main lines of business - zavarovalnica sava: intranet · 2004-03-08 · 2001 was a year of numerous...

ZAVAROVALNICA MARIBOR d.d.d.d.

Cankarjeva ul. 3, 2507 Maribor, tel.: 02/233 21 00, faks: 02/233 25 30, spletna stran: www.zav-mb.si, elektronski naslov: [email protected]

MAIN LINES OF BUSINESS: _________________________________________________________________________3 INSURANCE CLASSES OFFERED BY ZM: _____________________________________________________________3 ZM � HARNESSING EXPERTISE TO ENSURE THE SECURITY OF ITS CUSTOMERS________________________4 HISTORICAL HIGHLIGHTS _________________________________________________________________________4 BUSINESS PERFORMANCE IN 2001 __________________________________________________________________6 A MESSAGE FROM THE PRESIDENT_________________________________________________________________8 THE SUPERVISORY BOARD'S OPINION _____________________________________________________________11 BUSINESS REPORT________________________________________________________________________________12

MISSION _______________________________________________________________________________________12 VISION ________________________________________________________________________________________12 STRATEGIC AIMS UP TO THE YEAR 2006:________________________________________________________12 MARKET AND MARKETING ANALYSIS __________________________________________________________12

Economic trends 1995�2001_______________________________________________________________________12 SALES _________________________________________________________________________________________14

Premiums _____________________________________________________________________________________14 Claims ________________________________________________________________________________________14 Expenses ______________________________________________________________________________________15 Business units in Slovenia_________________________________________________________________________15

CLASSES OF INSURANCE REPRESENTING MORE THAN 95 PERCENT OF ZM PORTFOLIO __________15 MARKETING AND PUBLIC RELATIONS ACTIVITIES______________________________________________17 ZM INVESTMENT POLICY AND BREAKDOWN OF INVESTMENTS AS AT 31 DECEMBER 2001 ________17

Life Insurance Operations _________________________________________________________________________17 Allocation of profits to the account of life insurance policyholders _________________________________________18 Non-life Insurance Operations _____________________________________________________________________19

DEVELOPMENT OF NEW INSURANCE PRODUCTS AND QUALITY MANAGEMENT__________________20 Development of New Insurance Products_____________________________________________________________20 Information Technology __________________________________________________________________________21 Quality Management System ______________________________________________________________________22

PR SURVEYS ___________________________________________________________________________________22 PERSONNEL ___________________________________________________________________________________23

Satisfaction of employees _________________________________________________________________________26 CUSTOMERS' SATISFACTION ___________________________________________________________________27 COMMUNITY PROJECTS _______________________________________________________________________28

Some sponsoring projects in 2001 __________________________________________________________________28 OBJECTIVES FOR 2002 AND OUTLOOK FOR THE FUTURE ________________________________________29

FINANCIAL STATEMENTS _________________________________________________________________________32 AUDITOR'S REPORT____________________________________________________________________________32 APPOINTED ACTUARY'S REPORT _______________________________________________________________33 PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND CASH FLOW STATEMENT ___________________34

Zavarovalnica Maribor d.d., vpisana na Okro�nem sodi�ču v Mariboru dne 27. 11. 1990, �t. vloge 10376200, predsednik nadzornega sveta Zvonko Ivanu�ič, osnovni kapital 6.812.050.000,00 SIT, davčna �t. 44814631, matična �t. 5063400, �t. transakcijskega računa ostalih zavarovanj 04515-0000512086 in �ivljenjskih zavarovanj 20470-0011030597

Organ, pristojen za zavarovalni nadzor: Agencija za zavarovalni nadzor, Trg republike 3, 1502 Ljubljana

AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS _________________________________41 FOR THE YEAR 2001 ____________________________________________________________________________41

NOTES TO THE PROFIT AND LOSS ACCOUNT ____________________________________________________41 NOTES TO THE BALANCE SHEET _______________________________________________________________45

ORGANISATIONAL, OWNERSHIP AND MANAGEMENT STRUCTURE ___________________________________48 CORPORATE DATA: ____________________________________________________________________________48 ORGANISATIONAL STRUCTURE ________________________________________________________________50 ZM BUSINESS UNITS____________________________________________________________________________52

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ZAVAROVALNICA MARIBOR d.d.

MAIN LINES OF BUSINESS:

• sales of non-life insurance policies;

• sales of life insurance policies;

INSURANCE CLASSES OFFERED BY ZM:

• accident insurance including industrial injuries and occupational diseases;

• land motor vehicle insurance;

• railway rolling stock insurance;

• aircraft insurance;

• marine insurance;

• goods-in-transit insurance;

• fire and natural hazards insurance (fire, explosion, storm, natural forces other than storm, nuclear energy,

subsiding and sliding ground);

• other property insurance: covers damages caused by hail, frost or other causes (e.g. theft) that are not

covered within the scope of fire and natural hazards insurance;

• motor third-party liability insurance;

• aircraft liability insurance;

• marine liability insurance;

• general liability insurance;

• credit insurance;

• guarantee insurance;

• miscellaneous financial losses insurance (covers losses against occupational risks, insufficient income,

bad weather conditions, loss of benefit, loss of market value, loss of rent)

• travel assistance insurance;

• life assurance (the payments under the policy are payable in the event of death and endowment, annuity

insurance, additional accident insurance, voluntary pension and disability insurance, etc.)

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ZM � HARNESSING EXPERTISE TO ENSURE THE SECURITY OF ITS CUSTOMERS

Offering an exceptionally wide range of insurance products and being backed-up by rich and successful past experiences, ZM has proved to its customers that it is a successful, secure and trustworthy company. With our own knowledge and expertise ZM has developed innovative life and non-life insurance products, which can be reflected also on the insurance market. TO PROVIDE THE FEELING OF SECURITY AND PEACE OF MIND OF OUR CUSTOMERS IS THE ULTIMATE GOAL OF ZM The security offered to natural persons is called the web of security. People are putting energy all their lives into raising their living standard. When children are growing up, their parents invest money into their schooling and education, and when they finish their studies and get employed, they try to materialise those investments, which results in purchasing either a flat or a house, other goods and, for Slovenian citizens, a very important status symbol - a car.

But we often forget that it is not enough if we are the only ones who stand behind these investments. If you are like most people, you want the feeling of security and peace of mind you get from having your investments protected from destructive elements. Insurance is about protecting what matters to you most and helps you attain the feeling of security we all want.

The feeling of security offered by ZM to businesses enterprises is demonstrated by our wish for long-term co-operation. Many times it has been shown that we provided strong support to companies who had suffered from destructive elements like fires or similar perils. We have always made joint efforts to shorten the business interruption and restore the previous conditions for business operations as soon as possible.

The feeling of security offered by ZM to the community in which it operates is demonstrated through various forms of support to local events (donations, sponsorship) organised to raise the quality of life and the standard of living.

The feeling of security and peace of mind offered to ZM shareholders is based on setting realistic goals and taking proper decisions to achieve good business results. After the events that occurred last year on 11 September in New York the feeling of security has even gained in importance, since it is generally believed that those events will affect the insurance business world wide to the greatest extent and will exceed the losses caused to mankind so far by the greatest natural catastrophes.

HISTORICAL HIGHLIGHTS ♦ 1833 � the beginnings of insurance operations in our area date back to the first half of the nineteenth century

when the town of Maribor had its buildings insured against fire by an Austrian insurance institution.

♦ 1840 � Karl Denke and Karl Gerdes, the owners of a coffee substitute factory, started operating as insurance

agents selling hail insurance. They represented Mariborska vzajemna zavarovalnica (Maribor Mutual

Insurance Company).

♦ The period before the first world war - not less than seventeen insurance agencies opened their branch

offices in Maribor. They were representing insurance companies from Vienna, Trieste, Graz and London.

Most of them operated in Maribor also after the war, when even some more were added to the list.

♦ 1927 � in Maribor an insurance company 'Ljudska samopomoè' (People's Self-Aid) was established. Its

objective was to help relatives to cover the expenses for medical treatments or funeral services. Already in the

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first year of its existence the company had ten thousand insured persons, and less than six years after its

foundation their number had trebled.

♦ 1937 � the above first Maribor insurance company also started a mutual loan society 'Ljudska �tednja'.

Excellent business results led to the construction of a large building located opposite the railway station

(today's address is Partizanska c. 47), which suffered bombing during the second world war, and at the same

time even expanded its activities by opening its branch office in Ljubljana.

♦ 1939 � the second Maribor insurance company was 'Gospodarsko zavarovalna zadruga Drava', which built

its own business premises in the present Ulica talcev 1, and at the same time also opened its branch office in

Ljubljana.

♦ April 1941 � the property of the 'Ljudska samopomoè' insurance company was, due to German occupation,

transferred to the Südmark Insurance Comapny of Graz, Austria.

♦ 1945 � on the ruins of the ex-'Ljudska samopomoè' and other pre-war insurance agencies and branch offices,

two branch offices of 'Dr�avni zavarovalni zavod (DOZ)' (National Insurance Institution) were established:

DOZ - Maribor town, and DOZ - the surroundings of Maribor.

♦ 1962 � 'Skupna zavarovalnica za okraj Maribor' (a joint insurance company for the Maribor district) was

established due to the restructuring of 'Dr�avni zavarovalni zavod'; it was operating relatively independently

despite being under the supervision of 'Zavarovalna skupnost Slovenije' (Slovenian Insurance Community). It

was carrying out insurance operations in the territory of the then Maribor District.

♦ 1968 � the year of turbulent times all over the world. It was also the year that brought real independence for

the insurance company in Maribor, which was entered into the register under the title 'Zavarovalnica Maribor'

(Maribor Insurance Company). Soon it established its business units also in Celje, Ljubljana, Postojna, Piran

and Pula.

♦ The end of 1976 � in the seventies, there was a political pressure for mergers. This led to the integration of

the two sole Slovenian insurance companies - 'Zavarovalnica Sava' (Sava Insurance Company) and

'Zavarovalnica Maribor' (Maribor Insurance Company) into a joint insurance company called 'Zavarovalnica

Triglav' (Triglav Insurance Company). On 1 January 1997 a regional office Maribor of the Triglav Insurance

Company started to operate, but its operations were limited solely to the Podravje and Koro�ka regions.

♦ The end of 1990 � the winds of change started to blow in Slovenia and also in the biggest town on the Drava

river. The regional office Maribor with two bigger business units (in Slovenj Gradec and Ptuj) split from the

Triglav Insurance company and started to operate under its previous title Zavarovalnica Maribor (Maribor

Insurance Company)

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♦ 15. December 2000 � at the annual general meetings of the Maribor and Tilia Insurance Companies the

resolutions on merger were adopted. But on the grounds of the appeal filed by 17 minor shareholders of Tilia

the implementation of the entry of the integrated company into the register was suspended.

BUSINESS PERFORMANCE IN 2001

• Increase in balance sheet total by 22 percent.

• Increase in net technical provisions by 38 percent.

• Increase in gross premium written by 13.2 percent.

• Increase in property insurance gross premium written by 17.2 percent.

• Increase in investments of assets covering mathematical provisions and assets covering technical

provisions by 22.8 percent.

• An improved approach to paying out damages and preventing insurance fraud resulting in the fact that

ZM paid out 2.9 percent less damages than originally planned.

