Etiquetado de RESPEL

In thousands of SKK Goodwill VOBA Other Total

intangible

assets

Acquisition costs

Balance as at 1 January 2006 265,883 199,970 83,280 549,133

Purchases – – 23,328 23,328

Acquisitions through business combinations – – – –

Balance as at 31 December 2006 265,883 199,970 106,608 572,461 Balance as at 1 January 2007 265,883 199,970 106,608 572,461

Purchases – – 29,130 29,130

Balance as at 31 December 2007 265,883 199,970 135,738 601,591 Amortization and impairment losses

Balance as at 1 January 2006 30,726 5,898 63,926 100,550

Amortization for the year – 15,104 10,723 25,827

Impairment losses 51,152 21,118 – 72,270

Balance as at 31 December 2006 81,878 42,120 74,649 198,647 Balance as at 1 January 2007 81,878 42,120 74,649 198,647

Amortization for the year – 13,699 19,077 32,776

Impairment losses 20,000 – – 20,000 Balance as at 31 December 2007 101,878 55,819 93,726 251,423 Carrying amounts As at 31 December 2006 184,005 157,850 31,959 373,814 As at 31 December 2007 164,005 144,151 42,012 350,168 2.6.1. Goodwill

Allocation of cost of acquisition

The Company acquired part of the business of QBE. The Company allocated the cost of the business combination by recognising identifiable assets, liabilities and contingent liabilities that comply with the recognition criteria at their fair value at the date of acquisition.

65

Notes to the Financial Statements

Česká poisťovňa – Slovensko, akciová spoločnosť | Annual Report | 2007

The cost of the acquisition exceeded the fair value of the net identifiable assets, liabilities and contingent liabilities acquired by SKK 265,883 thousand, which represents goodwill. Goodwill is tested for impairment at each balance sheet date (see below).

Any impairment loss on goodwill is recognized in the income statement, “Administrative expenses”.

The structure of the acquired identifiable assets and liabilities (there were no contingent liabilities recognized) that comply with the recognition criteria at their fair values at 31 August 2005, the date of acquisition (in thousands of SKK) was as follows:

In thousands of SKK

Assets

VOBA 199,970

Equipment 500

Securities and term deposits 1,587,572

Receivables 7,746 Total assets 1,795,788 Liabilities Provisions 1,696,066 Trade liabilities 138 Deferred income 41,667 Total liabilities 1,737,871

Allocation of purchase price:

In thousands of SKK

Fair value of identified assets 1,795,788

Fair value of identified liabilities and contingent liabilities 1,737,871

Net fair value of acquired assets and liabilities 57,917 Difference between purchase price and fair value of acquired assets and liabilities (goodwill) 265,883

Goodwill impairment test

The basis for the goodwill impairment test comprises three parts: cross selling, conversion and new business. When performing the regular quarterly test (as at 31.3., 30.6., 30.9. and 31.12.) the original amount of goodwill at the date of acquisition of part of the QBE business is compared to the results of the test. Total value of goodwill amounted to SKK 164,005 thousand as at 31 December 2007. As at 31 December 2006, goodwill was recognized in an amount of SKK 184,005 thousand which represents a decrease in value of SKK 20,000 thousand – the goodwill was impaired. The goals have not been achieved in cross selling and conversion due to slower development than expected. On the other hand, new business shows slightly better than expected results.

Cross selling

• cross sold contracts are considered to be non-life contracts (MTPL, Motor hull, Private property insurance) concluded with former clients of QBE

• the numbers of contracts planned for future periods are derived from sales plans, which are consistent with the business plan and are reassessed regularly to reflect their actual development

• the value of one contract was determined as average premium decreased by the loss ratio, average acquisition costs and administrative expenses

• for discounting the expected cash flows a discount rate based on the weighted average cost of capital (WACC) 10.07% is used.

Conversion

• the source for the planned number of converted contracts is the sales plan, considering the number of contracts that meet the conversion criteria. The percentage of conversion success rate used for impairment test of goodwill is 35%.

