D.2. Segment reporting
The Board of Directors as a Group’s chief operating decision maker makes decisions on how to allocate resources and assesses performance of three operating segments: the Česká pojišťovna life insurance operating segment, Česká pojišťovna non-life insurance operating segment, pension funds and pension company. Data presented to the Board of Directors are as reported by the individual entities, therefore before consolidation adjustments. These segments represent a component of the Group:
- that engages in business activities from which the Group may earn revenues and incur expenses;
- whose operating results are regularly reviewed by the management of the Group to make decisions about resources to be allocated to the segment and assess its performance; and
- for which discrete financial information is available.
The Group comprises Non-life insurance, Life insurance, Pension funds and Pension company as the main business segments. Note C.4. of the financial statements provides further information about significant terms and conditions of insurance products.
Products offered by reported business segments brought following insurance premium revenues:
Gross earned premiums revenue and investment income for the year ended 31 December
| (CZK million) | 2014 | 2013 |
|---|---|---|
| ČP Life | 10,844 | 11,774 |
Traditional life insurance premium revenue | 9,327 | 10,164 |
Unit link insurance premium revenue | 1,517 | 1,610 |
| ČP Non-life | 18,347 | 19,038 |
Motor insurance premium revenue | 7,987 | 8,564 |
Personal insurance premium revenue | 4,044 | 3,997 |
Hull (cargo, marine and aviation) insurance premium revenue | 179 | 183 |
Commercial insurance premium revenue | 5,595 | 5,718 |
Income protection (previously Non-life accidents – individual insurance premium revenue) | 542 | 576 |
| Pension funds and Pension company | 1,993 | 1,856 |
Investment income | 1,993 | 1,856 |
| 31,184 | 32,668 |
Management has determined the operating segments based on the reports periodically reviewed by the Board of Directors that are used to make main strategic decisions. The Board of directors assesses the performance of the operating segments based on a measure of profit after taxes for all segments and for insurance segments the results are also measured based on net technical results.
The segment information provided to the Board of Directors for the reportable segments for the year ended 31 December 2014 is as follows:
| (CZK million) | CP Life | CP Non-life | Pension funds and Pension company | Total |
|---|---|---|---|---|
| Gross | ||||
| Insurance premiums | 10,844 | 18,347 | – | 29,191 |
| Technical benefits and claims | (6,018) | (9,103) | – | (15,121) |
| Total costs | (2,180) | (4,553) | – | (6,733) |
Commissions and other acquisition costs | (1,468) | (3,419) | – | (4,887) |
Administration expenses | (712) | (1,134) | – | (1,846) |
| Other technical items | (73) | (87) | – | (160) |
| Gross technical result | 2,573 | 4,604 | – | 7,177 |
| Reinsurance | ||||
| Premiums ceded to reinsurers | (1,313) | (8,254) | – | (9,567) |
| Reinsurer's share on claims | 408 | 3,499 | – | 3,907 |
| Total costs | 329 | 1,736 | – | 2,065 |
Commissions and other acquisition costs | 329 | 1,736 | – | 2,065 |
| Other technical items | – | – | – | – |
| Reinsurance technical result | (576) | (3,019) | – | (3,595) |
| Net | ||||
| Insurance premiums | 9,531 | 10,093 | – | 19,624 |
| Technical benefits and claims | (5,610) | (5,604) | – | (11,214) |
| Total costs | (1,851) | (2,817) | – | (4,668) |
Commissions and other acquisition costs | (1,139) | (1,683) | – | (2,822) |
Administration expenses | (712) | (1,134) | – | (1,846) |
| Other technical items | (73) | (87) | – | (160) |
| Net technical result | 1,997 | 1,585 | – | 3,582 |
| Total financial investments income | 1,385 | 135 | 1,520 | |
Acquisition expenses relating to investment contracts | – | (167) | (167) | |
Total other income and expenses | (189) | (34) | (223) | |
Income taxes | (731) | (8) | (739) | |
| Profit after taxes | 4,047 | (74) | 3,973 | |
| Contribution of other segments | – | – | 387 | |
Elimination of dividends | – | – | (740) | |
Other intercompany eliminations | – | – | 0 | |
Gains/losses relating to disposal of subsidiaries | – | – | — | |
Other consolidation adjustments | – | – | 53 | |
| Reconciliation to the income statement | – | – | (687) | |
| Net profit of the year | – | – | 3,673 | |
The segment information provided to the Board of Directors for the reportable segments for the year ended 31 December 2013 is as follows:
| (CZK million) | CP Life | CP Non-life | Pension funds and Pension company | Total |
|---|---|---|---|---|
| Gross | ||||
| Insurance premiums | 11,774 | 19,038 | – | 30,812 |
