% share in the company Euro-Center Holding SE and a 10% share in the company European Assistance Holding GmbH. Main Accounting

and Valuation Principles

The Company kept and closed its books in accordance with the Act on Accounting No. 563/1991 Coll., as amended, with the Ministry of Finance Directive No. 502/2002 from 6 November 2003, implementing certain provisions of the Act on Accounting No. 563/1991 Coll. (hereinafter “the Directive 502”), as amended, for insurance companies, with the Czech Accounting Standards for insurance companies and with other related regulations. The accounting books respect all general accounting principles, in particular the fair value principle, the historic cost principle, the matching principle, the prudence principle and the going concern principle.

Gross Premium Written Gross premium written includes all amounts due according to the insurance contracts written during the accounting period, irrespective of whether these amounts are fully or partially related to future accounting periods.

Claims Paid Claims paid comprise the amount assessed for payment based on the claims settlement



process, external and internal claims handling costs and a deduction for the salvage value and other recoveries. Claims paid are recorded upon completion of the settlement of the claim and in the amount of the assessed settlement.

 Acquisition costs include all direct and indirect expenses incurred in connection with Acquisition Costs concluding insurance contracts.  Deferred acquisition costs include the part of expenses arising from the conclusion Deferred Acquisition of insurance contracts during the current accounting period, which relates to income in Costs future accounting periods. In respect of non-life insurance, deferred acquisition costs are based on total commission costs incurred in the current period and the ratio of the gross provision for unearned premiums at the balance sheet date to the total gross premiums written for the financial year. 19    /

ERV Evropská pojišťovna annual Report 2015

Transfer of Expenses between Technical Accounts and the Non-Technical Account

During the accounting period all administrative costs are posted to the non-technical accounts. Costs are distributed between claims handling costs, acquisition costs and administrative expenses (the technical account), and costs of investment management and other non-technical costs (the non-technical account). At first costs are allocated to the individual cost centres, and then further distributed to the appropriate non-technical accounts based on the defined ratios for each cost centre. This procedure is not applied for taxes and fees or for other expenses not related to insurance or reinsurance activities.  During the accounting period all investment returns are posted to the non-technical Transfer of Investment Returns between Technical account. At the end of the accounting period returns from that part of the investment, covering the technical provisions, are transferred to the technical account. and the Non-Technical Account   The unearned premium provision is created from the part of the gross premium Unearned Premium written related to future accounting periods. It represents the sum of all provisions Provision calculated for each individual insurance contract using the “pro rata temporis” method. In respect of some long-term policies, the provision includes the gross premium written but not yet used for travel.  Claims provisions are created in the amount of the expected costs for: Claims Provisions • claims reported but not settled in the current accounting period (RBNS), • claims incurred but not reported by the end of the current accounting period (IBNR), • claims handling costs (CSC). The provision for claims reported but not settled by the end of the accounting period (RBNS) is set as the total sum of provisions calculated for each and every claim. The provision for the incurred but not reported claims (IBNR) is set for each class of insurance as follows: a) the method of the expected percentage of claims is used in case of property insurance, liability insurance and surety ship insurance classes; b) in case of travel insurance as a difference between total claims provision calculated by using Munich Chain Ladder method and already registered amount of RBNS provision; c) the amount of 2.2 % of the gross premium earned is used in other insurance classes. Provision contains all expected external costs connected with claims handling. Claims handling costs provision (CSC) contains all expected internal costs connected with claims handling. Although the Management Board considers that the provision for outstanding claims is fairly stated on the basis of the information currently available to them, the ultimate liability may vary as a result of subsequent events or new information, which may result in significant adjustments to the amounts provided for. Adjustments to the amounts of the provisions are reflected in the financial statements for the period in which the adjustments are made. The procedures and methods used in making estimates are reviewed regularly. Provision for and Rebates

20    /

Bonuses

A provision for bonuses and rebates is created in accordance with the insurance contract conditions. The provision is created for cases where the Company is liable to refund to policyholders a portion of the premiums relating to the current financial year due. Changes in this provision are presented under “Bonuses and Rebates” in the profit and loss account.

ERV Evropská pojišťovna annual Report 2015

Equalisation Provision

The equalisation provision is created to balance either technical loss or extraordinary loss development during the accounting period. The provision is created for insurance classes of credit insurance and surety ship insurance. The equalisation provision is created and disposed in accordance with Notice No. 434/2009 Coll. The Company creates the equalisation provision only in case total amount of gross premium written of respective insurance class in accounting periods equal or exceeds 4 % of total gross premium written of non-life insurance in respective accounting period or exceeds CZK 67 500 000. The Company used method no. 2 presented in Notice No. 434/2009 Coll., as amended, for equalisation provision creation.