• Introduction of new insurance products - car insurance (Modri kasko), travel assistance insurance, life

insurance (Zlata jesen) and loss of car value insurance (IVV).

• Allocation of profits to the account of life insurance policyholders in the amount of SIT 580 million.

• Completion of construction works on new premises in Betnavska cesta in Maribor and purchasing of

new business premises in Ljubljana.

• Exceptionally good response to the presentation of ZM by the spectators of one of the greatest

Slovenian events � 'Festival Lent' (Maribor summer festival) in Maribor.

• The lowest overhead costs in respect to the collected gross premium written among all the Slovenian

insurance companies.

• Another re-approval of ISO 9001:1994 quality certificate.

• Two new members of the ZM Board of Management.

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1996 1997 1998 1999 2000 2001

BALANCE SHEET TOTAL

BALANCE SHEETTOTAL

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TECHNICAL PROVISIONS/GROSS INSURANCE PREMIUMS

Technical provisionsGross insurance premium

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1996 1997 1998 1999 2000 2001

ASSETS

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1996 1997 1998 1999 2000 2001

SOURCES OF ASSETS

DEFERRED ITEMS

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RESERV. FOREXPENSESTECHN. PROVISIONS

CAPITAL

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EMPLOYEES

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1996 1997 1998 1999 2000 2001

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A MESSAGE FROM THE PRESIDENT

2001 was a year of numerous important events for ZM. We have achieved a great deal. Our portfolio has been

refined, several new offices have been opened, new business premises have been purchased in Ljubljana to

which we will move together with our partners of Tilia Insurance Company after the premises are appropriately

furnished for the second biggest Slovenian insurance company. In 2001 we placed on the insurance market

numerous innovative insurance products: comprehensive motor insurance 'Modri kasko', travel assistance

insurance and personal insurance 'Zlata jesen'.

A lot of novelties are being developed also for the coming year, such as: the loss of car value insurance, motor

third-party liability insurance with incorporated assistance services, redesigned property insurance cover for

various customers, e.g. small businesses, life insurance with investment risks, etc. The pension companies 'Moja

nalo�ba' (My Investment') and 'Pokojninska dru�ba A' (the Pension Company A), co-founded by ZM, are

successfully selling pension insurance. The growth rate of sales figures of ZM property insurance products is the

highest in the insurance market. Also the processes of business operations inside the company are being

improved: we are switching from quantity to quality services.

But not all our endeavours came up to our expectations this year. For instance, we are still waiting for the court

resolution on the merger with Tilia. And the government still has not passed all the decisions concerning the act

on the privatisation of insurance companies. But on the other hand the privatisation processes of our owners are

well under way. The Pension and Disability Insurance Act and in line with this the pension insurance products

started to be amended, which will consequently lead to amendments of the pension insurance policies. We are

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adapting our operations in line with European directives, which means that the financial criteria are becoming

stricter and the demands and requirements of our customers higher.

In the year 2002 the privatisation of non-nominated social capital of ZM can be expected. Already in 2001 we

were expecting the amendments of the Insurance Act governing the required amount of equalisation reserve. The

amendments came into force in March 2002. ZM is satisfied with the proposed regulations, even more: we have

been expecting all the time that the government will amend the insurance legislation in such a sense that it will be

reasonable to form equalisation reserve only in those classes of insurance in which considerable fluctuations in

loss occurrence have been established. Otherwise, the insurance business would be faced with an absurd

situation; i.e. the ZM equalisation reserve in 2011 would total 127 percent of the amount of unearned premium, or

it would represent 56 percent of provisions for outstanding claims.

These figures show that, should the amendments not come into effect, ZM in 2011 would have to allocate SIT

10.6bn instead of SIT 5.9bn for equalisation reserve. The new legislation which makes the rules and methods of

calculating reservations much stricter is also the main reason why ZM posts a loss of SIT SIT 5.5 billion in the

2001 balance sheet, despite exceeding the balance sheet plan by almost 2 percent.

In 2001 there were many discussions about 'mega mergers' of insurance companies, but from the merging

process of ZM and Tilia insurance companies it is more than evident that pooling of interests or fusion of financial

institutions obviously will not be as simple as it is in the case of companies in other branches of the economy in

Slovenia. But in the times of globalisation of insurance operations and the opening up of the Slovenian market for

European insurance undertakings, one of the long-term strategic plans of ZM surely is pooling of interests within

the frame of the Slovenian market. And also outside it, of course. Despite the interruption of the merging process

between ZM and Tilia at the end of the year, two former members of the Tilia management board became

members of the ZM Management Board.

At the end of May 2002 also the increase of ZM capital was effected according to the strict regulations of the new

law. Thus after ten years of our existence we have come to a new turning point: instead of further expansion of

our activities in Slovenia, which was successfully implemented with the help of ZM employees and agents, we will

have to focus our attention on improving our insurance services with the aim of attracting even more reliable and

loyal customers.

It will no longer be important only to sell more insurance policies, but the care will have to be taken to sell such

insurance products that will result in making more profits, which will be beneficial for our customers (we will be

able to achieve a higher return on investment rate and allocate more profits to life insurance policyholders), for

our shareholders (dividends), for our employees (safe working places) and also for our community (donations,

charity activities). In 2002 the tenth jubilee Maribor summer festival 'Festival Lent' will take place. We hope that

for ZM it will be as successful as it was in 2001 when, according to an opinion poll, ZM ranked at the very top

among all the sponsors.

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Despite all our achievements (the collected total premium written in the amount of SIT 29.8 billion, exceeding the

plan by 1.8 percent, successful promotion of ZM in its environment, development of new insurance products) and

apparent status quo (unfinished privatisation process, merger�), last year was also the year of terrorist attacks

on the World Trade Center and the Pentagon. In the aftermath of September 11th the insurance industry world

wide will be faced with great impacts, in the short and long run. The wide-ranging consequences of the shocking

and tragic events of September 11th are already felt and will be felt to an even greater extent in the future also by

all Slovenian insurance undertakings. The losses caused by these attacks were originallyestimated at approx.

USD 15 to 20 billion, but they have already climbed up to USD 100 billion. For comparison: the 1993 terrorist car-

bomb explosion in the underground garage of the WTC in New York, with no apparent damages seen from the

outside, resulted in insurance claims in excess of half a billion dollars.

The economic impacts of the September 11 terrorist attack in the USA will be felt by ZM only indirectly, but

certainly significantly. Immediately after the attack ZM started to face numerous problems regarding facultative

underwriting, and for the next insurance year we will have to fight battles for concluding a new reinsurance

contract. Reinsurers have become more careful and indicate exclusions from the policies. In the long run, this

means that the reinsurance rates will climb for all classes of insurance and that the coverage for war and acts of

terrorism will be excluded from the policies. The reinsurance industry must generate higher amounts of premium

underwritten if it wants to be able to cover similar potentially catastrophic losses. Higher reinsurance rates mean

increased costs for insurance undertakings, and while this goes on, policyholders will have to purchase coverage

at higher prices and at the same time also operating expenses of insurance companies will have to be cut down.

Whatever was forecast at the end of the year 2000 for the year 2001 will reach its epilogue in the year 2002. I

firmly believe that, together with our dedicated staff and ZM brokers, we will be able to demonstrate our

knowledge, expertise, power. Therefore let's take further bold steps into the second decade of the existence of

the independent ZM Insurance Company.

Drago Cotar,

President of the Board of Management

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THE SUPERVISORY BOARD'S OPINION ON THE ANNUAL REPORT OF ZAVAROVALNICA MARIBOR d.d. AND CERTIFIED AUDITOR'S REPORT FOR THE FISCAL YEAR 2001 The Supervisory Board examined the Annual Report of Zavarovalnica Maribor d.d., which was submitted to it

together with the Certified Auditor's Report prepared by the auditing company REVIDIS d.o.o. from Ljubljana.

On the basis of the certified auditor's opinion, who - by taking into account the appointed actuary's opinion of the

company - states that the financial statements present fairly, in all material respects, the financial position of the

Company as at December 31, 2001 and the results of its operations and its cash flows in 2001, the Supervisory

Board hereby confirms the ZM Annual Report and gives a favourable opinion to the certified auditor's report of the

Company for 2001.

After examining the annual report, the Supervisory Board has established that in the 2001 fiscal year

Zavarovalnica Maribor d.d. performed well against its objectives and achieved the following:

! Balance sheet total in the amount of SIT 48.5 billion, which is a 17.3 percent increase over 2000,

! An increase in the amount of technical provisions to SIT 48.4 billion, which is a 38.5 percent increase over

2000,

! investments in the amount of SIT 42.6 billion, which is a 22.4 percent increase over the previous year,

! a 17 percent rise over previous year in the collected insurance premiums for property insurance operations,

while gross expenses for claims incurred increased by 8 percent,

! ZM ranks among those insurance companies who are achieving good ratios between operating expenses and

gross premium written, and favourable trends are noticed also in the achieved gross premium written per

employee.

The loss posted last year and consequent increase of capital in order to meet the requirements for capital

adequacy was and continues to be the pivotal point on which the members of the Supervisory Board focus their

attention, apart from monitoring the implementation of the overall business plan for 2002 and the long-term plan

for 2002-2011.

The Supervisory Board agrees also with the proposal of the Board of Management to partly cover the net loss

posted in 2001 by using all the available reserves of past years (SIT 46,986,713.69) and non-allocated profit of

the year 2000 (SIT 1,291,097.87).

Maribor, 9 July 2002 Zvonko Ivanu�ič,

Chairman of the Supervisory Board

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BUSINESS REPORT

MISSION To offer economic security to our customers in case of accidents and damages, to enrich their assets so as to

ensure security and safety in their old age.

VISION To represent the second firm and strong insurance pillar in Slovenia.

STRATEGIC AIMS UP TO THE YEAR 2006: • To expand ZM insurance operations to all the regions of Slovenia;

• To strengthen insurance operations in the Dolenjsko region;

• Transformation of ZM portfolio from big business property insurance policyholders to policies oriented more

towards the individual holder,

• Expanding the range and forms of life-insurance products;

• Pooling of interests with other insurance companies in the insurance market of Slovenia and expanding

activities to the markets of the states of ex-Yugoslavia.

MARKET AND MARKETING ANALYSIS Economic trends 1995�2001

IN SLOVENIA 1995 1996 1997 1998 1999 2000 2001

GDP per capita (in USD) 9,431 9,481 9,163 9,847 10,078 9,132 9,458Average annual rate of inflation 12.6 9.7 9.1 7.9 6.1 8.9 8.4Size of population 1,990,266 1,986,989 1,984,923 1,987,334 1,987,755 1,990,272 1,992,969Number of employed - - - 745,169 758,473 771,383 779,041Number of unemployed 126,759 124,470 128,572 126,625 118,950 104,304 101,856Number of retired 460,513 455,133 449,794 456,660 476,449 482,240 487,947 Exchange rates of USD and DEM

• 31. 12. 2000 � 1 USD was worth SIT 227.38; as per 31. 12. 2001 1 USD was worth SIT 250.95, which

represents an increase of almost 10.4 percent;

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• 31. 12. 2001 � 1 DEM was worth SIT 108.14; as per 31. 12. 2001 1 DEM was worth SIT 113.21 which

means and increase of 4.7 percent.

