I. A message of the Chairman of the Board of Directors 4. II. Shareholders of ERGO poisťovňa Board of Director Supervisory Board 5 - PDF

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2003 Annual Report Contents I. A message of the Chairman of the Board of Directors 4 II. Shareholders of ERGO poisťovňa Board of Director Supervisory Board 5 III. History of ERGO poisťovňa

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2003 Annual Report Contents I. A message of the Chairman of the Board of Directors 4 II. Shareholders of ERGO poisťovňa Board of Director Supervisory Board 5 III. History of ERGO poisťovňa Foundation Scope of activities Shareholders Rating Membership KBC Group 6 IV. PROFILE of ERGO poisťovňa Orientation of the company Reinsurance Branches Vision, strategy after joining the ČSOB Group Rebranding 7 V. The CSOB Group in Slovakia and other Business Partners 8 3 VI. Life insurance Written premium Claim settlement Re-insurance Future plans 9 VII. Non-life insurance 10 VIII. Corporate insurance 11 IX. Reinsurance 11 X. Financial Results 12 XI. List of running products Producst offered by financial consultants Insurance of business risks and property 32 XII. Sales points of the company 34 1. A MESSAGE OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear clients, business partners and shareholders, We may say that the year 2003 has been one of the most significant years in the history of our insurance company so far. This year saw changes that had the ambition to move the development of our company towards the European quality level in the terms of providing insurance services and products. The end of the last year was marked by changes in the ownership of ERGO poisťovňa, a.s. which went hand in hand with the membership of the largest financial group in Central Europe. At the turn of the year, ERGO Poisťovňa, a.s. became a new member of the ČSOB financial group. Its current results rank ERGO poisťovňa, a.s. on the eight place among the 28 commercial insurance companies in Slovakia. We aim at not only sustaining our position on the market, but also at becoming a company that is capable to react flexible on market requirements. Furthermore, we want to create new insurance possibilities and focus on knowing our clients needs. The contribution of a foreign investor with experience of the European insurance market will help us to improve to observe trends in the insurance field, to strengthen the orientation on clients and closely monitor their requirements and needs. The innovation strategy for life and non-life insurance products and services in particular brought tangible results in the last year. The market share of our insurance company in the previous year confirms its stable position on the Slovak market. The total written premium in the Slovak Republic reached in ,811 billion SKK out of which the share of the non-life insurance was 24,803 billion SKK and the life insurance was 17,008 billion SKK. The proportion of non-life to life insurance in 2003 was 59% to 41%. In 2002, this index was 57% for non-life to 43% for life insurance. In comparison to 2002, the increase of life insurance slowed down. However, the launched pension reform is expected to bring a new impulse in the life insurance brought changes in the visual aspect of the company s logo and 2004 constitutes a period of anticipated final transformation of the whole corporate identity of ERGO poisťovňa, a.s. These clearly successful activities accompany the transformation of ERGO poisťovňa, a.s. The launched co-operation with other members of the ČSOB financial group confirms that the tendency to extend the complexity of offered services is our daily work for clients. New products Travel Insurance and Loans Insurance prove that nowadays, insurance becomes a common part of bank products. 4 Finally, I would like to express my belief in the success of the ongoing changes. I am convinced that all actions that have been already taken will move us closer to our clients needs. Their satisfaction is and will be the most important driving force for improving our financial services today as well as in the future. Moreover, we are still able to offer all our clients a stable financial background, modern products of competitive quality and prices with professional consultancy. Boris Čuchran Chief Executive Officer Member of Board of Director 2. Shareholders of ERGO poisťovňa on as of KBC Insurance NV Leuven, Belgium 40% 75% ČSOB Pojišťovna, a.s. Pardubice Czech Republic 35% 0 Prvá slovenská investičná skupina, a.s. Bratislava, Slovakia 25% 25% 2.1 Bodies of ERGO poisťovňa Board of Directors Boris ČUCHRAN Chairman of the Board of Directors Chief Executive Officer of ERGO Poisťovňa a.s. Vladimír KOŽUCH Member of the Board of Directors as of 13/06/2003 Ľudovít KRISTINÍK Ludo SWINNEN Member of the Board of Directors Member of the Board of Directors Dalibor PAVEL Member of the Board of Directors until 15/07/ Supervisory Board Chris DEFRANCQ Albert J. KESSLER Chairman of the Supervisory Board Chief Executive Officer of KBC Insurance NV Member of the Supervisory Board 5 Jeroen van LEEUWEN Vladimír RAJČÁK Member of the Supervisory Board Member of the Supervisory Board Jan LAMSER Member of the Supervisory Board as of 17/10/2003 Carl ROSSEY Member of the Supervisory Board until 17/10/2003 Peter VAJDA Member of the Supervisory Board 3. History of ERGO poisťovňa, a.s. 3.1 Foundation ERGO poisťovňa was founded on January 1, 1992 as an insurance company specialised in legal services insurance. 