Other Provisions

The Company does not create any other technical provisions.

 einsurers´ Share of R  The Company shows technical provisions in the net amount on the liabilities side of balance sheet, i.e. after consideration of the reinsurers’ share. The calculation of Insurance Technical the reinsurers’ share of the technical provisions is based on the provisions of the Provisions particular reinsurance agreements and the reinsurance settlement method. The Company reports the reinsurers’ share of the unearned premium provision and the claims provision. Reinsurers do not participate in the other technical provisions. Financial Placements Affiliated Undertakings and Participating Interests Participating Interests

A participating interest with controlling influence is understood to be a participation of more than 50 % in an enterprise of a third party. A participating interest with signification influence is understood to be a participation in of more than 20 %, but less than 50 %, in an enterprise of a third party. Participating interests are booked at their acquisition cost, which includes the purchase price and other direct costs connected with the acquisition. At the balance sheet date participating interests are revaluated to fair value in accordance with the Act on Accounting No. 563/1991 Coll. The fair value of participating interests is determined based on an expert estimate, e.g. as a share of the net assets of the company. Revaluation differences are shown in shareholder equity.

Debt Securities

Debt securities are booked at their purchase price on the day they are purchased. The Company carries out amortisation of any premium or discount for all debt securities in the portfolio at the date of closing the accounts. Premiums and discounts are amortised to the profit and loss account on the basis of the effective interest rate method from the date of acquisition to the date of their maturity.



21    /

ERV Evropská pojišťovna annual Report 2015

 Bonds hold to the maturity, which are issued by a member state of the Organization for Debt securities hold to Economic Co-operation and Development and whose rating was set at the level of the the maturity Czech Republic or higher by at least two of internationally respected rating agencies (“OECD bonds”) are shown in the amortized costs value in the balance sheet. Other debt securities hold to the maturity are revaluated to fair value in accordance with the Ministry of Finance Directive No. 502/2002, as amended, at the date of closing the accounts. Differences arising from revaluation are shown in equity.  Debt securities available for sale are revaluated to fair value in accordance with the Debt Securities Ministry of Finance Directive No. 502/2002, as amended, at the date of closing the Available for Sale

accounts. Differences arising from revaluation are shown in income statement. The amortised cost value is taken as the purchase price increased by related costs and lowered for discount/premium amortisation and adjustments. The fair value is taken as the market price announced by home or foreign Stock Exchange or presented on alternative public (organized) market. The Company applies the market value announced at the moment no later than the day of closing the accounts and closest to this date. If the market value had not been available or insufficiently represented the fair value, the market value would have been determined by an expert estimate method.

Shares

and Other Variabled Securities

 hares and other variable-yield securities are booked on the day they are purchased S at their acquisition cost. The acquisition cost of a share or other variable-yield security includes the purchase price and other direct costs connected with the acquisition. At the balance sheet date, shares and other variable-yield securities are revaluated to fair value. Revaluation changes are posted into profit and loss accounts. In case shares and other variable-yield securities are issued in foreign currency, their value is valuated in Czech Crown using exchange rate set by Czech National Bank. The exchange rate difference becomes a part of the revaluation to fair value. If there is no objective way of measuring the fair value, the securities are valued at the purchase price.  Bank deposits are initially recognised at their nominal value. At the date of closing Deposits the accounts these assets are revaluated to fair value. For short-term deposits with Financial with financial institutions fair value means the nominal value increased by accrued Institutions interest. In case of deposits issued in foreign currency, their value is valuated in Czech Crown using exchange rate set by Czech National Bank. The exchange rate difference becomes a part of the revaluation to fair value. Revaluation changes are posted into profit and loss accounts.  Loans are booked at their nominal value on the lending date. At the date of closing Loans the accounts, these assets are revaluated to fair value. The fair value of short-term loans is represented by the nominal value increased by accrued interest. 22    /

ERV Evropská pojišťovna annual Report 2015

Tangible and Intangible  Tangible and intangible fixed assets are stated at their purchase price. Fixed Assets Tangible fixed assets with their purchase price under TCZK 40 and intangible assets

with their purchase price under TCZK 60 are booked as expenses in an accounting period in which they were acquired, unless it was agreed otherwise to record them in assets in a balance sheet. An annual rate of accounting depreciation reflects the expected useful lifetime of assets. The Company calculates depreciation using the methods and over the periods shown in the following table: Fixed assets

Foreign Currency Translation

Method

Rate %

software

straight-line

33,3

machines, PCs

straight-line

33,3

furniture, equipment

straight-line

20

cars

straight-line

20

buildings, rebuilding

straight-line

2–25

 ransactions during the year are translated at the CNB (Czech National Bank) rate T effective on the transaction date. At the balance sheet date, foreign currency assets and liabilities are translated at the CNB official rate on that date. Foreign currency gains and losses are recorded in the Company’s profit and loss account.