1995 1996 1997 1998 1999 2000 2001Premium in EUR per capita in Slovenia

305 335 346 411 437 458 507

Premium in EU in million EUR 429,532 455,618 496,516 543,700 558,515 660,573 Premium growth over previous year in EU

106.1 % 109.0 % 109.5 % 102.7 % 118.3 %

Premium in Slovenia in million EUR 610 667 688 815 869 912 1,014Premium growth over previous year in Slovenia

109.3 % 103.1 % 118.5 % 106.6% 104.9 % 111.2 %

Premium as % of GDP in EU 7.1 % 7.2 % 7.3 % 7.6 % 7.4 % 8.2 % Premium as % of GDP in Slovenia 4.9 % 4.7 % 4.5 % 4.7 % 4.7 % 4.8 % Life- insurance premium (LIP) in million EUR in Slovenia

110 90 121 139 157 177 199

LIP as % of total premium amount in Slovenia

18.3 % 13.5 % 17.6 % 17.1 % 18.1% 19.4 % 19.6 %

Annual inflation rate in Slovenia 12.6 % 9.7 % 9.1 % 7.9 % 6.1 % 8.9 % 8.5 %Ratio 1 EUR/SIT as per 31. 12. 161.4538 175.4113 186.7334 188.9271 197.3215 211.5062 222.0Economic growth in Slovenia 4.0

ZM premium in million EUR � in total 109 111 122 122 124 135ZM premium in million EUR - life insurance

32 36 38 38 41 42

ZM premium in million EUR � non-life insurance

77 75 84 84 83 93

ZM market share � in total 16.37 % 16.20 % 14.97 % 14.03 % 13.63 % 13.32 %ZM market share � life insurance 35.43 % 30.11 % 27.01 % 24.34 % 23.19 % 21.00 %ZM market share � non-life insurance

12.59 % 13.21 % 12.48 % 11.77 % 11.34 % 11.44 %

In the period from 1991 to 1999 GDP increased by USD 4,000; the decrease in the year 2000 was mainly due to

the increase in the exchange rate of USD. In the year 2001, GDP increased again by more than USD 300, which

is still lower than GDP in 1996. After levelling of the inflation rate in the years of 1999 and 1998, it again went up

in the year 2000 and then it fell only by 0.5 percent in 2001. There was a slight increase also in the size of the

population and of the working population, as well as in the number of pensioners, which has been the trend of

recent years, but the number of unemployed decreased. All these positive trends definitely also contributed to the

growth of the insurance market. This market, however, has a specific characteristic, which is its great variety with

regard to the geographic position. In the regions where ZM has the greatest market share (Podravje and Koro�ka)

the basis for income tax for the year 1999 was lower by 50 percent than in Ljubljana. Consequently, the

purchasing power was lower, which also affected the amount of collected premium.

According to the data taken from the Statistical Insurance Bulletin of the Slovenian Insurance Association for the

year 2001 in comparison with the previous three years, the ZM market share shows the following trends:

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Including health

insurance Without health insurance

Year 1999 ZM market share 14.03 % 18.97 % ZM market share � non-life insurance 11.77 % 17.24 % Year 2000 ZM market share 13.64 % 18.39 % ZM market share � non-life insurance 11.34 % 16.69 % Year 2001 ZM market share 13.21 % 17.78 % ZM market share � non-life insurance 11.42 % 16.80 %

It is evident from the above table that, without taking into consideration health insurance, which ZM is not selling,

the ZM market share of property insurance increased by 0.11 percentage point. By taking into consideration also

health insurance and additional pensions insurance, the ZM total market share, however, decreased, mainly due

to the rise in price of optional health insurance coverage and the offer of new pension insurance products of some

insurance companies, which show the collected premium for these insurance products under the life-insurance

operations.

SALES Premiums

The collected premium for ZM property insurance classes increased by 17.2 percent and the plan was exceeded

by 3.7 percent. This is due to the achieved 28 percent growth in insurance premium for the third-party liability

motor insurance, which means 10 percent above the planned growth rate, and also due to very successful sales

of the newly launched insurance product 'Individual Property Insurance'. This product generated an increase in

collected premium over the prior year amounting to SIT 330 million. With life insurance operations, however, the

plan was realised only by 97.7 percent.

The amount of collected premium in the year 2001 shows a 13.1 percent growth; this means that the planned

growth rate was exceeded by 1.8 percent.

Claims

Expenses for claims incurred increased by 10 percent last year and thus exceeded the plan by 0.7 percent. The

property insurance claims exceeded the claims paid in the previous year by 16.1 percent, but despite this fact the

plan was realised only by 82 percent. In total claims incurred increased by 11.1 percent, but the plan was realised

only by 97.1 percent.

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Expenses

The operating expenses exceeded the plan by 9 percent, so that the portion of expenses in the gross premium

was slightly higher than in the previous year. This is due to the higher amounts of commissions for concluded

insurance contracts, spreading of our activities to all the regions of Slovenia and opening of new business

premises of individual branch offices.

Business units in Slovenia

The branch offices that deserve praise for exceeding the amount of the planned collected premium amount are

the following:

− Ljubljana Branch Office; exceeded the plan by 22.1 percent ;

− Ljutomer Branch office; exceeded the plan by 6 percent ;

− Maribor Branch Office; exceeded the plan by 5.6 percent ;

− Slovenj Gradec Branch Office; exceeded the plan by 4.7 percent .

CLASSES OF INSURANCE REPRESENTING MORE THAN 95 PERCENT OF ZM PORTFOLIO The following six classes of insurance represent 95 percent of the total ZM portfolio:

• Accident insurance;

• Comprehensive motor insurance;

• Fire and natural hazards insurance;

• Other property insurance;

• Motor T.P.L. insurance;

• Life insurance.

Accident insurance In the year 2001 this line of ZM insurance business generated more than SIT 2.7 billion of collected premium,

and represents 9.3 percent of the ZM portfolio. A more than a 13.3 percent increase was achieved over the plan

for the year 2000, which means that the plan was exceeded by 3.9 percent. ZM paid 9.3 percent more in accident

insurance claims than in the previous year and the plan was realised only by 64.1 percent.

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Comprehensive motor insurance This insurance class, for which we launched a novelty in the middle of last year, i.e. free assistance in Slovenia

and abroad to all the insured who take out full comprehensive insurance policies, represents 15.3 percent of the

ZM portfolio and ranks third. In 2001 a 10.2 percent growth of insurance premium was achieved over the previous

year, and also a 12.4 percent increase in claims paid, which is due to damages done by bad weather conditions.

Fire and natural hazards insurance In the year 2001 a 15 percent growth in collected premium was achieved over the year 2000, which means that

the plan was exceeded by 3.9 percent, despite the fact that the claims settled amounted to SIT 780 million, which

represents a 17.9 increase over the previous year. With 6.5 percent of the overall ZM portfolio this insurance

ranks sixth.

Other property insurance With 8.7 percent of the collected premium this insurance class ranks fifth. In the year 2001 the amount of almost

SIT 2.6 billion of premium was collected, which means a 15.6 percent growth over the year 2000 and the plan was

exceeded by 2.2 percent. The amount of settled claims totalled slightly more than 1.7 billion tolars, which

represents a 17.9 percent increase over the previous year.

Motor T.P.L. insurance Despite all the rises in prices of our insurance products with which our customers were faced in the year 2001, 10

percent more premium was collected than planned, and/or 28 percent more than in the previous year. Due to this

fact this line of ZM insurance business ranks firmly in the second place. The amount of settled claims was higher

by 8.8. percent, but the plan was realised only by 92.4 percent.

Life insurance Increased sales activities and the introduction of new insurance products in the year 2001 resulted in 13,000 new

life insurance policies, which represents a 12 percent growth over the previous year. A 5 percent higher collected

premium amount was achieved; this represents 98 percent of the planned premium amount, which is due to the

claims settled due to endowment, redemption, and due to increase of capital. In the year 2001, life insurance

operations fell to 30.5 percent of the overall ZM portfolio.

16


MARKETING AND PUBLIC RELATIONS ACTIVITIES For its sales promotion activities, ZM uses the most recent findings of market and public relations research. In

2001 we carried out the following activities:

• A national public opinion poll survey on insurance business with a sample of 1700 people;

• Internal PR;

• Market analysis;

The data obtained were used in various communication tools (direct mail, electronic communication, introduction

of intranet, maintaining web page, etc.).

In the year 2001, ZM continued with activities to establish two-way planned proactive relations with the media,

customers, key customers and financial, local and government institutions.

ZM INVESTMENT POLICY AND BREAKDOWN OF INVESTMENTS AS AT 31 DECEMBER 2001

Life Insurance Operations

In the year 2001 more than a third of all assets of the life insurance operations portfolio was invested in

government bonds. A fifth of this amount was invested in government bonds issued abroad. In contrast to

previous years, the banks offered us this year long-term deposits and suitably higher interest rates, which suit us

better, therefore our share of all deposits in our portfolio again almost reached the maximum prescribed by law.

In non-government debt securities and bonds, ZM invested 30 percent of assets, out of which on the basis of a

special permission given to ZM by the Insurance Supervision Agency over a sixth in the bonds issued by foreign

legal entities.

In comparison to the previous year, the proportion of investments in equity securities is not significantly different.

Less than 7 percent of all available assets were invested in equity securities, out of which the majority, slightly

below 90 percent were invested in the shares quoted on the Stock Exchange.

17


The proportional share of investments made before 13 November 1994, which in the year 2000 represented only

0.8 percent of ZM portfolio, is not recorded as a single category. The shares from this item were allocated to other

shares of the portfolio, whereas loans which were granted before the amendments of the insurance legislation

and which are therefore not collaterised by a mortgage, are recorded separately. Their share of 0.6 percent in the

ZM investment portfolio represents the lowest and oldest investment category.

BREAKDOWN OF INVESTMENTS AS AT 31 DECEMBER 2001 Life insurance operations

0

5

10

15

20

25

30

35

Government securitiesBank depositsDebt securitiesEquity securitiesOther loans

Allocation of profits to the account of life insurance policyholders

The efficiency of life insurance operations in 2001 and an adequate return on investment enabled ZM to allocate

profits amounting to 580 million tolars to the account of life insurance policyholders, which represents an increase

of almost 35 percent over the year 2000.

18


Non-life Insurance Operations

The largest portion of the investment portfolio, i.e. a little less than 30 percent, was invested in government bonds,

and the portion of investments in non-government debt securities and bonds was increased by a little less than 16

percent.

In comparison to the year 2000, changes were made in the portions of investments in deposits, shares, real

estate items and loans, which are to a large extent a matter of accounting principles. The portion of investments in

real estate items is slightly lower than in the previous year and amounts to more than 11 percent. The reason for

this lies in the transfer of contracts on the lease of real estate items to the contracts on loans.

The investments made before 13 November 1994 are not recorded as a single category anymore. More than a

half of these investments are the loans which in 2000, together with contracts on the lease of immovable property,

were linked into the category of non-collateral credits. These, the so-called other loans represent 7 percent of the

whole investment portfolio. The rest of investments, i.e. the investments made before the amended insurance

legislation in 1994, are represented by shares not quoted on the Stock Exchange, which were relocated to other

shares.

The share of investments in deposits and other investments in banks was decreased and represents more than

21 percent of all investments. The decrease is partly due to the increased proportion of investments in bonds, and

partly due to relocation of shares of banks to other shares of the investment portfolio. The proportion of all

investments in shares in the portfolio thus increased and now represents 10 percent of all investments.