• the conversion value consists of the increase in value, calculated by multiplying the weighted value of new contracts and the number of converted contracts (value of one new contract was calculated as the weighted average of new contracts)

• the conversion value is decreased by the value of the original contracts acquired from QBE that were converted and the costs of contacting people

66

Notes to the Financial Statements

Česká poisťovňa – Slovensko, akciová spoločnosť | Annual Report | 2007

New business

• as new life contracts are considered to be all life insurance contracts concluded by intermediaries taken over from QBE

• the planned number and the structure of the contracts (mainly unit-linked contracts and contracts of universal life insurance) are based on sales plans, which are in line with the business plan

• for discounting expected cash flows a discount rate based on the weighted average cost of capital (WACC) 10.07% is used

If the result of the goodwill impairment test is lower than the carrying value of goodwill, the goodwill is adjusted to its recoverable amount. Impairment of goodwill is recognized in the income statement, “Administrative expenses”.

2.6.2. VOBA

VOBA was calculated for individual product groups of insurance contracts acquired with the part of the business of QBE at the date of acquisition as the difference between the value of liabilities calculated using accounting methods (net provisions using original tariff assumptions) and fair value of liabilities at the same date, if this is lower. VOBA, as an intangible asset with a finite useful life, is amortized based on the amortization schedule over a period of 22 years, during which profits are expected. The amortization period of VOBA is different from the amortization period of DAC, as the lapse rate of acquired contracts is lower (these contracts are usually older than 4 years, during which time the probability of lapses is typically the highest). VOBA is tested for impairment as a part of the liability adequacy test using the same models and assumptions (see 2.17.4). Impairment of VOBA is booked when its fair value at the given date is lower than its carrying amount. A carrying amount represents the value at acquisition date decreased by accumulated amortization and impairment. Sensitivity of recoverable amount of VOBA to individual assumptions is disclosed in the table below:

In thousands of SKK

VOBA (recoverable amount) without MVM as at 31 December 2007 256,279

10% increase in loss development of accident riders (8,804)

Decrease by 0.25 basis points in risk-free interest rate for the purpose of discounting (9,947)

10% increase in serious illnesses and disability (2,503)

Increase in expenses and expense inflation by 10% (11,027)

Increase (decrease) in lapses without surrender option by 25% (130)

Increase (decrease) in lapses with surrender option by 10% (4,959)

Increase in mortality by 10% except for annuities and decrease of mortality by 35% in case of annuities (2,505)

Increase by 0.25 basis points in risk free interest rate for the purpose of DPF modelling (2,839)

Elimination of dynamization (8,208)

Interaction effect of the above 1,029

VOBA (recoverable amount) with MVM as at 31 December 2007 206,386

The sensitivity analysis was demonstrated on recoverable amount of VOBA, since its carrying amount as at 31 December 2007 represents SKK 144,151 thousand which is not sensitive to particular MVM. Based on that the Company neither did recognize any impairment loss as at 31 December 2007 nor during the year 2007. The recoverable amount of VOBA without MVM is in amount of SKK 256,279 thousand. If a 10% margin in the development of the loss ratio for accident rider is applied, the value of VOBA decreases by SKK 8,804 thousand to SKK 247,475 thousand. The most significant impacts on VOBA are from expenses and expense inflation. If the specific MVM is applied, VOBA decreases by SKK 11,027 thousand. After applying all MVM, the recoverable amount of VOBA as at 31 December 2007 is SKK 206,386 thousand.

2.6.3. Amortization and impairment losses

67

Notes to the Financial Statements

Česká poisťovňa – Slovensko, akciová spoločnosť | Annual Report | 2007

2.7. Investment in subsidiary

The Company established by a deed of incorporation dated 2 October 2006 a subsidiary with business name ČP Services, s.r.o. ČPS, a.s. is the sole shareholder of ČP Services, s.r.o. Share capital in amount of SKK 200 thousand was paid up upon incorporation.