 Adjustments are created for receivables. The adjustments represent a temporary Adjustments reduction in the value of individual receivables as evaluated by the Management of the Company. The Company creates the adjustments using the net method, i.e. the net release or net creation of adjustments in the current accounting period is charged to the profit or loss account.  Adjustments for receivables from policyholders are created based on an analysis of Adjustments their recoverability. The adjustments are created in accordance with the age of the for Receivables receivables and reflect the risk of non payment in some individual cases. from Policyholders

Corporate Tax Corporate income tax on the profit for the year comprises current income tax and the



change in deferred tax. Current income tax comprises the tax payable calculated on the basis of the expected taxable income for the year, using the tax rate valid at the balance sheet date and any adjustment to the tax payable for previous years. Deferred tax is provided on all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes multiplied by the income tax rate prescribed by the Income Tax Act for the next period. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which this asset can be utilised.

 An income tax provision is created in the amount of the estimated corporate income Income Tax Provision tax liability at the balance sheet date. This provision is accounted for at the moment the corporate income tax return is filed.

Consolidation These financial statements have been prepared on a non-consolidated basis. The financial statements of the Company are included into the consolidated financial statements prepared by the Company as a consolidating accounting unit. The companies Euro-Center Prague, s. r. o. and Etics ITP, s. r. o. are also included in the consolidation unit. The financial statements will also be included into the consolidated financial statements of Europäische Reiseversicherung AG, registered in Germany.

23    /

ERV Evropská pojišťovna annual Report 2015

Changes  in Accounting In 2015 the Company has not performed any change in accounting methods and processes in comparison with 2014. Principles and Procedures

Risk Management  In accordance with the decree No. 434/2009 Coll., which administrates some provisions of the Act on Insurance, the Company ensured an implementation of System of Governance to cover all its activities. The System of Governance is set to ensure a continuous and systematic risk management. The Company is exposed to insurance risk naturally resulting from underwritten insurance contracts as well as to other risks, especially market, credit, operational, liquidity and concentration risk.

The Company is exposed to an insurance risk and a risk arising from underwriting I  nsurance Risk insurance contracts within its product portfolio. in Non-life Insurance The insurance risk results from uncertainty relating to a period, frequency and a claims burden covered by insurance contracts. The most significant risk is the one resulting from an insufficient technical reserve as well as the risk arising from a premium volume. The premium volume is arranged upon historical background, which may differ from reality. An assessment of a reserve may be significantly influenced by the risk of trend, risk of estimation, change in background etc. Tests of reserve sufficiency are being used while assessing reserves to eliminate the risk resulting from it. To manage the insurance risk the Company utilizes internal guidelines for product development, internal rules for calculation of technical reserves, and obtains a strategy on reinsurance undertakings.  A concentration of an insurance risk may exist in cases, when some event or Concentration a sequence of events may significantly affect liabilities of the Company. The of Insurance Risk concentration of insurance risk then determines the scope of a possible influence of these events on the volume of liabilities of the Company. This concentration may result from one insurance contract or from a large number of connected insurance contracts, and it relates to circumstances that constituted the reason for creation of significant liabilities. A concentration of insurance risk may result from accumulation of risks within several individual group of contracts, may arise in cases of less frequent large-scale events (e.g. natural disasters), as well as in cases of serious legal processes, or in cases of change of legislation.

24    /

ERV Evropská pojišťovna annual Report 2015

Strategy of Reinsurance  The Company reinsures some risks arising from insurance contracts to mitigate



a risk of loss and protect its own sources of capital. The reinsurance program of the Company is based upon a combination of reinsurance treaties with external reinsurers and reinsurance treaties with its own parent company. The Company concludes both proportional and disproportional reinsurance treaties to reduce its exposure to risks. To obtain a supplementary protection the Company utilizes facultative reinsurance at some insurance contracts.

Market Risk  With respect to the nature of pursued insurance activities, market risk does not represent a significant threat to the operation of the Company and its ability to fulfill its obligations towards its clients. The only field being monitored by the Company is a monetary risk.