19


BREAKDOWN OF INVESTMENTS AS AT 31 DECEMBER 2001 Non-life insurance operations

0

5

10

15

20

25

30

Government securitiesBank depositsDebt securitiesReal estate itemsEquity securitiesOther loansMortgage loans

DEVELOPMENT OF NEW INSURANCE PRODUCTS AND QUALITY MANAGEMENT Development of New Insurance Products

In the year 2001, ZM placed on the market a new motor insurance product 'Modri kasko' and two life insurance

products: travel insurance with assistance services abroad, and 'Zlata jesen' .

'Modri kasko' offers many improvements, amongst the most important ones being: assistance services, i.e.

providing help in alleviating problems of a person in trouble on the road at home and abroad (over the whole of

Europe, in ex-Yugoslav republics and other Balkan states, without additional payment); it introduced premium

classes, which facilitate better and easier keeping of the acquired bonuses by the insured, and offer transparent

and clear terms and conditions.

The 'Travel Insurance with Assistance Services Abroad' insurance product is designed for all those potential

customers who travel abroad on business or for holidays. The customers can make a choice to take out an

insurance policy for a one-day journey only, or the period of cover can last for a maximum of twelve months. The

insurance contract may be concluded by an individual, a family or a larger group. The subject of the insurance

contract is the covering of expenses incurred due to sudden and unforeseen unpleasant events that occur during

travelling (ranging from the loss of registered luggage to covering legal expenses).

20


The new life insurance product 'Zlata jesen' was placed on the market in October 2001. By its nature and

characteristics it is oriented to the late middle generation and pensioners, and as such it supplements the offer of

life insurance products. According to the data of the Pension and Disability Insurance Institute of Slovenia, there

are 380,000 retired persons in Slovenia at present, and it is estimated that this number will increase in the coming

years. By offering the 'Zlata jesen' insurance product ZM wishes to give a chance to the existing customers whose

life insurance policy covers have expired, but who - due to their age - they cannot include new life insurance

contracts. Since the terms and conditions of the new product are attractive and simple, ZM also hopes to extend

the range of new customers.

The transformation of the comprehensive household insurance product was continued and the preparation of

special motor insurance products was started, since the new insurance legislation does not allow re-allocation of

profits between individual insurance classes. In future it will therefore be necessary for the calculation of

premiums for motor insurance to take into account criteria, such as: age groups, motor vehicle safety, age of a

motor vehicle, etc.

Information Technology

Further development of the ZM information technology service was fostered also in 2001. ZM had already been

partly equipped with the development environment for Lotus Notes; all the year round also data bases and data

processing procedures for the integration of Tilia Insurance company were performed. Intensive efforts were

made also to develop the information base for on-line B2B trading, for the time being only for the Motor T.P.L.

Insurance policies and Comprehensive Motor Insurance policies. As the first of all Slovenian insurance

undertakings, ZM will in 2002 offer the possibility for submitting claims arising out of household insurance policies

over the Internet. A great success is certainly the introduction of the Eurotax system and electronic processing of

submitted claims between ZM and motor-vehicle repair shops. At present a 'Quick check' system is being

introduced, which will further simplify the submission of motor insurance claims for the claimants as well as for the

motor-vehicle repair shops and ZM.

21


Quality Management System

With regard to the quality management system, the year 2001 was a demanding and active one. Through regular

audits we proved that the ISO 9001:1994 introduced for our business operations is being adequately maintained,

developed and continually improved.

Precisely because of ZM's focus on the processes within our organisation, we determined those processes which

assure that our services will meet the requirements of ZM customers as well as the regulation requirements, and

for certain processes also the documentation was adopted accordingly. It is important to know the individual

processes accurately, to implement them properly and at the same time to supervise their efficiency.

PR SURVEYS

ZM carried out a national public opinion poll survey on insurance business with a sample of 1700 people from all

the regions of Slovenia, by means of which we obtained important data for planning marketing and

communication activities. In comparison to other insurance companies,

ZM received above average appraisal of all the surveyed criteria (kindness to customers, professional expertise of

ZM employees, personal approach, adapting to meeting the customers' requirements, offer of insurance products

in an intelligible and transparent manner); the only exception is the assessment of claims settlement, where ZM

ranks below the average by 0.01 percent. This is one of the reasons why ZM in the year 2002 intends to pay

special attention to the improvement of this service. One of the ways towards this will be the possibility offered of

lodging the claims over the Internet, and the other one will be the introduction of the Auto-calc 'Quick check'

Eurotax system.

We carried out also an internal PR survey via telephone by putting questions to ZM employees on their opinion

about the newly introduced insurance products. We measured their reaction to the introduced 'Modri kasko'

comprehensive motor insurance product and to two new life insurance products - tourist assistance insurance and

'Zlata jesen'.

The data obtained by our surveys will be the guidelines for us also in the future and will form a basis for the

design and improvement of the motor insurance products in order to better meet all the requirements of our

customers. At the same time, the data will be used also for the design of new products that are sold by foreign

insurance companies. One of these that has successfully been placed on our market is AXA - a 24-hour

assistance service on the roads at home and abroad. For the coming year we are also planning to include AXA

assistance services in the motor third-party liability insurance product.

22


PERSONNEL In 2001 the number of ZM employees increased by 6.84 percent, and furthermore the trend to strengthen the

number of employees of individual branches was still preserved. The fact that at last the number of full-time

agents went up by 3.87 percent is especially encouraging, since in the past few years it has remained stagnant

despite our efforts to increase it. In the last three years also the number of senior-level and management staff

went up, which is due to the reorganisation of the company and strengthening the expertise of support services.

GROWTH INDEX OF THE NUMBER OF EMPLOYEES in the period of 1996 to 2001

0 200 400 600 800

1996

1997

1998

1999

2000

2001

ManagementInsurance agentsIn-huse employesTotal

Staff structure according to years and branch offices Branch

offices/years

1990 1997 1998 1999 2000 2001 Growth index 2000

Growth index 2001

MARIBOR 302 384 386 408 405 426 99.26 105.18 OTHERS 66 155 183 198 209 230 105.56 110.04

As already pointed out, the number of employees was increasing more in branch offices than in the head office in

Maribor. We hired more employees mainly for selling the insurance products and for claims settlement. In 2001,

the number of employees in branch offices increased by 10 percent.

Similarly to all the previous years, the number of the workforce fluctuated due to retirements, lapse of time, and in

rare cases also due to default.

23


Training In the year 2001 the number of employees with lower than secondary school educational levels (levels II - IV) was

further decreased, namely by 10 and 5 percent, while the number of those with secondary school educational

level (level V) went up by 4 percent, with higher professional level (level VI) by 13 percent, and the number of

employees with university level was increased again by 20 percent (from 90 - 108), and the post-graduate

'Master's' title was awarded to two employees.

Within the framework of part-time studies, out of 44 employees with whom we concluded contracts on further

education, 5 employees finished their studies, out of whom 3 reached university level (level VII) and 2 higher

professional level (level VI). Four employees, however, dropped out of further study. For postgraduate study

programmes 15 contracts were concluded, and two employees finished their studies. In the year 2001 we

concluded also 11 contracts on scholarships offered to employees for enrolling on undergraduate university level

study programmes. Out of these one scholarship grant was suspended, two contracts ceased to be valid, and one

employee finished his graduation thesis.

STAFF STRUCTURE ACCORDING TO THE LEVEL OF EDUCATION for the period 1998 - 2001

0

100

200

300

400

II V VII1998

2001

1998199920002001

24


Level of education in 2001 (plan and achievements)

In the year 2001, ZM employees attended seminars from the fields of insurance business, finance, accountancy

and rules and regulations governing insurance business, specific actuarial and information technology

knowledge.

By attending various courses, the employees were acquiring new and upgrading their existing language and

computer skills.

The professional knowledge from the field of insurance business and individual insurance class is being

continually revised at various specialised seminars and thematic workshops organised within the in-house training

programmes; The same goes for soft knowledge, especially for improving the sales activities and managerial and

leadership skills.

The innovation of the past year is education and training for passing the exam on professional expertise, as

prescribed by the law for performing insurance agency services.

By maintaining and improving the existing professional expertise of ZM employees, we are ready to face the times

of continuous changes in the insurance industry.

The sum total allocated for educational purposes amounted to 0.25 percent of expenses in gross premium written

and 0.97 percent of total expenses. Out of the total operating expenses incurred, the expenses for education and

training activities amounted to 2.24 percent. In the year 2001, 81.35 million tolars were allocated for educational

purposes, which is an almost 40 percent increase over the year 2000 and represents an amount of 124,000 tolars

per employee.

Length of service in ZM The average length of service of ZM employees is 7 years; the highest is in the Accounting Sector (14 years), in

the Maribor Branch Office (13 years) and in the Non-life Insurance Technology sector (12 years).

The average salary of an insurance agent amounts to SIT 395,681.88, of other in-house employees it amounts to

SIT 303,427.37, and the average salary of those employed on the basis of individual agreements is SIT

1,082,624.37.

25


Labour costs vs. operating expenses

In the year 2001, total labour costs (salaries, holiday allowance, compensations for loss of earnings, employer's

contributions, etc.) amounted to SIT 3,627,048,635.80, which represents a 15 percent increase over the previous

year. Expenses for gross salaries for the year 2001 amounted to SIT 2,651,689,679.00, and labour costs per

worker per month, on average, amounted to SIT 460,753.13 which represents only an 8 percent increase over the

previous year.

Age of ZM employees

The average age of ZM employees is 37 years. In individual organisational units the age ranges from 31 to 49

years. In the age group below 20 years there are 2 ZM employees, while in the age group above 60 we have

altogether 9 employees.

Satisfaction of employees

ZM PR service carried out a survey addressing ZM agents with the aim of obtaining information, suggestions,

questions, opinions and critical comments from the field of work they perform.

Among others, the opinion poll asked questions on the most positive sides of their work activities and the things

they miss most while performing agency services. At the end, the agents were asked also to give suggestions,

opinions, and critical as well as positive remarks.

The agents assessed most positively their work with customers (possibility of personal relationship, trust,

customers' satisfaction) and independence and the great variety of their agency services.

And which are the things they miss most?

Above all, better co-operation with in-house employees, the possibility of frank discussions with staff of higher

ranks and better co-operation with ZM experts. They would also like more sales promotion activities which would

lead to better recognition of ZM in individual regions of Slovenia.

26


CUSTOMERS' SATISFACTION The customers' requirements and expectations are higher year by year. They expect quality and a competitive

offer of insurance products, as much as possible tailored according to their specific demands.

Our insured persons (customers) are divided into three groups:

- Individual and/or natural persons;

- small business enterprises and/or craftsmen;

- bigger companies.

For each targeted group we have designed insurance products according to their requirements and expectations

and developed also the sales strategies and approaches for servicing these insurance products in a proper

manner.

Meeting the requirements and expectations of our customers is our basic guideline for planning the range of our

insurance services. With the aim of gathering as many possible viewpoints, suggestions and also critical remarks

from the environment in which ZM conducts its insurance business operations, we carried out opinion poll surveys

via the questionnaires, which helped us to gain an insight into the image of ZM in its environment. Filling in these

questionnaires at the ZM display has become a tradition of the Maribor summer festival 'Festival Lent', for which

ZM provides financial support every year

The results of these surveys have successfully been used for the introduction of new insurance products, e.g.