3.2 Scope of activities The significant capital contribution of ČSOB poisťovňa, a.s. Pardubice to ERGO Poisťovňa, a.s. in 1995 resulted in an extension of the scope of activities in the field of life and non-life insurance. The particular insurance products offered by ERGO poisťovňa, a.s. had passed the difficult test of the Czech insurance market and became a successful part of ERGO s product portfolio. 3.3 Shareholders Based on the acquisition agreements of August 2002, the Belgian company KBC Insurance NV became a new shareholder in the same month. KBC Insurance NV is a part of the bank and insurance group KBC Bank & Insurance Holding. It is also the majority shareholder of Československá obchodní banka, a.s. (ČSOB). The daughter companies of the bank in Slovakia are ČSOB Stavebná sporiteľňa a.s., ČSOB Leasing, a.s. and OB HELLER Factoring, a.s. Other Central European KBC members are: the insurance company Warta in Poland, Argozs and K&H Eljetbisztosito in Hungary and ČSOB pojišťovna Pardubice in the Czech Republic. On December 31, % of the share was owned by the KBC/ČSOB group and 25% by Prvá slovenská investičná skupina, a.s. 3.4 Rating In 2001, ERGO poisťovňa was as the first insurance company in Slovakia rated Ba, the second highest possible level of international rating for companies in Slovakia. This rating reflects the value and quality of the company, its capability to meet its obligations to clients. The rating was given by CRA RATING Agency, an associated company of Moody s Investors Service the leader in rating evaluation. 3.5 Membership ERGO poisťovňa is one of the founding members of the Slovak Association of Insurers. 3.6 KBC Group KBC Group (KBC Bank NV, Moody s Rating Aa3 / P-1) is a Belgian bank-insurance group established in 1998 by merging activities of the banks Kredietbank, CERA Bank and ABB insurance company. The group is institutionally sheltered by KBC Bank and Insurance Holding Company NV and is run by 3 daughter companies KBC Bank NV, KBC Insurance NV and KBC Asset Management NV. All other companies in the KBC group are (in)directly owned by these 3 companies. The KBC group spreads its activities among 30 countries employing more than people ERGO poisťovňa, a.s. PROFILE Head Office: Drieňová 7, Bratislava 2, Slovakia Commencement of activity: June 9, 1992 Share capital: 350 mil SKK 4.1 Orientation of the company The main activity of the company is providing services in life and non-life insurance. ERGO poisťovňa, a.s. is a universal insurance company offering a wide range of life and property insurance. Moreover, it provides insurance for entrepreneurs, their property, business risks and liabilities. High quality insurance services are offered to corporate organisations as well. 4.2 Reinsurance The reinsurance programme of ERGO poisťovňa is created by the insurance and reinsurance broker Benfield Group seated in London. The underwriting capacity of ERGO poisťovňa is covered by renowned international re-insurers, most of who are rated AAA, AA or A by Standard & Poors. 4.3 Branches Nowadays, the ERGO s branch network spreads across 31 Slovak towns and involves a range of other co-operating entities. It also uses the services of exclusive agents and insurance broker companies along with the ČSOB Bank branches in Slovakia. Table No. 1 Market share development The development of Slovak insurance market share of ERGO poisťovňa ,56 1,54 1,56 2,39 2,63 1,69 2,80 2,58 3,58 4,01 4,07 4,28 Life Insurance % Non-life Insurance % Total % 4.4 Vision, strategy after joining the ČSOB financial group ERGO poisťovňa is a member of a strong multinational group and covers life and non-life insurance within Slovakia. It plans to provide its clients with complex financial consultancy with a possibility to use the services of other ČSOB group companies. Current changes and transformation of ERGO poisťovňa take place in a period of chances resulting from Slovakia s participation in the European integration process. We hope that ERGO s joining the strongest financial group in Central Europe will bring better possibilities in providing insurance and financial services. International experience, a larger space and prospects of co-operation within the group, knowledge, experience in European financial market these are only a few means that will help us reach our objectives. We wish to create such conditions for our current and potential clients, which will develop our mutual relationship towards the satisfaction of either party. These are our strategic objectives for the following period: further stabilisation of the company s financial