Monetary Risk

The Company is exposed to monetary risk through transactions conducted in foreign currencies. Since the Company closes its books in Czech Crowns, any changes in rates of exchange of Czech Crown may have an impact on the financial statement of the Company.

Credit Risk  The Company is exposed to credit risk, which results from inability of a counterparty to pay sums due from a debt in full amount. Main areas where the Company is exposed to credit risk are: „„ Reinsurer’s share on insurance liabilities „„ Debt of a reinsurer concerning a settled claim „„ Outstanding premium An outstanding premium is continuously monitored and a methodology of creation of adjustments is described in the article "Adjustments". The Company conducts its own recovery of debt from insurance. Efficiency of this process is regularly controlled.

Operational Risk  Operational risk is a risk of a potential loss resulting from missing or insufficient internal processes, human resources and/or systems, or from other reasons, which may arise from either internal or external events. The Company analyses these risks and proposes adjustments of working procedures and processes with the aim to eliminate events incurring loss related to operational risk.

Liquidity Risk The Company is exposed to daily requirements for liquidity resulting from compensation payments. The risk of liquidity is represented by an event when an amount of money necessary to meet obligations is not available for adequate costs at its due date. The need for liquidity is continuously monitored in order to ensure necessary sources. The Company has several disposable sources of financing, and keeps, in accordance with the legislation, a sufficient proportion of financial placements in liquid financial instruments.  In 2015 there were no remarkable facts apart from those mentioned in the Notes Other Remarkable Facts to these financial statements.

25    /

ERV Evropská pojišťovna annual Report 2015

ADDITIONAL INFORMATION TO STATEMENT OF FINANCIAL POSITION Long Term Intangible Assets

At 31. 12. 2015 intangible assets of the Company comprised software with a net book value of TCZK 4 681 (2014: TCZK 4 004; 2013: TCZK 7 747). The software acquisition account balance amounted to CZK 0 (2014: TCZK 882; 2013: TCZK 76).

Financial Placements Purchase Price and Fair Value of Financial Placements

Purchase price Equity participations

Fair value

2015

2014

2013

2015

2014

2013

2 200

2 200

2 200

26 126

21 763

23 174

8 324

8 324

8 314

8 797

8 324

93 231 131 272 115 828

95 559

Stocks and bonds, thereof: with variable interest issued by nonfin. inst. unlisted

8 324

with fixed interest available for sale issued by CZ listed in CZ

126 884 110 313

with fixed interest hold to maturity issued by CZ listed in CZ

47 419

61 541

61 542

48 124

66 150

68 746

0

10 560

10 560

0

10 385

10 705

47 419

72 101

72 102

48 124

76 535

79 451

issued by fin. inst. listed in CZ Total

Socks and bonds total 182 627 190 738 173 657 187 710 201 160 183 334



Currency Structure of the Financial Placement

Short-term bank deposits

124 514 114 450

Financial placement total

309 341 307 388 275 023 338 350 337 373 305 674

99 166

At 31. 12. 2015 was amortized costs value of OECD bonds held to maturity TCZK 45 974 (2014: TCZK 61 697; 2013: TCZK 61 881). In 2015 the Company received dividends from Euro-Center Prague, s.r.o. TCZK 9 254 (2014: TCZK 10 743; 2013: TCZK 8 083) and from EURO-CENTER HOLDING SE TCZK 600 (2014: TCZK 596; 2013 CZK 0).

Securities, thereof:

Shares and other variable-yield securities 2015

2014

CZK

8 247

0

EUR

67

69

DKK Total

26    /

99 166 124 514 114 450

ERV Evropská pojišťovna annual Report 2015

Bonds and other fixed-income securities

2013

2015

2014

2013

0 177 246

187 910

168 145

77

0

0

0

0

0

0

0

8 728

8 247

8 314

8 797

8 324 177 246 187 910 168 145

P/L for the fin. year

Total amount

Equity Participations with Controlling Influence

Business name, head-office



Euro-Center Prague, s. r. o. Křižíkova 237/36a, 186 00 Praha 8

100

200

200

24 158

13 540

Etics ITP, s. r. o. Křižíkova 237/36a, 186 00 Praha 8

100

2 000

2 000

1 968

82

2 200

2 200

26 126

13 622

Share in %

Total

Purchase price

Share cap.

Equity

Euro-Center Prague, s. r. o. Křižíkova 237/36a, 186 00 Praha 8

100

200

200

19 872

9 254

Etics ITP, s. r. o. Křižíkova 237/36a, 186 00 Praha 8

100

2 000

2 000

1 885

72

2 200

2 200

21 757

9 326

Celkem 2014

For the accounting period the Shareholders capital and Profit for the year were determined by the estimate of result for the years 2014 and 2015 in controlled companies.