'Modri kasko' comprehensive motor insurance and comprehensive household insurance, and our promotion

activities in the form of a prize-winning competition have been supported in all the Slovenian printed media.

27


COMMUNITY PROJECTS

Some sponsoring projects in 2001

ZM pays special attention to the society and environment in which it conducts its business operations and strives

to take on responsibility for the people and environment in which we live. Through financing sports, cultural, health

care and artistic events, ZM is actively involved in wider social life and focused on achieving other important life

goals. Since insurance penetrates each and every pore of our social life, ZM cannot ignore the events going on

around it. Our basic mission, i.e. helping people in case of damages and alleviating the burden of loss, is thus

spread also to other areas of our operations. We provide substantial financial means for activities preventing

traffic accidents, fires and health hazards. We try to raise awareness of the necessity of cultural, sports and

physical activities, and substantial funds are donated also to humanitarian work, education and the development

of science.

In the sphere of the arts we try to provide financial support for innovative artists, artists who are widening new

horizons of our perception and comprehension of the modern world. Scholarships are offered by ZM for the study

abroad, financial support is provided for individual performers or groups (e.g. Amnesty Trio International) and

sponsorships are taken over by ZM for various events (exhibitions in the Arts Gallery, Summer Puppet Quayside

Display, 'Waldorf' educational institution, etc.) We try to financially support especially young people, since they

need this kind of help most if they wish to continue along the road they have taken.

In the year 2001 we provided financial support for the following events:

• the Maribor summer festival "Festival Lent";

• the "Bor�tnikovo sreèanje" festival of theatre performances;

• Musical September;

• "Waldorf" educational institution;

• the "Golden Fox Trophy" world ski cup competition for women

• the Maribor football team "NK-Maribor-Pivovarna La�ko"

• Slovenian Ice Hockey Association - world championship, Group B

• Secondary Schools Basketball League (�KL) etc. That there is no lack of sporting spirit among the employees of ZM was proved by the organisation of 75-km

mountain run across Pohorje (with the start in Slovenj Gradec and finish in Maribor).

The initiators of the ZM Mountain Running Trophy were the runners of the ZM Running Club, who are true sports fans and

spread their enthusiasm for sport also to others. This is why the mountain run was organised on the first Saturday in June, on

the day on which a sporting weekend is traditionally organised in Maribor. In this way we wanted to bring together people

from both sides of the massive range of mountain slopes of Pohorje. The event was attended by such a high number of

sporting enthusiasts that we decided to organise another ZM Mounting Running Trophy in the year 2002.

28


OBJECTIVES FOR 2002 AND OUTLOOK FOR THE FUTURE Basic directions The 10-year business plan of Zavarovalnica Maribor d.d. was prepared on the basis of the following assumptions:

♦ after Slovenia becomes a full member of the EU, the annual inflation rate also in our country will fall to the

European level (3 percent);

♦ the share of insurance premium in GDP will draw near the European average (8 percent);

♦ Slovenia's economic growth will achieve an increase of 5 percent;

Other expectations

The guidelines for the preparation of the ZM business plan for the period 2002-2011 are made separately for non-

life and for life insurance operations. Apart from the above stated basic assumptions (inflation rate, economic

growth rate and exchange rate of EUR), for both lines of insurance business the following other projections were

also taken into consideration for the 2002-2011 business plan:

• that ZM formulated the technical provisions prescribed by the new legislation already in 2001, and that

further increase of these reserves in the projection 2002-2011 is due to the rise in premium and claims;

• that along with the increased range of business, the operating expenses will be relatively reduced and in

the year 2011 they will represent 21 percent of gross premium written;

• that the reinsurance ratios in the future will not be significantly changed;

• that in the planned ten-year period the income rates from investments will be reduced in compliance with

the trends in the European Union;

• that the rise in claims will be lower than the rise in premiums;

• that the number of new insurance companies (domestic as well as foreign) on the Slovenian market will

not increase;

• that no foreign insurance company will enter the Slovenian market through brokers, which can represent a

threat to the ZM business property insurance sector;

• that the reinsurance quotations (especially in the case of business property insurance) will be competitive

(fast and with favourable premiums);

• that the Slovenian companies will not be taking insurance contracts abroad, directly from foreign brokers,

nor from Slovenian insurance and reinsurance companies;

• that there will not be substantial changes in the ownership structure of Slovenian companies - the foreign

companies penetrating the Slovenian market through mergers and take-overs of Slovenian companies

insist on taking out insurance contracts with the European insurance companies with which they already

co-operate;

29


• that ZM will follow the trends on the market regarding the co-operation with insurance agencies, which

means that ZM will follow possible increases in commission rates offered by its competitors.

• that the insurance agents who work on contract will not substantially change their conditions on co-

operation as a consequence of the new Insurance Act;

• that by offering new interesting life insurance products, ZM will try to retain a part of the existing ZM life

insurance policyholders whose insurance contracts will expire.

Non-life insurance operations

Each insurance class of non-life insurance operations will have to achieve a positive result for the year, as

prescribed by the new Insurance Act. Exceptions to this rule will be possible only during the transitional period or

for a short-time interval. At present, the results are less favourable for agricultural, accident, general liability,

credit and motor insurance classes. They will have to be improved by:

• careful selection of risks and customers: the insurance contracts with the customers who have been causing

negative results for several consecutive years must be avoided.

• change of terms and conditions of insurance contracts: our goal is to prevent losses which are systematic and

already expected. For these, new exclusions and policy franchises can be introduced, thus reducing the

number of insurance cases and also the administrative costs. Through policy deductibles transferring a part of

the expenses for losses to the customers, greater caution and taking the necessary safety measures by our

customers to avoid damages could be achieved.

• An improved approach to claims settlement: it will be necessary to settle the claims timely and carefully in

order to avoid too many law suits (the main goal being to reduce the expenses for court proceedings and

payment of default interest).

30


Life insurance operations

In the planned long-term period the following activities in the three key areas will be carried out: On average, the

customers in Europe take out 2.3 life insurance policies, whereas in Slovenia only 0.3 life insurance polices are

taken out. The plan therefore is obvious: to increasethe sales of life insurance policies. The sales activities

are in most cases performed through insurance agents visiting the customers at their homes. Our goal therefore

is to hire more insurance agents and offer them on-the-job training to equip them with the necessary knowledge

and skills for financial consultancy.

We aim to increase the sales of life insurance policies, which at present are performed through our existing

insurance agents (selling all insurance products, not specialised for life insurance policies only) and through two

insurance agencies, partly owned by ZM and focused mainly on selling life insurance. We intend to:

• offer life insurance policies at bank windows;

• establish one more ZM insurance agency in 2002;

• in the year 2003 establish a network of financial consultants who will co-operate with ZM

• introduce the sales of life insurance polices over the Internet

• sell life insurance policies in collaboration with Pension Insurance Companies.

31


FINANCIAL STATEMENTS AUDITOR'S REPORT

ZAVAROVALNICA MARIBOR d.d. FINANCIAL PERFORMANCE IN 2001

AUDITOR'S REPORT

TO THE SHAREHOLDERS OF ZAVAROVALNICA MARIBOR d.d.

We have audited the balance sheet of Zavarovalnica Maribor d.d. as at 31 December 2001 and the accompanying financial statements, IZKAZ SPREMEMB KAPITALA and the funds flow statement for the year then ended. We have read also the annual report of the ZM management for the audited business period. These financial statements are the responsibility of the management of the company. Our responsibility is to express our opinion on these financial statements based on our audits. We have conducted our audit in accordance with fundamental auditing principles and the International Auditing Standards. Those principles and standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The audit included examining evidence supporting the amounts and disclosures. The audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the disclosures in the financial statements. In our opinion the financial statements referred to above give a true and fair view of the financial position of the company Zavarovalnica Maribor d.d. as at 31 December 2001, the results of its operations and its funds flow for the year then ended, in accordance with the Slovenian Accounting standards. The annual report of the management of the company in all significant respects complies with the audited accounting statements. Without qualifying our opinion we would like to draw your attention to Note 24 to the financial statements entitled �Events after the balance sheet date� on page 41 of the report. Ljubljana, 28 May 2001 REVIDIS Revizijska dru�ba d.o.o.

Ignac DOLEN�EK Certified Auditor

32


APPOINTED ACTUARY'S REPORT

APPOINTED ACTUARY�S OPINION ON THE ANNUAL REPORT OF ZAVAROVALNICA MARIBOR d.d.

Pursuant to the Insurance Act (Official Gazette of the Republic of Slovenia No.: 13/2000 and 91/2000), the relevant secondary legislation, Slovenian Accounting Standards (SRS) and in accordance with accepted actuarial practice, I have examined the technical provisions set aside by Zavarovalnica Maribor d.d. as per 31.12.2001. According to these standards and practices I was required to plan and perform my tasks in order to obtain reasonable assurance that the ZM financial statements are free of material mis-statements. The setting aside of technical provisions in accordance with the regulations is the responsibility of the Board of Management of the company, the responsibility of the appointed actuary is to express his opinion about them. My responsibility was to establish whether the company organises operations and keeps appropriate business records so as to enable, at any point in time, supervision of the obligations of the company arising from the long-term and property insurance contracts. My responsibility was also to express an opinion as to whether the technical provisions are calculated and set aside so as to ensure the long-term meeting of all the company's obligations arising from insurance contracts, as well as express an opinion on the adequacy of investments of assets covering technical provisions and assets covering mathematical provisions. For the contracts concluded during the fiscal year for the newly introduced insurance products it was my responsibility to confirm whether the premiums charged and the anticipated revenues from insurance premiums from these contracts will ensure, according to rational actuarial anticipations, by taking into consideration also other sources of financial assets of the company, the meeting of obligations arising from these contracts. My responsibility was also to establish the amount of minimum capital required for meeting the requirements of long-term and property insurance contracts as well as to examine the company's capital adequacy. I believe that my audit provides a reasonable basis for my opinion. Zavarovalnica Maribor d.d. keeps books of account, records and documentation so as to enable supervision of long-term meeting of its policy liabilities from long-term and property insurance operations. The technical provisions are calculated and set aside in compliance with the regulations and in a sufficient amount so as to ensure the long-term meeting of all the obligations arising from insurance contracts. Premiums and the premium revenues from contracts of some insurance classes concluded during the year do not ensure meeting the liabilities arising from these contracts. Therefore, for the contracts of these insurance classes, Zavarovalnica Maribor had to ensure additional provisions for claims outstanding. On the date of the audit Zavarovalnica Maribor d.d. has a deficit in the investments of assets covering technical provisions for property insurance operations in the amount of SIT 9,648,948,365, i.e. EUR 43,679,649. On 31.12.2001 Zavarovalnica Maribor d.d. did not meet the requirements for the capital adequacy. In my opinion, the amounts of premiums calculated in the accounting period 2001, the amount of technical provisions for long-term liabilities of the company and investments of the assets covering mathematical provisions as per 31.12.2001 are adequate so as to ensure the long-term meeting of all the company's obligations arising from the contracts. In my opinion the amount of property insurance premiums, the amount of set aside technical reservations for liabilities of property insurance operations and the state of assets covering technical provisions for property insurance as per December 31 2001, without appropriate correction of premium levels and increase in capital, do not ensure the long-term meeting of the company's obligations arising from property insurance contracts. Maribor, 31.03.2002 Lillian Bel�ak, FSAA

Certified Actuary of Zavarovalnica Maribor d.d.