background modern products at one sales point with a full product spectrum 1st class quality services at a reasonable price pleasant, responsible and professional attitude of our staff to our clients Our priority within the company is mainly the growth of the professional potential of our staff. We consider the improvement of communication techniques and culture as one of the key aspects of the contact with clients. We also consider serious interest in our own employees as an invaluable investment into our future. Our aim is to become an attractive employer capable of creating pleasant and quality environment and conditions as well as a feeling of partnership and loyalty of our employees towards our company. We believe that by improving the internal environment, the relations within the company and a long-term profitability, we become a reliable and profitable investment for our shareholders too Rebranding The contribution of a new shareholder initiated the process of changing the logo and commercial name of ERGO poisťovňa, a.s. as the KBC financial group uses the uniform brand ČSOB combined with the KBC logo in the Czech Republic and Slovakia. Compare the logo of the mother company KBC and ČSOB. In order to gain more information essential for the decision on further actions concerning ERGO poisťovňa, a.s., a quantitative survey took place on a group of our clients and clients of other insurance companies. The outcome of the survey confirmed that the found-out information is conform to our market position. The priority of the ČSOB financial group is to provide clients as much advantages as possible resulting from the mutual co-operation. In addition to this, using the commercial potential of the ČSOB brand would be an effective option for ERGO poisťovňa, a.s. Taking into consideration the survey outcome, the following sequence in the rebranding was agreed on: Step 1 Transition period Change of logo with keeping the old commercial name, but with the change of symbol i.e. the symbol of ram substituted by the KBC symbol. Carried out in August Graphic change. Step 2 Change of the commercial name and logo into ČSOB Poisťovňa, a.s. with the KBC symbol. The change of the brand and commercial name will be completed in August Organisation structure See separate annex in segmentation according to divisions. 5. THE ČSOB GROUP IN SLOVAKIA AND OTHER BUSINESS PARTNERS 8 After the capital contribution of KBC Insurance NV, ERGO poisťovňa, a.s. became a member of the ČSOB financial group along other members ČSOB Bank,ČSOB Stavebná Sporiteľňa, ČSOB Leasing and OB HELLER Factoring. These companies collaborate closely and occupy prominent positions in the ranking of the Slovak financial sector. The collaboration within the financial group launched a gradual introduction of banc assurance sales of insurance products via bank branches. The first step was the sell of Travel Insurance as of June 2003 followed by the Consumer Loans Insurance and other products. The first leasing company in Slovakia B.O.F. Leasing is an important business partner of our company. Thanks to a variety of its products, it is able to offer complex universal-oriented services of financial leasing. ZFP Akademia, a.s., an international broker company active also on the Slovak market, belongs to eminent partners as well. Furthermore, our insurance company co-operates with a range of other renowned broker companies. 6. LIFE INSURANCE ERGO poisťovňa, a.s. experienced a successful year in This fact reflected in the increase of written premium and the number of clients. The company again confirmed its strong position on the insurance market also saw the improvement of the quality of services to our clients. We introduced new products, extended the product scale and the range of insurance coverage by the additional insurance of dread diseases. In 2003, ERGO poisťovňa, a.s. earned the market share in life insurance in the extent of 4,1% which ranks the company on the 6th position out of 21 insurance companies within the Slovak Association of Insurers. In 2003, the company reached a favourable valuation of premium technical reserve up to 6,4% for its clients by secure and prudent investment. 6.1 Written premium ERGO poisťovňa, a.s. reached the written premium total of 691,825 mil SKK in life insurance (including accident additional insurance), which was a 4 % increase in comparison to The number of concluded policies reached Development of written premium (in mil SKK) , ,5 665,5 691,8 In 2003, new life policies were concluded. The largest share was held by the OPTIMUS product. The new products KVARTETO and ŠTVORLÍSTOK which cover the dread disease risk experienced a successful launch in sales as well. 6.2 Claim settlement claims within personal insurance were reported in 2003, which means an increase by 19% comparing to the previous year claims were settled and the settlement ratio was about 88%. Our insurance company spent 65,6 mil SKK on claim payments, which is an increase by 12% compared to the previous year. The greatest volume of claim payments was made by accident payments in the sum of 62,8 mil SKK. This fact was influenced by the possibility of lowering the limit of daily compensation payment from 29 to 15 days of treatment and the limit of permanent after- effects from 10% to 1% plus an option of additional insurance progressive permanent after-effects payment Re-insurance The re-insurance of a part of the life insurance portfolio followed the tendency of previous years and traditional co-operation with prominent re-insurers. The growing portfolio and extended life insurance offer go hand in hand with an unfolding collaboration within the optional re-insurance. 