Loans Receivables

At 31. 12. 2015 the Company shows no loans (2014: CZK 0; 2013: CZK 0).

At 31. 12. 2015

Policyholders

Due

10 668

6 306

292

389

10 960

6 695

163

Net total

10 797

At 31. 12. 2014

Policyholders

Due

10 392

11 248

1 807

Other

Total

0

15 953

32 927

0

0

681

0

15 953

33 608

253

0

0

416

6 442

0

15 953

33 192

Insurance From reins. intermed. trans.

Other

Total

0

17 817

39 457

559

0

0

2 366

12 199

11 807

0

17 817

41 823

493

320

0

0

813

Net total

11 706

11 487

0

17 817

41 010

At 31. 12. 2013

Policyholders

Insurance From reins. intermed. trans.

Other

Total

Overdue Total Adjustments

Overdue Total Adjustments

Due

9 106

7 162

0

15 601

31 869

Overdue

1 520

317

0

0

1 837

10 626

7 479

0

15 601

33 706

446

271

0

0

717

10 180

7 208

0

15 601

32 989

Total Adjustments Net total

27    /

Insurance From reins. intermed. trans.

ERV Evropská pojišťovna annual Report 2015

2015

2014

2013

Inter-company Receivables

3 816

4 438

5 297

Inter-company Prepayments

2 791

2 280

2 245

Other Prepayments

258

218

353

Deferred Tax Receivables

149

783

117

Prepaid Taxes

7 861

6 623

7 561

Other Receivables

1 078

3 475

28

15 953

17 817

15 601

Other Receivables

Total Long-term Receivables

At 31. 12. 2015 the Company has no long-term receivables (2014: CZK 0; 2013: CZK 0).

(due in more than 5 years)

Other Assests Long-term Tangible Assets

Tangible

Acquired assets

Total

20 982

198

21 180

Additions

2 375

98

2 473

Disposals

1 689

197

1 886

21 668

99

21 767

Additions

3 011

0

3 011

Disposals

2 728

99

2 827

Acquisition cost at 31. 12. 2015

21 951

0

21 951

Accumul. depreciation at 31. 12. 2013

15 947

0

15 947

Depreciation

2 284

0

2 284

Disposals

1 521

0

1 521

16 710

0

16 710

Depreciation

2 248

0

2 248

Disposals

2 728

0

2 728

16 230

0

16 230

Net book value at 31. 12. 2013

5 035

198

5 233

Net book value at 31. 12. 2014

4 958

99

5 057

Net book value at 31. 12. 2015

5 721

0

5 721

Acquisition cost at 31. 12. 2013

Acquisition cost at 31. 12. 2014

Accumul. depreciation at 31. 12. 2014

Accumul. depreciation at 31. 12. 2015

Temporary Asset Accounts



Deferred

At 31. 12. 2015 the balance of deferred acquisition costs amounts to TCZK 15 316 (2014: TCZK 15 828 ; 2013: TCZK 11 318).

Acquisition Costs

Estimated Receivables Prepaid Expenses

28    /

and

At 31. 12. 2015 the balance of estimated receivables amounts to TCZK 18 (2014: CZK 0; 2013: CZK 0). At 31. 12. 2015 the company shows balance of the prepaid expenses in the amount of TCZK 8 245 (2014: TCZK 7 277; 2013: TCZK 4 052), thereof TCZK 4 507 (2014: TCZK 5 667; 2013: TCZK 3 181) represents prepaid commissions relating to the future accounting periods.

ERV Evropská pojišťovna annual Report 2015

Equity Share Capital

The share capital consists of common registered shares in booked form. The share capital consists of 303 shares with a booked value of TCZK 500, 41 shares with a booked value of TCZK 100, and 88 shares with a booked value of TCZK 50. All shares are in booked form. At 31. 12. 2015 100 % of the registered capital was fully paid up, i.e. TCZK 160 000. The level of the registered equity is in accordance with the requirements of the Law, taking into account the insurance classes in which the Company is licensed to do business. Profit of the current year 43 328 Expected Distribution of Profit Transfer to the legal reserve fund - 2 166 Profit to be transferred to retained earnings 41 162 The Annual General Meeting will decide on the distribution of the profit for the year 2015.

Valuation Differences Arising from Revaluation of Assets to Fair Value

Balance at 1. 1. Change in fair value (w/o security deriv.) Change from sales or permanent value decrease or maturity Deferred tax change Balance at 31. 12.