33


PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND CASH FLOW STATEMENT

year 2001 year 2000

A STATEMENT OF THE RESULTS OF NON-LIFE INSURANCE OPERATIONS

I NET REVENUES FROM INSURANCE PREMIUMS 14.433.954 12.517.529

II INVESTMENT GAINS TRANSFERRED TO THE STATEMENT OF RESULTS 327.005 281.943OF ORDINARY OPERATIONS

III OTHER NET REVENUES FROM INSURANCE OPERATIONS 37.418 29.869

IV NET EXPENSES FOR CLAIMS INCURRED 13.181.486 8.712.586

V CHANGES IN OTHER NET TECHNICAL PROVISIONS 1.005.496 43.092

VI NET EXPENSES FOR BONUSES AND DISCOUNTS 7.621 15.431

VII NET OPERATING EXPENSES 5.898.647 4.261.657

VIII OTHER NET INSURANCE EXPENSES 363.251 254.025

IX CHANGE IN EQUALISATION RESERVE 350.202 227.996

X -6.008.326 -685.445

B STATEMENT OF THE RESULTS OF LIFE INSURANCE OPERATIONS

I NET REVENUES FROM INSURANCE PREMIUMS 9.043.966 8.632.858

II REVENUES FROM INVESTMENTS 1.818.704 1.293.1141. Revenues from capital interests 44.666 -2. Revenues from other investments 1.609.337 1.159.2543. Revenues from investment revaluation adjustments 47.598 -4. Revaluation surplus - 1155. Gains on disposal of investments 117.103 17.869

III UNREALIZED CAPITAL PROFITS - -

IV OTHER NET REVENUES FROM INSURANCE OPERATIONS 10.567 8.506

V NET EXPENSES FOR CLAIMS INCURRED 3.144.510 2.775.609

VI CHANGES IN OTHER NET TECHNICAL PROVISIONS 4.403.088 3.827.2081. Changes in mathematical provisions 4.403.088 3.663.2082. Changes in other net technical provisions - 164

VII NET EXPENSES FOR BONUSES AND DISCOUNTS - -

VIII NET OPREATING EXPENSES 1.603.990 1.879.618

IX INVESTMENT EXPENSES 425.006 284.975

X UNREALIZED CAPITAL LOSSES - -

XI OTHER NET INSURANCE EXPENSES 11.566 3.060

XII INVESTMENT GAINS TRANSFERRED TO THE STATEMENT OF THE RESULTS -27.884 1.008.138OF ORDINARY OPERATIONS

XIII 1.312.961 155.869

C STATEMENT OF THE RESULTS OF HEALTH INSURANCE OPERATIONS

P R O F I T A N D L O S S A C C O U N T

RESULT OF NON-LIFE INSURANCE OPERATIONS (I+II+III-IV+/-V-VI-VII-VIII+/-IX)

RESULT OF LIFE INSURANCE OPERATIONS (I+II+III+IV-V+/-VI-VII-VIII-IX-X-XI-XII)

.991

.000

34


D STATEMENT OF TOTAL RESULTS OF ORDINARY OPERATIONS

I RESULT OF NON-LIFE INSURANCE OPERATIONS -6.008.326 -685.445

II RESULT OF LIFE INSURANCE OPERATIONS 1.312.961 155.869

III RESULT OF HEALTH INSURANCE OPERATIONS - -

IV REVENUES FROM INVESTMENTS 798.171 794.2671. Revenues from capital interests 39.2862. Revenues from other investments 758.884 794.2673. Revenues from investment revaluation adjustments 143.0194. Revaluation surplus 44.550 212.4895. Gains from disposal of investments 10.507 7.330

V INVESTMENT GAINS TRANSFERRED FROM LIFE INSURANCE OPERATIONS -27.884 1.008.138

VI INVESTMENT GAINS TRANSFERRED FROM HEALTH INSURANCE OPERATIONS - -(C XII)

VII INVESTMENT EXPENSES 287.997 214.549

VIII INVESTMENT GAINS TRANSFERRED TO THE STATEMENT OF THE RESULTS OF 327.005 281.943NON-LIFE INSURANCE OPERATIONS (A II)

IX OTHER OPERATING REVENUES 2.028

X OTHER OPERATING EXPENSES 266.047 675.620

XI OPERATING PROFIT/LOSS -4.804.099 100.7181. Profit/loss of non-life insurance operations -6.082.377 -846.2012. Profit/loss of life insurance operations 1.278.279 946.918

E STATEMENT OF EXTRAORDINARY ITEMS

I EXTRAORDINARY REVENUES 178.853 355.755

II EXTRAORDINARY EXPENSES 984.515 25.265

III EXTRAORDINARY PROFIT/LOSS -805.663 330.4891. Extraordinary profit/loss of non-life insurance operations -479.160 229.5372. Extraordianry profit/loss of life insurance operations -326.504 100.953

F PROFIT OR LOSS FOR THE ACCOUNTING PERIOD (D XI + E III) -5.609.761 431.2071 Profit or loss of other insurance operations -6.561.537 -616.6642 Profit or loss of life insurance operations 951.775 1.047.871

G INCOME TAX

H INCOME AFTER TAXES (E-F) -5.609.761 431.207

I OTHER TAXES

J NET PROFIT OR LOSS OF THE ACCOUNTING PERIOD (G-H) -5.609.761 431.207

35


in 000 SIT as at 31.12.2001 as at 01.01.2001

ASSETS IN TOTAL 48.503.385 39.744.402

A SUBSCRIBED BUT NOT FULLY PAID-UP CAPITAL

B INTANGIBLE FIXED ASSETS 85.217 90.090

C INVESTMENTS IN LAND AND BUILDINGS, FIN. INVESTMENTS 42.306.128 34.555.811I LAND AND BUILDINGS 3.139.279 2.645.423

1. Land and buildings used in insurance operations 2.078.979 1.801.6822. Other land and buildings (investments) 1.060.300 843.741

II INVESTMENTS IN RELATED ENTERPRISES - -III OTHER FINANCIAL INVESTMENTS 39.078.832 31.846.906

1. Long-term financial investments 32.256.936 31.080.4882. Short-term financial investments 6.821.897 766.418

IV DEPOSITS WITH ASSIGNORS - -V LONG-TERM RECEIVABLES 88.017 63.481

D INVESTMENTS FOR THE BENEFIT OF HOLDERS OF LIFE INSURANCE POLICIES THAT HAVE ASSUMED THE INVESTMENT RISK

E RECEIVABLES 4.492.251 3.902.382I RECEIVABLES FROM DIRECT INSURANCE OPERATIONS 2.355.373 1.988.271II RECEIVABLES FROM REINSURANCE AND CO-INSURANCE OPERATIONS 500.033 312.542III OTHER RECEIVABLES 1.636.845 1.601.570

F DIVERSE ASSETS 1.066.459 802.944I FIXED ASSETS (with the exception of immovable property) 675.288 525.975II CASH 352.013 240.910III PURCHASED OWN SHARES - -IV INVENTORIES AND OTHER ASSETS 39.157 36.059

G DEFFERED ITEMS 553.330 393.175

LIABILITIES IN TOTAL 48.503.385 39.744.402

A CAPITAL AND RESERVES -2.728.101 2.693.141I SUBSCRIBED CAPITAL 2.018.854 2.018.854II CAPITAL SURPLUS - -III CAPITAL REVALUATION ADJUSTMENT 821.275 632.756IV RESERVES 40.324 40.324V NET PROFIT/LOSS B/FWD FROM PREVIOUS YEAR 1.207 1.207VI UNDISTRIBUTED PROFIT/LOSS OF THE PERIOD -5.609.761 -

B SUBSIDIARY LIABILITIES

C NET TECHNICAL PROVISIONS 48.393.135 34.944.636I NET UNEARNED PREMIUMS 5.376.423 4.830.019II NET MATHEMATICAL PROVISIONS 27.262.983 21.409.561III NET PROVISIONS FOR OUTSTANDING CLAIMS 12.862.301 7.106.065IV NET PROVISIONS FOR PREMIUM DISCOUNTS AND BONUSES 6.483 5.788V EQUALISATION RESERVE 1.678.008 1.240.940VI OTHER NET TECHNICAL PROVISIONS 1.206.937 352.262

D TECHNICAL PROVISIONS FOR THE BENEFIT OF LIFE INSURANCE POLICYHOLDERS THAT HAVE ASSUMED INVESTMENT RISK

E LONG-TERM PROVISIONS FOR OTHER RISKS AND COSTS 72.997 72.997

B A L A N C E S H E E T

36


F LIABILITIES FROM A PART OF UNEARNED PREMIUMS OF REINSURERS

G OTHER LIABILITIES 1.630.484 1.267.290I LIABILITIES FROM DIRECT INSURANCE OPERATIONS 828.552 625.027II LIABILITIES FROM RE- AND CO-INSURANCE OPERATIONS 8.515 11.015III LIABILITIES FROM ISSUED BONDS - -IV LIABILITIES FOR LONG-TERM LOANS - -V OTHER LIABILITIES 793.417 631.247

1. Other long-term liabilities - 72. Other short-term liabilities 793.417 630.505

H ACCRUED EXPENSES 1.134.870 766.338

43

37


in 000 SIT year 2001 year 2000

I OPENING CASH BALANCE 240.910 230.526

II INFLOWS FROM BUSINESS OPERATIONS 27.170.142 23.608.648A REVENUES 26.323.860 23.324.421

1. Net insurance premiums 23.477.920 21.150.3872. Financial revenue 2.563.547 1.779.904

- associated with investments financed from technical provisons and reserves 2.386.104 1.690.111- associated with other investments 177.443 89.793

3. Other revenues from investments 53.527 --associated with investments financed from technical provisions and reserves - -- associated with other investments 53.527 -

4. Other revenues from investments 50.013 38.3755. Non-operating revenues 178.853 355.755

B INFLOWS FROM DISPOSAL OF INVESTMENTS - -C INFLOWS FROM OPERATIONS FINANCING 846.282 284.227

1. Increase in liabilities from direct insurance operations 315.045 129.8582. Increase in liabilities from reinsurance operations - -3. Increase in other current liabilities and accrued expenses 531.237 154.369

III INFLOWS FROM INVESTMENT OPERATIONS - 87.538A OFFSET DECREASE IN INTANGIBLE FIXED ASSETS - -B OFFSET DECREASE IN TANGIBLE FIXED ASSETS AND INVENTORIES - -C OFFSET DECREASE IN LONG-TERM INVESTMENTS - -D OFFSET DECREASE IN SHORT-TERM INVESTMENTS: - 87.538

- financed from technical provisions and reserves - 87.538- others - -

IV INFLOWS FROM FINANCIAL OPERATIONS 11.202.577 6.032.354A INCREASE IN CAPITAL AND RESERVES OUTSIDE PROFITS OF

THE ACCOUNTING PERIODB OFFSET INCREASE IN NET TECHNICAL PROVISIONS 11.202.577 6.001.069

- unearned premiums 520.090 472.785- mathematical provisions 4.243.168 4.109.997- provisions for outstanding claims 5.258.811 983.199- provisions for premium discounts and bonuses 290 -- for the benefit of life insurance policy holders who have assumed the investment ris - -- equalisation reserve 350.202 227.996- other net technical provisions 830.016 207.092

