D.2. Segment reporting
- 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 a 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 the reported business segments brought the following segment revenues:
Gross earned premiums revenue and investment income for the year ended 31 December
| (CZK million) | 2016 | 2015 |
|---|---|---|
| ČP Life | 8,790 | 9,624 |
Traditional life insurance | 7,214 | 7,989 |
Unit link insurance | 1,576 | 1,635 |
| ČP Non-life | 18,805 | 18,562 |
Motor | 8,254 | 7,995 |
Accident, Health and Disability | 630 | 638 |
Marine, Aviation and Transport | 287 | 261 |
Property | 7,379 | 7,509 |
General liability | 2,169 | 2,096 |
Other | 86 | 63 |
| Discontinued operations - Proama | — | 3,045 |
Gross earned premium | — | 3,045 |
| Pension funds and pension company | 1,959 | 1,952 |
Investment income | 1,959 | 1,952 |
| 29,554 | 33,183 |
Management has determined the operating segments based on the reports, periodically reviewed by the Board of Directors, that are used to make the 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 2016 is as follows:
| (CZK million) | ČP Life | ČP Non-life | Pension funds and pension company | Total |
|---|---|---|---|---|
| Gross | ||||
| Insurance premiums | 8,790 | 18,805 | – | 27,595 |
| Technical benefits and claims | (4,474) | (9,280) | – | (13,754) |
| Total costs | (1,788) | (4,919) | – | (6,707) |
Commissions and other acquisition costs | (1,103) | (3,889) | – | (4,992) |
Administration expenses | (685) | (1,030) | – | (1,715) |
| Other technical items | (62) | (96) | – | (158) |
| Gross technical result | 2,466 | 4,510 | – | 6,976 |
| Reinsurance | ||||
| Premiums ceded to reinsurers | (1,234) | (8,597) | – | (9,831) |
| Reinsurer's share on claims | 442 | 3,791 | – | 4,233 |
| Total costs | 308 | 1,911 | – | 2,219 |
Commissions and other acquisition costs | 308 | 1,911 | – | 2,219 |
| Other technical items | – | – | – | – |
| Reinsurance technical result | (484) | (2,895) | – | (3,379) |
| Net | ||||
| Insurance premiums | 7,556 | 10,208 | – | 17,764 |
| Technical benefits and claims | (4,032) | (5,489) | – | (9,521) |
| Total costs | (1,480) | (3,008) | – | (4,488) |
Commissions and other acquisition costs | (795) | (1,978) | – | (2,773) |
Administration expenses | (685) | (1,030) | – | (1,715) |
| Other technical items | (62) | (96) | – | (158) |
| Net technical result | 1,982 | 1,615 | – | 3,597 |
| Total financial investments income | 1,639 | 914 | 2,553 | |
| Acquisition expenses relating to investment contracts | – | (211) | (211) | |
| Total other income and expenses | (323) | 33 | (290) | |
| Income taxes | (732) | 91 | (641) | |
| Profit after taxes | 4,181 | 827 | 5,008 | |
| Contribution of other segments | – | – | – | 808 |
Elimination of dividends | – | – | – | (766) |
Other consolidation adjustments | – | – | – | 90 |
| Reconciliation to the income statement | – | – | – | (676) |
| Result of the period attributable to equityholders of the parent | – | – | – | 5,140 |
The segment information provided to the Board of Directors for the reportable segments for the year ended 31 December 2015 (restated) is as follows:
| (CZK million) | ČP Life | ČP Non-life | Pension funds and pension company | Total |
|---|---|---|---|---|
| Gross | ||||
| Insurance premiums | 9,624 | 18,562 | – | 28,186 |
| Technical benefits and claims | (4,932) | (9,443) | – | (14,375) |
| Total costs | (1,844) | (4,617) | – | (6,461) |
Commissions and other acquisition costs | (1,185) | (3,606) | – | (4,791) |
Administration expenses | (659) | (1,011) | – | (1,670) |
| Other technical items | (115) | (76) | – | (191) |
| Gross technical result | 2,733 | 4,426 | – | 7,159 |
| Reinsurance | ||||
| Premiums ceded to reinsurers | (1,275) | (8,599) | – | (9,874) |
| Reinsurer's share on claims | 438 | 4,367 | – | 4,805 |