29    /

ERV Evropská pojišťovna annual Report 2015

2015

2014

2013

20 191

21 334

18 394

3 880

- 1 191

3 023

- 191

0

0

36

48

- 83

23 916

20 191

21 334

Technical Provisions Claims Provision

The claims run-off result is given by the difference between the balance of the claims provision at 1. 1. 2015, less payments made (of claims included in the provision) and the balance of the provision at 31. 12. 2015.

Gross claims run-off result Provision for Bonuses and Rebates

2014

2013

6 930

6 305

7 461

In 2015 the provision amounted to TCZK 1 343 (2014: TCZK 1 187; 2013: TCZK 1 033).

Equalisation Provision Balance at the end of the year

2015

2015

2014

2013

2 835

2 093

1 526

The Equalisation Provision is created for insurance class B15 – Surety ship insurance.

Provisions

Deposits from Reinsurance

Opening balance

Creation

Drawings

Closing balance

Tax provision

3 364

1 503

-3 364

1 503

Total

3 364

1 503

-3 364

1 503

Provision type

The Company shows a deposit from reinsurers in the amount of CZK 0 (2014: CZK 0; 2013: CZK 0).

Liabilities At 31. 12. 2015 Due Overdue Total At 31. 12. 2014 Due Overdue Total At 31. 12. 2013 Due Overdue

30    /

Total

Policyhold.

Insurance intermed.

From reins. trans.

Received deposits

Other

Total

3 862

2 336

1 629

36 932

3 706

48 465

0

0

0

0

0

0

3 862

2 336

1 629

36 932

3 706

48 465

Policyhold.

Insurance intermed.

From reins. trans.

Received deposits

Other

Total

3 775

2 493

1 793

42 195

5 373

55 629

0

0

0

0

0

0

3 775

2 493

1 793

42 195

5 373

55 629

Policyhold.

Insurance intermed.

From reins. trans.

Received deposits

Other

Total

3 864

2 148

1 650

35 335

6 148

49 145

0

0

0

0

0

0

3 846

2 148

1 650

35 335

6 148

49 145

ERV Evropská pojišťovna annual Report 2015

Payables in Respect of Social Security and Health Insurance State –tax Liabilities and Grants  Long-term

Liabilities and Payables

At 31. 12. 2015 social security and health insurance payables amounted to TCZK 818 (2014: TCZK 780; 2013: TCZK 779), of which TCZK 460 represents social security payables (2014: TCZK 441; 2013: TCZK 440) and TCZK 358 represents health insurance payables (2014: TCZK 339; 2013: TCZK 339). None of these payables are overdue. At 31. 12. 2015 the Company shows tax liabilities in the total amount of TCZK 548 (2014: TCZK 827; 2013: TCZK 1 113). None of these payables are overdue. At 31. 12. 2015 the Company has no long-term liabilities (2014: CZK 0; 2013: CZK 0).

(due in more than 5 years)  Payables on Reinsurance

The Company presents a net payable to reinsurers in the amount of TCZK 1 629 (2014: TCZK 1 793; 2013: TCZK 1 650), of which the inter-company balance is TCZK 1 388 (2014: TCZK 1 793; 2013: TCZK 873).

Temporary Liability Accounts Passive Adjustments

At 31. 12. 2015 estimated payables amount to TCZK 28 456 (2014: TCZK 25 783; 2013: TCZK 15 142), which includes the estimated costs of services used but not invoiced in the accounting period, employee bonus payments for achieving the budget for 2015, which will be paid out in the next accounting period, the estimated costs of non-proportional commissions related to the year 2015 and the estimate of quota share reinsurance.

Inter Company Receivables Short-term Receivables and Payables Equity Participations with Controlling Influence

Receivables 2015

2014

2013

2015

2014

2013

Euro-Center Prague, s. r. o

0

0

0

0

174

0

Etics ITP, s. r. o.