6.4 Future plans Our activities will further focus on providing quality services of European standard to our clients. ERGO Poisťovňa, a.s. will continue to extend its product scale so that it further meets the changing requirements of the clients. We will focus on both the development of products sold in own sales net and the banc assurance where the KBC group belongs to leaders on the European market. In 2004, we plan the introduction of mortgage loans insurance in co-operation with ČSOB as well as the preparation of a new life investment insurance. Our aim is to provide clients complex service together with other companies of our financial group in the following years. We can reach this easily with the help of knowledge and long experience of our mother company KBC. 7. NON-LIFE INSURANCE The main aim of non-life insurance in 2003 was a maximum growth in the sales volume of non-life insurance products as well in insurance of SMEs. We focused on improving the claim settlement processes and optimalisation of the policy management back-office. These particular goals were formed based on the need to cut the costs of the Non-Life Insurance Division. As in life insurance, also within the non-life risks we began to carry out first systematic steps for distributing our products via ČSOB Bank and sales channels of other ČSOB group partners. The year 2003 saw also the increase in quality of services to our clients. We extended our product scope by introducing new products. All products meet the basic criteria and are therefore client-friendly, profitable and technically easy to sell. In 2003, the Product Management Department was created within the Division of Non-Life Insurance; its task is the development and management of existing and new products of non-life insurance. All products are designed for sales in our internal network and for possible distribution within the ČSOB group in Slovakia. Development in written premium (in mil. SKK) In 2003, we upgraded, launched the sales of or began developing the following products: ERGOLEX MTPL (Compulsory Motor Third Party Liability Insurance) The sales of this state-regulated product, reached the total written premium of 65 mil SKK. The number of insured cars rose by 39%. During the whole year of 2003, we strictly held onto our underwriting policy. This fact reflected in our excellent claim ratio that was lower than the claim ratio on the MTPL market. Motor Hull Insurance CASCO In 2003, we transformed successfully most of the portfolio of the ERGOCAR product into the high quality product VARIANT. The very good claim ratio justified the introduction of a strict underwriting control. 10 DOMOS Immovable Property and Household Insurance As the DOMOS product was considered to be too complicated for our sales net, we developed a new product DOMOS Kompakt. It is a unique product on the market thanks to its simplicity and concept. At the same time, we upgraded and simplified the already existing product DOMOS Klasik. Hence, these two represent one product line consisting of two products. TRAVEL INSURANCE This brand new product was introduced to our sales network and the ČSOB sales network as of June 1, It became the first product of banc assurance within the ČSOB group in Slovakia. Despite the fact that the whole product with its sales processes were developed very fast, we managed to exceed the planned sales volume. Improvement of claim settlement service In 2003, we carried out an important internal project within the claim settlement service. Its task was to monitor the settlements, to identify the obstacles in the settlement process and to implement the improvements within a short time horizon. The first phase of the project was successfully accomplished. In 2004 and the years after, we will continue to focus on the development of new products as well as the upgrade of the existing ones in order to accommodate even more our clients needs. 8. CORPORATE INSURANCE In 2003, the corporate insurance was separated from the non-life insurance within the new organisational structure. This insurance is oriented on providing service in corporate and entrepreneurs insurance. The results and observed ratios ranked ERGO poisťovňa, a.s. among the top ten on the Slovak insurance market. Within the product and services offer, our company focused on providing individual service not only to the large industry clien
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