C OFFSET INCREASE IN LONG-TERM PROVISIONS FOR - 31.285OTHER RISKS AND COSTS

D OFFSET INCREASE IN LONG-TERM DEBT - -E OFFSET INCREASE IN SHORT-TERM DEBT - -F OFFSET INCREASE IN DIVIDENDS PAYABLE - -

INFLOWS IN TOTAL 38.372.719 29.728.540

I OUTFLOWS FROM BUSINESS OPERATIONS 32.241.499 23.463.533A EXPENSES 31.491.669 22.538.362

1. Net claims paid 16.325.996 11.268.1942. Costs of provisions (math. prov., bonuses, other techn. prov.) 5.766.407 4.113.7273. Net oper. costs, with the exception of depreciation costs 7.159.103 5.852.0304. Costs of preventive activity 62.570 55.6065. Financial expenses: 613.551 346.441

- associated with investments fianced from techn. provisions and reserves 561.534 339.553- associated with other investments 52.016 6.888

6. Other expenses from investments: 1.234 -- associated with investments financed from techn. provisions and reserves - -- associated with other investments 3.323 -

7. Other operating expenses 578.293 877.0998. Extraordinary expenses: 984.515 25.265

- amounts used for covering losses from previous periods - -9. Taxes - -

C A S H F L O W S T A T E M E N T

38


B OUTFLOWS FROM INVESTMENT OPERATIONS 747.330 922.1301. Increase in claims arising from direct insurance operations 364.409 70.5712. Increase in claims arising from reinsurance operations 187.491 68.2383. Increase in other claims and deferred expenses 195.430 783.321

C OUTFLOWS FROM OPERATING DEFINANCING 2.500 3.0411. Decrease in claims arising from direct insurance operations - -2. Decrease in liabilities from reinsurance operations 2.500 3.0413. Decrese in other current liabilities and accrued expenses - -

II OUTFLOWS FROM INVESTMENT OPERATIONS 6.019.580 6.248.373A OFFSET INCREASE IN INTANGIBLE LONG-TERM ASSETS 31.150 42.253B OFFSET INCREASE IN FIXED ASSETS AND INVENTORIES 668.109 625.586

- used in insurance operations 665.010 625.559- inventories 3.099 27

C OFFSET INCREASE IN LONG-TERM INVESTMENTS 4.874.143 5.580.534- financed from technical provisions and reserves 4.867.291 5.580.534- others 6.852

D OFFSET INCREASE IN CURRENT INVESTMENTS: 446.179 -- financed from technical provisions and reserves 446.179 -- others - -

III OUTFLOWS FROM DEFINANCING OPERATIONS 535 6.249A DECREASE IN CAPITAL AND RESERVES OUTSIDE LOSSES OF THE ACCOUNTING - -B OFFSET DECREASE IN NET TECHNICAL PROVISIONS - 5.664

- provisons for premium discounts and bonuses - 5.664C OFFSET DECREASE IN PROVISIONS FOR OTHER RISKS AND COSTS - -D OFFSET DECREASE IN LONG-TERM DEBT 535 585E OFFSET DECREASE IN SHORT-TERM DEBT - -F OFFSET DECREASE IN DIVIDENDS PAYABLE - -

OUTFLOWS IN TOTAL 38.261.616 29.718.156

IV CLOSING CASH BALANCE 352.013 240.910

39


LIFE INSURANCE NON-LIFE INSUR. IN TOTAL in 000 SIT OPERATIONS OPERATIONS ALL INSUR. OPER.

I RETAINED PROFIT TRANSFERRED/B/FWD FROM PREVIOUS YEARS - 1.291 1.291II NET PROFIT FOR THE YEAR 951.775 951.775III ALLOCATION OF PROFIT FOR THE BENEFIT OF HOLDERS OF LIFE

INSURANCE POLICIESIV PROFIT AVAILABLE FOR ALLOCATION 951.775 1.291 953.066

1. Apppropriation to reservations - -2. Appropriation to dividends - -3. Appropriation to bonuses of managment staff and Supervisory Board members - - -4. Allocation of net profit to other components of capital 951.775 - 951.775

4.1. Covering loss of previous years4.2. Covering loss of other insurance classes 951.775 - 951.7754.3. Other pruposes

5. Retained net profit - 1.291 1.291

ALLOCATION OF THE PROFIT FOR THE YEAR 2001

--

LIFE INSURANCE NON-LIFE INSUR. IN TOTALOPERATIONS OPERATIONS ALL INSUR. OPER.

I LOSS B/FWD FROM PREVIOUS YEARSII LOSS FOR THE YEAR - 6.561.537 6.561.537III TOTAL LOSS NOT COVERED - 6.561.537 6.561.537IV COVERING THE LOSS - -

1. To the debit of other insurance classes - 951.775 951.7752. To the debit of provisions - -3. To the debit of other components of capital - - -4. Loss b/fwd from previous years - 5.609.761 5.609.761

COVERING LOSS OF PREVIOUS YEARS

-

-

40


AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS

FOR THE YEAR 2001 ACCOUNTING POLICIES IN 2001

The principal accounting policies adopted for the presentation of the financial statements for 2001 are based on

the new Insurance Act and 20 executive regulations of the Agency for Insurance Supervision. Basic accounting

principles and calculations of individual items are prescribed by the Slovenian Accounting Standards. The records

from 2000 are partly adjusted to the revised balance sheet formats.

We re-valued - reduced the present value of investments into land and buildings.

Financial results for the year 2001 were affected to the greatest extent by the new legislation on insurance

companies, which made the rules and methods of calculating technical provisions much stricter. The total effect of

the increase in technical provisions as at 31 December 2001 in comparison to the preceding year is 4, 835.689 (in

000 SIT).

The closing balance for the year 2001 includes also the newly calculated provisions for earthquake risks (SIT 56

million) and provisions for non-expired risks (SIT 891 million).

NOTES TO THE PROFIT AND LOSS ACCOUNT (in 000 SIT) REVENUES FROM INSURANCE PREMIUMS items 2000 % 2001 % index

Gross insurance premiums 17.630.925 100 20.656.552 100 117 Co-insurance premiums (balance) -8.859 0,1 13.229 0,1 -149 Reinsurance premiums -4.739.172 26,9 -5.812.497 28,1 123 Changes in gross premium reserves -516.674 2,9 -782.865 3,8 152 Changes in reinsurance premium reserves 151.309 0,9 359.534 1,7 238 NET REVENUES - NON-LIFE INSURANCE OPERATIONS

12.517.529 71,0 14.433.954 69,9 115

Gross insurance premiums 8.664.556 100 9.085.002 100 105 Co-insurance premiums (balance) -6.116 0,1 -22.278 0,2 364 Reinsurance premiums -25.582 0,3 -18.758 0,2 73 NET REVENUES - LIFE INSURANCE OPERATIONS

8.632.858 -99,6 9.043.966 -99,5 105

41


INVESTMENT REVENUES The structure of revenues according to the sources of invested assets is shown in the table below (in 000 SIT):

type of investment / source

Investments of/with regard to? assets covering technical

provisions

Investments of assets covering

mathematical provisions

Investments of own assets

Government securities 159.253 622.791Other securities 61.301 636.407Equity securities 44.527 105.721Mutual funds 0 3.835Bank deposits 57.415 435.330Real estate items 41.884 0 3.962Loans 134.041 13.579Other investments 69.068 952 29.219

IN TOTAL 587.636 1.818.615 33.181

Revenues from financing trade rel. 177.443 EXPENSES FOR CLAIMS INCURRED items 2000 % 2001 % index

Gross claims paid 13.005.309 100 14.309.566 100 110 Recourse claims paid -606.543 -4,7 -855.782 -6,0 141 Co-insurance claims paid (balance) 2.882 0,0 757 0,0 26 Reinsurance claims paid (balance) -4.249.158 -32,7 -5.118.421 -35,8 120 Change in gross provisions for outstanding claims

1.268.581 9,8 6.711.853 46,9 529

Change in provisions for outstanding claims (reinsurance)

-708.485 -5,4 -1.866.487 -13,0 263

NET EXPENSES FOR CLAIMS INCURRED -NON-LIFE INSURANCE OPERATIONS

8.712.586 67,0 13.181.486 92,1 151

Gross claims paid 2.352.306 100 2.731.065 100 116 Change in gross provisions for outstanding claims

423.303 18,0 413.445 15,1 98

NET EXPENSES FOR CLAIMS INCURRED -LIFE INSURANCE OPERATIONS

2.775.609 118,0 3.144.510 115,1 113

42


OPERATING EXPENSES Comparative figures for main groups of expenses (in 000 SIT):

TYPE OF EXPENSE 2000 % 2001 % index

MATERIAL COSTS 184.690 2,90 231.894 3,03 126COSTS OF INSURANCE CONTRACT ACQUISITION (commissions)

1.038.773 16,60 1.525.961 19,96 147

COSTS OF SERVICES 1.407.339 22,50 1.592.617 20,83 113DEPRECIATION OF ASSETS USED IN INSURANCE OPERATIONS

289.245 4,60 408.217 5,34 141

PROVISIONS 31.275 0,50 0,00 0LABOUR COSTS 3.038.940 48,50 3.710.092 48,52 122OTHER OPERATING EXPENSES 271.630 4,30 177.915 2,33 65 OPERATING EXPENSES IN TOTAL 6.261.892 100 7.646.696

100 122

INVESTMENT EXPENSES The following table shows the structure of expenses according to the source of investments (in 000 SIT):

type of investment / source of

investment

Investments of/with regard to? assets covering technical

provisions

Investments of assets covering

mathematical provisions

Investments of own assets

Government securities 6.987 77.127Other securities 317 224.898Equity securities 34.587 25.467Mutual funds 1.811 24.956Bank deposits 0Real estate items 72.109 3.323Loans 139.668 7.046Other investments 5.152 37.540INVESTMENT EXPENSES IN TOTAL 260.631 397.033 3.323Expenses for financing trade rel. 51.986

OTHER NET INSURANCE EXPENSES

2000 % 2001 % index

Costs of preventive activity 55.606 21,6 62.570 16,7 112Fire tax costs 146.550 57,0 159.905 42,7 109Claims paid for damage caused by drivers of unknown vehicles

43.375 16,9 107.194 28,6 247

Other insurance expenses 11.554 4,5 33.582 12,0 291

OTHER NET INSURANCE EXPENSES 257.085 100 374.816 100 146

43


EXTRAORDINARY EXPENSES Pursuant to the tax administration decision ZM paid profits tax amounting to SIT 474.3 million, which was

allocated to life insurance policyholders in the years 1996 and 1997. EXPENSES FOR TECHNICAL PROVISIONS Type of reservation Balance sheet

increase (gross res.)