Financial information about the subsidiary (100%):

2007 Property Liabilities Equity Income Profit/(Loss)

In thousands of SKK

ČP Services s.r.o. 220 57 163 603 19

2006 Property Liabilities Equity Income Profit/(Loss)

In thousands of SKK

ČP Services s.r.o. 168 25 143 – (57)

2.8. Financial instruments

The structure of financial instruments of the Company as at 31 December 2007 is as follows:

Balance as at 31 December 2007 Fair value through Available-for-sale Loans and Total In thousands of SKK profit or loss receivables

Equities 56,633 – – 56,633

Quoted 56,633 – – 56,633

Unquoted – – – –

Debt securities – Fixed rate 754,495 1,472,411 – 2,226,906

Government bonds 478,743 1,261,474 – 1,740,217

Other quoted 275,752 210,937 – 486,689

Debt securities – Floating rate 349,956 337,266 – 687,222

Government bonds

Other quoted 349,956 337,266 – 687,222

Mutual funds 1,458,252 – – 1,458,252

Loans – – 506 506

Derivative financial instruments 4,625 – – 4,625

Term deposits – – 520,477 520,477

Total 2,623,961 1,809,677 520,983 4,954,621

Balance as at 31 December 2006 Fair value through Available-for-sale Loans and Total In thousands of SKK profit or loss receivables

Equities 147,558 – – 147,558

Quoted 147,558 – – 147,558

Unquoted – – – –

Debt securities – Fixed rate 1,145,613 1 057,517 – 2,203,130

Government bonds 764,647 1,057,517 – 1,822,164

Other quoted 380,966 – – 380,966

Debt securities – Floating rate 510,154 – – 510,154

Government bonds – – – –

Other quoted 510,154 – – 510,154

Mutual funds 1,291,441 – – 1,291,441

Loans – – 144 144

Derivative financial instruments 10,234 – – 10,234

Term deposits – – 327,305 327,305

Total 3,105,000 1,057,517 327,449 4,489,966

68

Notes to the Financial Statements

Česká poisťovňa – Slovensko, akciová spoločnosť | Annual Report | 2007

The effective interest rate on term deposits as at the balance sheet date is 3.13% (31 December 2006: 4.12%), the average maturity of term deposits is 10 days.

The fair value of financial assets with known market prices as at 31 December 2007 are revalued using specific market prices.

For calculation of fair values of financial assets, for which a market price did not exist as at 31 December 2007, a discounted cash flow method was used based on the yield curve of particular financial instruments denominated in the relevant currency published by Bloomberg or Reuters. Zero coupon rates are calculated from yield curves using linear interpolation, which are further used for discounting cash flows (Bootstrapping method).

All of the financial assets classified as available-for-sale are as at 31 December 2007 valued using market prices. Out of the total amount of financial assets classified as fair valued through profit or loss, SKK 334,497 thousand was valued using discounted cash flows.

The following table includes values on the yield curve for particular maturities of securities that were used to calculate present values:

Maturities in years Interest rate Zero coupon rate Discount factor

1 4.30 4.27 0.96 2 4.44 4.40 0.92 3 4.42 4.38 0.88 4 4.50 4.47 0.84 5 4.55 4.52 0.80 6 4.54 4.51 0.76 7 4.62 4.60 0.72 8 4.62 4.59 0.69 9 4.66 4.64 0.66 10 4.74 4.73 0.62

The movements in financial instruments are as follows:

In thousands of SKK Fair value through Loans Available-for-sale Total profit or loss and receivables

Balance as at 1 January 2006 2,390,310 1,438,974 319,853 4,149,137

Purchases 1,617,775 – 765,483 2,383,258

Sales/maturities (850,080) – (53,866) (903,946)

Fair value net movements (48,940) – (748) (49,688)

Accrued interest (4,065) – 26,795 22,730 Change (net) – (1,111,525) – (1,111,525) Balance as at 31 December 2006 3,105,000 327,449 1,057,517 4,489,966 Balance as at 1 January 2007 3,105,000 327,449 1,057,517 4,489,966 Purchases 945,291 – 805,348 1,750,639 Sales/maturities (1,284,648) – – (1,284,648)

Fair value net movements (115,696) – (67,343) (183,039)

Accrued interest (25,984) – 14,156 (11,828)

Change (net) – 193,534 – 193,534

69

Notes to the Financial Statements

Česká poisťovňa – Slovensko, akciová spoločnosť | Annual Report | 2007

Based on a management contract dated 1 August 2005, part of the financial assets is managed by company PPF Asset Management, located in the Czech Republic.

Financial assets managed by PPF Asset Management, a.s.

In thousands of SKK 31 December 2007 31 December 2006

Balance 3,546,305 3,247,580

In document Formulación del Sistema de Gestión Integral de RESPEL para la Empresa Sercolpack Ltda (página 67-72)