0

0

0

0

0

0

Total

0

0

0

0

174

0



31    /

Payables

ERV Evropská pojišťovna annual Report 2015

Short-term Inter-company Receivables and Payables

Receivables

Other:

2015

2014

2013

2015

2014

2013

Europäische Reiseversicherung, Germany

0

0

0

0

0

9

Munich RE, Germany

0

0

0

1 388

1 793

873

0

0

0

92

0

93

2 791

2 280

2 245

0

0

0

CJSIC - ERV RU, Russia

2 639

3 157

2 696

0

0

0

PJSC - ERV UA, Ukraine

1 177

1 281

2 601

0

0

0

0

0

0

0

854

1 103

6 607

6 718

7 542

1 480

2 647

2 078

 Europaeiske K rátkodobéRejseforsikring, pohledávky Denmark a závazky vůči ostatním Euro-Center Holding, Czech republic podnikům ve skupině

ERGO Versicherungsgruppe, Germany Total Long-term Receivables and Payables (due in more than 5 years)

32    /

Payables

At 31. 12. 2015 the Company has neither long-term inter-company receivables (2014: CZK 0; 2013: CZK 0) nor long-term inter-company payables (2014: CZK 0; 2013: CZK 0).

ERV Evropská pojišťovna annual Report 2015

ADDITIONAL INFORMATION TO PROFIT AND LOSS STATEMENT Insurance Overview – Non-life Insurance 2015

Gross premium written

Gross premium earned

Gross claims costs

Gross operating expenses

Result of reinsurance

4 632

3 931

1 223

1 520

0

Liability insurance

10 402

10 864

880

2 071

- 3 194

Surety ship insurance

34 346

35 222

510

6 398

- 27 780

Misc. finan. loses ins.

4 364

 3 815

532

2 005

0

Travel insurance

381 942

385 325

152 076

197 241

- 3 078

Total

435 686

439 157

155 221

209 235

- 34 052

2014

Gross premium written

Gross premium earned

Gross claims costs

Gross operating expenses

Result of reinsurance

4 015

2 825

1 062

1 337

0

Liability insurance

10 620

10 378

675

2 787

- 3 238

Surety ship insurance

35 828

33 651

1 929

6 757

- 23 400

Misc. finan. loses ins.

3 216

 3 026

365

1 615

0

Travel insurance

325 910

322 398

119 274

169 722

- 4 390

Total

379 589

372 278

123 305

182 218

- 31 028

2013

Gross premium written

Gross premium earned

Gross claims costs

Gross operating expenses

Result of reinsurance

Property insurance

2 755

1 585

608

734

0

Liability insurance

9 757

9 842

1 487

2 471

- 3 947

Surety ship insurance

22 309

22 324

15

5 719

- 15 868

Misc. finan. loses ins.

2 219

2 090

190

1 085

- 160

Travel insurance

259 575

257 136

91 447

139 778

- 2 429

Total

296 615

292 977

93 747

149 787

- 22 404

Gross amount: Property insurance

Gross amount: Property insurance

Gross amount:

Bonuses and Rebates

In 2015 bonuses and rebates totalled TCZK 691 (2014: TCZK 832; 2013: TCZK 578). Bonuses based on the amount of premium amounted to TCZK 234 (2014: TCZK 285; 2013: TCZK 377) and no-claims bonuses amounted to TCZK 457 (2014: TCZK 547; 2013: TCZK 201). In accordance with the principle mentioned in paragraph “Provision for Bonuses and Rebates”, in the notes to the financial statements, the Company accounted for the following changes in the provision for bonuses and rebates:

2015

2014

2013

Creation of the provision

1 343

1 187

1 033

Disposal of the provision

1 187

1 033

1 051

156

154

- 18

Change in the provision

33    /

ERV Evropská pojišťovna annual Report 2015

Commissions and Other Insurance Contract’s  Acquisition Costs

Commissions

2015

2014

2013

129 228

106 101

80 242

56 549

56 253

49 168

511

- 4 510

- 2 477

186 288

157 844

126 933

Other acquisition costs Change in deferred acquisition costs Total

Overheads Personnel costs (payroll expenses, social security) Rent

2013 11 102

1 831

2 024

2 158

Office maintenance and equipment

2 073

1 980

1 329

1 624

2 908

2 742

669

621

1 409

1 108

1 134

824

SAP costs

289

248

381

Travel costs

482

588

476

Software services

Other administrative costs Total administrative costs

2 496

2 512

2 433

22 947

24 374

22 854

The average number of employees and executives and payroll expenses for 2015, 2014 and 2013: Average number of emloyees