Balance sheet increase

(reinsurance)

retention level

Unearned premium (life insurance policies)

32.481 32.481

Unearned premium (other insurance policies)

874.419 360.496 513.923

Claims outstanding (life insurance policies)

509.239 509.239

Claims outstanding (other insurance policies)

7.622.723 1.866.487 5.756.236

Equalisation reserve 437.067 437.067

Provisions for bonuses and discounts

695 695

Provisions for nuclear perils 70.305 70.305 Earthquake 56.602 56.602

Mathematical provisions 5.273.422 5.273.422 Allocation of profits in math. prov. 580.000 580.000

Non-expired risks 891.767 891.767 In t o t a l 16.348.720 2.226.983

14.121.737

44


LOSS FOR THE ACCOUNTING PERIOD In the Profit and Loss Account for 2001, ZM posted the loss for the accounting period (in compliance with the

amending act of 'ZGD-F' - the Law on Commercial Companies) as follows:

Net loss for the financial year -5.609.761.441 SIT Profit b/fwd (re-valued) from previous years 1.291.097 Statutory reservations from profit 46.986.713 Loss for the accounting period

-5.561.483.629

SIT

NOTES TO THE BALANCE SHEET

INTANGIBLE FIXED ASSETS

type Purchase value Allowance for depreciation

Present value % allow.

Finance/business lease 21.860 12111 9.749 55,4Software 195.914 125.895 70.019 64,3Other intangible fixed assets 17.040 11.593 5.447 68,0 In total 234.814 149.599

85.215 63,7

FIXED ASSETS The most important categories: type Purchase value Allowance for

depreciation Present value % write off

Computer system 19.722 19.109 613 96,89 PC computers and printers 901.272 586.356 314.916 65,06 PTT equipment 58.283 25.483 32.800 43,72 Cars 331.231 201.831 129.400 60,93 Furniture 411.180 266.735 144.445 64,87 Typewriters and calculating machines

77.740 66.635 11.105 85,72

Tools and other devices 57.218 37.532 19.686 65,59

45


INVESTMENTS

Assets covering mathematical provisions

Assets covering technical provisions

Type of investment

Balance sheet value

% Balance sheet value

%

Bonds issued by the Republic of Slovenia, a Member State or an OECD Member State

10.284.101 33 2.785.199 30

Bonds quoted on an organised securities exchange

9.020.375 29 1.301.675 14

Bonds not quoted on the Stock Exchange 12.286 0 149.700 2Shares quoted on an organised securities exchange

1.249.606 4 823 0

Shares not quoted on the Stock Exchange 143.837 0 907.364 10Investment coupons of mutual funds 707.596 2 25.035 0Loans collateralised by a mortgage on a real estate

484.343 5

Loans given to banks Loans collateralised by a lien on securities Claims arising from other loans 175.779 1 653.425 7Advance payments with regard to the surrender value on the basis of insurance policies

Immovable property and other real rights to immovable property

1.048.076 11

Bank deposits 9.134.513 30 1.976.879 21Cash in hand or sight deposits In total 30.728.093 100 9.332.519 100 RECEIVABLES Receivables are broken down as follows: Type of receivable Nominal value Value

adjustment Balance sheet

value % adjust.

Non-life insurance premiums 2.780.431 882.623 1.897.808 31,7Life insurance premiums 542.562 356.067 186.495 65,6Receivables from bankruptcy proceedings

494.006 494.006 100,0

Insurance agents 223.110 35.129 187.981 15,7Not included costs of insurance contract acquisition

82.720 82.720

In total 4.122.739 1.768.365

2.354.374 42,9

46


CAPITAL Shareholders' equity as at 31 December 2001 consists of 2,012.050 shares, including: - 208.500 preference shares of the first issue, but with the right to vote - 3.550 ordinary shares of the first issue, - 800.000 ordinary shares of the second issue, - 1.000.000 ordinary shares of the third issue, all with SIT 1,000 nominal value. All the amounts have been paid-in. NET TECHNICAL PROVISIONS Type of reservation Net 2000 % Gross 2001 Net 2001 % index

Mathematical provisions 21.573.561 62 27.262.983 27.262.983 56 126Unearned premiums 4.830.019 14 7.442.266 5.376.423 11 111 Provisions for bonuses and discounts

5.788 0 6.483 6.483 0 112

Provisions for outstanding claims 7.106.065 20 17.100.975 12.862.300 27 181 Equalisation reserve 1.240.940 4 1.678.008 1.678.008 3 135 Provisions for nuclear perils 188.262 1 258.567 258.567 1 137 Provisions for earthquake risks 0 56.602 56.602 0 Provisions for non-expired risks 0 891.767 891.767 2 Net technical provisions 34.944.635 100 54.697.652

48.393.135

100 138

OTHER LIABILITIES The table below shows some more important categories of liabilities (in 000 tolars): type 2000 % 2001 % index From direct insurance business 625.018 43 828.552 51 133From other insurance business 208.630 25 252.308 15 121From co- and reinsurance 11.015 1 8.515 1 77From long-term loans -- -- From liabilities to banks -- -- From other long-term liabilities 743 0 From liabilities to employees 180.273 14 221.162 14 123From financing activities -- 207 0 To state institutions 48.226 5 59.979 4 124To suppliers 128.376 7 187.925 12 146Other 65.009 5 71.836 4 111 In total 1.267.290 100 1.630.484

100 129

47


CAPITAL ADEQUACY In the year 2001 Zavarovalnica Maribor d.d. did not meet the requirements for capital adequacy prescribed by the new insurance legislation. Due to the amended approach to the calculation of capital adequacy, the required amount of the guarantee capital changed from the surplus in the year 2000 amounting to 1.7 billion tolars to the deficit in 2001 amounting to 2.5 billion tolars. In order to meet the statutory requirements for capital adequacy, the ZM shareholders carried out an increase of capital stock in the amount of 4.8 billion tolars, and the company issued also debenture bonds in the amount of 2,3 billion tolars. ORGANISATIONAL, OWNERSHIP AND MANAGEMENT STRUCTURE

CORPORATE DATA: Zavarovalnica Maribor d.d. (joint-stock company), Cankarjeva ulica 3, 2507 MARIBOR; Zavarovalnica Maribor d.d. (joint-stock company), entered into companies' register of the District Court in Maribor on 26 December 1990, entry number 1/03762/00; Capital: 2,012.050.000,00 tolarjev; Tax number: 44814631; Reg. number: 5063400; Telephone: + 386 (0)2 233 21 00; Free telephone for information services: 080-19-20; Telefax: + 386 (0)2 233 25 30; E-mail: [email protected]; Web page: www.zav-mb.si.

ZM Ownership Structure

44,46%

40,61%

8,80%2,68% 3,45%

Nova BM Pozavarovalnica Sava Probanka Perutnina Ptuj 25 minor shareholders

48


MEMBERS OF THE SUPERVISORY BOARD AS PER 31.12. 2001: • Borut Jezer�ek, Pozavarovalnica Sava d.d., chairman;

• Matja� Kovačič, Nova KBM d.d., vice-chairman;

• Janja Postru�nik, Probanka d.d., member;

• Oto Sekavčnik, član (representative of minor shareholders);

• Mladen Stariha, Nova KBM d.d., member;

• Edi Kosi, ZM d.d., member;

• Stanko Puhr, ZM d.d., member.

BOARD OF MANAGEMENT: Drago Cotar, president;

Pajica Skorobrijin, member;

Srečko Čebron, member;

Mitja Mejač, member.

EXECUTIVE DIRECTORS: Renata Doler (MSc), Financial Sector;

Marko Klemenčič, Life Insurance Technology Sector;

Primo� Tručl, Non-life Insurance Technology Sector;

Anton Vadnjal, Accounting Sector;

Marko Vončina, Marketing Sector.

49


ORGANISATIONAL STRUCTURE ZAVAROVALNICA MARIBOR D.D.

Board ofmanagement

Accounting Sector Financial Sector

Internal Audit Service

Legal Service

Actuarial Service

Information Technology Service

Human Resource ManagementService

Non-life InsuranceTecnology SectorMarketing Sector Life Insurance Tecnology

Sector

Advisor to thePresident of the Board

of Management

Advisors to the Boardof Management

Secretariat of theCompany's

Management

ComplaintsCommission

Company Secretary

Public Relations Service

50


ORGANISATIONAL STRUCTURE MARKETING SECTOR

MARKET ING SECT O R

In-house Training Departm ent

Com plaints Departm ent

Quality Control Departm ent

Bursary departm ent

Business Property InsuranceDepartm ent

Sales Departm ent

Sales Prom otion Departm ent

M ail and Telephone Serv icesOffice

Bursar's office

PE 2M aribor Branch

Office

PE 1Ljubljana Branch

Office

PE 3Celje Branch

Office

PE 6Koper

RepresentativeOffice

PE 5Nova G orica

RepresentativeeOffice

PE 4K ranj


PE 8Novo mesto

R epresentativeOffice

PE 9Ljutom er


PE 7Slovenj G radecBranch Office

51


52


ZM BUSINESS UNITS

LJUBLJANA BRANCH OFFICE Dunajska 8, 1000 LJUBLJANA Tel.: + 386 (0)1 234 55 03 (secretary's office) Fax: + 386 (0)1 234 55 10 (secretary's office), E-mail: [email protected] Director: MARKO VILFAN

MARIBOR BRANCH OFFICE Cankarjeva ul. 3, 2507 MARIBOR Tel.: + 386 (0)2 233 23 07 (secretary's office) Fax: + 386 (0)2 233 25 28 E-mail: [email protected] Director: URO� SKUHALA

CELJE BRANCH OFFICE Ljubljanska c. 14, 3000 CELJE Tel.: + 386 (0)3 428 45 04 (secretary's office) Fax: + 386 (0)3 544 31 45 E-mail: [email protected] Director: FLORJAN LORGER

KRANJ REPRESENTATIVE OFFICE Zoisova ul. 1, 4000 KRANJ Tel.: + 386 (0)4 236 70 40, 236 71 40 Fax: + 386 (0)4 201 22 10 E-mail: [email protected] Director: MILAN KO�IR (MSc)

NOVA GORICA REPRESENTATIVE OFFICE Bevkov trg 6, 5000 NOVA GORICA Tel.: + 386 (0)5 335 90 00 (tel. exchange) Fax: + 386 (0)5 335 90 15 E-mail: [email protected] Director: ADA FILIPIČ

KOPER REPRESENTATIVE OFFICE Cesta Zore Perello-Godina 2, 6000 KOPER, p.p. 223 Tel.: + 386 (0)5 611 77 80, 611 77 82 Fax: + 386 (0)5 639 36 85 E-mail: [email protected] Director: ZLATKO KEBER (MSc)

SLOVENJ GRADEC BRANCH OFFICE Francetova cesta 7, 2380 SLOVENJ GRADEC Tel.: + 386 (0)2 881 27 00 (secretary's office) Fax: + 386 (0)2 881 27 37 E-mail: [email protected] Director: JANEZ BLAGOTIN�EK

NOVO MESTO REPRESENTATIVE OFFICE Zwittrova 1, 8000 NOVO MESTO Tel.: + 386 (0)7 332 53 30, 332 56 16 Fax: + 386 (0)7 332 53 31 E-mail: [email protected] Director: JO�KO KLOBČAR

LJUTOMER REPRESENTATIVE OFFICE Pre�ernova 7, 9240 LJUTOMER Tel.: + 386 (0)2 584 13 60, 584 11 54 Fax: + 386 (0)2 584 12 42 E-mail: [email protected] Director: BORIS LEBAR

main lines of business - zavarovalnica sava: intranet · 2004-03-08 · 2001 was a year of numerous...

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