| Technical benefits and claims | (6,613) | (10,866) | – | (17,479) |
| Total costs | (2,392) | (4,786) | – | (7,178) |
Commissions and other acquisition costs | (1,657) | (3,653) | – | (5,310) |
Administration expenses | (735) | (1,133) | – | (1,868) |
| Other technical items | (65) | 69 | – | 4 |
| Gross technical result | 2,704 | 3,455 | – | 6,159 |
| Reinsurance | ||||
| Premiums ceded to reinsurers | (1,332) | (8,757) | – | (10,089) |
| Reinsurer's share on claims | 385 | 5,060 | – | 5,445 |
| Total costs | 332 | 1,902 | – | 2,234 |
Commissions and other acquisition costs | 332 | 1,902 | – | 2,234 |
| Other technical items | — | — | – | — |
| Reinsurance technical result | (615) | (1,795) | – | (2,410) |
| Net | ||||
| Insurance premiums | 10,442 | 10,281 | – | 20,723 |
| Technical benefits and claims | (6,228) | (5,806) | – | (12,034) |
| Total costs | (2,060) | (2,884) | – | (4,944) |
Commissions and other acquisition costs | (1,325) | (1,751) | – | (3,076) |
Administration expenses | (735) | (1,133) | – | (1,868) |
| Other technical items | (65) | 69 | – | 4 |
| Net technical result | 2,089 | 1,660 | – | 3,749 |
| Total financial investments income | 1,242 | 135 | 1,377 | |
Acquisition expenses relating to investment contracts | – | (308) | (308) | |
Pension company fees | – | 682 | 682 | |
Total other income and expenses | (140) | (51) | (191) | |
Income taxes | (751) | – | (751) | |
| Profit after taxes | 4,100 | 458 | 4,558 | |
| Contribution of other segments | – | – | – | 761 |
Elimination of dividends | – | – | – | (133) |
Other intercompany eliminations | – | – | – | 12 |
Gains/losses relating to disposal of subsidiaries | – | – | – | – |
Other consolidation adjustments | – | – | – | (771) |
| Reconciliation to the income statement | – | – | – | (892) |
| Net profit of the year | – | – | – | 4,427 |
Nearly all segment revenues in 2014 and 2013 are generated from sales to external customers. There is no single external customer that would amount to 10 percent or more of the Group’s revenues.
The following table represents the reconciliation of gross earned insurance premiums reported in the segment report and the income statement:
| (CZK million) | 2014 | 2013 |
|---|---|---|
| CP Life | 10,844 | 11,774 |
| CP Non-life | 18,347 | 19,038 |
| Other segments | 3,009 | 2,261 |
| Elimination of intragroup transactions | (2) | (3) |
| Insurance premiums in the income statement | 32,198 | 33,070 |
The following table shows key figures per business segment:
| 2014 | ||||
|---|---|---|---|---|
| (CZK million) | CP Life | CP Non-life | Pension funds and Pension company | Others |
| Segment revenue | 10,844 | 18,347 | 1,993 | 3,009 |
| Capital expenditure | (78) | (205) | (21) | (23) |
| Interest income | 1,675 | 585 | 815* | 57 |
| Interest expense | (5) | (16) | — | (115) |
| Depreciation and amortisation | (153) | (259) | (41) | (41) |
| Impairment losses recognised | (209) | (208) | (6) | (49) |
| Reversal of impairment losses | 35 | 199 | — | — |
* Interest income by Pension fuds and Pension company is presented net from interest assigned to the clients.
| 2013 | ||||
|---|---|---|---|---|
| (CZK million) | CP Life | CP Non-life | Pension funds and Pension company | Others |
| Segment revenue | 11,774 | 19,038 | 1,856 | 2,259 |
| Capital expenditure | (109) | (377) | (45) | (41) |
| Interest income | 1,891 | 655 | 710* | 404 |
| Interest expense | (5) | (33) | — | (37) |
| Depreciation and amortisation | (178) | (320) | (45) | (31) |
| Impairment losses recognised | (215) | (447) | (9) | (51) |
| Reversal of impairment losses | 11 | 252 | — | 2 |
* Interest income by Pension fuds and Pension company is presented net from interest assigned to the clients.
Segment assets and liabilities are not regularly included in the reports provided to the Board of Directors, therefore data presented below are after consolidation adjustments.
Geographical information
Total assets are allocated as follows:
| (CZK million) | 2014 | 2013 restated |
|---|---|---|
| Czech Republic | 202,819 | 194,950 |
| Poland | 3,188 | 2,205 |
| Others | 3,419 | 2,322 |
| Total | 209,425 | 199,477 |
The Group operates mainly in the Czech Republic and Poland (see note B.1.).
The geographical structure of total costs incurred to acquire segment assets that are expected to be used during more than one period is highly concentrated in the Czech Republic, the share of other countries is not significant.
Gross earned premiums from insurance business (including both life and non-life) are set out below by country:
| (CZK million) | 2014 | 2013 |
|---|---|---|
| Czech Republic | 29,671 | 31,285 |
| Poland | 2,527 | 1,520 |
| Others | — | 265 |
| Total | 32,198 | 33,070 |