Total

Payroll expenses

Social security

Social expenses

49

35 313

25 422

8 395

1 496

4

17 309

13 838

2 532

939

53

52 622

39 260

10 927

2 435

Employees 50 33 245 Management 4 18 704  Board Total for 2014 54 51 949

23 755

7 956

1 534

15 077

2 710

917

Employees Management Board Total for 2015

34    /

2014 12 359

Depreciation of tang. and intang. assets Consultancy

Employees and Executives

2015 12 375

38 832

10 666

2 451

Employees

45

27 094

19 030

6 609

1 455

Executives

6

21 186

16 756

3 482

948

51

48 280

35 786

10 091

2 403

Total for 2013



Administration staff personnel costs are shown in overheads (see paragraph “Overheads”). Sales staff personnel costs are included in acquisition costs and amounted to TCZK 29 672 in 2015 (2014: TCZK 29 107; 2013: TCZK 27 402). Personnel costs related to claims handling staff are included in claims costs and amounted to TCZK 6 391 in 2015 (2014: TCZK 5 685; 2013: TCZK 5 164). Personnel costs related to investment management staff are included in financial placement expenses and amounted to TCZK 140 in 2015 (2014: TCZK 134; 2013: TCZK 117). Personnel costs related to the other employees are shown in other non-technical expenses and amounted to TCZK 4 044 in 2015 (2014: TCZK 4 664; 2013: TCZK 4 495). In 2015 no remuneration was paid to members of the statutory bodies connected with their membership of these bodies. As at 31. 12. 2015 the Company has no record of loans provided to members of statutory bodies.

Information on the Statutory Auditor

The Company shows the statutory auditor fee in other expenses and in 2015 these expenses amounted to TCZK 1 308 (2014: TCZK 1 308; 2013: TCZK 1 334).

Fees

ERV Evropská pojišťovna annual Report 2015

Transfers of Expenses Between the Technical Accounts and the Non-technical Account

In 2015 expenses were transferred from the non-technical account in the total amount of TCZK 91 026 (2014: TCZK 92 160; 2013: TCZK 82 517), of which TCZK 11 530 (2014: TCZK 11 534; 2013: TCZK 10 495) was transferred to claims costs, TCZK 56 549 (2014: TCZK 56 252; 2013: TCZK 49 168) was transferred to acquisition costs and 22 947 (2014: TCZK 24 374; 2013: TCZK 22 854) was transferred to administrative expenses. Income from Financial Investments

In 2015 the Company received the share of profits of companies Euro-Center Prague, s.r.o. in the amount of TCZK 9 264 (2014: TCZK 10 743; 2013: TCZK 8 083) and Euro- Center Holding SE in the amount of TCZK 600 (2014: TCZK 596; 2013: CZK 0).

Returns

Transfers of Investment Between the Technical Account and the Non-technical Account

In 2015 investment returns were transferred from the non-technical account to the technical account in the amount of TCZK 2 117 (2014: TCZK 2 345; 2013: TCZK 2 514).

Account

Non-technical Result

In 2015 the non-technical account result was TCZK 11 833 (2014: TCZK 18 245; 2013: TCZK 8 130).

Result Before Tax

In 2015 the result before tax was TCZK 53 271 (2014: TCZK 54 617; 2013: TCZK 36 489).

Taxation Income Tax in Profit and Loss Statement

Provision on income tax - current year Difference on tax due for past period and disposal of budgeted provision Diff. in status of a deferred tax rec./pay. Total income tax

Deferred Tax

10 016

6 402

-131

- 459

0

657

- 939

- 508

9 943

8 618

5 894

Payables

Difference

2014

2013

2015

2014

2013

2015

2014

2013

0

0

0

82

60

227

-82

- 60

- 227

59

94

0

0

0

105

59

94

- 105

Receivables

51

123

80

0

0

0

51

123

80

Other

39

567

37

0

0

0

39

567

37

117

332

- 215

149

784

-635

667

Investment assets (in balance sh.)

0

0

Impact to Equity

0

0

149

784

Impact to Profit/Loss

Total Deferred Tax. Rec. / Pay.

OTHER INFORMATION Actual Concern Events Subsequent to the Balance Sheet Date

35    /

9 417

Intangible Fixed Assets

Total



2013

2015 Tangible Fixed Assets



2014

Reported deferred tax receivables and payables: Receivables



2015

0 117

82

60

-22

272

0

36

-36

48

82

96

84 416

67

724

-657

939

0

- 36

-36

48

67

688

- 84 - 299

For deferred tax calculation was used tax rate that will be valid in period when tax receivable or payable is applied, i.e. 19 %.

The Company has not concluded a controlling agreement with the majority shareholder Europaeiske Rejseforsikring A/S, Denmark. A report on relations between related parties is a part of the Annual Report. The management of the Company is not aware of any events that have occurred since the balance sheet date that would have a material impact on the Company’s financial statements as at 31. 12. 2015.

ERV Evropská pojišťovna annual Report 2015

ERV Evropská pojišťovna, a. s. Křižíkova 237/36a 186 00 Praha 8



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