| Total costs | 320 | 1,871 | – | 2,191 |
Commissions and other acquisition costs | 320 | 1,871 | – | 2,191 |
| Other technical items | – | – | – | – |
| Reinsurance technical result | (517) | (2,361) | – | (2,878) |
| Net | ||||
| Insurance premiums | 8,349 | 9,963 | – | 18,312 |
| Technical benefits and claims | (4,494) | (5,076) | – | (9,570) |
| Total costs | (1,524) | (2,746) | – | (4,270) |
Commissions and other acquisition costs | (865) | (1,735) | – | (2,600) |
Administration expenses | (659) | (1,011) | – | (1,670) |
| Other technical items | (115) | (76) | – | (191) |
| Net technical result | 2,216 | 2,065 | – | 4,281 |
| Total financial investments income | 2,019 | 931 | 2,950 | |
| Acquisition expenses relating to investment contracts | – | (207) | (207) | |
| Total other income and expenses | (335) | (37) | (372) | |
| Income taxes | (754) | (11) | (765) | |
| Profit after taxes | 5,211 | 676 | 5,887 | |
| Contribution of other segments | – | – | – | 663 |
Elimination of dividends | – | – | – | (743) |
Gains/losses relating to disposal of subsidiaries | – | – | – | (204) |
Other consolidation adjustments | – | – | – | (209) |
Loss from discontinued operations | – | – | – | (1,187) |
| Reconciliation to the income statement | – | – | – | (2,343) |
| Result of the period attributable to equityholders of the parent | – | – | – | 4,207 |
Nearly all segment revenues in 2016 and 2015 were 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:
| Gross direct insurance | ||
|---|---|---|
| (CZK million) | 2016 | 2015 |
| ČP Life | 8,790 | 9,624 |
| ČP Non-life | 18,805 | 18,562 |
| Other segments | 504 | 467 |
| Elimination of intragroup transactions | (1) | (1) |
| Insurance premium in income statement | 28,098 | 28,652 |
The following table shows the key figures per business segment:
| 2015 (CZK million) | ČP Life | ČP Non-life | Pension funds and pension company | Others | Intersegment eliminations |
|---|---|---|---|---|---|
| Segment revenue | 9,624 | 18,562 | 1,959 | 467 | (1) |
| Capital expenditure | (100) | (144) | (60) | (5) | – |
| Interest income | 1,489 | 515 | 889* | 9 | (41) |
| Interest expense | (5) | (15) | – | (98) | 41 |
| Depreciation and amortization | (127) | (202) | (37) | (9) | – |
| Impairment losses recognized | (304) | (96) | – | (2) | – |
| Reversal of impairment losses | 3 | 101 | 2 | 14 | – |
| 2015 (CZK million) | ČP Life | ČP Non-life | Pension funds and pension company | Others | Intersegment eliminations |
|---|---|---|---|---|---|
| Segment revenue | 9,624 | 18,562 | 1,959 | 467 | (1) |
| Capital expenditure | (100) | (144) | (60) | (5) | – |
| Interest income | 1,489 | 515 | 889* | 9 | (41) |
| Interest expense | (5) | (15) | – | (98) | 41 |
| Depreciation and amortization | (127) | (202) | (37) | (9) | – |
| Impairment losses recognized | (304) | (96) | – | (2) | – |
| Reversal of impairment losses | 3 | 101 | 2 | 14 | – |
* Interest income by Pension funds 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.
Geographical information
Total assets are allocated as follows:
| (CZK million) | 31.12.2016 | 31.12.2015 |
|---|---|---|
| Czech Republic | 215,733 | 204,526 |
| Poland | 821 | 725 |
| Others | 3,360 | 3,266 |
| Elimination of transactions between countries | (363) | (363) |
| Total | 219,551 | 208,154 |
The Group mainly operated in the Czech Republic and in other EU countries in 2016.
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) | 2016 | 2015 |
|---|---|---|
| Czech Republic | 28,098 | 28,652 |
| Poland* | – | 3,045 |
| Total | 28,098 | 31,697 |
* Gross earned premiums attributable to Poland are classified as discontinued operations in the consolidated income statement for the period ended 31 December 2015. For details please refer to Note F.8.
XLS